More stimulus measures should be directed towards reducing carbon emissions to keep Australia economically competitive, according to a supplementary report prepared for the Australian Local Government Association (ALGA) by National Economics.

The annual State of the Regions Report contains a snapshot of how Australia’s regions are performing across a range of economic, trend and statistical indicators.

The supplement to the 2008-09 State of the Regions Report was released by ALGA President Cr Geoff Lake last week.

The report argues that $1 billion of expenditure is required by the Federal Government to reduce greenhouse gas emissions by between 0.8 and 1 million tonnes per year.

"It stresses that the global financial crisis has not reduced the significance of climate change,” said Lake.

"Aggressive abatement measures are needed. The report emphasises the need for the Australian Government to link CO2 abatement measures with expansionary fiscal policy, as governments have done in China, Japan and South Korea," he added.

Lake said that the Carbon Pollution Reduction Scheme should be supported by a range of other complementary measures including retro-fitting programs, renewable energy sources, carbon capture and storage, specific taxes, regulations, subsidies and greater outlays for public transport infrastructure.

"Projections contained in the report also contain worrying implications for many regions,” Lake said.

The report also predicts that half of Australia’s regions will have worse employment levels by 2012 that they do today, Lake said.

“Projections contained in the report also contain worrying implications for many regions,” Lake said.