ADAPTING TO CLIMATE CHANGE

The Productivity Commission's five-yearly productivity report says clear policy direction is needed to address climate change or Australia faces much higher costs over coming decades.

* Agriculture, fisheries, tourism and outdoor work in general will be impacted by climate change.

* The centrepiece of Australian policy should be the safeguard mechanism (SM), including electricity facilities and transport, and allowing the earning of carbon credits for abatement below baselines.

* The government should improve the integrity of carbon offsets under the SM.

* Other carbon abatement policies not found to be complementary to the SM should be phased out.

* Government-subsidised insurance schemes should be avoided, as they risk subsidising the movement of people and businesses into harm's way and increase adaptation costs.

* Climate-risk disclosures, such as fire and flood risk, should be made to buyers of homes and businesses.

* The government should put a five-year sunset clause on the "capacity investment scheme" due to start this year to pay suppliers to ensure dispatchable electricity is available when needed.