The Productivity Commission has called for a carbon tax, describing Australia’s energy system as “an appalling mess”.

The commission has released its new report, titled Shifting the Dial, in which it says a price on carbon must eventually form part of Australia’s energy markets.

The review - the first of a series of new five-yearly reports on Australia’s economic performance – says a tax on harmful emissions would help deliver the greatest possible market regulation reform benefits in coming years.

The report takes aim at successive state and federal governments that it says have contributed to Australia’s “energy wars”.

It says politicians have not made good use of experts in recent years.

It also criticises the political practice of ruling in or out specific energy technologies to satisfy their own prejudices and electorates.

The criticism includes governments with moratoria on gas development.

In a broader view, the commission warns that productivity growth is historically low, and needs serious market reforms.

Solving Australia’s energy market problems would bring market regulation reform benefits, which would in turn boost productivity.

“Australian governments ... must stop the piecemeal and stop-start approach to emission reduction and adopt a proper vehicle for reducing carbon emissions that puts a single effective price on carbon,” the report says.

“It is a principle of every properly designed pricing system that the charge should reflects its harms. Thus carbon emissions intensity is necessarily a matter to be reflect in the regulated pricing system.

“Governments need an emissions target to provide certainty for the sector about the trade-offs allowed between emissions reduction and cost.”