Posted under Express 193
Last word: Unsustainable Growth Drives Latest Credit Crisis
“Our precious natural capital, which sustains all life, is being eroded faster than ever”
The economic crises of 2008-2009 – and others since – have devastated economies worldwide and put countless people out of work and livelihood.
While they received prompt attention and action by governments in managing the fallout, a bigger and more insidious crisis is happening right under our noses, without inciting the same amount of urgency from the same authorities.
A credit crisis of ecological nature is threatening our future prosperity, well-being and ecological integrity, yet we still chug along the train of endless economic growth that is the cause of the crisis.
Author of dozens of books, including the land mark climate change expose “Living in the Hot House”, Professor Ian Lowe, as President of the Australian Conservation Foundation, addressed the National Press Club, Canberra, Australia recently. We have no hesitation in giving our readers access to his complete speech. Read more
Ecological credit crisis
President of the Australian Conservation Foundation Professor Ian Lowe address to the National Press Club, Canberra, Australia (29 May 2013):
After a summer of record temperatures, bushfires and floods, what it will take for Australia’s leaders to see through the myth of endless economic growth and start to tackle the ecological credit crisis.
I am delighted to address the National Press Club. It is nearly 50 years since ACF was set up as a strong voice for the environment. Our members and supporters have played a key role in protecting outstanding natural areas and raising public awareness of the importance of our unique environment.
We have recently seen important positive steps to price pollution and boost clean energy, put in place a world class marine reserve system, reform water use in the Murray Darling, improve water quality on the Great Barrier Reef, and protect Tasmanian forests. But we continue to go backwards on the big measures of environmental health because our economy is still driving environmental degradation.
Our precious natural capital, which sustains all life, is being eroded faster than ever. The changes taking place are so rapid we can no longer focus on the symptoms alone. We urgently need to reconnect our social and economic decisions with the limits of our natural life support systems.
I want to focus on tackling the root causes of environmental degradation
I am proposing a set of ambitious investments to secure our future prosperity, wellbeing and ecological integrity. In order to achieve those goals, we must accelerate new business approaches that don’t destabilise the climate, don’t eradicate biodiversity and don’t wastefully destroy our natural resources.
Before I present three proposals in detail and issue a specific challenge to our leaders, I want to remind you of our dire situation.
Not so long ago, a well-known US politician said, “Restoring nature…is a cause beyond party and beyond factions. It has become a common cause of all the people of this country”. He went on to warn that young people would “reap the grim consequences” if leaders failed to act. “Through our years of past carelessness we incurred a debt to nature, and now that debt is being called,” he said.
Believe it or not, that politician wasn’t Al Gore, Bill Clinton or Barack Obama. It was Richard Nixon, who announced in 1970 the most sweeping set of environmental laws in US history – passed with strong bi-partisan support. Yet the ecological debt that Nixon recognised in 1970 has not been repaid. In fact, we haven’t even been keeping up the interest payments.
Our ecological debt has been accumulating faster than our economic growth
Nixon recognised that tackling this must be a cause beyond party and beyond faction. No politician can claim to be a sensible economic manager without a clear plan for rescuing us from our deep ecological debt.
We face a GEC – a Global Ecological Crisis. Our natural assets are stressed as never before. The Millennium Assessment and the International Geosphere-Biosphere Program both showed the decline of the critical natural systems we depend on for our food, our water, our clean air and the capacity to maintain a safe climate.
Within Australia, the signs are obvious wherever we look: the deterioration of our productive soils, our inland rivers, oceans and reefs, forests and wetlands, native species and ecological communities. Four consecutive State of the Environment reports show all the serious problems getting steadily worse. Globally, we have ‘maxed out’ our ecological credit card and are deeply in debt. We need urgently to transform our economy, invest in a better future and get Australia onto a sustainable path.
However, the core of the problem is that overall consumption of the present population is degrading our environment, yet we encourage both growing numbers and increasing consumption per person, compounding pressures on our natural systems. We have a whole range of other policies that are clearly making the situation worse.
Let me list some for you:
•Multinational mining companies receive public subsidies of several billion dollars a year to get their fuel cheaper than Australian motorists.
•Some business lobbyists are pushing to have the commonwealth abandon its responsibility for environmental approvals, leaving us to the mercy of the shortsighted pro-development agenda of state governments. Commonwealth governments – ALP and Coalition – have saved us from a range of disasters like drilling for oil on the Great Barrier Reef.
•UNESCO is considering putting the Great Barrier Reef on the ‘shame list’ of endangered World Heritage sites – it’s under further threat from proposed massive escalation of coal exports and shipping, and possibly even uranium exports if the Newman government has its way.
•The Queensland government is also proposing to go back to the industrial-scale land clearing devastation we used to see, threatening the Great Barrier Reef with pollution, farmlands with salinity, and wildlife with extinction.
•Northern Australia is threatened by environmentally destructive development projects that would repeat the mistakes of the south. It is costing taxpayers $11.8 billion to repair the Murray Darling.
•The quality of life in our cities has been undermined by reckless growth, but short-sighted decision-makers are still allowing further urban sprawl.
•This Federal Government has for the first time invested in major public transport projects, yet our politicians still pour public funds into expensive and wasteful road projects.
•We are prepared to sell uranium to any country willing to pay for it, even if they have misused peaceful nuclear technology to build weapons or have no effective democratic system of government.
•The level of carbon dioxide in the atmosphere is on the brink of the critical 400 parts per million mark, a level not seen for about three million years. Atmospheric scientists warn we are near or beyond critical tipping points. We have seen important progress on tackling climate change. This government, with the support of the independents and Greens, has put a price on pollution and started investment in clean energy. We need to go forward with urgency, not backwards. The opposition is committed to scrap the carbon tax and abolish the Clean Energy Finance Corporation, which supports the transition to a clean energy future. And every year we export more and more coal that will be burned overseas, accelerating climate change.
•Finally, there is almost universal support among politicians to maximise the rate of economic growth, regardless of the social and environmental costs of pursuing that approach.
We urgently need long-term thinking and leadership, not just on environmental issues, but also on economic development and social cohesion
We need to pay attention to the advice of the World Bank, the International Monetary Fund, the International Energy Agency and other UN bodies. All those conservative international agencies recognise that we need to phase out fossil fuel subsidies if we want a clean energy future.
This fundamental change won’t be easy. It will cause conflict because some vested interests are profiting from unsustainable activities. It will require courage. But we know we can do it. When people get together and our leaders act, huge changes can occur with long-term benefits.
People won out over short-term vested interests when governments around the world acted to ban the chemicals that were depleting the ozone layer. John Howard stood up to the gun lobby after the Port Arthur tragedy and introduced the sorts of restrictions that are politically impossible in the USA. We are all safer as a result.
The first wave of environmentalism was about conservation, the second was about regulation, and the third wave will be about investment” – a senior adviser to US President Obama
The Gillard government took on the might of the tobacco industry to enact plain packaging for cigarettes. As a result, our children are less likely to join the lung cancer epidemic.
These sorts of fundamental changes are possible when there is vision and determination: vision of a better way, determination to make it happen.
ACF has actively participated in the first two waves. And ACF is now broadening its activities. We will continue to campaign to protect our precious natural systems from shortsighted and inappropriate development: in other words, we still need conservation and regulation. But we are also working to mobilise public support for the changes needed to enable a sustainable future.
That means changing our style of economic development, changing the system of taxes and charges that influence the investment pattern, but most fundamentally ending the mindless obsession with economic growth at all costs; economic growth at the expense of our environment, economic growth at the expense of social cohesion, and economic growth even at the expense of our material wellbeing.
The future is not somewhere we are going. It is something we are creating
We need a new approach. ACF suggests these fundamental changes:
•We should invest in smart, clean industries and infrastructure.
•We should tax pollution more and productivity less.
•We should measure and invest in community wellbeing.
First, let me talk about investment in smart infrastructure. Ecological destabilisation is now a more urgent threat to our security and prosperity than any military threat. That’s what global business leaders said in the recent annual Global Risk Report issued by the World Economic Forum. Issues such as climate change, food shortages and water crises were rated both more likely and more severe in their impacts than risks like terrorism and war.
Our investment in ecological security should be a higher priority than military spending, for which the government target is two per cent of GDP. Imagine the changes if we were to spend $30 billion a year on a clean economy! That’s just government spending, which would leverage much greater amounts of private investment in new industries.
Let me give you three specific examples.
•The Australian Energy Market operator estimates it would cost $220-250 billion to shift to 100 per cent renewable energy by 2030. That sounds like a lot, but the 2011 government energy white paper projected $200-240 billion is needed anyway, just to keep up with business-as-usual demand. Maintaining and expanding the Clean Energy Finance Corporation would catalyse private investment to support the government efforts. What makes more economic sense: investing $240 billion to maintain a highly polluting energy system, or investing a similar amount to build an entirely new and clean energy system? It would be sound economic management to build the clean system.
•Investing in smart transport would improve our environment, as well as the lives of the millions of Australians caught up every day in gridlocked traffic or unreliable public transport systems. SGS Economic and Planning estimates that investing $50 billion by 2030 would halve the widening gap in access to public transport and jobs between suburban and inner-urban areas. A further $50 billion would put our freight and long-distance rail systems on an effective and sustainable footing. An initial smart grid for electric vehicles could be set up in our major cities for as little as a billion dollars. $20 billion would be enough to give every household an incentive to switch to an electric vehicle within a decade. That would be money better spent than the bottomless pit of subsidies for the failing petrol-car industry.
•An increase of just $2 billion in biodiversity protection would enable us to create continental-scale protected areas. Investing in our biodiversity is not just an end in itself. It would help agriculture, tourism, education and our biomedical industry. It would also build our resilience to climate change and natural disasters. It should be done in active partnership with Indigenous Traditional Owners, who have protected our natural capital for thousands of years. It would be a great investment in our future to establish a proper integrated network of wildlife corridors stretching from one end of the continent to the other, across public and private land. That would bring lasting benefits to future generations.
The Howard government introduced a Goods and Services Tax. I believe we should have a Bads and Disservices Tax!
This ambitious agenda only uses about four years’ worth of the two per cent of GDP I propose we spend on ecological security. We can afford to do it. In fact, we can’t afford not to!
These expenditures are not costs; they are genuine investments with measurable returns, both financial and non-financial. In each case, the return on investment in modern clean systems is far greater than we would get from polluting technologies, once you take into account environmental and social costs.
Secondly, let me tackle the tax system.
We must encourage and support the productive activity of workers and companies that grow and distribute our food, that build and maintain our houses, that reuse and recycle, that educate our children and care for us when we are sick.
It would be economically more efficient and fairer to reduce taxes on productive activity, and increase taxes on activities that are harmful to society or the environment. Taxes on environmentally damaging activities actually fell in the decade to 2011, from 7.9 per cent of tax revenue to 7.3 per cent. In terms of proportion of total government revenue, our environmental tax levels are among the lowest in the entire OECD.
Taxes on fuel use are relatively lower than ten years ago and we still give generous tax breaks for investing in pollution-intensive activities. Even with our modest carbon price, we have a net carbon pollution subsidy of about $4 billion a year, or about $7 a tonne. And still miners complain.
Phasing out the subsidies for fossil fuel supply and use would increase the incentive for industries to operate efficiently and use clean energy. It would also generate revenue to lower other taxes. As a realistic target, we should aim to increase environmental taxes to 12 per cent of total tax revenue, about the level in leading OECD countries.
Taxing pollution and resource use properly would make it possible to reduce other charges like personal income tax and company tax
Last year, plans to lower the company tax rate by one per cent were abandoned because peak business groups could not agree on how to fund the reduction. An increase in effective tax rates on pollution, waste and natural resource use could fund a far more ambitious reduction.
Modernising our economy will allow us to phase out activities that are morally indefensible, like expanding our coal exports when we know the world needs to move urgently to reduce coal-burning to slow climate change, and exporting uranium which we know makes the world a dirtier and more dangerous place. The Fukushima accident, fuelled by Australian uranium, should have been a wake-up call; reminding us that nuclear power will always be a risk to local communities. In a tense and hostile world, it is criminally irresponsible to export fissile material that increases the global capacity for nuclear weapons.
The third big change is a move to more responsible measures of wellbeing. Rather than the dangerous delusion that bigger is always better, which drives the obsession with having more dollars to spend even if we don’t have time to make use of what we already have. Quality of life is not just measured in money. It is measured by time with our family, affordable housing, fulfilling work, access to parks and natural areas with time to enjoy them, clean air and secure neighbourhoods.
ABS data show 21 per cent of Australian workers are officially over-employed. They would prefer to be working fewer hours, even taking into account the pay reduction. These are working Australians who don’t have enough time for themselves, their families, their relationships and their community.
We need to measure and value quality of life, rather than seeing wealth as the measure of wellbeing
In 1973, the Australian Treasury published a major paper entitled Economic Growth: Is it worth having? Treasury’s answer: “Obviously the pursuit of growth for its own sake misses the point: the aim must be to improve the welfare of the community.”
Our national leaders, and most economists, have forgotten this basic insight. Economic growth is treated as something to be pursued for its own sake, regardless of whether it is actually leading to improvements in people’s lives or the wellbeing of the community.
There are many better measures of progress than the single GDP figure called ‘economic growth’. The ABS has its broader Measures of Australia’s Progress, the OECD has a wonderful Progress of Societies project, the Australian National Development Index is poised to release a community-based version, and so on. Yet our national political leadership seems blind to these initiatives.
Peter Victor, professor of economics at the University of York, Toronto, wrote Managing Without Growth. He had spent 30 years promoting economic growth in the belief that it would end poverty, reduce inequality and enable us to clean up the environment. Facing the uncomfortable truth that growth by itself had not achieved any of those goals, he accepted the need to question his basic assumptions.
It is irrational to continue doing what you have always done and expect a different result; if you want a different result, you have to do things differently. You would be appalled if the coach of your favourite football team kept repeating the strategies that were causing the team to lose every week.
The coaching staff of our economic team has been pursuing the strategy of ‘growth at all costs’, but we are losing every week: we are losing biodiversity, widening inequality, and not even achieving the basic economic objective of making the average Australian better off. Using his Treasury’s models, Professor Victor showed Canadians would have a better future if growth were steadily reduced to zero over a few decades.
Ross Gittins, economics editor of the Sydney Morning Herald, argued in The Happy Economist that the goal of the economy should be to improve human happiness – just what Treasury said in 1973! By that standard, we are failing miserably by concentrating on one indicator: the overall size of the economy.
And so I issue a challenge today to the leaders of our major political parties: tell us during the election campaign how you intend to measure ‘progress’ over the next term of government
For too long, most decision-makers have seen economic growth as the be-all and end-all, the unchallengeable primary goal. Thoughtful economists are now questioning this obsession with growth.
Bad events increase the Gross Domestic Product: natural disasters, disease outbreaks, chronic illness, violence and crime. It increases the GDP if it takes you longer to drive to work, if you have more accidents or need more medical attention, if your clothes or domestic appliances wear out faster and need to be replaced more often at greater expense. Anything that makes the Gross Domestic Product grosser appears good by that mindless calculus.
But the GDP is not improved if you are happier, if you are healthier, if you are wiser, if you spend more time at home with your family, if you enjoy the sunset or the birdsong from your veranda. We need to think about what we value and how we get back to improving our quality of life. The important question is not whether our economy is growing, but whether it is developing in the way that will help us achieve our goals in life, individually and as a community.
Most people understand the idea of optimum size. If we put on weight, we are less fit and less able to meet the physical demands of our life. If we lose weight, we know something is wrong.
If we can’t live sustainably in Australia, the prospects for the rest of the world are truly bleak
The idea of optimum size also applies to corporations. As they grow, they become more cumbersome and harder to manage. We see the problems of huge firms like Ford and General Motors, trying to respond to the changing world with all the agility of the Titanic. We want our economy to develop and mature, improve qualitatively, become better able to meet our needs, but its overall size needs to be limited by the physical and human resources it can sustainably use.
If it grows beyond that point and consumes more resources than can sustainably be supplied, or demands more of the workforce than we can supply while having time for enjoying our lives, it is threatening our future.
We need to be wise and responsible global citizens, recognising that we share a common future with all the other members of the human family. The old conception of ourselves as homo sapiens should give way to the goal of being globo sapiens, wise citizens of the world, taking responsibility for ourselves, our community, all other people and the whole complex pattern of life on this planet.
We have to behave as if we intend to be permanent residents of planet Earth. So we need to recognise the limits of natural systems and live within them, rather than engaging in a futile endeavour to dominate nature.
After all, Earth is the only home we have. It is the only home we will ever have. There is no Planet B, no realistic prospect of mass migration to another part of the cosmos or rescue by friendly aliens
We must develop social systems that allow us to work together to solve difficult problems and take the hard decisions now to enable a sustainable future. And that means we have to move beyond seeing consumption as an end in itself, to recognise that material consumption is, at best, only a means to the end of human satisfaction.
We are incredibly lucky to live in this country at this time. We live at a level of material comfort that our grandparents could only dream of. But we have to take decisive action now or it will be a level of comfort that our grandchildren will only be able to dream of.
It is our responsibility, as this most privileged generation in this most privileged country, to re-set our moral and economic compass.
I said at the start that we have seen real progress on climate action and environment protection in recent years, but continue to go backwards on the big measures of environment health.
In this election year, I urge the leaders of our political parties to take this challenge seriously. We can’t afford to go backwards, and we can’t afford to continue to deepen our ecological debt.
I believe it is realistic and responsible to reform our economy and set these goals:
•Invest in smart, clean industries and infrastructure.
•Tax pollution more and productivity less.
•Measure and invest in community wellbeing.
ACF is now working for these changes.
We see them as our moral responsibility to the other species that we share this country with, and the future generations who will inherit it from us.
I look forward to seeing many of you with us on this journey.