Ian Lowe

29 May 2013 – It’s not a global financial crisis we should be so fearful of, but the looming global ecological crisis, Australian Conservation Foundation president Ian Lowe told the National Press Club on Wednesday in a speech that launches a new strategy and direction for the ACF to tackle economic and investment issues in the battle for Australia’s future.

Following are highlights of Professor Lowe’s speech.

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.

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.

The policies that are damaging our ecology

  • Multi-national 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 short-sighted 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 on a grand scale. 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;
  • While this Federal Government has for the first time invested in major public transport projects, 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 threatening to 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.

Conservative organisations such the World Bank, the International Monetary Fund, the International Energy Agency and other UN bodies say we need to phase out fossil fuel subsidies if we want a clean energy future.

The third wave will be about investment

A senior adviser to US President Obama said recently that the first wave of environmentalism was about conservation, the second was about regulation, and the third wave will be about investment.

The Australian Conservation Foundation has actively participated in the first two waves. ACF is now broadening its activities. We will continue to campaign to protect our precious natural systems from short-sighted and inappropriate development: 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.

We need a new approach. ACF suggests three 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.

The ecological threat more urgent than military threat

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.

So 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. Why would we waste $240 billion propping up a highly polluting energy system, when a similar amount would build an entirely new and clean energy system? That would be sound economic management.

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 systems 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.

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.

Australia’s Great Barrier Reef

Get the tax system to make sense

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 10 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 the 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

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.

As the third big change, we need to move to more responsible measures of wellbeing 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. We need to measure and value quality of life, rather than seeing wealth as the measure of well-being.

Harder faster longer

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.

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 well-being 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.

So how will you measure progress Ms Gillard and Mr Abbott?

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.

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.

If it doesn’t work, change the strategy

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. Professor Victor showed Canadians would have a better future if growth was 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.

Natural disasters, disease outbreaks, chronic illness,

violence and crime increase the GDP

By that standard, we are failing miserably by concentrating on one indicator: the overall size of the economy. 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 more gross 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.

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 grand-children will only be able to dream of.

The future is not somewhere we are going. It is something we are creating. 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 three goals:

  • Invest in smart, clean industries and infrastructure.
  • Tax pollution more and productivity less.
  • Measure and invest in community well-being.

The Australian Conservation Foundation 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.

The new national agenda document from the ACF, entitled Restoring the Foundations for a Better Australia, has been released and will be available soon on the ACF website.

3 replies on “ACF: The third wave is about investment – get set”

  1. Love the emphasis on working smarter, not harder and the reference to (was it?) Kennedy’s quote about GDP should not include jails, cigarette sales, but the education of our kids and protection of our most vulnerable, etc, etc……

    I was under the impression we were fairly well into the 3rd wave, so find most of this great, but old news.

    Am very interested to hear what Ian thinks about the 4th wave, for without changing ourselves internally how can we ever fix the things that are external to ourselves.

    When that gets discussed at the NPC then we’ll have truly turned a corner.

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