How do we build an economic system that serves the needs of people and nature, both for today and for tomorrow?
That our economic system is broken and needs fixing is not just the view of the Greens. It is the view of the World Economic Forum, which in its report “More with Less: Scaling Sustainable Consumption and Resource Efficiency” of January this year said:
“Current trends clearly show that business as usual no longer works. Unless the present link between growth and the consumption of scarce resources is severed, our resource base, governance and policy structures are unlikely to sustain the standard of living societies have grown accustomed to or indeed aspire to. Action to decouple business and economic growth from resource intensity and environmental impact, has never been more critical to the long term success of business.”
In Australia, this is heresy. Witness state and federal governments massively expanding coal mining and coal ports, approving the destruction of the Tarkine and Great Barrier Reef seagrass beds.
Surely it’s time that those who advocate economic growth derived from resource extraction and pollution as the major path be the ones labelled “wacky”, “loopy”, irresponsible, divorced from reality or connected to the CIA.
Australia’s economy is described as the envy of the world. We’ve have just posted our 21st consecutive year of economic growth with Australia outperforming most of the rest of the world , the unemployment rate is low, inflation under control, and Australia is one of only seven countries in the world to have maintained its AAA credit rating.
And yet, millions of Australians feel uncertain about the future, uncomfortable, under pressure. There are many reasons for this. The two speed economy is frequently cited, as is the GFC. Another is the relentless negativity of Tony Abbott, talking the country down with his catalogue of complaints. This is not just a political line – as economists will tell you, negative expectations become self‐fulfilling, impacting on investment across the economy.
But I want to focus today on the underlying reason, and that is that short term profits and this year’s carefully manipulated budget surplus are overriding the basic human need to care for one another, to plan for a secure future, and to protect the natural world which sustains us. In other words, our much envied economy is on borrowed time.
The economy is a tool; a tool we humans invented – like democracy and politics – to help govern our relationships between each other, and between ourselves and the world we live in. If our economic tools are not getting the outcomes we want, making us happy, safe, healthy, better educated and fulfilled and protecting and preparing our country for an increasingly uncertain future in a world on track to be 4 degrees warming, then it is time our economic tools changed.
Yet they remain entrenched. Despite Wayne Swan’s rhetoric, Gina Rinehart, Twiggy Forrest, Clive Palmer and their companies pay little tax, benefit from multi‐billion dollar handouts to their mining operations, and still have their hands out for more. We’re told day in and day out that it’s vital for the economy that they are given every break they demand and every environmental protection be set aside for their benefit – something the Gillard Government plans to deliver by devolving environmental power to the states later this year.
But who does this actually benefit?
The single mum not knowing how she’s going to put food on the table once this Labor government cuts her support payments to below the poverty line?
The stressed parent rushing through peak hour yet again to pick up kids from after school care and feed them a quick dinner before trying to catch up on bills and housework?
Or the older professional men and women stressing about their own retirement whilst trying to access aged care for their parents?
Does it help the young parent looking despairingly at graphs of Arctic sea ice melt, reading that it is a tipping point for the climate, wondering what kind of planet her child will inherit?
Or the farmer whose greatest wish was to pass on healthy land to his children but now is fighting to keep it from being riddled with coal seam gas wells while struggling with farm‐ gate prices that Coles and Woolworths have driven through the floor?
It’s clear from this list alone that, whilst the economy is growing, our quality of life is stagnating, our environment is suffering, and we are failing as a country to invest seriously in the things that we value, the things we need now if we are to have a better future: a fair education system where you can get a good start in life regardless of how much money you have or where you live; a zero emissions energy network that doesn’t pollute the air and drive global warming; a health system which takes care of all of us, from the state of our teeth to our state of mind.
It is time to change, to diversify our economy, clean it up, and invest in a future that doesn’t rely on digging up, cutting down and shipping overseas.
The old parties are grounded in a belief that the economy is an end in itself, and that we have to ‘balance’ the need to care for people and the need to protect the environment against the needs of the economy.
When you think about this, it simply makes no sense. Tasmanians recognised that as early as 1972 and established the world’s first Green Party. The idea reached mainstream by 1987, when, after an exhaustive three year process involving scientists, economists, governments, research institutes, industrialists, NGOs and the general public around the world, the Brundtland Report of the World Commission on Environment and Development, Our Common Future, was published.
The Brundtland Report revealed that world leaders were able to think rationally and caringly about the present and the future. It’s probably most famous for articulating the concept of ecologically sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. This is a concept that Tony Abbott, Gina Rinehart, Campbell Newman, Martin Ferguson and many of their ilk have utterly failed to understand.
One of the Brundtland Report’s most forgotten insights is that there are only two real things in the world: people and nature. The economy is not a physical thing; it is not something that exists in its own right. Rather it is a tool we invented for governing the relationship between people, and between people and nature.
When the Brundtland Report went to the World Bank, tragically, the insight that the economy is a tool for people and nature all of a sudden turned into a triangle where the three – people, nature and economy – were all real and equal. And we were plunged back into the old view of the world where nature lost every time, traded off against people’s short‐term benefits and “the economy”.
The next iteration will be the Murray Darling Basin Plan, where a short‐term economic focus will trump physical science and long‐term needs of communities. The economic tools are delivering a bad environmental, social and economic outcome.
Most of the battles of political philosophy over the last two centuries have been about competing views of how to run an economy. Where the old economic right, broadly speaking, has sought to create a ‘strong’ economy and the old left sought to create a ‘fair’ economy, neither has grappled with how an economy can be strong or fair when ecological limits are being reached: “without environment there is no economy”.
In Australia, the old parties emerged at a time when it was believed that the planet had an infinite capacity to give us resources, and an infinite capacity to absorb our waste. That was never, of course, true, but at a time when the Australian population was under 4 million and the global population was 11⁄2 billion, it was a lot closer to being true than it is now. So we can forgive Edmund Barton, Ben Chifley and Robert Menzies for not speaking about ecological sustainability, but instead focusing on how the bounty of this great country should be divided between owners of capital and providers of labour.
What is not excusable is that the old parties continue to do so. They have failed to keep up over recent decades when the huge ecological challenges of the 21st century – from accelerating global warming to food and water shortages, from air and water pollution to energy crises and resource depletion in a world headed to 9 billion people – have become overwhelming. How can we say we are working towards a strong or fair economy when we aren’t addressing these challenges? Just as we hit the limits, the big old parties are moving closer to each other and further out of touch with what people and the real world need.
Tony Abbott’s Liberals want to pretend that we can keep going the way we did in the 1950s, exploiting resources and exploiting those worse off than we are, dismissing global warming as crap.
The Labor Party, on the one hand, wants to embrace transformative policies and the benefits they will bring; on the other hand, it wants to cling to the past. Witness its contradictory policies on pricing pollution whilst bending over backwards to expand the coal sector, expand coal seam gas and protect fossil fuel subsidies.
Both the old parties still see the economy as an end in itself. The Prime Minister overnight described her job as “keeping the economy strong”. They demonstrate time and again that they will sacrifice people’s health, the environment that sustains us, and vital support for the people who are doing it toughest of all, in order to maximise short‐term profits and election‐cycle budget surpluses.
Are we supposed to give Treasurer Swan and Minister Wong a tick because the budget is in surplus when, to achieve that, they denied the unemployed a $50 a week increase in Newstart, locking them and their children, as 4 Corners showed this week, into cycles of poverty?
Tony Abbott has taken his surplus fetish to “loopy” levels, adopting the US Tea Party strategy of attempting to block lifting the debt ceiling. While objection to debt bears scrutiny in the USA where the debt to GDP ratio is over 100%, or Japan where it is well over 200%, Australia’s debt is a remarkably low 29% of our GDP – the fourth lowest in the OECD. Not only was this stunt based on wilful economic ignorance, but success would have had devastating consequences for real people. Pensioners, unemployed people, customs, even hospitals would have faced going without, bringing the country to a grinding halt. That is what Tony Abbott tried to engineer in his quest for power.
Tony Abbott accuses Julia Gillard of “spending like a drunken sailor”, but in reality both of them are caught in a surplus fetish that countless economists and business leaders have said is not only unnecessary but counterproductive. While the Greens support running a balanced budget over the economic cycle, trying to hit a political surplus target when an economy is already weakening has serious consequences for people’s lives, for small business and for our future if it defers essential investment in education, health and innovation. The surplus fetish must end. We need a proper debate about what is good for the country, over what time frame and how to raise the necessary funds to deliver it.
The Greens are calling on the Government to either work with us to find savings and revenue in a forward‐thinking, caring manner, or use the upcoming MYEFO to delay their ill‐ advised quest for a surplus at all costs to closer to 2015‐16.
The irony is that commentators continue to attack the Greens as not being as credible on economic policy when we are the only party willing to grapple with investing in our future while transitioning towards living within our means. We are the only party willing to take on the vested interests and the rent seekers and represent not only this generation but those who come after us.
So where does this lead us?
Einstein said “You don’t solve problems with the same thinking that created them”.
To set us on our new path, a path to an economy which serves the needs of people and nature, both for today and for tomorrow:
We will need new economic tools;
We will need to learn to do more with less;
We will need to reprioritise our investments; and
We will need sensible management of taxation and revenue to fund these investments.
It is a case of rethink, reduce, reuse and recycle.
For most of us going about our daily lives, the new, caring and ecologically sustainable society will look very similar in most ways to the old one. Yes, it will be powered entirely by clean, renewable energy – including electric cars, buses, trains and trams – and there will be more cycleways and better designed homes and offices. Witness here in the ACT, with the Greens’ light rail proposal in their upcoming election building on the 40% greenhouse gas reduction target and renewable energy support.
But in most ways, it will look the same but perform better. Any job can be a green job, with a slight shift in focus.
What will be different is that we will have replaced the idea that Australia’s wealth is dependent on digging‐it‐up, cutting‐it‐down and shipping‐it‐overseas with the knowledge that our prosperity depends at a personal and collective level on our brains, on our health, on our creativity and on a healthy environment.
Of course, that challenges those who have gone unchallenged for generations, those at the heart of current power. For that reason, our vision is labelled unrealistic or whacky by people who cannot or will not imagine a world different from the one in which they are currently powerful or comfortably making a profit.
This isn’t surprising. I often quote Nicolo Machiavelli, who wrote 500 years ago that: “there is nothing more difficult to carry out nor more doubtful of success nor more dangerous to handle than to initiate a new order of things; for the reformer has enemies in all those who profit by the old order.”
So how would the Greens recalibrate the economic tools? How would we make them enhance our natural, human, social, manufactured or financial capital?
Contrary to what you hear from some of our more excitable detractors, the Greens do not want to dismantle the market economy. Our view is encapsulated neatly by Hunter and Amory Lovins and Paul Hawken in their book, Natural Capitalism: “markets make a good servant, a poor master, and an even worse religion.” Take a look at global financial markets today, following the catastrophic failure of some of the world’s most sophisticated asset markets, to see what happens when we stop regulating and allow what Keynes described as “animal spirits” to run unchecked.
Markets are useful tools to achieve an outcome. The Greens adopted one in our long push to put a price on pollution through an emissions trading scheme. But markets need to be constantly evaluated against the outcomes that society and the environment require of them. The ETS has to drive a transition to a low carbon economy or be corrected for market failure by increasing the renewable energy target, for example, to at least 50% by 2030 to get us to where we need to be to tackle accelerating global warming.
The other accusation our detractors often throw at us is that we are anti‐growth and therefore want everybody to go back to living in caves, sipping nettle broth and whittling Huon pine condoms, as former Tasmanian Premier Tony Rundle famously pontificated. Given we are some of the country’s strongest proponents of new technologies, from broadband to smart grids to 3D printing, the caves jibe has always been nonsense.
But are the Greens actually anti‐growth? That depends on what you are growing and how it is measured. I am for growing natural, human, social, manufactured and financial capital and I am against growing global warming, species extinction, poverty, poor health, inequality, conflict and corruption.
As John Stuart Mill wrote in 1848:
There would be as much room for improving the Art of Living, and much more likelihood of its being improved, when minds ceased to be engrossed by the art of getting on.
The Greens want to see everyone given the opportunity to “practise the Art of Living”, we want to see people lifted out of poverty, and we know that unless this is done while protecting the environment which sustains us it can only last a very short time. That is what growth is supposed to achieve. The problem is, we measure it with the wrong tools; tools which tell us we’re growing when in fact we’re not.
If economic growth as it is currently measured isn’t actually making us happier, healthier, cleverer or safer then it isn’t real growth. If we are growing our economy in defiance of physical limits, that isn’t real growth: it’s a confidence trick.
On the other hand, if people are getting happier and healthier; if we’re protecting and restoring the environment which sustains us; if our schools, universities and research institutions are thriving; if we’re helping unemployed people find worthwhile jobs and we’re addressing structural inequities such as illiteracy; surely that is real growth, regardless of what our GDP numbers show.
GDP measures what we make and consume, not who we are (our human and social capital) or where we live (our natural capital). It ignores work done in the home and volunteer work across society. It disregards the entrenched gap between rich and poor. It loves a catastrophe like a car accident or the Queensland floods because they generate economic activity, regardless of the human cost.
GDP is useful for its purpose ‐ for predicting tax revenues, for example ‐ but it cannot be seen as the definition of our progress as a nation.
As Robert Kennedy put it:
…the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything in short, except that which makes life worthwhile.
There is work being done on this around the world. Within the existing national accounts, measures such as real net national disposable income per capita address some of these problems. The Australian Bureau of Statistics’ dashboard “Measuring Australia’s Progress”, along with its involvement in global efforts to construct environmental accounts are steps in the right direction. South Australia has indicators in a strategic plan and Tasmania had Tasmania Together until it was corrupted by Premier Bacon. Fairfax’s work with Lateral Economics in establishing and publishing a Wellbeing Index brings the concept to a large audience regularly.
But none of these efforts go to the heart of government decision‐making.
We have to limit our use of GDP to those purposes it is suited to and measure our true progress as a nation with different tools. The Greens will redouble our efforts to support development of the best possible economic tools and work to see them adopted across government and society so we can build and measure the well being of people and nature for the long term.
In short, the Greens do want to see growth, but growth in quality of life, growth in equality of society, and growth that plans for the long term.
Central to that is the need to “decouple” growth from resource use and pollution. In short, to do more with less – or, as economists would say, to increase productivity.
Productivity is a word that suffers terrible abuse at the hands of prominent business lobbyists and the Liberal Party. Contrary to what they say, there is no evidence that allowing workers to be treated more harshly and unfairly does anything to improve society.
Productivity gains are best found through investing in the future of the economy ‐ through education, R&D, better health and better resource efficiencies. All these are central Green goals and my team of Greens MPs are working on policies in all these areas.
Healthier people are more productive workers, with fewer sick days. If we invest now in publicly‐funded dental care, we will save billions of dollars in other health care costs into the future. And we know that healthy teeth make a huge difference to how we feel about ourselves.
A better educated population is a more productive population. That’s one reason why the Greens have been such strong supporters of the Gonski recommendations for fairer school funding and opponents of cuts to TAFE and university funding, especially in this Asian century. Better schools and a fairer funding system might seem expensive now, but the benefits of making that investment accrue to millions of people – the child who goes to good school gets a good start in life, has more opportunities to get better jobs and is likelier to be healthier and happier. And the benefits accrue to the whole economy through improved productivity, higher tax revenue and lower costs to support people struggling because they had a poor education.
If you’re living on support so low you struggle to afford food and rent, how can you prepare yourself to get back into the workforce? The Greens are working hard inside and outside parliament to lift Newstart and the Youth Allowance by $50 a week. Spending the money to lift Newstart to a liveable level is not only the right thing to do but it also will help the economy by helping people get off welfare and into jobs. We don’t need John Howard‐style punitive measures – we need to help people and they will help us all.
Innovation is vital for learning to do more with less, and Australia has historically punched above our weight in this field. But we still spend below the OECD average on R&D, and have always fallen short in commercialisation – allowing others to take advantage of our smart ideas. You only have to look at our world‐leading solar power technology being commercialised in China, Germany, and the USA. Did you know that our CSIRO was behind the development of wireless computing technology, and had to fight tooth and nail to get royalties for the invention which was commercialised overseas.
The Greens want Australia to set a goal of increasing R&D funding from 2.2% to 3% of GDP, with a greater focus on commercialisation. This would still be less than some innovative countries like Sweden, Finland, Japan and South Korea allocate. This will require continuing to use and better target tax measures to support R&D, as well as better funding research institutions.
The need to do more with less is obvious to farmers, who know they have to keep producing more food, fuel and materials but without any more of the traditional inputs – there is no more land to find, there is ever less water and petro‐chemical fertilisers are too expensive – both in dollars and in biodiversity. Farmers know they need R&D to help them to produce more food, to protect and enhance their land to increase carbon in the landscape, and to protect biodiversity on farm. That’s why we drove the Biodiversity Fund. Greens and farmers have plenty in common?
In industry more broadly, as well as in homes and businesses, energy and water efficiency are not only vital for a sustainable future, but they save money and improve productivity. Yet many of the easy energy efficiency opportunities still haven’t been taken up by industry or householders.
Clearly we need to get our priorities straight.
Why, for instance, are some jobs seen as more equal than others? Jobs in mining and manufacturing are important – of course they are. But why are people who work in the public sector, delivering the services we rely on day in day out, including doctors and nurses and teachers, seen as expendable so that the Commonwealth Government could cut 4200 of them this year alone? Why do we give billions to multi‐national corporations and not more assistance to jobs rich small businesses, such as our proposal to increase the instant asset write off to $10 000? Why is it more important to support the parts of our economy that dig things up, cut them down and ship them overseas than to invest in creating a smart, diverse economy? It’s not complex economics to know that having all your eggs in one basket is simply bad risk management.
Just like \energy efficiency saving us money and cutting pollution, policies that care for people and protect the environment also help the economy. This is not only true if you rethink economic goals, it is also true in the existing economic paradigm.
Food, clothing and housing are human essentials yet we have abandoned housing in public policy. 18,600 people sleep in crisis accommodation around the nation. Surely we can help people to live in highly energy efficient homes connected to public transport instead of promoting cheap inefficient housing on the edges of cities, unconnected to transport and displacing agricultural land.
Of all things that are precious, time is paramount. We long to have more of it to improve our lives. Yet a Greens work life balance bill attracts condemnation. The experience of thousands of small and large business owners is that if you give your employees flexibility and treat them with respect as human beings with families and private lives, they will work harder for you and do a better job.
Treating refugees as new and valued members of the Australian community instead of as criminals who need to be locked up or shipped away is not only the right thing to do but it costs 90% less. That saving to the budget, frankly, is worth less than the immediate benefit to all of us of helping people who have fled persecution and the threat of death to become productive members of our society – which is all they want to be!
Investing in the arts might seem frivolous to some, but it brings joy to millions of Australians every year. What’s more, our major performing arts groups earned $1.57 for every dollar of government funding in 2011. Chamber music earned $3.75 for every dollar of funding. As well as working to ensure artists young and old, established and cutting edge, are supported in their work, the Greens want to see the Location Tax Offset for films increased to 30%, in line with global practice. Attracting blockbusters to be made here ensures that we keep the skilled workers and technology we need for a flourishing domestic film industry to entertain us and tell our stories to the world.
Then there are so many examples of how working to protect the environment also helps people, creates jobs and helps the economy.
Despite what coal companies want you to think, investing in renewable energy brings power prices down, helping householders and the economy at large. Experience shows that, because solar and wind power have marginal costs close to zero while coal and gas have much higher costs to ramp up production, the more renewable energy we have in our system, the cheaper wholesale power prices become. Ignore claims that we need coal to keep power prices down. Solar and wind power is the path to more affordable energy bills, more jobs in local manufacturing, and less of the pollution that drives global warming. The Greens’ success in establishing a $10 billion Clean Energy Finance Corporation is Australia’s biggest ever step in this direction. Far from watering down the Renewable Energy Target, now is the time to set our sights on 100% renewable energy, with a target of at least 50% by 2030.
Meanwhile, investing billions of dollars in expanding coal ports is extremely short‐sighted when a simple examination of our major markets for that coal – China and India – shows that they are both moving away from coal as they see solar outcompeting it in the next few years. Government funding of coal export infrastructure should cease immediately. It’s not only bad economics, not only does it lead to higher insurance premiums, but it is terrible environment policy.
Long term jobs in tourism and fishing depend on a healthy Great Barrier Reef, as does our national self identity. We would be shamed by a world heritage in danger listing.
On the other hand, planning sensibly for a transition away from jobs in old, polluting industries that are already in decline is much fairer and more economically sensible than propping them up until eventually they collapse. Whether it is in coal fired power or car manufacturers, a planned transition is better for people than unplanned collapse.
All of these changes in priority will make for happier, healthier people, will see us planning sensibly for the future and will make sense for the economy as they pay very handsome dividends. But it’s true that many need a huge investment up front to become a reality. That brings us to the need for raising revenue and reducing spending.
Tax is not a dirty word. It is part of being a fair and sensible society that invests in caring for its own and preparing for the future. And the great majority of Australians agree with that.
We’ve heard calls to boost tax revenue in recent weeks from Treasury secretary Martin Parkinson, his predecessor Ken Henry, BCA head Jennifer Westacott and many more.
Unfortunately, many of the calls for a broader tax base from business figures very quickly turn into a form of NIMBYism: we need more revenue, but “don’t tax me”! Instead, they want to lift and broaden the GST, causing more pain to people already struggling to afford food and bills. They say we can’t tax them for fear of killing the goose that laid the golden egg. The problem with that metaphor is that the goose is not much use to Jack and his mum if the ogre at the top of the beanstalk keeps all the eggs to himself and refuses to share.
Despite what some commentators want you to believe, the Greens are the most economically responsible party in the parliament, even on the old measures, supporting the stimulus package and putting forward billions of dollars of sensible revenue and savings measures to match the investments we need in order to care for people and nature.
Removing four big fossil fuel subsidies, including making sure mining corporations pay the same excise on the fuel they use that you and I do, would create an additional $2.8 billion dollars in revenue in next the financial year and would have created $7.6 billion in revenue from the 2012/13 financial year until 2014/15. Reforming superannuation tax concessions to encourage those doing it tougher now to also save for retirement would save $2.6 billion in its first year.
The total additional revenue the Government could have raised through these simple and Treasury‐costed steps is $13.2 billion over three years.
In addition, a suite of more ambitious proposals – such as closing the mining tax loophole that is seeing State Premiers gouge royalties out of Commonwealth funds, broadening the base of the tax to what Ken Henry originally proposed, a fair increase in the top marginal tax rate for millionaires to 50%, removing free carbon permits from coal fired power stations, removing support for coal export infrastructure, and a very small 0.1% tax on financial transaction – could raise many billions more.
The Greens negotiated with the government to establish a Parliamentary Budget Office to independently cost each party’s policies. The PBO has now been established and we have committed to full transparency through it, to release more of these costed proposals as we get approach next year’s election. Will Tony Abbott and Joe Hockey also commit to doing so?
The other aim of tax reform that the Greens are focussed on is continuing the progress towards a system which encourages more forward‐thinking, cleaner investments; one which taxes bads and rewards goods. The Clean Energy Act is a prime example of this: putting a price on the pollution which drives global warming and balancing that out by tripling the tax free threshold so that people who earn less than $18,000 pay no tax at all. The price on pollution is only a first step, but it is a hugely significant step towards the zero emissions economy of the future – the only one in which people and nature can survive and flourish.
The Greens’ vision is becoming mainstream globally, with Australian politics and commentariat playing catch‐up. The ideas I’ve set out today are all from established economic theory, based on the early 20th century work of Arthur Pigou and John Maynard Keynes as well as more recent Nobel Prize winners from Joseph Stiglitz to Paul Krugman to Amartya Sen. They also encompass vital scientific work being done by the CSIRO and others that we either need to grapple with or be left behind.
We can make this vision a reality, but only if we recognise that the economy needs to serve the needs of people and nature, not the other way around.
