Category: Climate

The constant refrain of economists who get it wrong is that we should never rely on just one set of figures. (more…)

A rebadged carbon tax!

In its review of its climate change policies, the government will try to dance its way through internal politics, the demands of the fossil fuel lobby and comparisons with Labor’s proposals. Turnbull and Frydenberg appear to have concluded that the best way to appease the far right rump of the Coalition is to abandon direct support for renewables, help open up the Galilee coal resource and push for more coal seam gas. (more…)

 

I take as my starting point Prime Minister Turnbull’s admonition that we put ideology aside as we seek answers to this question.

(more…)

 

It was just six years ago when Malcolm Turnbull, then deposed Liberal Party leader, attended the launch of the Beyond Zero Emissions Zero Carbon plan for 2020, which suggested Australia should and could attain 100 per cent renewable energy by 2020.

Turnbull, by all accounts, was an enthusiastic participant, and was particularly excited by solar towers and molten salt storage. “There is a real opportunity there, with that technology, to generate baseload power from solar energy – something of a holy grail.” (more…)

 

The ABC is supposed to have a ban on advertising. But even if it was allowed, money couldn’t buy the sort of advocacy the fossil fuel industry and incumbent energy interests are receiving this week from the network’s chief political correspondent, Chris Uhlmann.

On Thursday, we took Uhlmann to task for the way he reported the blackout event in South Australia, and his suggestion that the state’s large portfolio of wind energy assets were at fault.

Later that day, Uhlmann doubled down, in an article on the ABC website, and then on a major piece to camera on the flagship 7pm TV news. The result, presented as “analysis” and to the layman as a collection of “facts”, was more than the fossil fuel industry could ever wish for. (more…)

 

The Coalition government launched a ferocious attack against wind and solar energy after the major South Australian blackout, even though energy minister Josh Frydenberg and the grid operators admit that the source of energy had nothing to do with catastrophic outage.

Frydenberg, however, lined up with prime minister Malcolm Turnbull, deputy prime minister Barnaby Joyce, One Nation’s Malcolm Roberts, independent Senator Nick Xenophon and a host of conservative commentators, including Andrew Bolt, Alan Moran, the ABC’s Chris Ullmann, and Fairfax’ Brian Robins to exploit the blackout to question the use of renewable energy.

Frydenberg used the blackout to continue his persistent campaign against the renewable energy targets of state Labor governments in South Australia, Victoria and Queensland, saying that the blackout was proof that these targets were “unrealistic.” (more…)

In this article, John Keane speaks of the slow death of social democracy but suggests that there may be possibilities that social democracy could embrace Green movements, intellectuals and parties that have common interests. See extracts from article below and link to the full article in The Conversation. (more…)

Are conservatives better economic managers? Part 1

In my blog of 3 May 2016, I queried the claim by Malcolm Turnbull and apparently supported by many media commentators and also by the public, that conservatives are better economic managers. The evidence and the record do not show that.

In last week’s budget and in the public relations selling afterwards, Scott Morrison fell back on slogans again. In this case the slogans were ‘jobs and growth’, ‘jobs and growth’. This was quickly followed by ‘we have a plan’, ‘we have a plan’. But as Ross Gittins in the SMH has pointed out, there is really no economic plan to get the budget back into surplus. The surplus is now pushed out again for years. With no real economic plan, the government again resorts to slogans at it did at the last election – ‘stop the boats’ ‘eliminate the deficit’ and ‘reduce the debt’. But we know from experience that the Abbott and Morrison activities did not stop the boats. It was a myth, but still believed by many. And the deficit and debt are much worse.

In this blog Ian McAuley pointed out that in the post-war years only Labor Treasurers, Paul Keating and Wayne Swan have won the prestigious Euromoney Finance Minister of the Year award. Peter Costello and Joe Hockey didn’t make it.

In The Guardian on 2 May, economist Stephen Koukoulis said

‘In terms of jobs, the ABS data show that average quarterly GDP growth and average monthly increases in employment are stronger when Labor has been in government compared with the Coalition. … GDP and employment growth both rise at a faster pace when Labor is in government.’

In this blog, Ian McAuley has set out three reasons why we might be misled into believing that conservatives are better economic managers. The first is that Labor has been in office at the wrong time. Coalition governments held office in the long boom years from 1949 to 1972 and from 1996 to 2007. Both Robert Menzies and John Howard were very lucky. By contrast the Whitlam government, which made many mistakes, encountered the biggest economic shocks of the post-war era – the 1973 oil embargo, the end of the Bretton Woods exchange rate arrangement and severe contraction in the US economy after the end of the Vietnam War. The Rudd government was also unfortunate in that it was confronted by the Global Financial Crisis, the other major post-war shock.

Ian McAuley argues that conservatives have successfully persuaded many, including themselves that government spending is inevitably wasteful and Labor is all about taxes and spending. Yet there is much more to a successful economy than budget balance and public debt. In world terms, Australia does not have a large government sector and Australian government revenue is modest in global terms. The most successfully managed economies in the western world are the Nordics that have high taxation levels and high government spending.

As Ian McAuley also points out, there is thirdly an assumption that rich people are clever and therefore better managers. Some clever people may be good managers but many rich people have the benefit of inheritance. Other rich people like developers, are able to manipulate governments to obtain concessions, but they don’t show much ability to compete in an open market without government support. As John Maynard Keynes reminded us we need to distinguish between speculators and business persons who really make things. He might have had people like Malcolm Turnbull in mind. When Malcolm really had a business management job, the NBN, he failed badly.

My view is that the big and beneficial changes that have set the Australian economy up in the post war years were initiated by Labor governments – the Curtin and Chifley governments, and the Hawke and Keating governments.

The former guided Australia out of the depression of the 30s and the destruction of WWII into full employment and economic growth. The Hawke and Keating governments laid the basis for almost three decades of uninterrupted economic growth.

The Whitlam government clearly had problems, some of which I saw at first hand…too much spending and too many government supported wage claims. There was a poisonous relationship between the Government and Treasury. Both sides were at fault The Whitlam Government did however set Australia on the path to freer trade with a 25% across the board cut in tariffs. It refused to bow to the Department of Defence and knocked back the Navy’s plan for locally designed and built light destroyers. It chose instead to buy off-the-shelf frigates from the US. The Department of Defence went into quite a sulk. Bill Hayden was getting the budget back into shape in 1975 but the improved economic performance was cut short by the Dismissal.

The Fraser government’s economies performance was poor as both John Howard and John Hewson have told us. The Fraser Government was the most protectionists in history although Malcolm Turnbull may surpass him with the extraordinary French submarine deal. Malcolm Fraser said ‘we will give industry the protection it needs’. The effective rate of protection of the car industry rose from a high of 54% in 1974-75 to a peak of 143% ten years later. The effective rate of protection for the textile clothing and footwear industries peaked in 1984-85 at 250%.

The Hawke and Keating governments were undoubtedly the most successful economic managers we have had. Amongst other things, they floated the dollar, reduced protection, broke the wage spiral with a wages accord, introduced the concept of a social wage and broke down a centralised wage-fixing system. The political problem for the government at the time was the ‘recession we had to have’ and record high interest rates. But successful economic management reform was the hall mark of the Hawke-Keating governments.

The Howard-Costello government’s economic performance was poor despite John Howard grasping the nettle of the GST. The world economy and the mining boom gave the Howard-Costello governments an easy ride. But Peter Costello left us with more serious structural problems like no other Treasurer has bequeathed. He was described by the IMF as ‘the most profligate Treasurer in 50 years’. This view was shared by the Australian Treasury and the Reserve Bank. Peter Costello did achieve a brief budget surplus, but he squandered the mining boom with locked in and permanent tax cuts in response to a temporary increase in revenue There were eight tax cuts in a row.. He cut tax on capital gains by half. He made income from superannuation entirely tax free. With John Howard he handed out billions of dollars in middle class welfare. Money was being shovelled out both the front and back door as if there was no tomorrow.

Costello was true to his ideological bent. For ideological reasons he wanted to reshape the Australian economy by shrinking the public sector. The best way to ‘starve the government beast’ he believed was to reduce government revenue so that in future governments would have to contract government spending in areas such as health and education. We are still paying for the Costello legacy and profligacy.

The Rudd-Swan government, at a critical junction with the Global Financial Crisis, handled it extremely well. Australia was about the only advanced economy that avoided recession. Wayne Swann received international plaudits but was unable to explain his success at home. That success was obscured by the campaign of Tony Abbott with his slogans and the Murdoch media who picked holes in programs such as pink batts and the capital funding of schools. The success was blanketed out by the joint efforts of the Murdoch media and Tony Abbott. That economic success was also obscured by the political division between Rudd and Gillard. Swan also failed in his latter years to effectively bring the budget back into surplus. The Mining Super Profits Tax was good policy but in the face of a media blitz by the mining industry, mainly foreign owned the government failed to communicate the case for such a tax.

Are conservatives better economic managers? Part 2

In Part 1 I argued the best governments in economic management since WW2 were the Curtin/Chifley and the Hawke/Keating governments.

More recently we have had the Abbott-Hockey team which won an election through the default of Labor and by persuading us that we had a debt and deficit emergency. It was an artifice. In fact both debt and deficit have worsened under Coalition management. The last Swann budget forecast a deficit of $ 10 .6b .It is now $ $37b. In each year the budget prospects have got worse. Our budget deficit is now in the top third of of 39 advanced economies. Debt will grow from $ 450b last year to $ 497b this year.

From a budget and deficit emergency three years ago, the government has moved to denial that we have ever had a problem. It is abdication of economic responsibility.

Joe Hockey used to tell us that interest rate reductions by the Reserve Bank were the sign of a struggling economy. Yet on the day of Scott Morrison’s budget, the Reserve Bank cut interest rates again. Morrison told us that it was due to lower inflation. But the Reserve Bank refuted this by pointing out that the ‘prospects for sustainable growth’ were of concern. The Bank is clearly worried about the ‘growth and jobs’ that Scott Morrison tells us will occur under his watch. Economic commentators have similar doubts.

Joe Hockey blamed the problem of housing affordability on low income people who weren’t working hard enough and saving enough to buy a home. Malcolm Turnbull gives a variation on that theme by telling parents, presumably wealthy parents, that they should ‘shell out’ more to help their children get into the housing market.

In any event, Joe Hockey’s performance and particularly his 2014 budget meant that Washington couldn’t come fast enough.

Scott Morrison talks about the importance of transitioning our mining based economy to a more broadly based economy. But his budget made no mention of the importance of developing a sustainable economy based on renewable energy .That would make environmental, economic and business sense. But there was no mention of it in Scott Morrison’s ‘economic plan’.

For years, the Business Council of Australia has been urging repair of the budget. But has now been seduced by a large reduction in company tax. Corporate Australia was the real winner in the budget.

There is no credible evidence that a reduction in company tax or reduced taxes on the wealthy increases jobs and growth. As Michael Keating has pointed out in this blog that ‘where ever the tax rate has been changed it has never made a perceptive difference to investment, either here in Australia or anywhere else’. The ‘trickle down ‘theory does not really help ‘jobs and growth’

And after almost three years of Coalition Government the story on business investment is disturbing. The budget is framed around business investment falling by 11% in 2015/16, falling 5 % in 2016/17 and with no growth in 2017/18. The Treasury figures also show unemployment is expected to remain at 5.5% until at least the middle oy 2018.

The budget figures do not show much ‘growth and jobs’ in the years ahead despite what the Treasurer says. Ross Gittins in the SMH on May7/8, 2016 said ‘…there is no evidence to support Morrison’s claim that the budget will do great things for ‘growth and jobs’.

The Supply side’ economics of Ronald Regan, cutting taxes for companies and wealthy individuals that Scott Morrison is pursuing, left the US with record deficits and debt and dramatically increased inequality. This inequality is described by the OECD as ’harmful for long term economic growth. As Nobel winning Joseph Stiglitz put it ‘the world faces a deficiency of aggregate demand brought on by a combination of growing inequality and a mindless wave of fiscal austerity. Those at the top spend far less than those at the bottom. So that as money moves up, demand moves down’.

We are learning at last that growing inequality is not only bad for society but it is also damaging for the economy. This is the path that the Turnbull government wants to take us down.

Malcolm Turnbull has told us many times that the Free Trade Agreements with several countries are ‘massive building blocks’ for our economy. However the Productivity Commission has warned us that there is more hype than benefits in these FTA’s. ‘Pebbles’ would be a better description than massive building blocks.

For a government that presumably has some regard for markets and free trade, its decision on a $50 billion submarine and naval build in Adelaide is remarkable. Christopher Pyne must really be a national treasure if the government needs to spend so much money to help keep him in public life. This submarine decision by the Turnbull government will surpass by far the protection ways of the Fraser government.

In this blog on 29 April, Jon Stanford and Mike Keating pointed to

‘The implications for industry policy constitute a particularly egregious element in the [submarine] procurement decision. … We need to remember that the Abbott government showed the door to the car industry. The end of the ‘age of entitlement’ meant that around $500 m. a year, not high by international standards, was too much to pay to support a high technology(car) industry that, directly and indirectly, employed around 200,000 people. Now the government is keen to support a (shipbuilding) industry with a cost disability, according to the Rand Corporation, of up to 40%. Given the likely moderate local value-added in an industry where all sophisticated hardware is important, the effective rate of protection (assistance to value added) will be much higher than this. Indeed a leaked paper from Defence suggested an effective rate of protection of 500% would be required to build the submarines in Adelaide. Even at the height of the Fraser government’s protection excesses … the effective rate reached only 143% for the car industry. … On the Prime Minister’s figures, 2,800 jobs will be created directly and indirectly, a far cry from the 200,000 jobs that are related to the car industry. Some early estimates suggest we are looking at a cost of around $4 m. for every job created.’

It is hardly good economic or business management.

In his interview with Laurie Oakes, Scott Morrison acknowledged that the contract with the French submarine builder had not been signed and the design and specifications were open-ended even though we have apparently agreed on a price. It sounds like a thorough business mess.

The crack down on high income earners who mis use the superannuation system is welcome but as Saul Eslake and others have warned these same people are likely to now transfer their surplus funds into negative gearing of property, a problem which the government refuses to tackle. In its cautious way the Reserve Bank has warned about the risks of negative gearing. ’Any change which discourages negative gearing may be a good thing from a (financial stability) perspective. The concessional rate of taxation of capital gains might encourage leverage speculation, particularly in combination with negative gearing provisions’

We are likely to see even more wasteful infrastructure spending, particularly on roads. As Michael Keating has pointed out in this blog we must have’ proper pricing signals and evaluation’ for infrastructure investment. A government that professes to understand business, markets and pricing should know this. Unfortunately it doesn’t and allows so much of road spending to be influenced by powerful motoring organisations and construction companies.

There is no credible plan to bring the budget back into surplus or secure ‘jobs and growth’. But we will have plenty of slogans in the coming weeks as we had at the last election.

And the budget is quite silent on the two most important issues of our time climate change and growing inequality. Ideology has been put ahead of good economic management

The case that conservatives are better economic managers does not stand up to serious examination.

Prime Minister Turnbull made a splash on urban transport recently. He sketched a vision of ‘30 minute cities’ where residents spend on average just one hour a day travelling to regular activities like work and shopping. He also considered mass transit solutions rather than just more motorways.

This article is the first of three raising questions about where politics and bureaucracy find themselves in transport and its infrastructure – and where they might head next. In a subsequent post, more on funding and the role of the Commonwealth. For now, the PM’s focus on mass transit and 30 minute cities:

Mass transit                                                                   

There is a case for favouring mass transit systems over motorways. In this, the current Rhodes Scholar distinguishes himself from the previous PM, who was more of a roads scholar (guided, one suspects, by Margaret Thatcher’s famous views on the emasculating shame of public transport ([i])). If PM Abbott’s objective was reducing travel time to power the city economy, he had it wrong: new motorways can appear liberating, but when ‘aimed’ at major centres in cities can induce more and more cars to use them – until they soon become full again ([ii]). You can’t bust congestion just by building more motorways.

30-minute capital cities

There is a theory, based on historical record, of long-term constant average travel times in some major cities of around half an hour. But these places mostly aren’t Australian capital cities. Our cities have around 200 years of development to consider; most evolved intensively only after the advent of the motor car; they spread out and luxuriated in wide spaces. Many Australians, especially in the biggest cities, already spend considerably more than 30 minutes commuting each way every day. Data for Sydney shows total average daily travel time to exceed 40 minutes, 35 minutes on work trips alone ([iii]).

Little wonder that a 30-minute city is an attractive political stance. Even less wonder that sections of Sydney and Melbourne’s media dismissed the Prime Minister’s proposal as ludicrously ambitious ([iv]).

What can the PM do about this? Will spending enough billions on big projects break the mould and reduce Sydney or Melbourne commutes to 30 minutes? Settled economic theory around equilibriums would say no. Whether the travel time is 30, 40, or 50 minutes, attempting to change these numbers could hazard many scarce billions for little long term gain: it is difficult to drop travel times sustainably through infrastructure, least of all by roads, and by inference through housing.  Naturally, this view won’t be popular with the infrastructure industry that stands to profit most directly from massive spending. But in this respect, as someone or other said recently, Canberra is not an ATM – not for the states, not for civil engineering firms either.

So is it all hot air? No. But Prime Ministerial effort will benefit most from avoiding blank-cheque public transport evangelists and instead playing a strong and focussed hand in the game, with an eye on creating a robust Commonwealth legacy:

• Canberra can influence better city transport design through road pricing. As distinct from charging to pay for roads, road pricing has the best potential to reduce congestion. It also can help resolve the vital but usually ignored question: which mix of transport, including public transport, gets the best results? This is especially the case if road profits are available to systems separated from car use, such as rail and bus rapid transit. Canberra can put its oar in the water here by asking for the theoretical application of road pricing in the identification and assessment of every major urban transport project proposal. An ‘as if there was road pricing’ test is a practical way of doing this today, without needing another bureaucratic study or debate on how to introduce road pricing.   Indeed, to not use such a test now entails major risks to the design, economy and amenity of Australia’s cities.

• Distributional effects of transport projects merit closer examination. The largest economic and social gains, such as increased workforce participation, may well be reaped by helping those at the physical and social margins of our cities; in this sense, the discussion should be more about access to services and less about speed/mobility. More about the ability of the young to get to good jobs; less about pandering to the privileged few by making their drive to the CBD or holiday home a little faster under the guise of ‘congestion busting’.

• Arising from this, as Mike Keating and Luke Fraser wrote for last year’s Fairness Opportunity and Security series ([v]), there is a need to give renewed consideration to buses in the Australian setting, including redesign of new housing developments to better accommodate buses, rather than just giving the westies a motorway, or inner city dwellers their longed-for token ‘iron pony’ (aka light rail), or some obscure minister his or her bronze dedicatory plaque on a motorway that points itself at a city centre.

• Lastly places like Newcastle, Wollongong, Geelong and Townsville seem a much more feasible testbed for the 30-minute city than Sydney, Melbourne and Brisbane. Among other things, unlike in the big capitals, this would not require an archaeological understanding of historical agendas for these cities, and avoids angsts such as having attractions close to where people live and not just near the CBD.

• Higher Speed rail connections between places like Newcastle or the Central Coast and Sydney can create a much larger ’30-minute city’ and the value capture from such projects might be larger than for projects confined to Sydney’s already expensive property market. This deserves proper consideration, in contrast to the eccentricities seen in Canberra’s recent high speed rail studies.

So, lots to be done – and none of it even remotely attended to by Canberra to date. Plenty of ideas for a Prime Minister who wants to take cities seriously. But to set up a real legacy, any Prime Minister, whether Turnbull or Shorten, must ensure their Government’s actions align with a proper and sustainable role for the Commonwealth.

John Austen is a happily retired former official. He was Director of Economic Policy for Infrastructure Australia from its inception in 2008 to his retirement in 2014. Further background is at: thejadebeagle.com.

Luke Fraser is the founder and principal of a transport policy and investment advisory. In 2012 he was appointed to the board of the Prime Minister and Premiers Road Reform Project. Prior to this he was a national freight industry chief executive and provided advisory services to Infrastructure Australia. He recently authored a tax-rebate-based road pricing reform model for the SA government. The views expressed here are his own.

[i] Worth quoting, a reminiscence, albeit from the other side, from UK Hansard (2 July 2003, Column 407): ‘The hon. Member for Wolverhampton, South-West (Rob Marris) said that the Conservatives had no policy on buses, but that is hardly surprising in view of the most famous quote of all time about the buses, delivered by Margaret Thatcher …in 1986:

“A man who, beyond the age of 26, finds himself on a bus can count himself as a failure”.’

[ii] http://www.citymetric.com/transport/does-building-more-roads-create-more-traffic-934

[iii] 2012-13 Household Travel Survey at http://www.bts.nsw.gov.au/Statistics/Household-Travel-Survey/default.aspx#top

[iv] http://www.smh.com.au/comment/the-30-minute-city-is-a-silly-idea-but-malcolm-turnbulls-cities-policy-isnt-as-hollow-as-it-seems-20160502-gokk5e.html

[v] https://publish.pearlsandirritations.com/blog/?p=3834

Scott Morrison’s Commonwealth budget aims to be politically balanced but, like the Hockey budgets, neglects struggle street. The budget still labours under the neoliberal belief in minimal taxes, small government and maximum freedom for private enterprise.

Morrison’s mantra is that cutting taxes on businesses and the wealthy will increase investment, growth and jobs. The trouble is, this is not the case, in part because the meagre income of much of the population reduces demand. It appears also that tax cuts for the wealthy make little difference to the growth rate.

In addition, the unfairness of the economic system builds up popular resentment against elites groups who often make the rules to benefit themselves. This explains much of the disenchantment with politics that we see in Australia. We haven’t reached the situation of the United States, where anger and resentment is very evident in the widespread support for Donald Trump and Bernie Sanders. Consider also the rise of populist movements in parts of Europe with very high unemployment. Youth unemployment in Greece is at 48 per cent. How long can nations manage such social distress without turning to extremes?

Trickle-down economics & inequality

The trickle-down assumptions of supply-side economics have been proven bogus, but they supply a rationale for rich individuals and corporations to justify the inequitable division of wealth.

Joseph Stiglitz and many other economists have highlighted how inequality has grown to astonishing levels in the United States and elsewhere. Mike Secombe in The Saturday Paper pointed out that in Australia, the top 20 per cent have 70 times more wealth than the bottom 20 percent. While 10 per cent of households own 40 per cent of the wealth, the bottom 40 per cent of households own just 5 per cent. Secombe quoted an OECD study that ‘growing inequality is harmful for long-term economic growth.’

This is certainly the view of Pope Francis and other religious leaders. The Pope’s recent social encyclical, Laudato Si’, identified inequality and climate change as two of the greatest challenges to human wellbeing today. Francis highlights greater equity as a key to sustainable growth and prosperity.

Scott Morrison declared an end to class warfare, yet it would seem that the very rich have been waging class warfare for years, largely unhindered.

Major budget problems

The 2016-17 budget makes superannuation somewhat fairer for low-income people, but three-quarters of the benefit goes to the top 10 per cent of taxpayers. In addition, few of the steep cuts to services and programs made by the Abbott government have been restored. Indeed, there are more cuts to health and aged care in particular, and some Medicare benefits.

Despite strong support from business groups to lift unemployment benefits, the government curiously refused to increase them. For people going on to Newstart, the benefit will actually drop because they will not receive the small carbon tax compensation benefit. Unemployment benefits remain under $530 a fortnight for a single adult without children, not enough to pay for board at a backpacker’s and for food, medication, clothing and a phone card. Many walk the streets by day, and at times sleep rough. Increasing numbers of people are relying on charitable agencies for emergency support, and you may have seen more people begging in the streets of major cities.

The budget does little for the homeless or those in housing stress. And what of the 600,000 children living in poverty? Instead the budget cuts 810 jobs from the Department of Human Services, and a further 344 from the Department of Social Services. There was little new for Indigenous programs either. The budget did not restore earlier cuts, and there were further cuts to Indigenous legal services and higher education participation programs.

The extraordinary cost of housing is raising great concern in the community, as it is pricing many young couples out of the housing market, or saddling them with crippling debts. The housing bubble is also socially damaging, a source of considerable stress and delaying family formation. The budget completely resiled from any attempt to tackle the problems arising from negative gearing, as well as from capital gains taxes.

Perhaps most surprising, the budget ignored the looming crises from global warming. At a time when Australia could be a world leader in sustainable energy, and developing ways to adjust to climate change with new technologies and know-how in farming, fishing, housing, health care etc., the Coalition seems diffident, despite the Prime Minister’s own personal views. The cuts to funding for our world-famous CSIRO, and for research on climate change, are emblematic of the blinkered thinking of the Coalition government.

As for the budget’s centrepiece, the ‘enterprise tax plan’ to cut company tax from 30 per cent to 25 per cent over ten years, Stephen Long called it a ‘con’, and Tim Colebatch considered it ‘breathtaking’ and ‘courageous’, in Sir Humphrey’s famous phrase. Will the tax cuts produce growth and jobs? Not for years, according to Stephen Long. Small companies will likely retain profits in the business rather than risk new investment. The lower tax rate will encourage investors from overseas, but that will take years to eventuate. ‘The gains for jobs and wages are so small they are trivial’, comments Long. Malcolm Turnbull eventually confirmed that the program could eventually cost nearly $50 billion.

One of the few bright spots in the budget is an effort to tighten multinationals’ tax avoidance and capital flight. Voters are naturally outraged at such systemic tax avoidance and governments themselves are suffering from this massive haemorrhage of capital into tax havens. All the political parties broadly support curtailing this tax avoidance.

Yet because the Coalition had reduced its funding, the Australian Tax Office cut its workforce from 22,000 to about 18,500. In a major about-face, Treasurer Morrison announced that the ATO would now gain an extra 1000 staff, with 390 of them joining a taskforce of 1300 to ensure tax compliance by multinationals. Better late than never.

In short, what we urgently need in Australia is stronger support for those on struggle street, and policies to restore a fairer distribution of wealth and opportunity.

Bruce Duncan is a Redemptorist priest lecturing in social ethics at Yarra Theological Union in Melbourne. He is one of the founders of the advocacy organisation Social Policy Connections.

Better concepts and measures of quality of life and wellbeing make sustainable development more achievable. 

The debate about progress and development is converging and merging with that about sustainable development. My analysis of the flaws in equating progress with modernisation, discussed in my previous article, contributes to this debate because it shows the equation counts modernity’s benefits to wellbeing but not all its costs.

Modernity’s dominant narrative of material progress gives priority to economic growth and a rising standard of living. It is being increasingly challenged by the alternative narrative of sustainability, which seeks to balance social, environmental and economic priorities and goals to achieve a high, equitable and lasting quality of life. Material progress represents an outdated, industrial model of development: pump more wealth into one end of the pipeline of progress and more welfare flows out the other.

Sustainable development reflects an ecological model, based on our understanding of complex systems, in which wellbeing results from many entities or factors interacting in often multiple, diffuse and non-linear ways. (Its implications include paying more attention to the quality of economic activity, not just its quantity; and trading off some growth to achieve other, social and environmental benefits.)

One approach to measuring sustainable development is to divide quality-of-life or wellbeing measures by energy use or environmental impacts. The New Economic Foundation’s Happy Planet Index does this, multiplying national life satisfaction by life expectancy and dividing the resulting ‘happy life years’ by a country’s per capita Ecological Footprint. My aim here, however, is to assess the wellbeing side of the equation. Wellbeing measures tend to reinforce the conventional view of progress by suggesting wellbeing is continuing to increase; even indices which include environmental impacts show Western nations performing best on the social and economic measures.

There is often an assumption, explicit or implicit, that there will be a cost to current quality of life in shifting to a sustainable path, as reflected in the title of a recent paper on the topic: ‘Untangling the environmentalist’s paradox: Why is human well-being increasing as ecosystem services degrade?’. The Happy Planet Index notes the ‘undeniable tension’ between its numerator of happy life years and the denominator of the Ecological Footprint. The Sustainable Society Index no longer aggregates beyond the three dimensions of human, economic and environmental wellbeing because of the negative correlation between human and environmental wellbeing, which it says seem to be on a ‘collision course’.

A 2008 study comparing countries’ Human Development Index scores with their per capita Ecological Footprints shows environmental impacts rise steeply with high development. Only one country (Cuba) of the 93 surveyed met the requirements for both high development (an HDI score of 0.8 or more) and global sustainability (a footprint of less than 1.8 global hectares). Among high-income countries over the previous 25 years, improvements in index scores came with disproportionately larger increases in their footprints, showing a movement away from sustainability. Some lower-income countries, in contrast, achieved higher levels of development without a corresponding increase in their footprints.

My wider perspective on wellbeing helps to resolve this dilemma by highlighting how Western high-consumption lifestyles and the type of economy and culture they reflect and require are not only increasing resource consumption and environmental damage, they are also hostile to health and wellbeing (especially in countries that are already rich). The importance of ‘correcting’, or at least questioning more deeply, the conventional picture of progress and development is underscored by environmental analyses which demonstrate the extent of the environmental costs, the limits they impose on orthodox development, and their potentially catastrophic impact on human health. That most measures of progress, including newer indices, do not reflect this reality – and show, in effect, that we are enjoying a high or improving quality of life even as we move ever closer and faster to an ecological abyss – demonstrates how far we have to go.

This perspective reinforces the message which is becoming clearer from global threats to humanity such as climate change, food, water and energy security, economic collapse, and technological anarchy. This message is that we need to change the myths, worldviews and values by which we define ourselves, our lives, and our goals. The necessary transformation can be compared to that in Europe from the Middle Ages to the Enlightenment: from the medieval mind, dominated by religion and the afterlife, to the modern mind, focused on material life here on earth.

Without this deeper change, we will not close the gulf between the magnitude of the challenges and the scale of our responses. A cultural transformation of this depth is very different from the policy reforms on which our public discussions and political debates focus and which, by and large, our indicators of development track. The 2015 Paris Agreement on climate change, hailed politically to be an outstanding success, but judged scientifically to be a failure, exemplifies well this ‘reality gap’

 

Richard Eckersley is a director of Australia21, a public-interest, strategic research company. This article draws on a longer paper published this month in the leading international development journal, Oxford Development Studies. For those with subscription access, it is available at: http://dx.doi.org/10.1080/13600818.2016.1166197. An author version is available at: www.richardeckersley.com.au

 

Carol Richards is Vice Chancellor’s Senior Research Fellow, Queensland University of Technology.  Bree Devin is Lecturer in Public Relations, Queensland university of Technology. This article first appeared in The conversation on February 29, 2016.