June 2007

Comment

Consuming the planet

By Clive Hamilton
Illustration by Jeff Fisher.

Australians go into the federal election affluent and, on the surface, satisfied. Signs of prosperity are everywhere. Yet in a culture now defined by the idea of lifestyle, aspirations continue to rise ahead of incomes. A number of interest-rate rises and warnings (admittedly half-hearted) from the Reserve Bank have failed to temper consumer confidence. Household debt grew from $300 billion in 1996 to over $1 trillion last year. The sociology of the debt binge is little studied, but the political implications are far-reaching.

The benefits of the boom have been broadly spread. It is true that the rich are getting richer, but it is not true that the poor are getting poorer, either in absolute terms or relative to the average. For a neo-liberal government committed more to equality of opportunity than of outcomes, the Howard government has made sure, through carefully targeted welfare payments and tax concessions, that households on low incomes have kept pace with the average. In an era when every politician must be a friend of the family, having a child has never been so lucrative.

On the face of it, the credit boom keeps everyone happy: consumers have their dreams realised, retailers and banks announce record profits, and the federal government basks in the economic sunshine. No one seems to worry any more about the chronic deficit on the current account, much of it due to imports of consumer goods and funded by the steady sale of assets. Marx noted that the modern credit economy is like a house of cards, but we act as if the bottom storeys have been araldited together.

The Coalition rules over a new golden age. The prime minister and his treasurer will never make the mistake of Gough Whitlam, who told a meeting of angry farmers in 1974 that they had never had it so good. Deep down we do not accept our affluence, for to believe that we are doing it tough is rooted in the Australian psyche. Like the student at the University of Sydney, the son of a medical specialist, who complained that his family is struggling because they cannot afford to install floodlights for their tennis court, most Australians continue to believe that they cannot afford to buy everything they really need, irrespective of how wealthy they are.

Sydney epitomises the new dispensation, a city now divided between the haves and the have-yachts. For most Australians the stoicism that characterised their grandparents' generation has been transformed from a survival skill to a nostalgic ideal, to which we cling. This is why we in the cities love a good bushfire, especially around Christmas time. As the orgy of spending reaches a climax, we begin to wonder whether we have become decadent. The firies who battle the elements on our behalf remind us of our ‘true' selves.

Despite the extraordinary affluence, for which John Howard is quick to claim credit, our political leaders still deploy the language of the ‘battler' at every turn. The image of the battler is the holiest icon of Australian political folklore, although the number of people who truly struggle has shrunk to a small proportion of the population. For every real battler - a term for which ‘working family' has become a close synonym - there are several who imagine themselves to meet the criteria.

The strange mood that has emerged in the new golden age - consumer confidence married to self-pity - has gradually transformed Australian politics. The old social-democratic notion of social justice has been replaced by middle-class welfare, typified by the massive handouts of the rebate for private health insurance and the tax concessions for superannuation. Although they are recognised as bad policy by every dispassionate observer, they remain politically untouchable.

All of this ought to make the next election a three-inch putt for the Coalition. Why would the people vote out a government that has overseen, if not generated, 11 years of sustained economic growth and full employment? If the hip-pocket-nerve theory of voting is valid, there is nothing to stop the Coalition buying itself another term in office. Yet a niggling worry now seems to be intruding on Australia's long period of comfortable complacency. A hitherto suppressed fear is felt by many: that the good fortune enjoyed by this generation may leave a world less habitable for future ones. In the past 12 months the true implications of the scientists' warnings about the climate crisis have begun to sink in and cast a pall over the whole project of ever-increasing prosperity.

In the first half of 2006 something shifted. Perhaps it was the announcement in January that 2005 had been the hottest year on record; perhaps it was the seemingly endless drought that found its way into the cities. Whatever it was, it was reinforced by Al Gore's film and the Stern Review. It is still not certain how central global warming will be to the federal election, but one thing is clear: after a decade of neglect, John Howard is taking no risks now. Although remaining in his heart a greenhouse sceptic, he knows that to win the election he must neutralise Labor's advantage on the issue. He needs policies that appear credible; piecemeal policies and defensive rhetoric will not do, which is why he needs the big bang of an emissions-trading system, expected to be announced this month.

This represents a serious danger to Labor. A rigorous emissions-trading system is the core policy response to the climate crisis, and Labor risks being caught up in a debate over the details of a policy that the public will not understand. On the other hand, Howard suffers in the public mind from the accumulated legacy of mistrust over climate change. The epithets of "mean and tricky" and "lying rodent" that have leaked out from his own side reflect a widespread view that the prime minister cannot be trusted, that he does to the truth what David Beckham does to the football.

The company Howard keeps is also a problem. His position on climate change has a lot to do with his friendship with Hugh Morgan. As the one-time CEO of Western Mining, an important figure in the anti-Kyoto Australian Industry Greenhouse Network and the former president of the Business Council of Australia, Morgan has been the driving force behind business opposition to an emissions-trading system. He has also been the central figure of climate-change denialism in Australia, not least through his role in founding the Lavoisier Group of sceptics. Morgan has been a close confidant of the prime minister since the early 1980s, when, as treasurer, Howard appointed him to the board of the Reserve Bank. Although now in retreat, Morgan and the denialists have not been wholly vanquished and still exercise an influence over key cabinet members. The Lavoisier Group and the Institute of Public Affairs (a think-tank staffed entirely by climate-change sceptics, thus perhaps best referred to as a sceptic tank) will fight a rearguard action.

Both the Coalition and Labor want to believe - indeed, are desperate to believe - that Australian greenhouse-gas emissions can be sharply reduced without any noticeable effect on the economy and our affluent lifestyles. In this they draw considerable comfort from the Stern Review and the Intergovernmental Panel on Climate Change, among others, which have concluded that deep cuts can be had at a low economic cost. The report of the IPCC's Working Group III, released in April, estimates that to cut emissions by 50% by the middle of the century requires the sacrifice of only one or two years' economic growth out of a period of 40 or more years.

Sir Nicholas Stern is confident that once a powerful signal is sent to the market, the market will find a way to carry out the restructuring of the energy economy. Is he right? In 50 years' time the world will be dramatically different. If a strong signal can be sent now, there are some grounds for optimism. While we already have the technologies to reduce the world's emissions sharply over the next decade or two, by 2050 the market, suitably guided, will present a set of possibilities we cannot foresee. After all, 50 years ago we did not have electronics, television, computers, nuclear power, the widespread use of plastics or mass-produced whitegoods, let alone biotechnology, genetic engineering, nanotechnology or space tourism.

In the short term, we can estimate some of the economic costs. To achieve a reduction of greenhouse gases to 550 parts per million (admittedly still too high a level), the carbon price will need to be set in the range of US$20-50 per tonne of carbon dioxide. This will see petrol prices increase by 4-10 Australian cents a litre, and electricity prices for householders rise by 2-5 cents a kilowatt hour on top of the 12 cents or so they pay now.

So far, so good. But in truth, cutting the world's greenhouse gases by the required amounts is an almost intractable task. The sheer weight of economic growth constantly works to make the 50% reduction target a difficult one to reach. In his report, Stern estimated that the developing world's gross domestic product will grow by 400% by the middle of the century and that of rich countries by more than 200%. The overwhelming question is whether a world likely to grow at rates like these can at the same time cut global carbon emissions in half.

What Stern had to say was nothing new. For some years now, economic modelling has shown that the costs of meeting the Kyoto targets would be vanishingly small. Even modelling estimates commissioned by the Bush administration typically conclude that cutting emissions as mandated in the Kyoto Protocol would see the gross national product of the US reduced by only 1% by 2012. Seen in this light, the hostility to the protocol appears to be a form of madness.

Given the scale of the cuts in carbon emissions that are required, what is at stake is not just a matter of economic policy, but a demand for a social and cultural transformation. Are we in the rich countries of the world capable of making such a psychological transition? The glib answer is: Well, we simply must. Yet such an environmental imperative must conquer a more powerful force. In consumer societies such as ours, consumption activity is the primary means by which we create an identity and sustain a sense of self. If, in order to solve climate change, we are asked to change the way we consume, then we are being asked to change who we are - to experience a sort of death. So desperately do we cling to our manufactured selves that perhaps we fear relinquishing them more than we fear the consequences of climate change.

This helps to explain the chasm between the phlegmatic approach of our political leaders and the rising panic among climate scientists and clear-eyed environmentalists. Politics aside, it is apparent now that the principal obstacles to saving the planet are not technological or economic, but psychological.

Cover: June 2007

June 2007

From the front page

Robo-dead

Today’s humiliating backdown could jeopardise the return to surplus

Bring Assange Home: MPs

The US extradition case against the Australian journalist sets a dangerous precedent

Image of Steve Kilbey

The Church frontman Steve Kilbey

The prolific singer-songwriter reflects on four decades and counting in music

Illustration

Bait and switch

Lumping dingoes in with “wild dogs” means the native animals are being deliberately culled


In This Issue

War of words

The future of journalism as a public trust

Wendi Deng Murdoch

Shute the messenger

How the end of the world came to Melbourne
Words: Shane Maloney | Illustration: Chris Grosz

Daisy Bates & Harry ‘Breaker’ Morant


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The passing of Labor’s great speechwriter Graham Freudenberg highlights the party’s absence of a clear rationale

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The terrible truth of climate change

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