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An address toThe International Society of Ecological Economists


by the
Federal Minister for the Environment and Heritage
Senator the Hon Robert Hill

Australian National University
Canberra
July 6, 2000

It is more than three decades since man first walked on the moon. The Apollo 11 mission captured the imagination of the general public and was viewed at the time as an example of how far we had progressed as a people. In the following years, however, it also became a defining contrast: we were clever enough to put a man on the moon but we couldn't come up with the answers to our problems here on earth - poverty, hunger, disease, cross-border violence and so on.

Many of us would have been reminded of this contrast in the past fortnight with the announcement of the success of the Human Genome Project. Scientists have now mapped almost all of what US President Bill Clinton referred to as "the language in which God created life." It is unquestionably a breathtaking achievement for medical science.

But like the moon landing of 31 years ago, doesn't this latest example of how clever we have become as a people also raise questions about how we have failed to resolve other more immediate concerns affecting our people and our planet?

Can the concept of improving the quality of life be isolated to the medical condition, or does it not also relate to the social condition and the natural environment?

Is it possible that one day we may be clever enough to prevent genetic disorders in our children, but still not be clever enough to guarantee them safe drinking water or clean air?

I find it remarkable, for example, that science can map my genetic structure, but science can't yet tell me the environmental flow required in the Murray River to give me safe drinking water in my home city of Adelaide for the decades to come.

Could it be that we have become clever enough to dramatically improve the life expectancy of the world's people but still make the fundamental mistake of failing to protect the natural systems which support them?

The broader Australian community has shown its willingness to take action to conserve our natural environment.

We have seen it first hand through the Howard Government's Natural Heritage Trust which has funded the work of almost 9,000 community projects across the nation involving more than 300,000 Australians.

But despite these efforts, environmental degradation still costs us an estimated $2 billion a year.

If we don't become smarter in the way we manage our natural resource base we will continually be playing catch-up - environmental degradation always running faster than environmental repair.

The answer is simple in concept but more complex in implementation - prevent or minimise the degradation in the first place.

This requires a commitment from governments, industry and the community.

As I've said, the community is prepared to play its role, not only through the type of projects funded by the Natural Heritage Trust, but also through household actions such as recycling and reduced energy use.

Our government has played a leadership role in setting down a policy framework to deliver environmental change.

In just under two weeks, our new Commonwealth Environment Protection and Biodiversity Conservation Act comes into force. It provides a modern, comprehensive legislative framework and has been hailed as being amongst the most innovative of its kind in the world.

We have also established a high-level ministerial taskforce to develop a better national natural resources management strategy for Australia. We have produced and are implementing Australia's first National Ocean's Policy to ensure that our marine resources are used in a sustainable manner.

We have also worked with industry to seek better environmental outcomes through measures such as the National Packaging Covenant, the National Pollutant Inventory, the Greenhouse Challenge, and the Wastewise program to reduce waste and cut energy use in the construction and other industries.

I would acknowledge that industry in general has responded positively to changing community attitudes toward the environment.

The newsprint industry, for example, has responded to community support for recycling. Australia now sets the benchmark for world's best practice in newsprint recycling achieving a 70 per cent recycling rate. What is even more heartening is that the industry is not satisfied with that remarkable rate and is examining ways to even further improve its recycling performance.

And I could list a number of industries or individual companies with similar success stories in implementing programs to deliver better environmental outcomes.

But we need to go further. We often hear it said that the environment has become a mainstream political issue. What is now needed is for the environment to become a mainstream economic issue.

We need to develop decision-making processes which take into account not only the financial costs and benefits of our actions, but also the social and environmental consequences.

Those processes will need to shift the focus away from short-term economic gain toward long term economic, social and environmental impacts - the triple bottom line.

It will require a fundamental change of culture in the way we go about doing business.

That change of culture will need to sweep through governments, boardrooms the financial markets and even into the family home.

For example, one of the issues raised at yesterday's Environmental Economics Roundtable by our international guest Amory Lovins involved re-thinking the way we go about planning and building homes.

He argued that some simple but effective design changes could deliver major long term savings in terms of reduced energy costs through the life of the building.

The first cultural change required is to overcome the established mindset that changing the way we've built houses for decades will inevitably add to the completed cost. We need to consider the operating cost of the building, not just the cost of construction. The current mindset focuses on the monthly mortgage payments, dictated by the size of the loan, which in turn is dictated by the construction cost of the home. But the operating cost includes payments for water, heating, cooking, and waste removal. What we need factored into the equation is the significant savings which can be made off these operating costs through better design practices - savings which will continue throughout the life of the home.

Again, the focus is on the short-term economic issue of sale price. We need to shift that focus, from both a builder's and consumer's point of view, to the longer-term benefits, both environmental and economic.

Across Lake Burley Griffin is one of Australia's most famous houses - Parliament House.

Built at considerable cost to the Australian taxpayer, it was officially opened in 1988.

While the average Australian home has 20 lights, Parliament House has more than 40,000.

Since 1989, efforts have been made to reduce energy consumption in Parliament House, resulting in a 41 per cent reduction in energy use with the flow-on effect of reducing greenhouse gas emissions by more than 20,000 tonnes annually. This has also brought about a saving of more than $2 million a year in running costs.

These efforts are an outstanding example of what can be achieved through implementing simple but effective energy efficiency programs in existing workplaces.

But the new wave of environmental thinking would have us question why these measures weren't incorporated in the design of the building in the first place and what other opportunities for energy saving design features were missed. It would argue that it has taken us a decade to gain savings which could have been there from the first day the building was open for business.

The issue of community attitudes again plays a role. The cost of a publicly funded building project is usually a sensitive political issue. There is always the temptation to go for the lowest bid tender to minimise public sensitivity to the cost. Measures which may add to the final cost of the building would usually be amongst the first casualties despite the savings they may bring through the life cycle of the building. Again our challenge is to communicate to the public the long-term benefits, even if they add to the short-term cost.

It's a simple example of how the environment is still considered an add-on option as opposed to being central to the way we do business.

If it can be said that community pressure has made the environment the core business of government, then equally we must make the environment the core business of business.

The tools of environmental accounting provide us with the best means of steering our industry down the path toward sustainability.

Good business practice tells us not to risk more than we can afford to lose. We depend on ecosystem services for survival and businesses depend on their natural resource bases for continued prosperity, and hence we should not put them at risk.

The precautionary principle of ecologically sustainable development is therefore just good business practice.

While we would like industry to be interested in the environment from an altruistic point of view, it is always more likely that we will steer them down this path through sound economic arguments - as they say in politics, always back self-interest.

Our challenge is to show them that the goal of conserving our natural resource base is not inconsistent with their goal of obtaining improved economic results.

If anything, the goal of minimising our impact on the environment through reducing our resource and energy use is actually one of industry's best options to achieve its economic goals.

Industry has already made impressive advances in terms of increased labour productivity.

Only now are we starting to see the more progressive businesses begin to focus on their resource productivity and the contribution it could potentially make to their bottom line profit.

Put simply, good environmental practice translates to better bottom line profits through reduced costs.

As I mentioned earlier, our government is already working on a range of programs with industry which reinforce this message.

We are also promoting the uptake of "eco-efficiency" through the signing of agreements with industry associations. Through these we hope to see more industries implementing environment management systems, environmental accounting, product stewardship, life cycle assessment and design for environment.

Our government has also made a major commitment to increase the acceptance of public environmental reporting by Australian companies. We have developed and released a national framework to increase the uptake of public environmental reporting and have funded positions in industry associations to provide further support.

The widespread adoption of public environmental reporting as a business discipline would be a significant step toward achieving truly sustainable development as it would force businesses to focus on their environmental and social performance alongside their traditional economic reporting.

The markets, the community, and public policy makers would have a more accurate picture of the true net worth of a company and its actions through this triple bottom line approach.

As I have acknowledged in previous speeches, the move toward triple bottom line accounting will not be easy to achieve.

We have a range of established measures of social, financial and ecological impacts - but how does one bring them all together to determine the net worth of a decision or action?

The Federal Budget, for example, contains a range of social indicators such as expected employment growth and allocations for social welfare. It also has economic indicators such as predicted economic growth and inflation targets. Our government was also the first Australian government to bring together in the Environment Budget Statement the full range of expenditures on the environment across all government departments.

But I'd be the first to admit that we would have a very long way to go before we could call the Federal Budget a triple bottom line document. Just one of its more obvious shortcomings is that it predicts economic growth but doesn't factor in the cost of environmental degradation which results from that growth.

So as a government, we understand the complexities which arise when dealing with triple bottom line accounting and that it will not be an easy concept to sell to business.

But the general community is demanding that we move down this path, even if they may not express it as such.

The work being done in our academic community in the field of ecological economics provides us with a starting point to move forward toward sustainability.

Some may argue that your challenge of bringing together diverse economic, social and environmental indicators into meaningful tools to assess sustainability is just as daunting as mapping human DNA.

As I said earlier, to achieve our goal we need to bring about a radical change of culture in our boardrooms and in our community.

Our government is committed to playing its part in delivering that change. But we will require your expertise and your advocacy to drive this movement forward.

Commonwealth of Australia