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1996 Fenner Conference on the Environment

"Tracking Progress: Linking Environment and Economy Through Indicators and Accounting Systems"


Senator Robert Hill
Commonwealth Minister for the Environment

30 September 1996

Introduction

As Australia's Minister for the Environment it gives me great pleasure to be here this afternoon to open the Australian Academy of Science, Fenner Conference on the Environment.

The Fenner Conferences, which are generously supported by Professor Frank Fenner, are without doubt, one of the leading avenues for advancing solutions to the environmental dilemmas facing this and other nations.

The subject for this years conference will I am sure, further contribute to us finding solutions to the great challenges facing the global community as the 20th century draws to a close.

It is in fact one of the key issues - how do we measure environmental change flowing from our interference with natural processes and how do we account for that change to present and future generations.

It has to provide the key to adopting more responsible behaviour in relation to our natural heritage.

It has, by any measure, been an extraordinary century.

We have, as a result of an exponential growth of technology, witnessed increases in material wealth that could not have even been dreamt of a few generations ago.

There is no doubt that the growth of knowledge and exploitation of resources has bought great benefits.

Yet this explosion of technology through the industrial revolution, and the associated growth in world population, has also been at a massive cost to the basic life support systems of the planet.

It is these life support systems that underpin our material wealth - our natural capital if you like and it is their protection that will present the most profound challenge for humankind throughout the early part of the next millennium.

Since the beginning of this century, the world's population has grown from just under 2 billion (1.8 in 1900) to nearly 6 billion (5.8).

If, for example, we continue the growth in consumption of fossil fuels to a point where other nations emit the same level of greenhouse gases per capita as we do, and given that the world's population is predicted to grow another 30% to 8 billion by 2025, carbon dioxide concentrations in the atmosphere will exceed 200% of pre industrial levels.

Even under conditions of moderate population growth and economic expansion, computer models suggest that increases in atmospheric concentrations may lead to an increase in global temperatures by 2 degrees over the next century - with major detrimental consequences.

This exploitation of resources has also led to a crisis in the loss of its biological diversity.

A number of eminent scientists such as Professor Peter Raven have concluded that perhaps 25% of the earth's total biological diversity is at serious risk of extinction in the next 20 - 30 years.

A primary cause for this loss of biodiversity is that humankind has been able, through its harnessing of technology, to exploit most of the planet's ecosystems without perhaps appreciating the full consequences of such exploitation.

According to the Global Biodiversity Assessment released by UNEP in 1995 "humans today annually mobilise approximately 40% of the total primary production on land, a massive and pervasive co-option of resources that inevitably leads to significant impoverishment of the biota."

Environment and Economy

With us having to confront these sort of scenarios, it is hardly surprising that protecting the environment has become, along with unemployment, the mainstream issue to confront our generation.

Opinion polls over the past few years consistently show that the community values the environment and economics almost equally - a remarkable change in attitude over the last generation.

The Australian Bureau of Statistics conducted a recent poll which found that over 70% of people over the age of 18 years believe that protecting the environment is as important as economic growth.

A recent Australian Newspoll confirmed trends over the past few years, which showed that Australians ranked protection of the environment (61%) third, below health (73%) and unemployment (71%), but above many of the economic issues such as taxation (58%) and interest rates (53%).

Global Action

The challenge for the world's leaders of today is to modify our economic systems so that the world we leave our great grand children not only provides for their personal material wellbeing, but that it does so in an ecologically sustainable manner.

How to increase material benefits but not rundown fundamental life support systems is a great challenge.

This integration of environmental protection and economic development is a fundamental aspect of ecologically sustainable development.

Given that our current economy has developed in a way heavily dependent on natural resource depletion, and that our technology is driven by the consumption of fossil fuels, the challenge before us is a profound one indeed.

The world community has started to face up to the reality.

We saw it with the United Nations Agenda 21, signed at Rio in 1992, when we all signed up to a policy framework for sustainable development. We saw it in the development of the Convention on Biodiversity. We saw it in relation to Ozone gases. We are seeing it in relation to the Berlin Mandate on climate change.

This last example however typifies how difficult it is to achieve economic growth contemporaneously with a better environmental outcome.

Australia's Commitment

Our Government is firmly committed to playing its role in meeting these challenges.

We will do this by building on the National Strategy for Ecologically Sustainable Development that the Commonwealth, all States and Territories and Local Government endorsed in 1992.

It's worth noting that two of the key guiding principles in the National ESD Strategy are:

Both are obviously relevant to your discussions.

A key focus of future work by the Commonwealth will be to develop pricing mechanisms which lead towards the sustainable use of natural resources in a way which does not restrict innovation or the ability for individuals to make personal choices.

As part of last months Budget, I presented a Ministerial Statement entitled "Investing in our Natural Heritage".

In it I stated that "better pricing for natural resource use and the application of economic instruments are critical measures in achieving environmental goals and improving economic efficiency."

At the moment we don't even have the capacity to measure the environmental consequences of our actions.

Over the next few years, it is my intention to substantially improve Australia's capabilities in this field.

In setting the scene for this conference, I'd like to briefly mention some of the more specific initiatives that the Commonwealth Government has taken recently and is currently undertaking that will contribute to linking the environment and economy through indicators and accounting systems.

There are five initiatives that I'd like to particularly mention:

a) State of the Environment Report

Firstly the SoE report.

Fundamental to building an ecologically sustainable economy is the ability to benchmark our actions, so that we have some measure as to whether we are heading in the right direction. As the SoE report, which it was my pleasure to formally release last week, states:

"Establishing a pattern of sustainable development is not possible without adequate and accessible information.... Decision makers need reliable information data on ... key indicators of the state of the environment....."

"Without adequate, accessible information, it is possible to make two errors: we may inadvertently do irreparable damage to the natural systems on which all life depends; and we may forego opportunities for desirable developments through lack of detailed understanding of the potential impacts." - p1-4

Australia: State of the Environment -1996 is Australia's first independent, comprehensive report of the state of the Australian environment and provides a baseline for future national state of the environment reporting.

The report was prepared by seven reference groups under the broad direction of the independent State of the Environment Advisory Council, chaired by Professor Ian Lowe and has already received glowing press.

The Sydney Morning Herald reported that this report "is one of the most spectacular books that has ever been produced by any government in Australia and one of the most valuable and encyclopedic analyses of our nation".

It's environment reporter said " The scientists - more than 60 of them - have produced a formidable and highly readable document. Tables, graphs, graphics, photographs and impressive prose make the work accessible to everyone and it is easy to imagine that the report will make its way into nearly every school and university in the nation."

Many of the people involved in the report's preparation are at this conference, and I would like to take this opportunity to thank them for their generous contribution of time and expertise and for the quality work from the officers in my Department of the Environment.

The beauty of the report is that it looks at all the elements of our environment as an integrated whole and shows that management of the environment is best when treated within the context of the whole ecosystem. This is best summed up by its criticism of our lack of an integrated systems approach to the management of natural resources when it states:

"Overall, economic planning appears to take little account of environmental impacts. It is assumed that the first priority should be a healthy economy, and that problems can always be solved using the wealth created.

"The economy is a subset of human society, which in turn, is part of the environment. Progress towards sustainability requires recognition of this fundamental truth, and a willingness to build environmental thinking into our economic planning."

I will leave it to Ian Lowe, whose stewardship of the process has been truly outstanding, to tell you more about this report in his address tomorrow, but I trust that this conference will produce some useful suggestions as to how we can build on this report to create more informed and integrated decision making processes.

b) Report on Environmental Subsidies

The second area of Commonwealth activity I'd like to briefly mention is our recent work to address such economic policy failures as have been brought home in a report titled "Subsidies to the Use of Natural Resources".

This report, which I am formally releasing today, will make a significant contribution to the debate on pricing the use of natural resources.

It was produced by the National Institute of Economic and Industry Research on behalf of the Commonwealth Environment Department and argues that financial and environmental subsidies to the use of natural resources in eight key resource sectors in Australia amount to at least $13.7 billion per annum - 3.2% of GDP.

Debate which will no doubt occur on the detail should not be allowed to shield the principle.

In my Ministerial Statement I have stated that the government will, as a mater of priority "identify those areas where economic instruments can be used to provide lower cost and more flexible solutions to environmental problems."

Such measures are a more effective way of achieving environmental goals, as they contribute to economic efficiency and at the same time, conserve Australia's natural resource base.

Through these measures we can internalise environmental costs so that they are taken into account by those making economic decisions.

c) Environmental Indicators

The third area of Commonwealth activity that I'd like to briefly mention building on the work of the SoE, is the development of environmental indicators.

Through this work we will be developing a set of national, scientifically credible environmental indicators for state of the environment reporting and environmental auditing.

The Commonwealth Government is working with the States, Territories, local government, and scientific and community groups, to ensure these national indicators are the most relevant, useful and practical for all decision makers.

Work is already underway to develop indicators on land, inland waters, marine, biodiversity and the atmosphere.

But the best scientific information and assessments in the world are not useful unless the community has a good awareness and understanding of our environment.

If we only develop indicators comprehensible to a few specialists, we have only done half our job. We must interpret and communicate trends to the general community in the same way we currently communicate economic and employment statistics - ie regularly and in a simple agreed format.

We must also involve the community more in the monitoring process.

The Australian Conservation Foundation's 'Listening to the Land', which is a directory of community environmental monitoring groups which I had the pleasure of launching last month, shows the impressive role already being undertaken by community groups throughout Australia.

A truly wonderful example of community monitoring described in the book is the "Great Parrot Count" which monitors parrot numbers and distribution in and around Melbourne. The count started in 1994 with 65 schools participating.

Monitoring is carried out in conjunction with The Age newspaper and takes place on a state and regional basis. So far, 4,500 responses have been received which are stored on paper, computer and GIS and are used for local decision making, education, habitat restoration and to encourage planting and nest box construction.

Such volunteer schemes have been criticised by some for their alleged lack of scientific purity.

For those critics, it is worth remembering that when governments established a Bureau of Meteorology in 1910, they turned to the weather records kept by volunteers.

Since then, nearly every Australia benefits every day from the weather information provided by the network of volunteers. Today some 6,000 volunteers collect weather data from across Australia.

The 1996 State of the Environment report draws attention to the deteriorating state of our waterways and so it comes as no surprise that there are a growing number of community groups now monitoring the rivers, streams and wetlands.

Through the Commonwealth's highly successful Waterwatch Australia program, water quality monitoring is taking place in nearly 90 river catchments across the country, involving more than 1,000 community groups in monitoring the physical, chemical and biological health of our creeks and rivers.

It won't be too long before these programs are linked through modern communications technology to provide real time monitoring and management.

d) Green Accounting

Another most significant area of Commonwealth activity is that being undertaken by the Australian Bureau of Statistics on national physical accounts for natural resources.

Physical accounts are currently being developed by the ABS for water, fisheries, land use, minerals, energy and forests, biodiversity and emissions.

The first of these, for energy, is in press and expected to be released soon.

As part of this work, investigations are also under way to link the physical resource information to economic statistics for particular sectors.

This will show how economic activity in particular areas has an environmental impact and how economic decisions must take into account the environment.

Whilst these accounts cannot replace all non monetary values when natural resource management decisions are made, in time these national satellite accounts will assist in better understanding of how the economy as a whole relates to the Australian environment.

e) Natural Land and Water Audit

Finally, I would like to mention a new initiative to audit the nation's land and water resources, which will be picked up in the Commonwealth Government's Natural Heritage Trust.

The Natural Heritage Trust Bill to set up this program is currently before the Federal Parliament, which if passed will address many of the problems of land and water degradation and loss of biodiversity through an investment of an additional $1.15 billion over the next five years into repairing our natural capital.

The Trust, which I will jointly manage with my colleague John Anderson, the Minister for Primary Industries and Energy, will integrate the Commonwealth's sustainable agriculture and biodiversity programs through five integrated program packages relating to Vegetation, Rivers, Biodiversity, Landcare, and our Coasts.

As I am sure you are all aware by now, the funding of these programs is to be secured from the one third sale of Telstra.

It is, if you like selling one third of a publicly owned asset which is now capable of providing its services to the community with less capital support from the Government, and reinvesting that capital to restoring our natural infrastructure which has been depreciated. We will account to the public for the capital asset in a slightly different way.

I could be a little cheeky and suggest that this is an example of the Commonwealth Government "Linking Environment and Economy through ... Accounting Systems"!

Turning specifically to the land and water audit, we have recognised that in delivering such capital into these programs, in many areas again, we simply do not have enough information to judge whether our current pattern of development is sustainable.

It is for this reason, that one of the five key infrastructure projects to be funded from the Trust is a $32 million National Land and Water Audit.

This audit will measure the extent of land and water degradation on a national scale using about 20 key types of land and water degradation and include an economic analysis of each problem.

The audit will assess in a coordinated and comprehensive way, the extent of land and water degradation on a national scale based on the CSIRO resource accounting framework.

In particular, the audit's data set will combine economic value, production and resource data sets into a single coherent structure.

It has only been made possible by new computer and remote sensing technology, combined with world class intellectual property developed in the CSIRO.

Critically, it will underpin better decision making and priority setting for natural resource managers, communities and landholders throughout this vast continent, and will contribute in a most profound way to linking the environment and economic accounting systems across the continent.

Conclusion

I would like to conclude my address by reaffirming the Commonwealth Government's commitment to playing its part to improve the management of our natural environment.

In doing so, I am reminded that it is now 4 years since the "World Scientists Warning to Humanity" was released. You will recall that this warning was signed by 1700 of the worlds leading scientists, including the majority of Nobel laureates in the sciences.

The warning stated that "...many of our current practices put at serious risk the future that we wish for human society, ... and may so alter the living world that it will be unable to sustain life in the manner that we know".

The message that I would leave with you today, is that we are well past the warnings, and we are well past the theoretical arguments.

We are now into the most critical phase of all - action and implementation.

It is for this reason, that the outcomes from this conference need to focus on practical ways for all decision makers to integrate environmental protection and economic development through indicators and accounting systems, so that we all begin speaking the same language.

I am sure that the bringing together of economists, scientists, statisticians and people from other interests at this conference will provide an excellent forum for the development of ideas in this area.

Finally, I would like to express my gratitude to Professor Fenner, the Institute of Environmental Studies and the Australian Academy of Science for their support. I am pleased that we have been able to join with the Australian Bureau of Statistics and the NSW Environment Protection Agency in sponsoring this conference.

Commonwealth of Australia