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CHECK AAN DEflIqfEl RMRARrnnn UNTIL DELIVERY
SPEECH BY THE PRIME MINISTER
RAC/ CEPR CONFERENCE DINNER
" THE ECONOMICS OF ENVIRONMENTAL POLICY"
CANBERRA 11 OCTOBER 1990
It is a very positive sign to see academics and policy
makers coming together, as they are today and tomorrow in
this Conference, to discuss some of the most momentous, and
complex, policy issues of the day.
If we are going to solve some of the critical environmental
problems that face Australia and the world then we certainly
need to draw upon the combined intellectual resources of
universities, public administration and business.
So I commend the Resource Assessment Commission, and the
Centre for Economic Policy Research here at the Australian
National University, for so actively contributing to the
discussion and advancement of policies that will make
Australia, and the world, a better place to live in.
As a starting point, let me refer you to some comments I
made earlier this week while announcing the agreement
reached by the Commonwealth and New South Wales Government
on the future of the South East forests. I told a press
conference that I believed that it will be even harder in
the future than it has been over the past seven years to
integrate effectively environmental and economic decisionmaking.
That of course is precisely why over the last couple of
years I have initiated new processes to analyse and resolve
these issues notably the ecologically sustainable
development working groups and the Resource Assessment
Commission. These processes are designed to bring together
the full range of relevant interests developers, unions,
environmentalists, and State Governments and to hear the
full range of their views, so that the recommendations for
decisions that. 1 merge will be based on the broadest base of
knowledge that can be assembled. Differences within the
community that would otherwise, and inevitably, hamper the
resolution of these issues will I trust to a considerable
extent be resolved while decisions are being reached.
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This is a very large challenge for us all and it will demand
hard work and a continued preparedness to look at the other
person's point of view.
And essential to the success of the effE*~ t, of course, will
be an improvement in the quality of the analytic skills that
we all bring to environmental issues.
In this context, one of the most notable, and welcome,
developments in the discipline of economics over the past
decade has been the broadening of its scope to encompass
some of our key concerns about the environment.
Not so many years ago, the environmental effects of
industrial and resource developments were not considered by
economists to be important factors or, if their importance
was conceded, they were believed to be unquantifiable and
thus, by default, outside the scope of orthodox analysis.
That orthodoxy is now changing.
Economics of course is essentially concerned with the
attainment of human well-being. That re mains unchanged.
What is new is the recognition first at the level of the
community, and then rapidly percolating throughout
Government, academia and the professions that human wellbeing
these days depends on many issues including,
critically, the quality of the natural environment.
Economists now better understand that the degradation of the
natural environment has costs for the economy, for society
and for individuals. And they accept that those costs can
be counted, and must be counted, so as to arrive at a more
complete assessment of our overall well-being.
Let me point to three innovations in the discipline of
economics which are helping us incorporate environmental
effects explicitly into economic analysis of policy.
First, economists are seeking to develop new methods for
valuing damage done to the environment. Putting a price on
environmental damage forces us to recognise that the
benefits of a development have to be set against any costs
it incurs in the form of environmental damage.
Second, there has been a burst of activity in the area of
environmental accounting in other words, in attempting to
incorporate into our system of national accounts the costs
of depletion of natural resources. The Australian Bureau of
Statistics is currently developing methods to adjust
Australia's national accounts to reflect some of the costs
of economic growth to the natural environment, and I await
the outcome of this work with great interest. 2 V
Third, and as a result of all the foregoing, economists are
helping develop policy options that may minimise damage to
the natural environment. There are now vigorous debates
over the merits of economic policy instruments such as
poll~ ution taxes, carbon taxes, tradeable permits and other
market based incentives for protecting the natural
environment. All these advances in economic analysis are playing, and
will continue to play, a major role in helping to resolve
environmental questions. I know the Resource Assessment
Commission is actively employing them all in its efforts to
assess the questions that I have referred to it, and to
develop the options that the Government should consider.
Let me also express here, as I have elsewhere, my
appreciation of the fact that conservation organisations
representing the views and concerns of millions of
Australians have also accepted the challenge of integrating
economics and environmental protection.
The contribution they are making to the Resource Assessment
Commission inquiries is a very welcome and constructive one.
Of course, like any large groups, these conservation
organisations embrace a diversity of opinions. And as I
said earlier this week, there are some parts of the
erironmental movement who will never be satisfied unless
theay get 100% of their ambit claims. To those people I say
that in confronting these complex issues no one, and
certainly no Government, has the luxury of just being able
to apply one criterion, be it economic or environmental.
The important thing is to arrive at an integrated decision,
and it is that truth that is now very widely accepted
th~ roughout the community.
But there is another important aspect to the way the
Resource Assessment Commission is going about its task.
We can't expect economics to supply the whole solution to
our environmental problems even the enlarged concept of
economics I have outlined this evening. Economic values
ar~ e, still, mostly expressed through the mechanism of
p: xices, and prices are not a good measure for the ethical or
aesthetic values that are also tied up in any consideration
of the environment.
There is no doubt in my mind that there are some extremely
important ethicsJ,, issues underlying many of the
environmental ds! utes which we witness in our society and
in the world today. The question of species preservation is
an ethical issue more than an economic issue; the
preservation of sacred sites, the retention of areas of
n~ atural wilderness these are necessary actions but they
cannot be easily explained or justified within the
parameters of economic analysis. Price tags are not easy to
pin on them.
So I am pleased that the Resource Assessment Commission as
an explicitly interdisciplinary body is identifying and
assessing the range of economic, ecological, social,
cultural and ethical issues that are integral parts of
environmental and resource-use disputes.
The-Commission has been asking individuals and organisations
making submission to its inquiries to state forthrightly the
ethical and moral values which underlie their positions.
This is commendable because frequently, the disputes in
question come down to differences in the basic values people
hold. This is nowhere more clearly shown than in the difficult
questions surrounding Kakadu. The Commission's inquiry into
mining in the Kakadu Conservation Zone is due to report to
me next April, with a draft report made public at the end of
the year. Many people have suggested that asking the
Commission to produce its first report on the Kakadu issue
was a ' kiss of death', since the positions of the main
parties in the Kakadu issue are so very deeply entrenched.
Let me simply express my very great confidence that I will
receive from Justice Stewart and the RAC Commissioners a
report that reflects the independence, professionalism and
high calibre of their work and that of the Commission's
staff. I am wholly confident that whatever conclusions the
Commissioners reach will be reached only after all the
issues have been weighed up, so as to determine where the
best interests of Australians as a whole truly lie.
Further down the track is the RAC inquiry, that I
foreshadowed in my Environment Statement last year, into
Coastal Zone Management issues. The Government has decided
that an initial reference will address Building, Tourism and
Associated Development. I appreciate that the management,
conservation and development of the coastal zone involves a
huge range of very complex issues, and I have recently
written to State Premiers and Territory Chief Ministers
proposing detailed consultations on draft terms of
reference. Consultation will also take place with other
relevant interest groups prior to finalising the terms of
reference. I am grateful for your invitation to address you tonight and
I regret that I can't stay for dinner. You probably know
that I have an appointment in the Cabinet Room this evening
at which these very issues I have been talking about the
integration of economic and environmental considerations
will be once again confronted, this time in relation to the
question of greenhouse gas emission targets.
You will appreciate that I can't tell you anything about the
substance of our deliberations themselves.
But I do want to say this. When the decision is made, I
urge you to look closely at it, and to consider the issues
that underpin it.
When we reached our decision in Cabinet over Wesley Vale
last: year, we were accused, by those people who didn't study
the full decision properly, of being too green.
When we announced our decision this week over the South East
forests, the same lack of careful study led us to being
labelled excessively pro-development, with our so-called
green credentials fading.
But the truth is, not surprisingly, more complex for what
we have done consistently is to make decisions on their
merits, and not on the basis of lobbying campaigns or of
emotional appeals by any side. So it's not a question of
being pro-green or pro-development. It's a question of
being pro-Australian, and the sooner we get our collective
minds around that concept the better we will all be.
This Conference will help play an important role in that
task, and I wish you well in that. ;~ s~ ci
2.; 1i()