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No basket-case: Tasmania on the bumpy road to economic sustainability

Tasmanians are pretty happy with their lot in life: isn’t that worth more than growth for growth’s sake? Georgie Sharp

Is Tasmania at a tipping point? Over the next two weeks The Conversation, in conjunction with Griffith REVIEW and the University of Tasmania, is publishing a series of provocations. Our authors ask where does Tasmania’s future lie? Has it reached a “tipping point”, politically, economically and culturally? Thinkers, writers and doers from Tasmania and beyond, including members of its extensive diaspora, challenge how Tasmania is seen by outsiders and illuminate how Tasmanians see themselves, down home and in the wider world.

A steady drumbeat of purportedly bad economic news from Tasmania has been seized on by mainstream politicians and pundits to drive home a standard Economics 101 lesson.

Economies must grow or they are doomed.

The prescribed medicine takes two rather different forms. The standard neoclassical remedy is to cut taxes, eliminate red tape, downsize government, and let the market work its magic.

In contrast, a Keynesian approach promotes deficit financing to stimulate the economy and regenerate business confidence.

Before we swallow either pill, it would be prudent to get a third opinion.

Even using conventional economic measures, Tasmania remains one of the best places in the world to live.

Consider the following. Tasmanians’ average per capita income in purchasing power parity terms is about $31,472. While certainly lower than the Australian average ($42,112), if ranked as a country, Tasmania would still be in the world’s top 30.

True, Tasmania’s unemployment rate of 7.3% is greater than Australia’s (5.1%). But the state is well below European (11.3%) and OECD (8.0%) averages. It is also well below that paragon of market virtue, the United States (8.1%).

The state’s debt is minuscule. Projected debt for 2013 is $134 million which, for a $24 billion economy, gives a debt-to-GSP ratio of less than 1%. Few other OECD economies come close.

In modern economic discourse, the growth mantra drowns out measures of fairness. It should be noted, however, that Tasmania has a low Gini index (0.238) indicative of an egalitarian society. This measure is substantially below the coefficient for the United States (about 4.0).

Luckily, Tasmanians recognise how well they are actually going. An August 2012 EMRS survey of community attitudes reported that almost 90% were satisfied or very satisfied with their own life and personal circumstances. Similar high percentages were reported with regard to standard of living and level of personal happiness.

So, as a broad generalisation, Tasmanians are doing fine, thank you very much.

This is not the same as saying that no Tasmanians are hurting. The shake-out from the bursting of the woodchip bubble, for example, has affected the forest sector heavily, especially in the state’s northwest.

More generally, a recent study by Tasmania’s Social Inclusion Commissioner suggested that around 13% of Tasmanians live on or below the poverty line.

The trick is to figure out how to improve the lot of those who are doing it tough without dismantling all that makes living in Tasmania worthwhile: stunning natural beauty, safe communities, affordable housing, low traffic density, rich culture, and superb food and wine to mention but a few.

Asking the right question

There is so much wrong with modern economic theory that it is entirely understandable that it asks — and then answers — the wrong questions about national and regional economies.

A central problem is that, at its core, modern economics whether neoclassical or Keynesian has little interest in either social capital or the physical processes that underpin the operation of the market.

With regard to the latter, as ecological economists have clearly demonstrated, the operation of national and regional economies depends on physical, biological and chemical laws.

Production and consumption fundamentally involve the conversion of matter and energy. We know from the Second Law of Thermodynamics that this is a one-way process. Production and consumption use up low-entropy energy sources — such as coal and oil — leaving in their wake not only the (not-always) useful products (which deteriorate over time) but waste and pollution.

The waste and pollution are disposed of in the earth, air and sea. The more we produce and consume, the more waste and pollution there is, unless there are accompanying gains in “eco-efficiency”.

Labour efficiency is not the issue here. It is throughput efficiency. Less material, less energy, less waste and less transportation per unit of output is what is required. The market only haphazardly delivers this kind of eco-efficiency, as even the World Business Council on Sustainable Development recognises.

While some producers are working hard to be more eco-efficient, marketers, advertisers, fashion designers, promoters and yes, even governments, are busy stimulating us to consume more and more indiscriminately. In the race between the two, eco-efficiency clearly seems to be the loser.

From an ecological economics perspective, therefore, the right question to ask is not why Tasmania’s economic metrics are lower than the rest of Australia’s and thus require either market or state stimulus, but whether the state is beginning to live within its ecological means.

Answering the right question

Is Tasmania on the path to sustainability? One way to answer this question would be to calculate the state’s ecological footprint.

Ecological footprint analysis measures how much annual biocapacity (land and sea) a region has at its disposal to produce the resources it consumes and absorb the wastes it generates.

If a region’s annual consumption continuously exceeds what can be produced from its available biocapacity, then the region is living beyond its means and needs to modify its production and consumption profile to bring it back into balance.

Ecological footprint analysis is now well established, following the publication of Our Ecological Footprint by Rees and Wackernagel in 1996. It is being used to compare countries and regions within countries.

Australia fares very badly in international ecological footprint comparisons. As a nation, we consume about 6.6 global hectares per person per annum, ranking us 8th worst in the world behind Qatar, Kuwait, United Arab Emirates, Denmark, USA and Belgium.

If the whole world consumed like Australia, we would need three Earths instead of the single one we have.

Is there anything more unrealistic than that?

A few Australian states and territories have calculated their own ecological footprints. In 2008, the Government of Victoria released a report that concluded “The average Victorian requires 6.8 productive hectares to support their lifestyle…. This level of consumption is unsustainable and places significant pressure on the natural environment” (page 3).

The key elements contributing to Victoria’s high ecological footprint were food (especially processed foods) (28%), services (22%), residential energy use (16%), goods (14%) and transport (10%).

Sadly and surprisingly, no ecological footprint has been calculated for Tasmania. How would it fare, if one were done? An inter-temporal comparison might demonstrate it has embarked on the bumpy journey towards real rather than rhetorical sustainability.

Several unique features about the island state suggest that its ecological footprint might be lower than Australia’s or Victoria’s. Compared to Victoria, we can note that Tasmanians:

  • produce much of their own food

  • have a sustainable energy mix of hydroelectricity and wood heating

  • earn and spend less

  • spend fewer hours a day in cars and traffic.

These features may mean that Tasmania’s economy is more sustainable than Australia’s overall as well as than most other states in Australia. For comparative purposes, it is not unreasonable to think that Tasmania might rank similarly to New Zealand, which is currently 35th in the ecological footprint league tables.

We won’t know of course until a detailed study is conducted.

Of course, if Tasmania were to have a similar rank to New Zealand’s, there would still be no room for complacency. Tasmanians would still be consuming more than four productive hectares per capita per annum: the required level for global sustainability is 1.8 hectares. But while there would be some distance to travel, the analysis would indicate that Tasmania is on the path to sustainability while the rest of Australia is lagging behind.

That would all paint a rather different picture of where we are, where we need to go, and the policies that might get us there.

Getting to sustainability

Ecological economists have proposed numerous policies to help regions like Tasmania in their quest for sustainability. Many of these policies are designed to reduce the level of material throughput and foster a more social economy.

One set of policy measures that goes to the heart of the matter is known as Sustainable Consumption and Production, or SCP. SCP emerged at the 1992 United Nations Conference on Environment and Development and played a bit-part in last year’s hugely disappointing Rio+20 conference.

While the SCP agenda has been all but ignored in Australia, a few other countries, notably the UK, have been more welcoming. In 2009, Tim Jackson, Economics Commissioner for the UK’s Sustainable Development Commission, published Prosperity without Growth, a landmark analysis of all that’s wrong with our current economic growth fetish.

From his and other reports, a wide range of infrastructural, taxation and information policies can be elucidated to promote far more sustainable consumption patterns at the national, state and local levels. These include:

  • sustainable transportation policies, like dedicated bike lanes so people can cycle to work without fearing for their lives

  • food security policies, like [community supported agriculture](]( to foster producer-consumer partnerships in the production of locally grown, low-input vegetables, fruit and other produce

  • green taxation policies, like a tough carbon tax to make carbon-intensive goods substantially more expensive than their decarbonised substitutes

  • certification and labelling schemes, like the Forest Stewardship Council’s, to enable consumers to purchase economically, socially and environmentally responsible products.

A shift to knowledge-intensive industries would also be actively encouraged.

In fact, there is no end of SCP and degrowth policies that could be implemented to keep Tasmania on the trajectory towards sustainability.

The problem is not a lack of policy ideas, but the continued dominance of the vision of materialistic growth embedded in modern economics on the one hand and of a governance system that is ill-adapted to tackle the range of complex, cross-cutting issues raised on the other.

Knowing this means that we cannot call upon the normal suspects to lead on the issue. Most are too fully committed to the growth mantra and too embedded in a winner-takes-all political system to be able to think and act outside the box.

It will be up to innovative groups in civil society — especially those committed to fostering sustainable communities of place and interest — to be the agents of change.

Luckily, this is an area where Tasmania has proven capacity.

Tasmania is uniquely placed to be a world leader in sustainability and is clearly taking faltering steps along a very bumpy road to get there.

Rather than lecture Tasmania on its growth-mania shortcomings, perhaps it’s time for the rest of Australia to follow the island state’s lead.

You can read the whole series here.

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