The Politics of Affluence

The politics of affluence

The Institute’s recent paper on ‘the rise of the middle-class battler’ (Discussion Paper No. 49) appears to have struck a powerful chord in the community. Clive Hamilton, the report’s author, comments on the political implications of ‘imagined hardship’.

No. 33 December 2002 A recent Newspoll survey, statement that they cannot afford to buy commissioned by the Institute, reveals everything they really need. that 62 per cent of Australians believe that they cannot afford to buy The politics of affluence everything they really need. When we The proportion of ‘suf- Clive Hamilton consider that Australia is one of the fering rich’ in Australia is world’s richest countries, and that even higher than in the Who should pay for mater- Australians today have incomes three USA, widely regarded as nity leave? times higher than in 1950, it is the nation most obsessed remarkable that such a high proportion Natasha Stott Despoja with money. feel their incomes are inadequate. The Coalition’s Claytons health policy It is even more remarkable that almost Richard Denniss half (46 per cent) of the richest In other words, a fifth of the poorest households in Australia (with incomes households say that they do not have Letter to a farmer over $70,000 a year) say they cannot afford difficulties affording everything they Clive Hamilton to buy everything they really need. The really need, suggesting that they have proportion of ‘suffering rich’ in some money left over for ‘luxuries’. This Deep cuts in greenhouse Australia is even higher than in the USA, is consistent with anecdotal evidence that gases widely regarded as the nation most some older people living entirely on the Clive Hamilton obsessed with money. pension report that they get along just fine. Future population dilem- The survey also asked respondents mas whether they ‘spend nearly all of their The survey results confirm something Barney Foran money on the basic necessities of life’. obvious that we frequently forget: above Across the population, 56 per cent of some fairly low threshold, feelings of The exhausted Australian? respondents agreed. More than a quarter deprivation are conditioned by Barbara Pocock of the wealthiest households in expectations and attitudes rather than Australia believe that they spend nearly real material circumstances. Institute notes all of their money on the basic necessities of life, a belief shared by The political implications of the around 40 per cent of those on incomes Institute’s research are far-reaching. Baby of $50,000 to $69,000. boomers today are financially three times better off than their parents and perhaps The responses of some of the lowest five times better off than their income households are equally grandparents at the same age. But pick suggestive. Surprisingly, among the up any newspaper or listen to any lowest income group (with annual politician and you would conclude that incomes of less than $20,000) 21 per average Australians cannot make ends cent of Australians disagreed with the meet. THE AUSTRALIA INSTITUTE

The commentators are reflecting back the sense of material deprivation felt by the great majority of Australians, House and household size, including the richest. Despite the fact Australia, 1955-2000 that we live in an era of unprecedented abundance, the broad mass of middle- 4 class Australians believe that their incomes are insufficient to provide for 3 House size their needs. 2 (100 m2) The problem is not inadequate incomes No. per but inflated needs. This new ‘middle- 1 household class battler’ syndrome has transformed 0 Australia’s political culture. Politicians tell 1955 1970 1985 2000 us ad nauseam that ‘people are doing it tough out there’ and ‘families are struggling’, validating the self-pity of people who are well off by any standard. to shift resources from public schools 220 square metres, double that of the and hospitals to private ones. 1950s, and it must be filled with furniture, carpets, appliances and The problem is not inad- The emphasis on the tribulations of the ensuites, with retail sales of these goods equate incomes but in- middle classes not only trivializes the booming. flated needs. concerns of those facing real hardship but reinforces their obsession with their own financial circumstances. The little Aussie battler has turned into the great John Howard has been more adept than The rise of the middle-class battler over Australian whinger. others at fanning the embers of the last 10-15 years has coincided with complaint. The manufactured privations the outbreak of ‘luxury fever’. In the of ‘Howard’s battlers’ gave the Coalition 1980s attitudes to consumption and victory in the 2001 election. material acquisition underwent a Australian households are accumulating transformation, reflected in booming so much ‘stuff’ that even bigger houses All of this is bad news for the ten per sales of luxury travel, luxury cars, and garages can’t cope, and a cent or so of Australians who are cosmetic surgery, holiday homes and burgeoning self-storage industry has genuinely struggling. Political parties can professional quality home appliances. grown to accommodate it. There are now see more advantage in pandering to the nearly 1000 self-storage facilities around imagined woes of the middle classes Above all, houses have become bigger the country. than the real distress of the poor. So and more opulent. People have been they cut taxes on the well-off , increase building bigger houses at the same time Although incomes have never been middle-class welfare and use the as the average size of families has been higher, the desired standard of living complaints of the wealthy as an excuse shrinking. The average new house is over of the average household is now so far above the level actual incomes can provide that people feel a gnawing sense Proportions who agree. that they cannot of deprivation. The little Aussie battler afford to buy everything they really need, has turned into the great Australian by income group (%) whinger. Yet when asked to reflect on the state of our society, a large proportion of

$70000 plus Australians believe that we place too much emphasis on money and material $60000-$69999 goods and neglect the things that really $50000-$59999 matter. $40000-$49999

$30000-$39999 In response to another question in the Institute’s Newspoll survey, 83 per cent $20000-$29999 agreed that Australian society is too <$20,000 materialistic, with too much emphasis 30 40 50 60 70 80 on money and not enough on the continued page 4

2 THE AUSTRALIA INSTITUTE Who should pay for maternity leave?

In the last Institute newsletter, Bruce Chapman argued for a HECS-style system of loans for maternity leave. His scheme includes a public subsidy component, but above that level payments to mothers would take the form of loans that would begin to be repaid when they returned to the workforce and their incomes reached a certain threshold. Here, Democrats Senator Natasha Stott Despoja puts the alternative.

The momentum for paid maternity indirect discrimination associated with Already, it is common for women to leave in Australia continues to grow motherhood and caring. Paid maternity carry the burden of a HECS debt well with employers, unions, women’s and leave is a basic and essential measure after their male contemporaries have community organisations, and 75% of which will go some way to addressing repaid their debt. This is partly due to Australians supporting such a scheme. this discrimination. the ongoing discrepancy between male The notion that the debate is ‘bogged and female salaries, but also because down over who should pay’ fails to Any system of paid maternity leave women are more likely to spend periods recognise that the bulk of supporters funded entirely by employers will simply of time outside the paid workforce favour a government-funded model perpetuate the discrimination against caring for small children. with a supplementary role for women and the inequities among them. employers. It is Government inaction If such a scheme were mandatory, A HECS scheme for paid maternity leave that is delaying the introduction of a employers have made it clear that they would simply add to the burden of debt national scheme. are likely to favour male applicants for faced by many women. They will have positions to avoid potential liability for multiple or much larger debts which paid maternity leave. will take longer to repay. Paid maternity leave is both economically and On the other hand, a voluntary system Professor Chapman’s suggestion that a socially beneficial to the of paid maternity leave will be fraught paid maternity leave debt could be community, and an im- with inconsistency. Already, we are seeing recorded against the woman’s partner if portant anti-discrimina- inequities develop along industry and he or she has a higher salary, would go sector lines, with women in larger some way to addressing this problem, tion measure. companies and the public sector being but it assumes that the woman has a more likely to have access to paid partner and will have one until such maternity leave, while women in time as the debt is fully repaid. This will This is not a simple stand-off between feminised industries and small business simply not be the case for many women. a Government that wants employers to are less likely to. meet the costs of paid maternity leave and employers who want the The more worrying aspect of these A HECS scheme for paid Government to meet these costs – it is trends is that women on lower incomes, maternity leave would a case of the Government failing to whose partners also tend to be on lower simply add to the burden accept a fundamental social incomes, frequently miss out on paid responsibility. maternity leave, forcing them to return of debt faced by women. to work prematurely after having a baby. Paid maternity leave is both economically and socially beneficial to The introduction of a HECS-style loan Furthermore, if the Government were the community, and an important anti- scheme for paid maternity leave would to retain its poorly-targeted Baby Bonus discrimination measure. be an inappropriate response to these in addition to a HECS scheme for paid issues. Firstly, it would perpetuate the maternity leave, it would create an By necessity, women take time out of trend towards a ‘user-pays’ community. inequitable system in which working their paid working lives to give birth. We have already witnessed the effects of women were required to repay their As a result, their earnings are lower than this shift within the higher education maternity leave while women outside men’s, their careers and experience are sector: students have become of the paid workforce would face no truncated, and their retirement benefits consumers, education has become a such obligation to repay the Baby Bonus. are reduced. In fact, women forgo commodity, and inequities in access to between $167,000 and $239,000 as a education have become further A flaw in Professor Chapman’s result of the birth of their first child entrenched. Professor Chapman is the argument is revealed in his proposition alone, depending on their qualifications. first to acknowledge that his original that, since women, companies and the scheme has been distorted by Government each stand to benefit from In the absence of compensating subsequent Government changes, thus paid maternity leave, the obvious arrangements, women suffer systematic, making it seriously unfair. implication is that ‘a correct funding

3 THE AUSTRALIA INSTITUTE

model … is likely to involve should be supported by the My Private Member’s Bill proposes 14 contributions from each of the three government, their employers and the weeks government-funded paid agents’. wider community. maternity leave at the Federal minimum wage, topped up by local bargaining. This line of reasoning misses the point Paid maternity leave will never fully This model represents a practical means that, if the benefits of paid maternity compensate women financially, or in any of taking action now and will deliver leave cannot be construed strictly in other respect, for the investment they basic paid leave to the two-thirds of economic terms, then neither should make in having a child. It will go just a working women who do not currently investment in paid maternity leave. small way to alleviating the effects of have access to it. I have recommended the discrimination they currently that specific aspects of the legislation be Although Professor Chapman focuses experience. reviewed three years after it comes into predominantly on the economic operation. benefits of paid maternity leave, he acknowledges that there are ‘broader Paid maternity leave is a Australia remains one of only two social benefits’ associated with it. government responsibil- OECD countries which do not provide ity and ... even on its own paid maternity leave. Other OECD There is widespread evidence that paid figures, the Federal Gov- countries have not had to resort to loan maternity leave improves the health and ernment can afford to in- schemes in order to fund paid maternity welfare of mothers and newborn leave and neither should we. Such a troduce a basic scheme. children and results in an increased rate scheme is unnecessary and represents of return to work by women who have bad public policy. had a baby. Industry groups have also argued that it results in improved For this reason, a HECS scheme for paid The Government must not continue to returns on public investment in maternity leave is somewhat of a drag its feet on this issue. In failing to education and training. paradox in that it undermines one of introduce a national government- the key objectives of providing paid funded scheme, it is neglecting a The contribution that a woman makes maternity leave. fundamental social responsibility and to the community by taking time out to perpetuating discrimination and have a baby should not be viewed merely Paid maternity leave is a government inequity within the Australian as an economic investment. Women responsibility and it is clear that, even community. n make a physical, emotional, social and on its own figures, the Federal economic investment in the creation of Government can afford to introduce a the next generation. This investment basic scheme.

Overconsumption from page 2 things that really matter. The They promise to put more money in The people are disillusioned with proportions agreeing with the statement our pockets and it is the unanimity with politicians because the politicians are are remarkably constant across the which it is accepted that this is what giving them what they say they want, income distribution, with the exception people want that has caused social without understanding that they really of the richest householdswhere only 69 democratic and labour parties around want something different. per cent agreed that Australia is too the world to converge on the politics of materialistic. their conservative opponents. n Proportions who agree that Australian ...a large proportion of society is too materialistic, Australians believe that by income group (%) we place too much em- $70000 plus phasis on money and material goods and neglect $60000-$69999 the things that really mat- $50000-$59999 ter. $40000-$49999

$30000-$39999 Whereas once political leaders promised to bring peace, educate the masses, $20000-$29999 abolish poverty, fight exploitation and <$20,000 build a decent society, today they promise only one thing – more 50 60 70 80 90 100 economic growth.

4 THE AUSTRALIA INSTITUTE The Coalition’s Claytons health policy

The Federal Government continues to spend billions of dollars propping up the private health insurance industry while the public health system struggles with a shortage of funding. The Institute has recently revealed two new problems associated with the current system – tax rorts and an exodus of young people from health funds. Richard Denniss reports.

In 1997 the Coalition Government insurance and if the policy costs less taking out cheap private health insurance introduced the Medicare Levy Surcharge than $750 they will be ahead. policies with the sole purpose of to encourage high-income people to take escaping the surcharge. Having signed out private health insurance. Set at 1 per If this took pressure off the public up for cheap policies with high excesses cent of taxable income, the surcharge is health system, there would be no and escaped the surcharge, they then paid by all individuals with taxable problem. But large numbers of ignore their private health insurance and incomes greater than $50,000 per annum taxpayers are purchasing private health use the public hospital system. and all couples with taxable incomes insurance and still using the public greater than $100,000. However, system. This behaviour is built into the This double dipping is costing at least taxpayers who have ‘eligible’ private Claytons policies. $100 million each year with no benefit health insurance are exempt from the to the public hospital system. surcharge. The lower the chance of using a health insurance product, the cheaper it will be. To estimate the amount of tax revenue The cheaper the health insurance, the lost due to Claytons health insurance greater the saving to the taxpayer trying products the Institute drew on ‘Claytons’ health insur- to escape the Medicare Levy Surcharge. unpublished data from the Australian ance policies - the health Bureau of Statistics. insurance policy you have Insurance products are priced according when you don’t want to the amount of risk to which the In a recent survey, a representative health insurance. insurance company is exposed. sample of the Australian population Expensive cars in areas where theft is was asked why they had taken out common are therefore more costly to private health insurance. The results insure than cheap cars in safe areas. suggest that for more than 215,000 The Institute has recently conducted an Another way to reduce your car people responded that their only reason analysis of the extent of ‘Claytons’ insurance premiums, however, is to was for tax avoidance. An additional health insurance policies – the health agree to pay a large ‘excess’. That is, if 200,000 people gave tax avoidance as insurance policy you have when you your car is damaged or stolen you agree one of their reasons for having health don’t want health insurance. We estimate to pay some hundreds or thousands insurance. In order to construct a that the Government is losing at least of dollars of the cost yourself. Not only conservative estimate of the lost revenue $100 million dollars per annum to this does this excess directly reduce the cost these people were excluded. rort. of a claim to the insurer, but it signals that you believe you are unlikely to make As part of the research, the Institute any claims. A large excess also precludes ...double dipping is phoned a large number of private health claims for small amounts of damage. costing at least $100 insurers and asked them if they had any million each year with products that suited someone who did A similar system operates for private not want health insurance but who just health insurance. Individuals who wish no benefit to the public wanted to avoid the Medicare Levy to minimise their health insurance hospital system. Surcharge. It was clear that some funds premiums can increase the excess they provide products for precisely this are willing to pay. But the combination purpose. Some of their responses are of low premiums and a high excess for reported in the box on page 7. health insurance should be a major In addition to data on the reasons why concern for the Government. people have health insurance, the This is how it works. The cost of the Institute also used data on the incomes surcharge to an individual taxpayer The difference between car insurance of people buying Claytons cover. earning $75,000 per annum is one and health insurance is that with the Combining the number of people with percent of their taxable income, or $750 latter individuals still have free access to the savings associated with avoiding the per annum. Instead of paying the the public hospital system. As the one percent Medicare Levy Surcharge surcharge, however, the taxpayer can Institute’s research shows, large ensured the Institute could make a purchase ‘eligible’ private health numbers of high income earners are reliable estimate of the lost revenue.

5 THE AUSTRALIA INSTITUTE

While $100 million dollars may be only from selling products that people do young healthy people subsidise older a small portion of the total health not want and have little, if any, intention less-healthy people. budget, its injection into the public of using. hospital system would deliver The private health industry – already the enormous benefits to those currently on most heavily subsidised industry in public hospital waiting lists. According ...in the last two years, Australia – will be asking for further to figures released by the NSW Health more than 180,000 people assistance in the near future. Minister, $100 million dollars could pay aged under 40 have aban- for 7,500 hip replacements or 49,000 doned their private The health funding system is a mess. As cataract procedures. health insurance. the Institute has shown in the past, the 30 percent private health insurance rebate The loss of such a large amount of is not only highly inequitable but revenue does not appear to concern the inefficient. It is now becoming clear that Health Minister, Senator Kay Paterson. The Government set out to increase the the Lifetime Health Cover policy is also In responding to the Institute’s number of people with health failing to lower the average age of people findings, the Minister’s office simply insurance. The hundreds of thousands taking out health insurance and there are stated that the current arrangements of people with Claytons health big holes in the Medicare Levy Surcharge ‘worked well in taking the strain off insurance products help to inflate the system. public hospitals.’ figures, but they do nothing to ‘take the pressure off’ the public hospital system. The Government’s repeated defence of the current rebates and tax exemptions Flight of the Gen-Xers The problem is that the Government is is that they are achieving the objective fixated on a particular policy instrument, of taking the strain off the public The old pattern of rising health private health insurance, rather than the hospital system. However, people insurance premiums and more best way to improve health outcomes in taking out Claytons health insurance are exclusions is actually driving customers Australia. While billions are being spent doing little, if anything, to take pressure out of private health insurance. The subsidising health insurance already held off public hospitals. When faced with latest data available show that in the last by high income earners, there is little the choice between using their private two years, more than 180,000 people money available for preventative health insurance (and paying a large aged under 40 have abandoned their medicine, public health promotion and excess) or using the costless public private health insurance. This decline has intensive in-home assistance for those hospital system, large numbers of been partly offset by a rise in at high risk of hospitalisation such as privately insured patients are refusing to membership for those over 40, but that the aged. n reveal that they are actually privately can be little comfort to the Government. insured. After all, the purpose of the Lifetime Health Cover rules that, in the year 2000, The Australia The main winner out of this system is forced so many people into taking out Institute the private health insurers who profit private insurance was to ensure that · Members of the Institute Membership of private health funds by receive our quarterly people under 40 newsletter and free copies 5,000,000 of recent publications 4,500,000 (on request).

4,000,000 If you would like to become a member of the 3,500,000 Institute

3,000,000 please contact us at:

Garden Wing 2,500,000 University House ANU ACT 0200 2,000,000 Mar-00 Jun-00 Sep-00 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02

6 THE AUSTRALIA INSTITUTE

Health insurers’ reactions to requests for Claytons policies The Institute asked: “ Hi, I was speaking to my accountant and he said I could save a lot of tax if I got myself a cheap health insurance policy. I don’t really need health insurance, I just want the cheapest policy that will allow me to avoid the Medicare Levy Surcharge. Have you got something that would suit me?” The following comments were recorded. “We have a policy just for that.” “We have had a lot of inquiries for tax purposes.” “We do indeed; it’s going to suit you down to the ground.” “It’s mostly young people taking this product. They aren’t interested in insurance now, but they want to get in now so they don’t have to pay a higher price later on.” “You’d be surprised just how many people take this out. You can change your policy as your life changes.” “Do you need it just for tax purposes?” “I think we have something that will do you fine.” “You don’t need to hear the exclusions do you? Because you’re only interested for tax purposes.” Letter to a farmer Members may have been surprised to hear the Institute’s Executive Director argue in the press that much of the cost of the drought – including the costs imposed by dust storms on city dwellers – are preventable. Here, Clive Hamilton responds to a letter from an unhappy farmer.

Thank you for taking the time to write sympathy for the bush when there is a dust storms to ask why. If it is to me in response to my comments on drought, there is a real cost to that preventable, then it should be prevented. radio. sympathy. Isn’t that what Landcare is all about? In my comments on the drought and I am old enough to be aware of six or associated dust storms I was making eight droughts in Australia, and in all the point that if we in Australia ...if more expensive food previous ones I have shared the general establish water-dependent industries in is the price of sustain- view of city dwellers: ‘Isn’t it terrible; a drought-prone land then we need to able land management, poor old farmers’. But now I am asking bear the consequences. If droughts were then that is how it has to myself: ‘How many more droughts do freak events then one could have more be. we need before proper precautions are sympathy for those dependent on taken?’, and if some farmers are not farming who are caught unawares, but taking all reasonable steps, why should as droughts are regular events in the tax-payers in the cities, many of Australia, and always will be, then the It might seem trivial that Canberra, and whom are themselves on low incomes, hard question must be put: If a farming subsequently Sydney, were blanketed in bail them out? What’s fair about that? dust. But the thousands of dollars that operation cannot live through periodic The usual answer we hear from the it cost to wash the National Gallery, droughts, then should the land in bush is the one you repeated – how Parliament House and so on came out question be farmed in the way it is? would you like to pay more for food? of your pocket and mine. More Well, if more expensive food is the price In my view, we simply have to take importantly, the dust pollution caused of sustainable land management, then sustainability seriously and that means distress and, in severe cases, threatened that is how it has to be. And if changing land management practices so the lives of asthma sufferers in the Australian farmers cannot supply some that the soil, vegetation, water and cities. biodiversity are protected in the long types of food on well-managed land – term. Many land managers are making If the dust storms were simply acts of which includes allocating sufficient water this transition and that is one reason God then we would just have to live from our rivers to protect the natural why they are managing to ride out this with them. But if they are worse because environment – then we will simply buy drought without too much damage. some land managers have not taken it elsewhere. Many people I speak to measures to minimise erosion, when think it is madness to have wet rice I was also making the point that while many others have, then I think it is quite cultivation in Australia. city folk love to show support and legitimate for those who suffer from n

7 THE AUSTRALIA INSTITUTE Deep cuts in greenhouse gases Climate scientists have warned that the nations of the world will need to shift to a low-carbon future in order to avoid dangerous changes to the global climate. Even Federal Environment Minister David Kemp admits that Australia will need to cut greenhouse gas emissions by 60 per cent or more. The Institute has completed a path-breaking report (Discussion Paper No. 48) showing how such a target could be met.

Like the climate system itself, energy, reducing domestic greenhouse gas different activities use vastly different transport and urban systems have great emissions by 60 per cent by the year amounts of energy in the production inertia. They take decades to change. 2050. of each unit of output. How the This means that, to achieve deep cuts structure of the economy will change and avoid the worst effects of climate Economic forces over the next 50 years will depend on a change, early planning and action are number of factors of which changing needed. The key factors in any study of this type consumption patterns are perhaps the are projections of economic growth and most important. social change, the opportunities for ...to achieve deep cuts energy efficiency and the availability and Abatement opportunities and avoid the worst ef- cost of low- and zero-emission sources fects of climate change, of energy. The study assumes that any Existing technologies provide early planning and action technologies that will prevail in 2050 enormous scope for reducing emissions are needed. must already be proven (although not from energy consumption. For the necessarily be cost-effective). In other industrial sector, abatement words, we do not rely on the emergence opportunities arise predominantly from of a new solution to our energy needs. energy efficiency measures, particularly In the United Kingdom, the Blair increased cogeneration, but with direct Government has released a detailed The authors also adopted a simple fuel switching and a shift to renewable discussion of how a 60 per cent assumption about future energy costs: electricity also playing important roles. reduction in emissions might be the energy production technologies in Although the services sector will grow achieved. 2050 must have unit prices no greater strongly, growth in emissions from This study is a contribution to the than the prices of electricity or transport energy use will be offset mainly by longer-term thinking about Australia’s fuels that currently prevail in Western improvements in buildings, improved response to climate change and seeks to Europe. Although economic activity is equipment and a switch to gas investigate a feasible scenario for closely related to energy consumption, cogeneration for heating. continued page 12

Emissions by sector under the deep cuts scenario Greenhouse gas emissions by final sector, 1999 and 2050 Greenhouse gas emissions by final sector, 1999 and 2050

600

Transport 500 Construction and waste

-e) 400 Agriculture, land-use 2 change and forestry Residential 300 Commercial

200 Mining Emissions (Mt CO

Manufacturing 100

0 1998-99 2050

8 THE AUSTRALIA INSTITUTE Future population dilemmas In early November the CSIRO’s Future Dilemmas study emerged with a policy release by Minister Phillip Ruddock, an ABC 4 Corners program ‘The Search for a Super Model’ and a welter of media activity, some highly critical of the study and some which focused on the issues rather than the personalities. Barney Foran, one of the authors, outlines the study.

Future Dilemmas examines the resource optimistic and compatible with use, environmental quality and continuing economic growth. infrastructure implications of three Technology alone does population scenarios to 2050. The Future Dilemmas study points to five not offer any magic cure issues that should be introduced more alls. The central population scenario was explicitly into the next round of debates intended to reflect a national policy on population numbers in addition to position that had been in place for the fertility rates, immigration levels, proposed doubling or halving of previous decade and was driven by a net workplace skills and structural change in Australia’s population size by 2050 will immigration rate of 70,000 persons per the economy. be remedied by some wondrous new year (see figure). This is termed the technology or by policy incentives ‘policy scenario’. Consumption matters proposed by self-seeking think tanks. Technology alone does not offer any The first issue is that the individual An environmental population scenario magic cure alls. Australian consumer is the driver of (termed ‘deep green’) was driven by a Australia’s economic metabolism and net immigration rate of zero persons the receiver of most, if not all, of its Inertia per year where the migration inflows goods and services in some form or equal the outflows. A business The third issue is the recognition of the other. Adam Smith, the father of perspective was represented by a net inertia in most infrastructure and modern economics, said this more than immigration rate of two thirds of one institutional systems. The car fleet turns 200 years ago and his words have never percent of the total population each year over every 20 years or so, period housing been truer. Thus, the positives and (termed the ‘business’ scenario’). designs in attractive suburbs can last 100 negatives shown in the results can be years or more and any significant change directly attributed to individual The evolution of each population in Australia’s constitution may take consumers rather than to politicians, scenario sets in train a series of physical centuries if attempts to loosen our ties lobbyists or faceless bureaucrats. requirements to meet the changing needs to the English monarchy provide any of each Australian future. While guidance. population is the focus of the study, Timescales many changes take place at the same time The second issue is the acceptance of Trade matters – motor cars improve and use less fuel, linkages over long time scales The fourth issue is an examination of electricity plants become more efficient, throughout Australia’s social, economic the physical effects of continually inbound tourism keeps growing and and physical systems. Commentators expanding Australia’s global trade flows the nation’s export industries continue and senior bureaucrats tend to focus on in order to pay for consumer imports to expand. In general, the assumptions the immediate minutiae expecting that and interest payments on the country’s behind the numbers are deliberately the obvious follow-on effects of a international debt. When a full analysis of New Zealand’s tourism industry, was Total Population to 2100 recently undertaken, nearly one quarter 50 of national energy and greenhouse gas Business emissions were related to tourism 40 activities, much of it to international tourism. Similarly, while many export

30 industries in Australia bring in good Policy financial returns, the profits are seldom enough to repair the indirect effects of Millions 20 Deep Green production. 10 Resource limits The fifth issue to include is that of 0 limits. Australians are beginning toaccept that the country’s ageing 1946 1961 1976 1991 2006 2021 2036 2051 2066 2081 2096 Time of Simulation population might limit national contined page 11

9 THE AUSTRALIA INSTITUTE The exhausted Australian?

The recent ‘reasonable hours’ case put by the ACTU to the Industrial Relations Commission was a reaction to the reversal in the 1980s of the historical decline in working hours. Barbara Pocock, the Director of the Centre for Labour Research at the University of Adelaide, suggests some solutions to the epidemic of overwork.

Many Australians are working longer schools, sporting organizations and the Australian system saw us lead the world hours. The issues of work, quality of larger civil society is constrained. on hours reductions; but we now lag life and family life are – in the Prime well behind. The 2001/02 ACTU test Minister’s recent words – ‘barbeque stop- What is more, long hours raise the per- case to contain the growth in hours met pers’ in conversational terms. At the formance bar in many workplaces so that with limited success, and did not aim same time, over 600,000 Australians are all employees are measured against the to reduce the overall length of working officially unemployed and the imbalance long-hours worker, and either strive to hours. between over-work and under-work is meet their standards or are seen as ‘not stark in many locations. Why are hours serious’. Men who refuse long hours or Nevertheless, it convinced the Austra- growing for so many Australians, and look for part-time work join women in lian Industrial Relations Commission how much does it matter? part-time work on a ‘daddy-track’ that that a problem exists, and some unions parallels the established ‘mummy-track’. are now taking up the issue of reduc- Their careers and prospects are sidelined ing overtime and hours more gener- ...long hours of work as they attempt to take their roles as car- ally. However, against the examples of are bad for families, for ers and parents as seriously as they do bargaining to reduce working hours and kids and for individuals. their paid jobs. Many wives of long- cap overtime, in general enterprise bar- hours workers describe themselves as gaining and industrial relations change single parents, who take on all the do- since the late 1980s have weakened con- mestic and parenting roles, while their trols on hours and eroded employee The time that Australians devote to paid husbands talk about the ‘work/eat/ say over the time-effort bargain. work is growing and much of it is made sleep’ cycle that defines their days and up of unpaid overtime. Between 1982 narrows their lives. Time sovereignty and 2001, the average hours of full-time Australians rose by over three a week, The growth in casual and precarious confirming our place at the long hours employment has seen a drop in em- end of the international spectrum ployee time sovereignty and reduced amongst industrialised countries. As re- Questions of time sover- access to all forms of leave (sick, holi- cent work by Ian Campbell has shown, eignty are now high on day, long service, maternity and paren- a growing proportion of Australians are the agenda of many em- tal) which assist work/family reconcili- working long and very long hours: over ployees... ation. Questions of time sovereignty 26 per cent of full-time employees now are now high on the agenda of many work more than 45 hours a week. At a employees, especially those who have time when many countries are reducing The work-time squeeze is not new. Fam- caring responsibilities for aged parents, hours of work, Australia’s have been ily households where both parents work disabled family members or children. moving in the opposite direction. have always been time pressured. How- ever, the proportion of Australians now Enterprise bargaining to contain hours The impacts on families, communities experiencing this squeeze has grown sig- and overtime is one way forward. But and individual lives are not hard to nificantly. In 1984 over half of families only 37 per cent of Australians are cov- fathom. Recent qualitative research for with children were headed by a male ered by such arrangements and only the the ACTU (Fifty families: what long ‘breadwinner’ with female partner at most powerful of these are likely to be hours are doing to Australians, their home; now less than a third take this able to win reduced hours. The 23 per families and their communities) con- shape, and in 61 per cent of families both cent of award-covered workers (dispro- firms common sense: long hours of partners are in paid work. In this con- portionately women) and the 40 per work are bad for families, for kids and text, the growth in long hours has a cent on individual agreements have a for individuals. They are also draining much more vicious bite. harder road. our communities as more individuals give up their hobbies, sport and social So, what is to be done? The rising level There are a number of other ways involvement to preserve their energy for of hours of full-time employees in Aus- forward, including the kinds of leg- work and the private sphere of the fam- tralia is occurring in a unique industrial islative caps and limits adopted in ily. Their capacity to contribute to relations system. In the mid-1800s the some European countries, notably the

10 THE AUSTRALIA INSTITUTE

UK and France. There are mechanisms However, the long service system in SEASONS by which state and federal governments Australian provides a good base on GREETINGS (using the corporations power, for which to build general leave banks for TO ALL OUR example) could take steps along these employees and underwrite their family,, lines. community and individual needs. These MEMBERS, banks could be built up by means of CONTRIBUTORS Secondly, in the same way that new rights to accumulation, employer AND Australian employees bargained contribution, employee contribution, collectively to trade prospective pay rises and by income sacrifice. FRIENDS for new superannuation income, they AND A could trade future pay rises (or at least There are many solutions, and it is well GREAT some of them) for general reductions past the time that Australia moved in the standard working week. In the forward once more with creative NEW YEAR six years to 2000, productivity rose by industrial approaches to the growing 10 per cent. If we took that productivity work-time squeeze that impoverishes so rise in the form of reduced hours we many households. n could have reduced a 40-hour working week to 36, or granted ourselves an extra month’s annual leave. Instead, we have seen productivity feed shareholder value and executive salaries as the hours – many of them unpaid – of ordinary employees have grown.

Finally, many Australian employees look for flexible leave in order to meet their work, recuperative and family needs and reduce their working year. Historically, long service leave has often provided flexibility, but it is only available to long- serving workers, mostly with single employers.

Population cont from page 9 economic productivity due to workforce substituted for them. In aggregate size and composition. In the resource though, if imports grow too high, the and environmental sectors, the Future international monetary system may The Dilemmas study concludes that domestic correct us, the dollar may become the oil resources may effectively run dry by peso and international debt levels may 2020 and that many of the country’s become difficult to service. Eventually Electronic marine fisheries are already on the edge. many of the physical limits perceived in the analyses may translate through into economic and social constraints. Since Institute ...the country’s ageing humans are a long-lived species, the population might limit national population debate cannot national economic pro- ignore the possibility that many limits may cascade and link. That is where we ductivity due to Australians might find ourselves workforce size and com- ‘between a rock and a hard place’. position. Future Dilemmas and the shorter lay [email protected] version Dilemmas Distilled can be www.tai.org.au downloaded from the CSIRO website The oil and fish that we require can at http://www.cse.csiro.au/research/ www.gpionline.net always be imported or other resources program5/futuredilemmas/index.htm n

11 THE AUSTRALIA INSTITUTE

Deep cuts continued from page 8 In the residential sector, growth in en- Environmental trade-offs ares of dedicated arable land, although ergy demand will be restricted through much can be supplied from plantation improvements in building design and The availability of large renewable en- forests and agricultural and food indus- uptake of high-efficiency appliances. ergy resources is fundamental to the fea- try wastes. The projected amount of Large-scale uptake of solar thermal wa- sibility of achieving the deep cuts in energy obtained from biomass in 2050 ter heating and gas-fired cogeneration for emissions envisaged in this study, and it is only around 70 per cent of the amount electricity generation and space and wa- is possible that resource constraints may used by Brazil today. ter heating will further reduce emissions. limit the expansion of some forms of renewable energy. The report concludes that using avail- Growth in demand for transport will be able technologies Australia could feasi- driven by increased economic activity, Under the deep cuts scenario, wind sup- bly cut its greenhouse gas emissions by higher incomes and population growth. plies 50 per cent of gross electricity needs. 60 per cent by 2050. However there are However, major technology improve- Australia will need to have more than likely to be some significant trade-offs. ments are expected, and the relatively fast 11,000 turbines installed, or around 500- Even allowing for very substantial turnover of the vehicle fleet will facilitate 600 wind farms. One critical question is progress in energy efficiency, supplying a rapid uptake of these technologies whether there are 500-600 suitable sites much of our energy needs from renew- which include hybrids, fuel cells and spread across the country, including on able sources may require intensive exploi- biofuels. Increased patronage of public the coast, inland and off-shore. tation of Australia’s wind resources and transport is expected to have a relatively allocation of a substantial share of small impact on emissions. Australia’s arable land to biomass crops and plantations. By contrast, there is limited scope to re- The relevant constraint duce emissions from the agricultural sec- for energy from biomass The Institute’s study presents only one tor without major structural change, al- is the availabability of of several feasible scenarios that could though an end to land clearing will make suitable land... achieve the required deep cuts in emis- a major contribution to achieving deep sions. There may, for example, be break- cuts in emissions. throughs that allow much greater use of solar electric technologies. But it dem- Growth in global demand for beef will The relevant constraint for energy from onstrates what is possible with existing mean that by 2050 emissions from beef biomass is the availability of suitable technology. Undoubtedly, technological cattle will alone be responsible for over land, including fertility and climate. Sup- breakthroughs will make the task easier, half of the emissions from agriculture, plying the required energy from biom- especially if governments provide the forestry and land-use change combined ass to achieve the 60 per cent cut would right signals sooner rather than later. (see figure on page 8). require the equivalent of 6-7 million hect- n Institute notes New Publications

Discussion Paper 48 Long-Term Greenhouse Gas Scenarios: A pilot study of how Australia can achieve deep cuts in emissions, by Hal Turton, Jinlong Ma, Hugh Saddler and Clive Hamilton. October 2002 Discussion Paper 49 Overconsumption in Australia: The rise of the middle-class battler, by Clive Hamilton. November 2002. Web Paper Health insurance tax rorts, by Richard Denniss and Clive Hamilton. November 2002. Forthcoming Publications Discussion Paper 50 Downshifting in Australia, by Clive Hamilton and Elizabeth Mail. Discussion Paper 51 The effectiveness of greenhouse policies, by Paul Pollard. Discussion Paper 52 The effect on youth of exposure to pornography, by Michael Flood and Clive Hamilton. Welcome back Richard Richard Denniss has returned to The Australia Institute after 15 months as Chief of Staff to Senator Natasha Stott Despoja.