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Imperatives for Australia: our environment and economy: Jonathan Mann lecture series, Albury-Wodonga Campus, La Trobe University, 22 October 1996


Pro Vice Chancellor Keating, ladies and gentlemen. Thank you for inviting me here today to present the 4th Annual Jonathan Mann lecture.

I note that in previous Jonathan Mann Lectures, speakers have provided very interesting and erudite accounts of life along and in the Murray River.

Tonight I wish to provide a perspective which crosses many boundaries, much like the Murray River itself.

In my role as the Minister for the Environment in the Federal Government I am ever more convinced of the crucial need to ensure protection and management of the environment as an integral feature of our quest for economic prosperity.

I must help the Government keep a focus on its role in the management of Australia's environment while at the same time ensuring that the Commonwealth Government does not usurp the role of State and Local Governments in environmental management.

I think that the communities reliant upon the natural resources of the Murray Darling Basin are probably more aware of the critical linkage between these economic and environmental forces than anyone else in the country.

We have traditionally thought in terms of finding a balance, becoming accustomed to phrases like "trade-offs between the economy and the environment" and simplistic, black and white choices like "trees versus jobs" or "water for wetlands and birds versus water for cotton or rice".

If you take home one point from this speech tonight, let it be this:

The smart and successful countries of the 21st Century will be those who have recognised that the key to lasting prosperity is not how to trade-off the interests of the economy against those of the environment, but how to manage economies based around wise use of natural resources, economies which celebrate nature, rather than consume and degrade it.

To efficiently address this issue, certain facts should be accepted:

- Australia is trying to develop export-oriented, internationally competitive, resource-based industries within a small, deregulated, open economy, on some of the oldest and most impoverished soils on the planet.

- Environmental problems, left to take their destructive course, will increasingly affect our productivity, our trade and our international standing.

- Over the long term, ecological capacities and constraints are as binding on land use systems as the disciplines of the market.

- We can be certain that markets will get greener, standards will get higher, international scrutiny will get sharper and sanctions will get tougher.

It is wrong to see environmental best-practice and long-term profits as competing goals.

In fact with careful planning and sensible application, good environmental practice will lead to higher profits - a win/win situation - for example, by the use of efficient energy.

The Australian Financial Review recently described a wave sweeping through world economies which is seeing business and environmental interests converge for commercial gain.

Conversely, poor environmental practices will lead to environmental damage and economic cost.

A good example is the City of Adelaide and the industry, including a significant part of the car industry, which operates in that city. Many of you may have heard about Adelaide water. Those unfortunate enough to drink it are quickly aware of the downstream impacts of the management of the vast Murray Darling Basin.

Urban consumers are far from the only interested parties of course. Manufacturing industry in Adelaide and as far north as the Iron Triangle depends on Murray River water, which is as damaging to industrial boilers and other machinery as it is to kettles and hot water services.

Despite current Commonwealth and State agreements to regulate the salinity of the Murray, its salt levels are likely to continue to rise, possibly beyond drinking standards within 25 years unless massive action is taken.

We must learn to build environmental protection into economic activity and not wait to pick up the pieces afterwards - a process which is usually expensive for taxpayers.

A recent Federal Parliamentary Inquiry indicated that after only 200 years of modern land use, Australia is now one of the most degraded of developed countries.

It is hardly surprising that protecting the environment has become, along with unemployment, a mainstream issue confronting 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 more than 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%).

The challenge for leadership today is to modify economic systems so that what we leave our great grand children not only provides for their personal material well being but that it does so in an ecologically sustainable manner.

We should not be closing off options for our successors.

How to increase material benefits without running down fundamental life support systems is the great challenge of our time.

And this integration of environment protection and economic development is fundamental to 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 Earth Summit at Rio in 1992, when we all signed up to Agenda 21, 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 can be to achieve economic growth contemporaneously with a better environmental outcome. Sometimes we have to think outside our contemporary norms.

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

We will do so by establishing a natural heritage trust to provide the capital base for the restoration of our natural environment about which I will speak a little later.

And we will do it by building on the National Strategy for Ecologically Sustainable development that the commonwealth, all States and Territories and Local Government endorse in 1992.

These programmes are not mutually exclusive. In fact, the legislation for the Natural Heritage Trust is the first to specifically adopt ESD principles.

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

"decision making processes should effectively integrate both long and short term economic, environmental, social and equity considerations"

and that

"cost effective and flexible policy instruments should be adopted, such as improved valuation, pricing and incentive mechanisms"

A key focus of future work by the Commonwealth will be to develop these mechanisms which lead towards the sustainable use of natural resources in a way which does not restrict innovation, nor the ability for individuals to make personal choices.

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 our intention to substantially improve Australia's capabilities in this field.

Monitoring environmental impacts of economic activity through such activities as State of the Environment Reporting, environmental indicators, the Natural Land and Water Audit and green national accounting will be a start.

But incentives, pricing, monitoring and getting broader economic policy right, all interrelate.

For instance, economic incentives will not work effectively unless industry is aware of the cleaner production possibilities they can take up in order to respond to such incentives by changing their behaviour.

If industry does not account properly for environmental costs, economic incentives will be lost in overheads and again no change in environmental behaviour will be encouraged.

If we do not monitor the state of the environment and have no indicators of the environmental performance of different economic sectors, we do not know what economic incentives are required.

Finally if we do not integrate environmental considerations into all of economic policy, we are likely to undermine any particular efforts to put in place policies to address specific environmental problems.

This Government's Saving our Natural Heritage Policy aims to tackle these challenges head-on. Central to our efforts in this direction is the establishment of a one billion dollar Natural Heritage Trust - the major mechanism through which we will invest in rehabilitation of Australia's natural environment.

The recently released State of the Environment Report calls for a strategic, integrated approach to tackling the environmental problems facing our nation. That is precisely what we propose to do through the establishment of the Trust.

The initiatives to be funded from the Trust are aimed at reversing the decline in our natural capital. They will contribute to the conservation, repair and enhancement of Australia's unique environment into the 21st century.

This is the first time an Australian Commonwealth Government has established a Trust for such a purpose.

Under this Coalition Government, the Trust will provide funding certainly for important natural heritage programs over the next five years.

The initial capital of $1 billion to be invested in the Trust will come from the proceeds of the partial sale of Telstra. In effect, this represents a transfer from an investment in technological capital to an investment in natural capital. Investing in natural capital will benefit not only present but also future generations.

The establishment of the Trust, and the magnitude of funds to be provided, will enable Australia to take a dramatic leap forward in the sustainable management of natural resources.

I would like to think that from now on, no Australian government will be able to walk away from such investment. Investing in natural capital should be seen as just as important as investing in transport, education and health. But because it has become so degraded, a major capital injection is at this time required.

The Government acknowledges that everybody is responsible for protecting our environment. We firmly believe that the people who live in a community, a catchment or a region, are central to any efforts to improve management of natural resources and to manage change.

Australia's natural resources can only be used sustainably if best management practices are applied globally, at the catchment level and also adapted to the local and farm level. But those community members need to be supported in their capacity to learn from their land and to apply sustainable land management practices.

The success of Landcare in getting people involved, and in starting the process of understanding problems and planning solutions, has been remarkable. That one in three farm families is involved in a Landcare group provides a great foundation for strategic investment.

We are therefore committed to developing a cooperative approach to the implementation of the Natural Heritage Trust programs, to tap into the enormous enthusiasm which exists throughout the Australian community for the restoration and protection of our unique environment.

We are committed to achieving a greater level of cooperation between the three spheres of government to deliver resources to local communities and landholders. Our commitment is clearly evident in the close links which the Natural Heritage Trust forges between environment and sustainable agriculture programs.

In designing and delivering the Trust initiatives, we will develop integrated approaches to minimise the number of separate programs and consequent administrative burden on people trying to access these programs.

We will work with the community, farmers, local and state and territory Governments, volunteer organisations, industry, environmental groups and the scientific community in a cooperative and coordinated manner.

We will ensure that communities and landholders will have an important role in priority setting processes, and that the delivery mechanisms are as streamlined as possible.

The Commonwealth Environment and Primary Industries portfolios will be working cooperatively to achieve common and complementary natural resource management and environmental outcomes from the Trust initiatives.

As I said, earlier programs will be consistent with the principles outlined in the National Strategies for Ecologically Sustainable Development and Biodiversity.

The National Strategy for the Conservation of Australia's Biological Diversity, together with the State of the Environment Report, has given the government added impetus for developing its program of incentive measures for biodiversity conservation.

Conserving that biodiversity is not only important for non economic reasons but as we have learnt the effective management of Australia's natural resource based industries is dependant on the effective management of our biodiversity.

The Natural Heritage Trust demonstrates this Government's commitment to addressing our nation's environmental problems. But the ecological benefits which will flow from the Trust will also make a real contribution to Australia's national wealth and international competitiveness.

The bottom line is that we must get the community, our land managers involved in decision making about the environment. We must plan on a time scale which protects our resources for the future and integrates our ability to meet our own needs whilst protecting the resource base for future generations through the conservation of biodiversity.

In this context conservation must be seen as an investment in natural capital. It is not an alternative land use nor an opportunity cost, it is the fundamental protection of the natural resources which underwrites our material wealth.

The Murray Darling Basin provides an excellent example of the constructive way that many of the issues which I have raised this evening can be integrated.

The elements worthy of reiterating in the context of how we operate in the Murray Darling are:

* governance crosses the traditional administrative boundaries through the Murray Darling Basin Ministerial Council, which sets major policies and defines broad directions for natural resources management in the Basin;

* the Murray Darling Basin Commission is the executive arm of the Council which coordinates strategies and programs agreed by the Council bringing science and the community together;

* the Murray Darling Basin Community Advisory Committee provides for a mechanism to bring community views to the Ministerial Council and its executive Commission; and

* landcare groups at local level provide mechanisms for communities to work together for their own farm and regional mutual benefit.

Our approach to environmental management through the Murray Darling Basin Commission has provided an example for other nations to follow. We have set up a good framework, but we still have a lot of environmental repair work to do. And we must link this better with economic signals reaching producers.

The Murray Darling Basin Commission has recently published a book on 'Cost-Sharing for On-Ground Works', which helps the understanding of incentives for people to undertake works on private land and share the costs where there are agreed public benefits.

One of the most critical issues for which we must bring all of these tools together is in finding solutions for the provision of environmental flows in waterways.

Waterways are an integral part of ecological processes on which all life depends - especially in the driest, flattest, most poorly drained continent with the most variable climate. Our inland waters support a wide range of uses - industry, irrigation, urban and rural development, recreation and landscape amenity - all of which are fundamental to our quality of life.

The Murray Darling 2001 project to be funded from the Natural Heritage Trust will receive $150 million over 5 years to contribute to the rehabilitation of the Murray Darling Basin.

An additional $13 million will be allocated to support further work on what is one of the most challenging issues in environmental policy for the next decade-how to ensure that our rivers, many of which are over-regulated and over-allocated, receive adequate environmental flows.

Environmental flows are not an option to be considered after all possible consumptive demands have been met. Water pricing, reform of water resource rights and establishment of water markets all have a crucial role to play in ensuring more rational resource use.

However, given some evidence of market failure in natural resource management, we must be careful not to be seduced into assuming that markets will allocate adequate environmental flows.

To continue the economic analogy, we should be considering the environmental flow component in our rivers as capital, rather than income.

We ignore environmental flows at the long term expense of entire catchments and the communities who live in them.

I am confident that the Murray Darling 2001 project, complemented by the National Rivercare Initiative outside the Basin, will result in improved water quality, increased environmental flows, retention of essential habitat and improved waste management practices. It will therefore bring both environmental and economic benefits.


We need to continue develop our understanding of the best ways to provide governance for natural resources management, which involves the community in decision making and supports their efforts in looking after the public interest in the environment by bringing together economic measures and environmental reality.

I believe that the Natural Heritage Trust programs will provide many lessons about bringing Governments together with community and private interests using a broad range of policy tools and program delivery mechanisms knitted together through partnerships agreements and strategic plans.

I thank you for this opportunity to speak with you this evening and look forward to working with you to restore our natural heritage through the reinvestment of capital and the continuing investment of enterprise, ingenuity and community effort.