“We’ve now got shareholders, they’re the beneficiaries of the profits, but they’re saying, ‘Hang on, this is not right…’ We’ve got workers saying, ‘Why the hell would I want to work for you, given the damage that you’re inflicting on the natural environment?’ We’ve got consumers saying, ‘Why would I buy your products, given the damage you’ve been inflicting on the natural environment?”’ – Ken Henry, former Secretary of the Australian Treasury
Australia is often praised for its high standard of living and its performance on various economic, social and environmental indicators. As reported in the 2022 Budget Statement 4 Measuring What Matters, compared to other OECD countries, in terms of areas such as household wealth, employment, life expectancy, and premature mortality, Australia is among the best in class.
However, just because we are doing better than others, that does not mean things are as they need to be. For example, over two thirds of Australians think that the differences in income in Australia are too large. More worryingly, behind these headlines, there are many troubling trends that threaten the wellbeing and progress of the nation and its people. These include negative trends in homelessness and housing, financial stress, mental health issues, wealth inequality, trust in government, biodiversity loss, pollution and native vegetation clearing.
The 2022 State of the Climate report sets out the environmental aspect:
“warming has now increased to 1.47℃…The year 2019 was Australia’s warmest on record. The eight years from 2013 to 2020 are all among the ten warmest ever measured…Since the 1950s, extreme fire weather has increased and the fire season has lengthened across much of the country. It’s resulted in bigger and more frequent fires…In Australia’s southwest, May to July rainfall has fallen by 19% since 1970. In the southeast of Australia, April to October rainfall has fallen by 10% since the late 1990s…Lower rainfall has led to reduced streamflow; some 60% of water gauges around Australia show a declining trend. At the same time, heavy rainfall events are becoming more intense.”
The University of Melbourne’s Pulse of the Nation results illustrate the social aspect:
“Today, more than half (53 percent) of Australians report just making ends meet or worse. Among those aged 18 to 44, the share with some financial stress has increased to 60 percent. In terms of bill paying, half of all Australians and more than 90 percent of those financially stressed indicate that they have had one or more challenges in paying bills or putting food on the table in the past three months. Across the board more than half (and in some cases much more) of Australians have reported increases in housing costs, missing meals or eating less, eating less nutritious meals, not being able to pay utility bills, and skipping doctor appointments or not filling prescriptions.”
The current economic configuration clearly fails on many scores: socially and in terms of impact on the planet. Let us lay out the evidence of this, firstly as seen in social terms:
Statistics such as these illustrate a situation where too many people are struggling in the face of business as usual, a set up that has also brought with it extraordinary pressure on the planet and Australia’s natural habitat:
These various dynamics do not operate and impact in isolation – they overlap and reinforce each other. For example:
One of the characteristics of the current economic model is the apparent importance of economic growth, which is often touted as ‘lifting all boats’ (the assumption being growth improves wellbeing for the population). Yet, this has not occurred to a degree that would justify carrying on with business as usual. Until the COVID recession of 2020, Australia had a world-record breaking run of nearly thirty years of uninterrupted economic growth, and in recent years Australia has had what would be deemed strong growth – GDP increasing, for example at 3.3% in 2021. Australia’s GDP growth of recent decades has come at the cost of great harm to the planet, and hasn’t enabled enough people to thrive. Indeed, the current economic configuration, which encourages asset price speculation and the extraction of short-term profits, is driving inequalities and over-consumption of the Earth’s resources. If growth was the answer to Australia’s social and environmental problems we should have seen clear progress – perhaps even some of these problems solved – during this time. Instead, we saw deterioration in many of the measures we care about and an undermining of the long-term sustainability and resilience of the Australian economy, ecology and society.
The Herald/Age-Lateral Economics Wellbeing Index adjusts GDP to create a broader indicator that takes account of changes in education, health, work life, social inequality and environmental degradation. The outcomes are expressed as a dollar figure which allows both economic and non-economic aspects of human wellbeing to be compared in a tangible way. The result is a much fuller gauge of national progress than GDP. This work demonstrates that, while our economic output continues to grow, our collective wellbeing in recent years has levelled off.
One of the reasons why these problems persist is that policy responses tend to focus on treating the symptoms, rather than addressing the root causes. For example, the amount of money now being spent on mitigating the impacts of climate change on communities and places could have been avoided if previous governments had prioritised reducing greenhouse gas emissions. Similarly, Australian governments and families spend a lot of money on health care, but not enough on preventing chronic diseases and promoting healthy lifestyles. Governments also spend a lot of money on providing temporary accommodation for homeless people, but not enough on ensuring accessible and affordable permanent housing or on reshaping our macroeconomy so that fewer people end up destitute. This react and repair approach is inefficient and ineffective. Here are some of the figures that illustrate this:
These mini-briefings look at the idea of a wellbeing economy, how it relates to other ideas for economic change, and what some of the core elements of a wellbeing economy are. They reflect on why Australia needs to build a wellbeing economy.
This series of ‘mini-briefings’ attempts to clarify terms and expressions and associated wellbeing economy ideas so that discussions can take place from a basis of shared understanding and language.
