Sustainability, Inequality and Policy

Thank you for the invitation to open your conference on Sustainability, inequality and policy.

I make no claim to be a geographer, having barely scraped a pass in University Scholarship geography and taken the subject no further, but I did teach for some years in the Dept of Planning at Auckland Uni, where the geographers from time to time tried to assimilate the Planners, on the basis that they were the same discipline.

My HOD used to say, the difference between geographers and planners is real – geographers seek to understand the world, planners seek to change it. That has certainly been true of me and my subsequent work, but I think it is a little unfair to geographers, some of whom, in this room, are also engaged in trying to bring about change towards sustainability and fairness.

I congratulate you for bringing those two concepts together, as either without the other leads to a world that is bleak indeed.

There is so much inequality of power, of resources, of access to health and education and land and jobs that it would be easy to spend many lifetimes addressing that. But creating a world that just shares a changing climate, diminishing resources and polluted water and air more equally is not much of a goal to aspire to. Similarly, addressing the ecological crisis by ensuring that only those who can pay will survive is obscene.

There has never been a time in history when sustainability and fairness are so woven together in the future we must build. We in the Greens are often attacked for not “sticking to our knitting” and just talking about the environment. But knitting needs both plain and purl and we make no apology for saying that the forces that are driving the damage to our soils, water, air, biodiversity and climate are the same forces that are driving hunger, poverty, homelessness, and deprivation, and that these issues must be tackled together.

Climate change will not affect people equally. NIWA tells us that in the next few decades, droughts in Canterbury and Otago will halve production from cropping and livestock; but no-one is suggesting New Zealanders will starve, unlike in Africa where water shortage means life or death. Sea level rise here over this century will mean an inconvenient and costly relocation of quite a lot of coastal infrastructure; to tens of millions in Bangladesh it means their homes will be underwater and they have nowhere else to go.

Air pollution from industry or motor vehicles concentrates in valleys where poor people live, not on the sunny slopes favoured by people who can afford homes there. Pollution of a local river may take away the only accessible swimming spot for local children who can’t afford holidays in distant, less polluted parts.

In the last few years it has become more obvious than ever that we are already bumping up against the limits of resources and ecological processes we were warned about 30 years ago by the Club of Rome in The Limits to Growth, a book widely ridiculed, condemned and misquoted by many who have never read a word of it, but which is now proving to be right. And those taking the hardest bumps are, predictably, the poor and the vulnerable.

It is remarkable that all of the four apocalyptic horsemen the Club of Rome projected would overshoot and collapse in the early years of this century have appeared within the same decade – energy, food, pollution and population growth. Energy, particularly oil, has shown up most obviously in the cost of transport, but is a major factor in sky rocketing food prices, as world grain stocks shrink to their lowest ever. Oil consumption is a direct cause of pollution as it changes the chemical composition of the atmosphere, and so the climate. Behind them all, of course, is the fourth horseman of population growth.

But as they cut their swathes through human populations, they do not cut equally. In a contest for resources the privileged will always be able to feed grain to their animals so they can eat meat and feed more grain to the fuel tanks of their SUVs so they can travel. In a market economy the stomachs of the poor will never be able to compete with that.
Customary and sustenance fishers will always lose out to commercial fishing for export.

The doubling of the price of a big block of cheese goes unnoticed by those of us on a university or MP salary, but means real hardship to those on an invalid’s benefit or surviving as a solo parent, in this country with the fastest increase in inequality in the developed world. Radical threats to these processes that support life demand radical action. But too many policy prescriptions designed to drive sustainability will make inequality worse rather than better.

It is axiomatic among economists that if you want people to use less of something you put the price up. That could indeed be the sole remedy if everyone had a similar ability to pay. Then purchases would genuinely reflect how much that good was valued. But in a world of large and growing inequality rationing by price simply means some go without entirely while others consume as they have always done. This is already the reality for many in developing countries.

So to policy. Should we abandon pricing as a tool to bring about sustainability? I don’t believe so, but there are ways of doing it that mitigate its effects on inequality. The NZ proposed Emissions Trading Scheme provides some good examples.

The ETS essentially puts a price on greenhouse emissions to encourage energy efficiency, renewable energy, better soil management and agricultural practices, and to transform the economy in a low carbon direction. The scheme currently before Parliament does this with so many exemptions for trade-exposed industries and farming that the net result is the people and firms who produce 30% of the emissions would carry 90% of the cost over the first five year Kyoto period.

Some shelter for trade exposed industries is unavoidable until other countries have a similar price on carbon, but there is a lot we could do to reduce the impacts on households of price rises for electricity and transport fuel.

Renewable electricity, which will be sold at the same price as thermal power, will yield a large dividend to government from state owned enterprises. The regressive effect of the ETS could be mitigated if that dividend were ring fenced for assistance to households. Free energy efficiency improvements to their homes would directly bring down power bills, without affecting the price signal which changes behaviour. Instead or as well, it could be used to pay a citizens’ dividend to help them afford higher bills. The one thing that should not be done with this fund is to reduce the electricity price, which of course would negate the whole purpose of the exercise.

Another approach is progressive pricing, with several escalating steps, where a high price signal is maintained at the margin for most consumers, but a basic household allocation of power – and you can do the same with water – is available at a low price. That way everyone can afford to meet basic needs but is encouraged to avoid waste by a high marginal price. It is disappointing that the Government considered, and rejected, this approach a couple of years ago.

Ironically, because we did not act soon enough to encourage sustainable resource use, the sheer costs of resource depletion are now making it very difficult to fully implement sustainability measures. In the period that the ETS has been under policy development the price of petrol has risen more than 50 cents/litre. The Government recently amended its proposal to delay the entry of transport fuels from 2009 to 2011, on the basis that a price increase now would be too great a burden for households and too inflationary. I don’t know anyone who really thinks the price of oil will be less in 2011 than it is now, so there is the real possibility that a carbon price on transport fuels will keep on being deferred. For some reason they haven’t taken up our idea of phasing it in more slowly.

So resource and ecological limits are driving up the price of food, energy and transport, and thereby driving inflation, interest rates and a high exchange rate. Household disposable incomes will be lower and inequality greater. In this situation I would argue that a key policy tool is to increase the social wage. It becomes even more important to invest in quality and accessible education, health care, public housing, and public transport.

The people who can least afford the current price of petrol are those on low incomes with old inefficient vehicles, living on the edge of town with poor or no public transport. The social wage in this situation is not more motorways but better and cheaper public transport. Yet transport expenditure announced on Monday continues the pattern of a 6:1 ratio of roading to public transport spending.

The problem is that the decision makers work to a three year cycle which in itself drives inequality – the lack of justice between this generation and the next. We know our grandchildren will inherit a world with a less stable climate and more unpredictable weather; with much less oil and gas; more costly food; and less wild nature. We know they will never have many of the opportunities we have had. We could at least choose now to invest the last of our relatively accessible energy and mineral resources in leaving them some renewable energy infrastructure; a greatly improved public transport system; warm dry homes; and an economy more dependent on intellectual capital and the sciences of sustainability than on oil. But to do that, we need to shift our planning horizon to 3 generations rather than the 3 year electoral cycle.