Business Daily Media

We modelled 4 scenarios for Australia's future. Economic growth alone can't deliver the goods

  • Written by Cameron Allen, Researcher, UNSW

Despite 28 years[1] of uninterrupted economic growth, future generations of Australians face being worse off[2] due to increasing household debt[3], cost-of-living pressures[4], rising wealth inequality[5], climate change impacts[6] and environmental degradation[7].

But our new research[8] finds a fairer, greener and more prosperous Australia is possible – so long as political leaders don’t focus just on economic growth.

Evaluating Australia’s progress by 2030

We modelled four development scenarios for Australia through to 2030:

  • “Growth at all Costs”, emphasising economic growth
  • “Green Economy”, emphasising environmental outcomes
  • “Inclusive Growth”, emphasising social equality
  • “Sustainability Transition”, balancing economic, social and environmental outcomes.

Each scenario involved different policy and investment settings, particularly around tax and subsidies, government expenditure and private investment.

We then evaluated each scenario against the Sustainable Development Goals[9], an internationally recognised set of targets and indicators that measure national progress in 17 major areas. These include economic growth, poverty, inequality, education, health, clean water and clean energy.

image CC BY-NC-SA[10] Goals, targets and indicators Each goal involves multiple targets and indicators. Goal 8, for example, is “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”. This involves 10 targets including per capita economic growth, decoupling economic growth from environmental degradation, and protecting labour rights. Each target comes with at least one indicator (for example, the growth rate of real GDP per capita, material consumption per GDP, and the rate of occupational injuries). In all, the 17 goals cover 169 targets. Because Australia has not adopted SDG targets, we chose 52 of those (with about 100 indicators) then modelled Australia’s progress in 2030 using our four scenarios. Read more: Australia falls further in rankings on progress towards UN Sustainable Development Goals[11] The graph below shows each scenario’s score (with 0% meaning no progress, 100% target achieved) on each of the 17 goals. We also calculated an average score for each scenario across all goals to aid comparison. image Simulation results for each scenario across all 17 SDGs. The scenarios are: 1.GC = Growth at All Costs; 2. GE = Green Economy; 3. IG = Inclusive Growth; 4. ST = Sustainability Transition. Coloured bars show the % progress on each goal based on a set of targets from 0 to 100%. Cameron Allen, Author provided (No reuse) Growth alone is not the answer Our model projects a business-as-usual approach will achieve progress of about 40% across all goals and targets. The “Growth at all Costs’ scenario scored only slightly better: 42%. Economic growth – defined as an increase in a nation’s production of goods and services – is generally measured by the annual change in real gross domestic product (GDP). Our "Growth at all Costs” scenario involves accelerating economic growth through higher population growth and lower taxes. Net migration is modelled as being 350,000 a year by 2030, with the population reaching just over 30 million. The government’s tax revenue as a proportion of GDP is 10% less than now as a result of lower tax rates. Read more: If you think less immigration will solve Australia's problems, you're wrong; but neither will more[12] Government spending is about 15% less (as a percentage of GDP), with cuts particularly to health, education and social security, but more spending on transport infrastructure. There are no new measures to tackle greenhouse gas emissions, land degradation or other environmental concerns. In our modelling this scenario increases GDP growth to about 2.6% a year, with low unemployment and declining government debt. But it comes at the expense of income inequality and the environment. Even on the one goal it might be expected to do relatively well – Goal 8 – this scenario performs quite poorly. That’s because the goal measures per capita GDP growth, not just the total GDP growth most politicians talk about, along with a range of social and environmental indicators. The following graphs show how the four scenarios compare on real GDP (i.e. adjusted for inflation), per capita GDP, income inequality and greenhouse gas emissions. image Caption here. Cameron Allen, Author provided (No reuse) Sustainability transition With an overall score of 70%, the “Sustainability Transition” scenario is the clear winner. This scenario modelled slower population growth and higher taxes on consumption, income and profits and trade. With net migration of 100,000 a year by 2030, the population reaches about 28 million. Tax revenue as a percentage of GDP is about 8.5% higher than now. This funds more spending on health, education and social security, as well as the equivalent to 1% of GDP on the sustainability of transport, water, energy, agriculture and energy systems. The overall result is economic growth of about 2.1% a year, with government debt 10% higher than our business-as-usual projection. But per capita GDP is higher. Unemployment and income inequality are lower. Fewer people live in relative poverty, and life expectancy is higher. Energy, water and resource consumption is down. So are greenhouse gas emissions. There is more forested land. This delivers a more prosperous, fairer and greener nation in 2030. Read more: Australia has the wealth to ensure a sustainable future, but too many people are being left behind[13] Possible futures These results run contrary to the “growth and jobs” narrative that dominates political debate in Australia[14]. Both sides of politics emphasise economic growth as the key to prosperity. But this narrative is clearly flawed when we look at a broader set of issues. The Sustainable Development Goals seek to capture all of these issues in a coherent way. Our study explores four plausible futures, and there are many other possible combinations that could be explored with worse or better results. What is clear is that business as usual certainly won’t ensure Australia has a more prosperous, fairer and environmentally sustainable society.

References

  1. ^ 28 years (theconversation.com)
  2. ^ being worse off (www.sdgtransformingaustralia.com)
  3. ^ increasing household debt (www.sdgtransformingaustralia.com)
  4. ^ cost-of-living pressures (www.sdgtransformingaustralia.com)
  5. ^ rising wealth inequality (www.sdgtransformingaustralia.com)
  6. ^ climate change impacts (www.aidr.org.au)
  7. ^ environmental degradation (soe.environment.gov.au)
  8. ^ new research (www.nature.com)
  9. ^ Sustainable Development Goals (www.un.org)
  10. ^ CC BY-NC-SA (creativecommons.org)
  11. ^ Australia falls further in rankings on progress towards UN Sustainable Development Goals (theconversation.com)
  12. ^ If you think less immigration will solve Australia's problems, you're wrong; but neither will more (theconversation.com)
  13. ^ Australia has the wealth to ensure a sustainable future, but too many people are being left behind (theconversation.com)
  14. ^ dominates political debate in Australia (www.businessinsider.com.au)

Authors: Cameron Allen, Researcher, UNSW

Read more http://theconversation.com/we-modelled-4-scenarios-for-australias-future-economic-growth-alone-cant-deliver-the-goods-126823

Business Today

3 in 4 fundraisers have experienced sexual harassment on the job – often because of inappropriate behavior from donors

Sexual harassment is a common workplace hazard for nonprofit fundraisers.fizkes/iStock/Getty Images PlusWhile the #MeToo movement that raised public awareness of sexual harassment is making fewer headlines than it did in 2017 and ...

Cathay Pacific 2021 Sustainability Report

New commitments in carbon neutrality and diversity, and supporting the Hong Kong community during the pandemicThe Cathay Pacific Group has released its annual Sustainable Development Report that addresses its commitment and prog...

Cozycozy, is tackling consumer manipulation in the travel industry

With its user-centric algorithm, Cozycozy fights against the Online Travel Agencies' rampant manipulation of consumers’ choices. In 2019, 112.3 million domestic trips and 11.3 Million international trips were taken by Austral...

Foreign companies exiting Russia echo the pressure campaign against South Africa's racist apartheid system

McDonald's is leaving Russia after three decades of operating there.Sefa Karacan/Anadolu Agency via Getty ImagesMcDonald’s provided many Russians with their first taste of capitalism three decades ago. Now, the global fast-f...

Jennifer Westacott's interview with Ross Greenwood

Ross Greenwood, host, Business Now: Joining us is the chief executive of the Business Council of Australia, Jennifer Westacott. Jennifer, many thanks for your time as always. Quite clearly the government is setting out its age...

Business success as Aussie kids skateboard brand, Ookkie, launches in UK and Europe

Australia’s leading kids skateboard company, Ookkie, has set the wheels in motion for global business success, expanding into two new overseas markets thanks to growing demand for its products from ‘skateboard loving paren...

Business Daily Media Business Development

Rishi Sunak's £15 billion cost-of-living package and windfall tax: four experts respond

Rishi Sunak, the UK chancellor of the exchequer, has unveiled a £15 billion package of measures to help households with the cost of living, after energy watchdog Ofgem announced it wou...

Jonquil Lowe, Senior Lecturer in Economics and Personal Finance, The Open University - avatar Jonquil Lowe, Senior Lecturer in Economics and Personal Finance, The Open University

the economic tactics that drive Liverpool and Real Madrid

Liverpool against Real Madrid in the Champions League final is a fixture for football fans to savour – two giants battling it out for one of the most prized trophies in the game. And r...

Simon Chadwick, Global Professor of Sport | Director of Eurasian Sport, EM Lyon - avatar Simon Chadwick, Global Professor of Sport | Director of Eurasian Sport, EM Lyon

Cathay Pacific 2021 Sustainability Report

New commitments in carbon neutrality and diversity, and supporting the Hong Kong community during the pandemicThe Cathay Pacific Group has released its annual Sustainable Development Repor...

Business Daily Media - avatar Business Daily Media

Cozycozy, is tackling consumer manipulation in the travel industry

With its user-centric algorithm, Cozycozy fights against the Online Travel Agencies' rampant manipulation of consumers’ choices. In 2019, 112.3 million domestic trips and 11.3 Million i...

Business Daily Media - avatar Business Daily Media

How to talk to your employer about trauma

Chanintorn.v / ShutterstockThe impact of trauma and post-traumatic stress disorder (PTSD) is a hidden chronic mental health issue in the workplace. A 2016 survey of UK adults found that one ...

Stefanos Nachmias, Principal Lecturer and Deputy Head of HRM Department, Nottingham Trent University - avatar Stefanos Nachmias, Principal Lecturer and Deputy Head of HRM Department, Nottingham Trent University

Jennifer Westacott's interview with Ross Greenwood

Ross Greenwood, host, Business Now: Joining us is the chief executive of the Business Council of Australia, Jennifer Westacott. Jennifer, many thanks for your time as always. Quite clear...

Ross Greenwood - avatar Ross Greenwood



NewsServices.com

Content & Technology Connecting Global Audiences

More Information - Less Opinion