A sustainable future will require policymakers to deal with issues in a much more transparent, innovative and integrated manner than has been the case over the past few decades.
Without broad behavioural and socio-economic change complementing its capacities, technology will not deliver a superior quality of life for the many more people on an Earth depleted of much of its natural resources. And what will be the role for technology in dealing with the social equity issues which will continue to divide humanity? Already we have a global dichotomy evidenced in OECD countries grappling with the challenges of fertility decline, aging populations and unhealthy lifestyles while the developing world continues to battle enduring poverty, high fertility rates, and entrenched disadvantage.
On the other hand, Marshall McLuhan’s notion of the ‘global village’ might yet become a reality because of increasing social and personal mobility and digital communications that promise to universalise the range of services, products and experiences available to consumers wherever they may be. The downside is that this looming convergence of the digital and natural worlds also threatens to further disassociate humankind from its natural senses as lifestyles become subsumed in the virtual experiences of the ‘I World’[vii]
5. Economics and finance is all short term focus
It is incredibly difficult to persuade people to prioritise longer term concerns on their personal and political agenda. Short term thinking pervades everything and short term gain dominates political, commercial and investment thinking. In Australia we have $1.3 trillion in superannuation funds, too much of which is invested in equities (public companies) from which funds managers expect returns on a 3 monthly basis. Of course if we were to be efficient in our approach to the future and underwriting of sustainable development, we would need a financial and investment sector capable of looking beyond the next three months as the horizon of its focus.
Australia’s superannuation industry is the type of vehicle that should be providing patient capital, yielding long term value. Instead, we have a financial sector that is totally at odds with sustainability. It is short term focussed, overly reliant on the performance of equities and demanding of public companies that they focus on investments that ramp up the price of the stock. The risks of gain and loss are obvious in any cyclical market that is both non-rational and unpredictable. An analysis of the recovery times of the All Ords Index after serious declines shows that it takes at least five years to make up the losses of a crash. It took more than 8 years for the market to recover from the 1987 crash and in 2012 we are still less than 70% of the way back to the prices of early 2008 or the 5000 index mark where it was before being pummelled by the three crises of the US sub-prime mortgage collapse, the resultant contraction in global banking liquidity and the ongoing ravages of a two generations of unsustainable European sovereign debt coming home to roost[viii].
But still our superannuation funds keep punting on equities in preference to infrastructure and the other forms of capital likely to ensure sustainable development of Australia well into the future. This year is no different to any other. So far this year (late October) shares on the All Ordinaries Index are up 13% as investors seek to reap profits from high yielding stocks.
An international economy configured on short term speculation by its finance sector and levels of credit which ignore the basic principles of risk is unsustainable. As far as private sector credit is concerned, Australia has been far more prudential than most other OECD economies with private sector credit here as a ratio of GDP being still well below 150% – in contrast to the US, UK and some of the euro economies where it nears or even exceeds 200%.
6. Household debt constricts the interest of the mortgage class
The short term focus is reinforced at the average household level by another anti-sustainability driver, namely burgeoning growth in average household debt. In a country that otherwise shows a prudential approach to personal credit and market risk, Australia’s housing sector presents a challenging exception that significantly impacts on the quality of life of young metropolitan Australians.
As a percentage of disposable income for the average Australian household, debt has increased from just less than 40% in the 1970s to 150% in 2012 – and the main cause of that increase is the insane price of housing in a country with more space for new housing than just about any other country. According to Moodys, household debt in Australia exceeds that of equivalents in the US and most OECD countries with the exception of the UK and Denmark[ix].
As well as planning policies that have pushed young home buyers to the urban fringe, we have a wealth accumulation culture grounded in the preferential tax treatment of housing. While it suits we baby boomers who have built a sizeable ‘nest egg’ through inflated housing prices, the housing scene in Australia cannot be described as sustainable for all manner of reasons starting with social and inter-generational equity and extending to economic and eco-efficiency. Transport joins education and health as core life functions which cost more today as a proportion of the average pay packet than they did back in the 1980s[x].