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Second Environmental Economics Round Table Proceedings

Convened by Senator Robert Hill, Minister for the Environment and Heritage, Canberra, 5 July 2000
Environmental Economics Research Paper No. 7
Commonwealth of Australia, 2000
ISBN 0 642 19485 8

Session 3 - Discussion


CHAIR–We have had a tremendous set of talks covering a huge area. Professor Freebairn, you indicated you thought that the introduction of green taxes, which change relative prices to bring them more into line with our social preferences, would have no aggregate employment effects. While that might be true in the long term, the experience over the decade and a bit of micro-economic reform seems to suggest that at least in the short term there are significant problems of structural adjustment, particularly for the older unskilled and those in regional rather than major urban economies or the peri-urban/urban fringe. Do you feel that you are just abstracting a little bit from the stickiness of some of those responses–that we do not clear those markets quite as readily as our textbooks would assume?

Professor FREEBAIRN–You are right. Textbooks do work better than the real world. I guess we do know something about it. If we think of some of the Productivity Commission inquiries, particularly surveys of people who lost jobs in the textile clothing industry, with those stories after two or three years about 50 per cent of the displaced people have been retrained or have another job. That leaves 50 per cent who do not do well out of it. Quite of lot of them just leave the work force. I do not think we know whether they are happy or unhappy. Then there is another lot who are unemployed. Certainly the structural changes in moving from the polluting industries to the non-polluting industries will cause some structural unemployment and this does raise issues of what you will do in retraining and assistance and so on.

The other thing that is important, though, is: just what is the mix of people who win and lose jobs? There is a very quick assumption that this is all bad for low-skilled people. One of the stories that comes out is that some of those industries that expand also hire a lot of unskilled people. The classic is: when you cut down textiles and motor vehicles, one of the industries that gains out of it is the agricultural sector. Quite a lot of low-skilled farm labourers get jobs who would not otherwise have got a job. Again, there is the growth of the service sector, as in Jim’s Lawn Mowing and all that sort of thing. So it is not quite so clear that it is adverse in terms of the skill mix.

I guess you could rightly argue that in many cases these pollution taxes, particularly when they are agricultural, are going to be regionally biased. It may well aggravate the regional crisis that we have. On the other hand, to be quite frank, I think this rah-rah business has been overdone. Some parts of the bush are doing badly, but other areas in the bush are doing very nicely, thank you, and a hell of a lot better than some parts of the urban cities.

I accept your point that there will be some structural unemployment, and that is a serious problem. But I am not convinced that it will be all that adverse regionally and skill-wise. However, in selling the story we ought to be cognisant of that. You might even have to bribe people with appropriate compensation schemes for those who are seen to lose.

Dr WILLIAMS–The thing that strikes me about the conversation we are having is that–maybe because I have not got my head inside what is going on in Australia–there has not been a lot of discussion today about establishing what clear outcomes you are trying to achieve. I know that has gone on at all sorts of levels, but I find the dialogue this afternoon difficult in the sense that: what are your big ticket items? Roger, you started off talking about biodiversity, water qualities and so on. But have you as a nation set some clear targets and goals? I guess I am focusing on the targets and goals in order to achieve certain things. They give you something to shoot for. Several people have talked about visions.

It seems to me that a useful discussion we could have to build on the four presentations, is about measuring the progress towards some of these things. Quite clearly, I am hearing you saying you have to invest a lot more in the ecosystem services of your nation. That is invest in what is underpinning your biodiversity. Lack of such investment is why Adelaide is worried. They do not like salt in their water; they prefer it on their fish and chips. At the bottom of all that though is: what is the level of investment in educating a nation about the whole business of a sustainable existence? It seems to me that we are all grappling (we certainly are in New Zealand) with: how do you actually empower a whole nation to think differently about something? How do you put in enough building of understanding to do big taxation shifts which, as John was quite rightly saying, we need to have a go at? It has been absolutely fascinating watching the debates over the introduction of the GST here. I think there is an enormous opportunity to unpick how you educate a nation to make that sort of shift. Listening to the taxi drivers over the last two years in your country, spreading mythologies about what this tax is going to do to you, and then reading the papers over the last two days, it seems to me that there has to be an opportunity to learn something about how to educate a nation about a green taxes regime. This is something we will have to grapple with in the next couple of decades.

I throw it back to you Roger, as head of Environment Australia and with the other departments that are in this patch. There are two things. Firstly, there is the whole education component to make this happen. Secondly, can you build some monitoring into the GST debate so that, when we have enough political courage again somewhere in the next decade to make the greening tax shift that both Australia and New Zealand needs to take, we can say this is what we need to do?

CHAIR–I think that is a really useful comment. We have expressed some national-level goals. For example, with the Natural Heritage Trust, we talked in terms of no net loss of native vegetation by the end of the trust period. In terms of greenhouse, we have goals that we have committed to in Kyoto. On the educational front, the minister is pushing an environment education foundation. But we do have to make these more explicit and we do have to get more comprehensive ownership of these goals and commitments on natural resource management. This is recognised also by our State governments. One of the benefits that has flowed from the recognition of the slow-moving, impending ecological disaster of the Murray—Darling Basin has been an agreement between the Commonwealth and the States to put together a paper on natural resource management. Gary’s team have been working with us on that exercise. One of the points that we as officials think is important is defining some national-level goal statements for natural resource management–what is it that you can use as the beacon on the hill to begin to work towards? Ian, would you like to comment on that? Gary, you might like to say something as well.

Mr DONGES–I have a couple of comments and I want to ask a couple of questions after that. I think it has been an extremely interesting session. The concentration on land clearing is something that gets under my skin a little bit, because there is really only one State where this is an issue and that is Queensland. In the rest of the Australian States, of course, land clearing is not an issue; in fact, revegetation is happening. That is something that is part of the change in culture, in addressing the evolving ecological problems we have in this country.

The area that I would like to concentrate on–and it is one that is very important to agriculture–is the way that we can structure government incentives to help the environment and help address environmental problems which we all talked about. We have had virtually all those put on the table by the speakers this afternoon. I would just throw it back to those speakers: how would you prioritise the incentives that government can bring to the problem as being perhaps the most effective? I am asking, as an economist, to try to hone that down. I did not hear a lot about taxation incentives in those discussions. I thought the auction system was quite neat. We had some government contributions there in setting some goals and outcomes; I thought that was pretty good. Regarding John’s comments about perhaps some environmental tax on this side, I presume he would come around and offer incentives on the other side to address the problem. I would like to throw that one back again and see if we can hone that down a bit.

CHAIR–One of the problems with farmers is that they do not pay an awful lot of tax. That makes it very hard to use the tax as a very effective instrument.

Mr DONGES–Exactly. So I am talking generally.

CHAIR–First of all, Gary, did you want to add something on the NRM issue?

Mr STONEHAM–I make just a couple of points. We do have some national goals, for example, greenhouse. We have some other perhaps less clearly stated goals. From my perspective, the problem is how to achieve whatever goal we do set. The other problem with setting goals is that we are in this dynamic loop where as incomes go up, demand for environmental services goes up. We have to think of the future generations in setting these goals. This becomes a very complex problem. This is an area that does need more work. Brian, your people are looking at some of these questions of what are the optimal levels of revegetation in various catchments. That sort of work needs to be done to at least get some general sense of where we are going. I do not think we can be that specific, though.

CHAIR–In a sense what you are saying is that it is very hard to talk about a national goal on salinity or on vegetation. What might make sense is talking about a system that facilitates you making those sorts of decisions in a sensible way, looking at the economics and the science of recovery and of prevention–almost catchment by catchment.

Dr BYRON–Another element in response to Morgan’s question is that, unlike New Zealand, we have a constitutional issue. This is really relevant when so much of natural resource management is a State responsibility. The national strategy for ESD that all governments signed onto in, I think, 1992 had a lot of those objectives and goal statements and even mechanisms for getting much greater public support–education, and so on. But it seems to me there was not a great deal of subsequent follow-through on that. I often wonder why. If there are difficulties at a national level in getting interest in sustainability and natural resource management to have a broader constituency than just an environment department–to also carry Treasury, finance, industry departments, primary industry and so on–those sorts of difficulties are even greater at a State level. In the national strategy for ESD, with all its goals and targets, a lot of the on-the-ground responsibility fell to the States. I can think of all sorts of reasons why the States were not really in a position to pick it up. The Commonwealth has income tax as a policy instrument but, as we have said, an awful lot of Australian farmers have incomes so low that tax deductions are useless. The other thing about tax is that you can get deductions for income-generating expenditure but conservation and resource improvement activities are not going to be deductible anyway, even if you do have a taxable income.

We have tax policy as a federal instrument but we do not have many instruments at the State level. At the local government level you can have property tax rates rebates. But there are relatively few instruments, apart from what Gary has been talking about, where the States could actually buy in and have a very active role. I think a lot of the responsibility and impetus really has to come at a State level.

Mr YOUNG– I was trying to make the point that one way of thinking about the goals is to realise hat they are the sum of all catchment plans. We need to have operational goals that are measurable, at a catchment and even at a sub-catchment level. The biggest problem I have found in looking at the accreditation work we have been doing is that the planning process is very flawed. This is a bit unfair and a bit simplistic.

At the moment, plans tend to include ambit applications for funding by government. There is a real institutional problem here. We do not tell the people who are responsible for putting the plans together how much money they are going to have. In the world I work in, when I am told to put a plan together, I am also told what the budget is. I am then expected to plan accordingly. There is a real need for an institutional mechanism that makes it quite clear to the people responsible for preparing these plans how much money they can expect to get–up front–so they can put a serious plan together, Ministerial approval should be expected. Too many plans, today, contain ambit claims and, as a result, still have to be approved.

The reason why I think it is very important to have the tax concessions for biodiversity that I outlined in my paper is that many of the most threatened areas in Australia are located around our cities and up and down our coast line. We are talking here about land which is owned generally by people on very high incomes and by people who are not part of Australia’s farming agricultural landscape. These are people who own rural retreats and who own land that is sought after for development. Tax incentives offer a powerful means to influence in these areas because the people involved pay a lot of tax. You need to average the value of a donation over five years so that all tax benefits can be considered,.

Mr BILLSON–Listening to the contributions, I think one thing that becomes very clear is that the solutions do not rest within one political cycle. When you are talking about institutional barriers, further tax adjustments, and a shared vision–which is something I think we lack; we have a lot of visions but they are not shared by everybody and that always presents a bit of a challenge–I wonder whether there is a meta-theme we should be working on. That is, mobilisation of broader public opinion–to stick it out, to work through some of these issues, to bring it down to a point where it is discussed around the dining room table over dinner. At the moment, we talk about how the unemployment rate is going and how the GDP is going, but we should be recognising that avoiding a car accident in the first place is actually a virtue in GDP terms when it is probably a more valued outcome for the community. Where is the work at when it comes to those sustainability indicators–trying to bring some of these ideas together in a way that the ordinary punter in the street can see whether we are travelling better or worse, whether the billion and a half we are investing in the Natural Heritage Trust is delivering outcomes that justify further investments, and those sorts of things? Where is the best thinking at the moment in getting regular people to stick out the journey and hop on and be prepared to work through some of these adjustment issues, many of which are quite difficult?

CHAIR–One of the challenges in all of that–and we have seen this with the mid-term review of the NHT–is that the changes on these big biophysical systems take a long time. Just as it took 20 years for Mike’s salt to reach Adelaide, it takes a long time to begin to turn these systems around.

Mr BILLSON–It is Mike’s point precisely. If you are getting 12 months’ funding and you know you need a 15-year commitment to make a difference, you are looking for gestures of that magnitude to get people involved. I am wondering how we are mobilising broader public opinion to make sure that we do not revisit.

CHAIR–We have seen some of that over the last several months, in part through the pressure that the Minister has helped assist and build, on problems in particular of water and soil degradation and biodiversity loss. At least the newspapers are now carrying stories about that almost every day of the week.

Mr BILLSON–Andre might know of how the Swedish national efforts translated into GDP and something else–letting the folks know how you are travelling.

Mr HEINZ–It was very useful to raise public awareness in Sweden about 10 years ago. It helped to create an attitude of inquiry and concern on behalf of the general market. People started asking tricky questions of politicians and legislators, as well as of the local companies and municipalities. One of the goals of the big education movement we had in Sweden back in 1989 was to try and respond to the seemingly endless debate surrounding what the problems we are facing are. Is there or is there not global warming? Is there an ozone problem or not? People would fight and fight and fight about it, and nothing ever got done. So, in conjunction with a lot of effort, our education effort really made a difference. But I would say that was not enough. With the little I know of Australia, I would not feel comfortable saying that Australia is back where we were 12 years ago. Since the early 1990s, with the Rio earth conference and everything, the level of the debate has changed quite a lot–it has improved, if I may say so–but action has not really followed suit.

One of the critical factors for success that we have identified is working with players, be they municipal, government or corporate, to try to understand: then what–what do we do next? Now that we understand a bit better what sustainability is, how do we do something about it? I actually agree a bit with what I think Morgan was getting at when he talked about how the goal still has not been defined. To me, what has held back any sort of concrete sense of, ‘Okay; we know what we are doing Monday morning,’ from this meeting is not a lack of the will of the people. I have been floored by the open-mindedness and the preparedness of everybody around here. I was not expecting public servants to be as on-board as I have witnessed here today. I do not suspect that that is the problem. From what I have been reading and hearing, the farmers in Australia know full well the problems of salinisation, water logging, clearing paddocks, and so on. To my mind, it is a question of first identifying what you are trying to achieve in concrete terms. The big difference between that and saying, ‘We want to be sustainable,’ and there is a big difference between saying, ‘Sustainability is just resource management,’ and, ‘Sustainability is a slightly larger picture.’ One of the problems you might run into, if you only define it in terms of resource management, is overlooking something that might come and bite you in the long term. For example, you could take care of your agricultural areas and your forests really well but pay no attention to what is going on in the mining sector, say, or in your perhaps soon-to-be-blooming chemical sector should you ever decide to develop one. What are you doing today that is preparing you to think, deal and legislate properly for that tomorrow?

Our office here does focus on trying to educate the Australian public with some unique distance learning programs. I would challenge all of you to ask yourselves: what is it that you are really trying to achieve, concretely? Then you can look to see as to whether or not ecological tax reform, which I am a personal champion of, is being properly implemented. On the list we saw ETR–ecological tax reform–relating to greenhouse gases, but there are other issues than just the greenhouse effect that you need to be careful of. Resource management and greenhouse gases are all based on effects that we have witnessed in nature. No-one seems to want to distinguish between the fact that we are responding to effects rather than trying to head them off at the pass–thinking upstream. You see the difference? In other words, do we want to levy a tax on people because we start seeing increasing mercury poisoning in the population or do we already know that mercury poisoning will occur if mercury is allowed to accumulate in nature? Can we levy a tax on it now, before it becomes a problem? It is the same thing with the greenhouse effect. To my mind, if you are doing smart policy, you try to think in terms of that as well as downstream mechanisms.

Senator HILL–I wanted to say something on taxes. John is right: we are all taxed out at the moment. We have reservations anyway. You say: you could introduce a tax on tourism. We have an environment management charge on usage of the Great Barrier Reef. It is basically a fee charged against industry, which they on-charge to tourists that travel out to the reef. It provides a revenue to government but it does not provide any sort of leverage towards better behaviour. The leverage towards better ecological behaviour is through other means. It is the whole set of rules and regulations that we have as to where they can take tourists and what they can do with them. It is to do with the education of the groups of the industry. It is to do with the industry’s own public awareness that good ecological practices are an important asset of its industry. These are a voluntary contribution towards better behaviour, as well. But the tax in itself does not contribute directly to a better environmental outcome at all. You could say: if you put that tax on at a huge rate, it might stop some tourists from going. But that to me is a very blunt instrument. It is not the number of tourists that are going that is the problem; it is how they behave when they get there.

Our opposition to a carbon tax is not dissimilar. I think a moderately priced carbon tax would have very little effect in outcome, in our circumstances in Australia. It might be a good revenue source but, in terms of leading to changes of behaviour in relation to emission production, I do not think it would have any effect. If you put it up so high that it does have an effect, then what you are doing is you are then attacking an area in which we have a competitive advantage. The Australian economy is an energy-intense economy because that has been an area in which we have had a comparative economic advantage over others. That is why the Europeans, with small distances to travel, are very keen on putting a new tax on airline fuel and why we are not so keen. The Europeans are not frank enough to acknowledge the economic differences to different markets. We think there are other, much less blunt, instruments–some that were on the board–a whole suite of instruments that can give us a better opportunity to achieve the greenhouse targets that we are committed to at a lower price. We believe economic competitiveness and a strong economy is a key to better environmental outcomes. It is not necessarily a cost to better environmental outcomes.

In relation to land clearing, putting a tax on future clearing in areas that might be cleared is not necessarily going to produce a better outcome in relation to salinity, because the whole issue is what land is being cleared, where it is being cleared and what type of land is it. The understanding of what is necessary for the sustainability of that particular property or region is really the core. Then I think you need a range of incentives and disincentives to try to modify behaviour to achieve the best environmental outcome in that regard. Good environmental outcomes have been shown over time to lead to your best chance of a good long-term economic outcome, as well, in terms of sustainable production. I cannot see that just to put a blanket tax on future land clearing is going to achieve that better outcome. Carbon tax in particular, but ecological taxes generally, may still have a place somewhere, but I wonder whether they have really been overtaken by more innovative ways of influencing behaviour at a lower cost.

Mr MUNCHENBERG–I just wanted to go back to something that Morgan mentioned and Andre has also covered, and that is the need for a clear idea of where we are heading. We have certainly got national goals on things like land clearance and greenhouse, but I think there is a lack of a view of what a sustainable Australia would actually look like, and a view that it has wide ownership from business, government and the community. I think that is a very important step towards dealing with a lot of these issues rather than trying to deal with them in isolation on an issue-by-issue basis.

Mike Young’s reference to the Hilmer report was interesting. If we look back at competition policy and why that was so successful, it was because it was able to raise a lot of issues that were thrashing about at a time at a higher level. There was that agreed goal of: we need a competitive Australia. People could sign on to that. From that you were able to work back as to what steps need to be taken to achieve that. That is something that needs to be seriously thought about in the area of sustainability.

Mr STILLER–I would like to raise two issues. First, on the targets: Germany does not have any targets directly. It was on the agenda but it has been withdrawn due to the change in government. Our neighbours, the Netherlands, have an environmental action plan with targets for 2010 and 2020 that are quite ambitious. The results are an encouraging indication that such a system works. Of course, the Netherlands is smaller than any State in Australia, so you cannot directly take the same issues on an Australian level. But I think to first try to find a consensus among different stakeholder groups in society on what are the goals for environmental policy in a long-term perspective will be very fruitful. The next step is this link from the discussion about the goals to what kind of instrument is best to achieve these goals. This is much better than if it is mixed, because otherwise the discussion about the instrument is going to be in effect about the targets.

Concerning taxes, our experience is not so encouraging in Germany. We have had tax reform, but you can clearly see that this is biased by revenues sinking and optimising in some respects. It is not ecologically optimised; it is other priorities. I would also like to stress that you should keep in mind, if you discuss tradeable permits and taxes, what John did. That is, that tax is nearly the same as tradeable permits in economic modelling. I think you should not forget that its institutional costs are quite different. Imagine, for example, if you have an auction system. You would have to establish it in a similar way to a central bank, like the Fed in the US or the European Central Bank in Germany. You have to first establish legislation and afterwards the governor of this environment permit bank would be more or less free as to the way to achieve the target. This is completely different from changing tax laws. Tax laws always have to go through a parliament and are part of the political debate. It is much simpler to establish a goal and set up an agency to run this auction system or the tradeable permit system than to be always changing the tax law. Therefore, I think we should discuss not only the theoretical economic issues but also all the practical advantages that a permit system would have, as against a tax.

Mr HEINZ–I agree with Senator Hill’s assessment of some of the shortcomings of an ecological tax reform system, in particular the one about tourism. It is not tourism per se that you are trying to limit but the negative effects of poorly managed tourism. Just taxing tourism does not actually change that. But it can have roles–for example, with fossil fuels–if the tax is high enough.

Senator HILL–Then we would go broke.

Mr HEINZ–But there are other mechanisms you can use to make it politically saleable–and here is the challenge–you can do revenue-neutral tax shifting, which is another way of saying, ‘Why don’t we shift the taxes from the goods to the bads?’ Tax the pollution, take away subsidies and tax resources, but reduce taxes on things like income–which we purport to try and encourage people to save–so that at the end of the day people are not paying more. Instead, you have actually placed taxes into the market so they have the opportunity of going down, unlike with income tax. The problem for government is that a revenue stream might begin to dry up over time. But that is a good sign that you are being successful, if that happens.

Dr WILLIAMS–Just to build on that point: the New Zealand Business Council for Sustainable Development ran a workshop over two days in February this year. There were nearly 50 people involved. One of the rather surprising outcomes at the end was a consensus in the group that at the end of the day we are going to have to undertake exactly the sort of tax reform that Andre is talking about–somehow. One of the commitments of the group was that they would try to facilitate over the next two or three years some substantive research work on what some of the tax models might look like and, more importantly, what some of the really big transition issues would be from our current systems to a future system. I would say: watch this space; it could be useful.

Dr FISHER–I might stay away from tax reform because I am a bit taxed out as well. Just coming back to this whole question of goals and how we should set those and how important they are, obviously broad goals are important but I would be a bit concerned if we were to come away from this meeting with a notion that we would try to set out what is the meaning of a sustainable Australia, given the enormous complexity of what the Australian continent is. We have been wandering around talking to farmers, particularly those involved in the Landcare movement. For those who are not familiar with it, the Landcare movement is locally-based farm and community groups of people trying to solve local problems. One of our observations is that the Landcare movement has been a very powerful means of getting local individuals involved in environmental issues in Australia, but a fair few people are becoming a bit tired of that process. There is a bit of churn now turning up in Landcare membership. That is all being driven by the fact that a lot of these people have been going to a lot of meetings for a long time and not achieving very much. It seems to me we have to balance this question about looking for broad goals with actually getting something that is achievable and getting some runs on the board for local communities. There is in fact a balance between trying to set these broad goals and actually setting up some things that you can do in local communities and getting some runs on the board.

If you have a look, for example, at the Murray—Darling Basin and the problems we face there, they are enormously complex. It is simply not a system where you can say, ‘We have a black box. We will have a look at the out-turn of saline water at the bottom of this farm and we will tax the individual on that farm,’ because it is almost certain that that farm is not the problem. You have the potential to set up all sorts of disincentives, in fact, by implementing a textbook solution. I am quite fond of these textbook solutions, John, as well, because they are a hell of a lot easier to talk about than the real world. We can learn a bit from those things but I think we need to be very cautious about the way we implement textbook solutions in real world problems like the Murray—Darling Basin.

I think the real question is: how do we get enough science involved in the process, identify two or three big issues that we can get local people involved in, and get on with it today–whilst keeping these longer term goals in mind but not spending too much time on them. We need to actually keep people involved today and now.

Mr HEINZ–I have to take issue with your analysis. I agree with a lot of your points on how to deal with the local specific issues, which are different from one side of Australia to another, but I do not think we can say that broad goals prohibit us from action. I do not think that we cannot come to some sort of consensus in concrete terms about what needs to be done across Australia. What is sustainable for here must also be sustainable for somewhere else, even though they are different. We cannot talk about a sustainable Australia but at the same time talk about an unsustainable earth. The task for the scientific community–which is not actually a monumental task if you ask the right questions–is to first say: what are the things that minimally must be met from a scientific perspective? It is not a question of long term or broad; it is just a simple question of what are the principles. Then within that frame you can say: how do we apply that to this location? How do we ensure that this ecosystem is not destroyed–if we understand that one of the principles is that we must have sound ecosystems? The reason it is important is that, when you start using the same language across society for Joe cab driver, for CEO of a company or for regulators, then you can have conversations that produce results. In Sweden our biggest problem was that people did not have a common dialogue. Our experience, in all the countries we are working with, is that it is producing the most amazing results–from South Africa to America to here. That is my issue.

Mr YOUNG– I will first step back and say that Brian is very right. In the modelling that CSIRO has been involved in, if you plant trees in some areas, what you do is you stop water run-off and you actually lower water yields. This means you then have to cut back on irrigation allocations because the water that is available for irrigation is less and the water in the Murray is less. It also means that salt concentrations may be higher in the water that is left, Simple naive schemes start looking very scary, because you can actually make the situation worse by following simple instructions and just ‘plant trees’ Anywhere. You can plant a lot of trees and make no change at all on an aquifer. You have to know where you are planting them and why.

The question I was going to ask was about the question of who sets the goals, if they should be set and what process should be used to set them. At the end of this morning, Paul raised issue of alternative institutional arrangements. We really have to think very carefully about what is the right process to go through in articulating these goals and whether it should be done through a government process or through an independent structure. One of the things that I think was very important in the Hilmer approach was that the report was written by a person, who really pulled all the concepts together. He consulted very wisely and very carefully and then put a clear set of recommendations and principles out for discussion. It was a paper that stood on its merits. It was written by one person without filtering by all sorts of people who tried to water it down and adjust it. The challenge was to put down a statement which was so good it would stand on its own. It was something that other people would be keen sign on to–simply because it was good. This is the challenge. I am looking for a process that will produce a set of goals that are very simple.

We have a problem at the moment with all the indicators being put together. Every time I look at the work being done, I drown and groan at the number of indicators used. I think that there is a need for about five or six indicators, or perhaps 10 at the most. Indicators that are very easy to understand, that can be discussed around a kitchen table–rather than having lots and lots of statements that are all over the place and are all so qualified they do not mean anything. The challenge is to set up a process that puts the goals together, identifies some really good targets and then has some bottom line operational rules that will really help people work out what will happen in any one area.

CHAIR–That is a tremendous question, in a sense, on which to close without an answer, because we can all go and think about that. This has been a tremendous day. We have moved from the frontiers of technical possibilities and thinking possibilities with Amory Lovins through to the importance of goals and turning those into an EMS system, with Andre and Hartmut’s presentations, and then some excellent papers this afternoon on economic instruments and how we might use them. The three years since the last round table have seen a very significant increase in the sophistication and a much larger number of stories about application of these sorts of techniques. It has been a thoroughly fruitful discussion. Thank you all very much.

Senator HILL–I would like to also thank the officials who organised this round table.