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"Accounting for our natural asset base"

A speech by the
Federal Minister for the Environment and Heritage
Senator the Hon Robert Hill
to the Australian Industry Group's
"Australia@world" Conference

Canberra, March 6, 2000

Australia and its people are competitive by nature. And there's nothing we enjoy more than competing in the global arena.

For example, our cricketers this week are in New Zealand, our national soccer team is in Europe, our rugby union sides will do battle against clubs from South Africa, while our athletes and swimmers continue to prepare for the greatest of all competitions in world sport - the Sydney Olympics.

Not surprisingly, this competitive urge is shared by Australian industry.

Increasingly our companies are looking beyond state and national boundaries and are seeking to compete in the global market place.

Certainly profit has been a key motivating factor in this trend - but I'd also like to think that that Australian competitive urge is also a force at play.

Australia is a part of the global economic environment.

The title of this conference Australia@world and its connotations of the rapidly changing world of the internet and the burgeoning opportunities of e-commerce is yet further confirmation that Australia cannot afford to turn its back on the world if it wants to remain strong, independent and competitive.

But Australian industry needs to come off a strong domestic base if it is to compete successfully in the global marketplace.

The Howard Government has played its part with policy settings which have delivered a fundamentally strong domestic economy, returning the Budget to surplus and providing a low interest rate-low inflation environment for business to operate in.

Australia has successfully weathered the Asian economic crisis with the latest figures showing our economy still moving ahead at an impressive growth rate of 4.5 per cent.

So the domestic economic outlook is good, which should give Australian industry greater confidence to compete in the global market place.

But in considering our place in the global economy, we must also pay heed to an issue of both domestic and global importance - the environment.

Reliable surveys show that almost three-quarters of Australian people believe that protection of the environment is of equal importance to economic growth.

The international community, through mechanisms such as the Kyoto Protocol on Climate Change, has also signalled that the environment must be central to the economic decisions taken by individual nations.

While placing a strong emphasis on getting the economic fundamentals right, the Howard Government has also established an impressive record on environmental issues.

For example we have set up the Natural Heritage Trust which has already invested $700 million in about 6,000 projects across Australia.

We have overhauled Australia's outdated environment legislation, produced the world's first National Oceans Policy, and taken a world-leading role on conservation of marine wildlife.

We are investing more than $1 billion in greenhouse gas abatement and air quality measures and, in fact, are more advanced in our domestic response to greenhouse than most other developed nations.

Australian industry, I believe, has also heard the growing public calls for environmental responsibility to match their desire for growth.

Each year our industries commit billions of dollars in capital expenditure to keep themselves ahead of the game in an increasingly competitive market place.

This usually involves major investment decisions relating to either new plant and equipment, or the maintenance of existing capital assets.

Industry's competitiveness in global markets is greatly influenced by the success of these investment decisions.

Of course, there would not be a company in Australia making such decisions without having put in place both internal and external accounting procedures.

Building and maintaining the capital base is a basic discipline of modern business.

Without wise and prudent decisions on capital investment, and without an on-going commit to maintain and upgrade those assets, a company will not survive, either here or in the global market place.

As we enter the new millennium, the Howard Government is committed to supporting and promoting the introduction of a new business discipline - environmental accounting.

As I said, companies are making decisions on a daily basis to protect and maintain their capital assets.

Companies need to understand that they must show the same level of commitment to protecting and maintaining the natural asset base upon which they depend.

Decisions regarding natural assets can be viewed as being decisions relating to inputs of natural resources and outputs of waste and pollution.

In terms of inputs, if an industry doesn't adopt sustainable practices in the use of natural resources, the resource runs out, the industry folds.

In terms of outputs, if an industry has no regard for the levels of waste and pollution it generates, the industry loses competitiveness through higher costs, but we all lose from the damage to our natural environment.

And in that regard, the decisions of one industry can impact on the fortunes of another. Our tourism and agriculture industries, for example, rely heavily on Australia's international image of having a clean, pollution free environment. Our push for financial companies to base their regional operations in Australia also relies on that same image.

Environmental accounting is a business discipline which can help ensure that the decisions we make regarding our natural asset base are both sound and sustainable.

Australian industry cannot compete in the global market place without a sound capital base. You can't win tomorrow's markets with yesterday's technology.

But we also cannot afford to ignore the reality that industry will ultimately fail if we pay no respect to our natural asset base.

Fortunately, there is a growing awareness among all industry sectors that better environmental performance can translate in a better bottom line both through savings on production costs and improved consumer support.

Again, that Australian trait of competitiveness has come through. We now see companies trying to outdo each other not only in terms of profit performance but in terms of environmental performance.

Australian companies have embraced programs encouraging cleaner production and waste reduction - programs such as the Greenhouse Challenge for example.

The Commonwealth has played an important role in promoting these programs and their success in changing the way Australian industry does business has been encouraging.

An example of this new environmental attitude was the recent launch of the National Pollutant Inventory.

The Inventory is a database which allows all Australians to check what is being emitted by industry and other sources into their local environment.

It is an opportunity for companies and industry sector to assess its environmental performance against others, identify problem spots, and set about implementing solutions. As I mentioned earlier, these solutions can often deliver economic benefits through lower production costs.

More importantly, it is an opportunity for industry to build confidence with the communities within which they operate.

Australian industry has seized these opportunities and actually went beyond what was legally required of it in the first year of Inventory reporting.

The concept of the National Pollutant Inventory had been talked about for years. The Howard Government was able to make it a reality by working cooperatively with industry and the States.

In urging you to do even more to improve your environmental performance, the Commonwealth intends to continue to that cooperative rather than coercive approach.

There are new opportunities being taken up by Australian industry to build confidence with their consumers and the general public.

The concept of public environmental reporting is just one effective and practical way to provide greater transparency and accountability to a company's activities.

Already around a hundred Australian enterprises have published environmental reports.

Western Mining Corporation, for example, is just about to release its fifth annual environmental report. In the preparation of their reports they consult broadly with the community and other stakeholders and have their reports independently verified. They have even gone on now to report on community and social issues.

Public environment reporting serves as an internal check on the eco-efficiency of a company's operations. It can be used to identify inefficiencies within the production process and opportunities to reduce waste and input costs.

It can also raise staff morale, giving them confidence in their own health and safety and the knowledge that they are not impacting on the community

Reporting can also help to create market opportunities in 'green' products and services. This is of particular relevance to companies seeking a competitive edge in global market place.

And most importantly, it provides an internal discipline which can help ensure the sustainability of a company's operations by protecting the natural asset base.

The Howard Government is determined to build on the successful partnerships we have already established with industry on environment matters by assisting in the uptake of public environment reporting.

As many of you would be aware, we decided to take a lead on this issue by funding and directing the development of a national framework for voluntary public environmental reports.

I have the great pleasure of being able to officially launch that framework today.

This framework - developed by a team comprising the Snowy Mountains Engineering Corporation and the Australian Industry Group - will assist companies to develop their own public environment reports.

Issues covered by the framework include:

To support and promote the framework the Government will sponsor three environmental reporting extension officers, one each with the BCA, ACCI and the Australian Industry Group.

The extension officers have been funded by the Commonwealth with contributions from the participating industry associations. I'd like to thank the Australian Industry Group for your contribution and cooperation in setting the program up.

These officers will be with these organisations for a period of twelve months and will work directly with businesses to assist them with environmental reporting. This will include workshops and seminars to increase the understanding of business of the requirements and benefits of public environment reporting.

One issue they will be addressing is how small and medium sized business should tackle reporting. The benefits of environmental reporting are not necessarily restricted to big business. However, a different and less resource intensive approach is required.

The Government will also be sponsoring a public environmental reporting award through the Banksia Environmental Awards. This will help raise the profile of environmental reporting in Australia and reward those who have shown excellence and commitment in this field.

In introducing a public award I have no doubt we'll be tapping into the competitive spirit of Australian industry.

As I mentioned earlier, that spirit has seen Australian companies performing strongly in the global market place.

They have used a solid domestic economic base as a launching base for their global enterprises.

They have also used our wonderful natural resource base and benefited from our clean and healthy natural environment.

Public environmental reports are a valuable tool for Australian industry to ensure that it pays due respect to that natural asset base.

It is the next logical step in ensuring that the environment is a key consideration in all decisions relating to industry.

No company hoping to compete either domestically or internationally can allow its plant and equipment to fall into a state of disrepair.

It's time to start adopting a similar approach to our natural environment.

Sound and sustainable environmental practices are the very least that could be expected of a wealthy, developed nation such as Australia.

Our contribution to a better global environment begins in our own backyard.

Issues such as greenhouse, the hole in the ozone layer, and ocean pollution are proof that the environment does not respect national boundaries or the vagaries of global market forces.

Australian industry does have a national and global responsibility to perform and behave in an environmentally sound manner.

Our work together on issues such as the National Pollutant Inventory, cleaner production, and public environmental reporting should give the public increased confidence that Australian industry is willing and capable of meeting that challenge.

Commonwealth of Australia