Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

At lunchtime I was one of a number of MPs from both sides of the parliament who took up Dick Smith's invitation to MPs and senators to support his view that perpetual growth in the use of resources and energy is not sustainable in a finite world. I want to take this opportunity to set out why I think he is right and why I was, and am, pleased to be associated with him.

Our obsession with economic growth, using GDP as a performance indicator, sucks us into a number of traps, most notably inevitably luring us into policies to promote population growth. It is a quick and easy way to boost the GDP number. Of course, it is dodgy. If more people come to live in your street, an economist will do the sums and say your street is wealthier. However, it does not make you any better off. Indeed, population growth makes people's lives harder. There is more competition for jobs, more competition for housing, more competition for space on the roads and a spot on the bus et cetera. It brings with it rising costs of living, more people out of work, traffic congestion, declining housing affordability and environmental damage.

Joseph Stiglitz and his fellow Nobel Prize winner Amartya Sen said in 2009 that the shortcomings of GDP as a measurement were one of the causes of the global financial crisis. The deficiencies helped portray the US economy and the global economy as being in better shape than they actually were before the credit crisis hit. Stiglitz said:

In a performance oriented society, what you measure affects what you do. If you have the wrong measures, you can wind up doing the wrong thing.

GDP does not take into account anything where money is not involved. Accordingly, it does not say anything about the contribution made by households or community volunteers. This leads to transparent anomalies. If we paid our neighbours to do our housework and they paid us to do theirs, the GDP would boom and politicians and economists would be delighted.

It is hard to see, however, precisely how we would all be better off under such an arrangement.

More seriously, a whole realm of essential work caring for our children and caring for our older people goes uncounted. But just because this work does not have a dollar value does not mean it has no value at all. On the contrary, it is and always has been an essential part of the richness of our society. If you take out the volunteer work, the community work and the work we do maintaining our houses, our society would soon fall over. Moreover, it can hardly be right that work such as child care or housekeeping has value if money changes hands but no value if it does not.

I believe we should ditch GDP as a key performance indicator. We certainly need to continue to have measures of economic performance, but we need to give equal billing to environmental indicators, health indicators, education indicators and social justice indicators. We should treat GDP and economic growth as a by-product, not as an objective. The important economic indicators are employment, inflation, interest rates and a balanced budget. These things really do matter. We want full employment or as close to it as we can possibly get. We want low inflation, keeping prices as stable as we possibly can. We want low interest rates; we do not want people in debt and going broke. And we want balanced budgets; we do not want countries in debt and going broke. Full employment, low inflation, low interest rates and balanced budgets—these are the important economic indicators.

There are, of course, many possible different environmental indicators of performance, but I think that some need special attention. The first is stopping the decline in the number of birds, plants and animals and stopping the habitat destruction, which is the biggest driver of this. The second is cutting carbon dioxide and other greenhouse gases, preferably globally by 60 per cent over the next 40 years, to head off dangerous climate change. And, because of the numerous adverse environmental impacts of population growth, the third important indicator is how countries are going in stabilising their populations.

We need health indicators such as life expectancy and how our rates of obesity and diabetes are moving. We need education indicators such as English literacy standards and post-secondary education outcomes. And we need social justice indicators. What is happening to the gap between rich and poor? What about fairness in the workplace? How are we treating our students, our older people, our people with a disability and our Indigenous people? These are the things that really matter. These are the things that we should be putting real effort into measuring, and even more effort into achieving.