Age
Friday 30/1/2009 Page: 8
An edict to install solar panels and rainwater tanks in every house would create jobs, writes Michael Short.
DESPITE the economic fear and loathing brewing across the land, most Australian households are financially better off than they were as recently as six months ago. A seven-year series of interest rate increases has been unwound at a desperate pace, a process all but certain to continue next week, and the price of oil has plunged by two thirds.
So, millions of household budgets have been boosted by hundreds of dollars a month. The problem is, this fillip is a paradoxical part of the transition from global financial crisis to global economic crisis. The transition is ending. Australia has about 500,000 people officially unemployed. That number might swell to about 800,000 by the end of the year. Hundreds of thousands of households are about to be hurt.
Having pumped half its $20 billion surplus into the economy late last year in a bid to stimulate demand, particularly at the cash register, our Federal Government is examining further ways to ameliorate the impending social and economic crunch. The fall in consumer demand (consumption accounts for about $6 in every $10 of our economy) needs to be offset by greater spending elsewhere, and we need to generate new areas of employment.
Other policy imperatives include the drought and the need to take the economy towards renewable energy and reduced emissions. Dealing with a recession that the International Monetary Fund and so many others predict will be historically profound is the immediate focus, but it is occurring in the context of the longer-term need to confront climate change.
While climate-change sceptics remain, a sensible consensus has emerged that it would be imprudent not to act. The best analogy refers to insurance: most of us do not believe our houses will burn down, but most of its have insurance against that very eventuality The question is the cost of the premium and the nature of the insurance, not whether we ought to act.
A further element of Australia's public policy picture is that the federal budget is clearly headed into deficit. This is a good and natural thing, and is a source of the economic stimulus required to compensate for private spending by households and businesses.
Despite having been given a filthy reputation by the fiscal ineptitude of governments, such as the former Victorian ALP administration, there is nothing wrong with budget deficits per se. Problems come when politicians generate deficits by spending too much of our money on short-term items, even to the point of covering the interest bill on state debt, as was the case in Victoria. But if the money is spent on the right intergenerational assets, our legislators are doing what we employ them to do.
So, given the present constellation of circumstances, might it not be worth doing something like installing solar panels and a water tank in as many houses as we possibly can? Using present and future taxes this way would stimulate the economy, generate jobs, move us away from reliance on fossil fuels and end the ridiculous failure to harvest rainwater in such a dry land.
Would we really need to be spending billions on unpopular projects like a pipeline and a desalination plant were we harvesting rainwater effectively? The cost of panels and tanks on such a scale would be huge. So would be the benefits. As is evident from the response of democratic administrations around the world, the immediate issue is getting the right policies in place, rather than being shackled by angst about the cost. That is not to say the cost is not crucial - it is our money - but that inaction in the face of challenge and opportunity is not a particularly bright option.
As always, the devil is in the deficit detail, but God is in the big picture, and perhaps we have an opportunity to be bold and do something now that will help present and future generations live in a sustainable and smart economy. In Victoria, new houses are required to have either a rain tank or a solar panel, but that covers less than 10% of Melbourne residences. Established houses are only bound by sustainability rules when alterations are made.
In his recent report to the Victorian Parliament, Victorian Sustainability Commissioner Dr Ian McPhail called for regulations forcing home owners to upgrade water and energy standards before selling their homes. Why not go further? Public policy is all about incentives and disincentives that render certain behaviours rational. Is there really any compelling reason why we do not have, as part of our crisis response, a supercharged effort to get panels and tanks into every Australian household? Sure beats counting jobs as they evaporate.
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