Page 3590 - Week 10 - Wednesday, 13 September 2017
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mind. I am looking forward to some investments in these areas, given our financial stability.
But, as I said, it is not just financial stability; social sustainability is equally important, and that is the second issue. We need a society that includes everybody. And that is why I asked the question yesterday about the impact of rates and how we need to look at that impact on different people in different situations in our community. The third, of course, is environmental sustainability. I will not bore the Assembly by repeating my speech from last sitting week, but I will point out the equation again: environmental impact is population times consumption times technology. If we do not have a sustainable economy, a sustainable society in Canberra, we need to get one, and we clearly do not. People in Canberra are clearly consuming a lot more than the average person.
The fourth issue is credit ratings. As I said, it was good to hear Mr Coe’s scepticism about this. We really need to be careful about our focus on credit ratings. At the beginning of the GFC I worked for a financial company, and I am very aware that the GFC showed that credit ratings are just another financial product. To some extent you pay your money to the rating agencies and that influences the result you get, but it is a financial product. We found that, before the GFC, home loans were bundled, sliced and rated into securitised products which were all wonderfully rated. In the USA many AAA products saw a 100 per cent loss. I am not suggesting in any way that the ACT is at that level; I am just saying that we need to have a very healthy scepticism as to what the AAA rating may be measuring.
As has been indirectly pointed out by Mr Steel and more directly by Mr Coe, given the particular economic circumstances of the ACT, to quite an extent our AAA rating is a reflection of the commonwealth’s ratings. So this is positive for the ACT but not something that we can take total credit for. On that note, we should all remember that, regardless of what we are doing, if the federal government’s credit rating is downgraded this will impact us, in that no Australian state or territory jurisdiction can have a rating higher than the commonwealth government.
The fifth issue I want to talk about is growth. The motion talks about continuing to invest in Canberra’s growth, and there is the naive assumption that growth is always good. As I said, I will not repeat my speech of last sitting week, but growth is not always good. It is definitely not always good from an environmental point of view, but it is also not always good from a social point of view. Many studies have come to the conclusion that once a society reaches a reasonable level of affluence—we are all fed and we all have shelter and clothing—additional financial prosperity does not increase happiness. In fact, a lot of academic research—Pacitti started this—suggests that as a society gets less equal unhappiness goes up, regardless of the fact that potentially the people at the bottom of the pile may still be a lot better off than they were 10 to 20 years ago or than people in some other countries.
So GDP is a very, very flawed measure of prosperity. It was never intended to be a measure of quality of life or the environment, and it is not. As I said before, economic growth driven by population growth and consumption is environmentally unsustainable and does not necessarily deliver social benefits.
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