Fear of cautious households

The events of the past few weeks couldn’t give anyone confidence that long term agendas such as food security and sustainability of the planet have received positive support. In fact, short-term agendas – political support and market share – are far more important when the heat is on.

You can blame the nervous Australian consumer for this. While we think we are in the process of a modest economic growth phase, my reading of what we’re seeing in spending and saving behaviour suggests that households are fairly anxious for their cash flow and stored wealth. The Reserve Bank has backed off interest rates for the same reason.

How does this affect the political will for change?

As the first example, take the circus that has erupted over the announcement of Plan B for control of greenhouse gas emissions. No sooner had the latest scorecard of Australia’s greenhouse gas pollution been released than the Federal Multi-Party Climate Change Committee had to show some of the fruits of its hard work to date by announcing an outline of a proposed carbon pricing system. While it is a scant and cautiously worded parable, it took earthquakes and football scandals off the front pages for a few days.

Let’s assume there is merit in the science that says greenhouse emissions are adversely affecting long-term climate. If we are to control emissions by limiting the permits to emitters, allowing permits to have a value or price, surely the aim of the overall exercise is to ensure that “emitting behaviour” is curbed. That way, it incurs a price that is high enough to hurt.

A tedious and noisy political football game was immediately commenced over the impact on the household, and how we should protect people from the impact of the higher costs associated with polluting activities. The vast majority of emissions are incurred by consumption – including household consumption of energy, transport and other materials. To ensure people aren’t worse off, we are going to protect as many as possible from the costs. Expect little change in behaviour. What do we achieve then except move money around from one sector of the economy (the senior emitters) to another (the junior emitters).

My other example comes from the food market. At a time when the world is running short of nutritious food and commodity prices spiralling to new heights on world markets, our food production systems are under unprecedented stress from the elements. Yet in the interests of moving shoppers from one store to another, it’s prime time to give food away. Rather than pandering to voters about a low-impact green policy, this tempts consumers to vote with their purses.

Once again politicians eager to please their constituency have waded into this issue with specific interest in the effect on the milk industry, which will undergo fundamental change if the new retail value of a litre of milk holds. Considerable anger and frustration has been poured into more than 100 submissions to an inquiry into whether the government or the ACCC or both can do something about it.

Does anyone really think politicians will stare down the interests of the struggling householder and put in place mechanisms to limit how cheap a food product can be sold, when the same politicians are trying to save them money on their future power and petrol bills?