Australian Broadcasting Corporation
FOUR CORNERS
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TV PROGRAM TRANSCRIPT
LOCATION: abc.net.au > Four Corners > Archives
URL: http://www.abc.net.au/4corners/stories/s718523.htm

Broadcast: 5/11/2002
Search for a Supermodel

Australians enjoy one of the world's best lifestyles - but can the good times last? Four Corners reveals a landmark study that looks to 2050 and sounds ominous warnings about the nation our children and grandchildren will inherit. Researchers have devised a unique model of Australia's physical economy to predict the pitfalls of the future. Are they prophets or alarmists?

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Reporter: Ticky Fullerton
Producer: Quentin McDermott



TICKY FULLERTON, PRESENTER: Australia's 20 million people boast one of the planet's greatest lifestyles.

But a major scientific study, a world first, says it can't go on.

In an inner-city suburb is the house of the future -- electricity from the sun, water from the roof and waste dealt with on site by the owner, Mike Mobbs.

MIKE MOBBS, DESIGN CONSULTANT: We're stopping over 100,000 litres of sewage leaving the site each year and going into the ocean.

So if you get crook at Bondi, it's not ours.

TICKY FULLERTON: It's a far cry from the domestic habits of most home owners, but if our top scientists are to be believed, this is the mind-set we must embrace, or face the consequences.

BARNEY FORAN, RESOURCE FUTURES PROGRAM, CSIRO: For the last 150 years, our water use, our land use and our energy use have been expanding at an almost logarithmic rate -- that's one of those curves that goes up like that.

BOB CARR, NSW PREMIER: We're all hooked on it.

We're all hooked on it.

TICKY FULLERTON: Now, a highly controversial scientific study, backed by 10 years of research, is made public.

It challenges decades of economic wisdom -- warning of the costly downside to growth and exports.

The report has put conventional market economists on the offensive.

CHRIS MURPHY, DIRECTOR, ECONOTECH: It really is a primitive form of, um -- sort of economic models that were constructed at the dawn of economic modelling back in the early 1940s.

BARNEY FORAN: Somewhere, sometime, all of these costs catch up with us.

TICKY FULLERTON: Tonight on Four Corners, scientists take on the economic puzzle.

It's a battle over which model should drive long-term national policy, and how we see our future coming together.

Fish is part of Australia's staple diet.

Every week, tonnes of fish are bartered through the Sydney markets.

FISHMONGER: Righto, buying it at $8 again.

$8 up there now, yes, for that.

$8, anyone?

CUSTOMER: $8.

FISHMONGER: I've got $8.

$8, I've got.

$8 down there.

Are you in it?

$8.50 over there now.

$8.50 up there now.

$9.

$9 up there now.

$9.50.

$9.50 over there.

50?

$9.50 here too.

Sushi King.

TICKY FULLERTON: The daily catch pumps millions of dollars into the economy.

But our scientists warn that within 50 years our demand for fish will be three times today's production.

Barring a miracle, fish will run short.

It's just one of their blunt messages.

It's been a decade of intensive research for a seven-man team from the government-funded CSIRO -- the world-recognised science body.

The goal?

To build a unique working model of life in the future.

The result is a highly provocative report by co-authors Barney Foran and Franzi Poldy.

FRANZI POLDY, RESOURCE FUTURES PROGRAM, CSIRO: We've got about 60 years of history there.

The red line is the amount we actually catch, and the green line is the growth of that stock.

It's gone down very, very substantially to only about 10 per cent of the unfished level.

TICKY FULLERTON: These scientists claim there are other resources with an equally bleak future.

Four years ago, their work attracted the interest of the Department of Immigration.

It commissioned them to look at Australia under different future population scenarios.

P.A.: Passengers travelling to the Gold Coast on Qantas flight 838 --

TICKY FULLERTON: CSIRO chose three scenarios for the year 2050.

The first is deep green.

It assumes no immigration and a population of 20 million.

A second has current immigration policy continuing, with the population reaching 25 million.

And the third scenario, favoured by business, has high immigration, delivering 32 million people.

BARNEY FORAN, RESOURCE FUTURES PROGRAM, CSIRO: We looked around to all the big issues in environmental science that weren't being captured in Australia, and no-one was doing people.

TICKY FULLERTON: What makes the work so controversial is the methodology.

Most models of the economy use financial transactions that drive world markets.

Foran's group measures the physical economy -- the resources we use and the waste and pollution we create.

Instead of dollars, the models use litres of water, joules of energy and tonnes of material.

BARNEY FORAN: Manufacturing, fishing, farming, tourism, power plants, housing -- domestic housing, commercial housing.

Each one of these is a huge model in its own right, sufficient, if you like, to keep an entire research group just working on each model for a good 10 years or so.

TICKY FULLERTON: The models took in 50 years of historical data on our population, infrastructure and resources.

Information overload for any layman.

BARNEY FORAN: By far the dominating type you get into this sort of work are physicists.

They have brains like steel traps, can understand really complex data structures and put these lovely equations across them.

TICKY FULLERTON: The biggest challenge was putting the whole physical economy together.

BARNEY FORAN: When you think of the Rubik's cube, those things we used to fiddle about as we were kids, if you turn, if you're trying to get a particular pattern out and you've turned it one direction, you also have to make a whole range of accommodating turns and changes in the other part of the cube to get the pattern to come out.

Buildings, factories, motor cars, and all of our capital equipment, the age discrimination of our stocks are the vital things that work out at what rate they turn over.

And that in turn determines at what rate new technologies, or let's call them environment-saving technologies, can penetrate the existing infrastructure and make a number of flows, be they pollution flows or energy-use flows or water flows, start to stabilise and come down and get over the plateau and start to come down this huge challenge of sustainability.

TICKY FULLERTON: For environmentalists like Ted Trainer who have been campaigning for decades, this kind of analysis makes perfect sense.

TED TRAINER, LECTURER, UNIVERSITY OF NSW: How do you define economics?

As one American economist recently said, "Oh, but agriculture only accounts for about 2 per cent-3 per cent of American GDP."

But if agriculture wasn't there, you'd all starve and then you'd realise how important it was.

So the dollar component of GDP is a very meaningless indication of the real significance of things.

Take, for example, the pollination of plants by bees for which we pay nothing.

Now you wreck the ecosystem and how much food are you going to get if that process doesn't take place?

TICKY FULLERTON: The disturbing core of the report is the hard numbers it delivers that support the view of Australia as a nation of future eaters.

Perhaps for this reason, government appointed an independent committee to review the credibility of the research.

It's chairman, a scientist, gives the unconventional report a weighty endorsement.

DR ROGER BRADBURY, VISITING FELLOW, ANU: It's the first time that anyone has ever taken a whole continent and tried to get a look at it.

It's the first time we've ever been able to do it in such depth.

It's the first time it's ever been done with such rigour with the data going so deeply back into history and so broadly across all the different sectors of what makes this part of the globe tick.

TICKY FULLERTON: However, the two economists on the report's five-member review committee are highly critical.

One of them is Chris Murphy.

CHRIS MURPHY, DIRECTOR, ECONOTECH: Economics has traditionally been known as the 'dismal science' because we don't just look at the benefits of things, we look at the costs as well.

But the CSIRO modelling only wants to look at the costs.

Economic activities don't have any benefits in this model.

So that's about as miserable and dismal as you can get.

TICKY FULLERTON: So how seriously should we take the scientists work?

After all, it's not the first time we've been told of a looming crisis.

MAN ON NEWSREEL: On a warm July night in 1968, 30 eminent scientists and businessmen gathered at the request of the chairman, Aurelio Peccei, who sat here.

Peccei told them that they'd been gathered to discuss the disastrous future he believed was facing the world.

TICKY FULLERTON: The eminent gentlemen that met in this palace would form the Club of Rome, a think tank lobbying world governments on sustainability.

The Club of Rome's book, 'The Limits to Growth' sold over 12 million copies.

VOICE ON NEWSREEL: The Club of Rome's survey gets close to what's called the Doomsday syndrome in futurology, that men will become oppressively overcrowded and the quality of life will plummet.

TICKY FULLERTON: The Club of Rome also ran scenarios and the most notorious of these provocatively warned that in a few decades food, oil and minerals would begin to run out.

DR KEITH SUTER, CLUB OF ROME: The people who believed in the market system said the report should be ignored because the market would solve every problem.

In other words if you're running short of resources then what would happen is you'd get an increase in the price of those resources and that would discourage excessive use of resources.

At the other end of the spectrum, in the Soviet Union people said that Karl Marx had claimed that every problem can be solved by technology.

So that whatever your problem is with the environment, don't worry, we'll invent a machine that will solve it.

And so by being attacked by left and right contributed considerably to the book's popularity.

And, of course, what is interesting is that's a debate that goes on to this day.

TICKY FULLERTON: Yet the Club of Rome's warning was overstated -- it's members failed to predict the green revolution in agriculture and a boom in resource exploration.

Many prices actually fell with a resource glut.

Do you think though that the work of the Club of Rome and what happened after it, the great criticism that it received, actually set back --

TED TRAINER: Yes.

TICKY FULLERTON: ..the political agenda for you?

TED TRAINER: Yes, that's true.

That's true, but strictly speaking I think the claims that the book made are correct because they were basically saying if we go on as we are, then there will be terrible problems.

And it seems to me that's quite true.

TICKY FULLERTON: Four Corners asked three orthodox economists what they thought of CSIRO's report.

On this occasion, they all had the same opinion.

ROD MADDOCK, HEAD, EQUITIES RESEARCH, COMMSEC: It's almost like the Club of Rome sort of view of the world.

CHRIS MURPHY: What Barney has done is too close to what the Club of Rome did to be considered reliable.

PROFESSOR WARWICK J McKIBBIN, CONVENOR, ECONOMICS DIVISION, ANU: There's a history of this.

The Club of Rome in the '60s and '70s came out with reports of a very similar nature predicting dire consequences of running out of everything.

BARNEY FORAN: And it always comes up, particularly in a place like Canberra -- over and over, normally in some august gathering and some chap in a pinstripe suit jumps up and says, "And the Club of Rome were wrong.

"And the Berlin Wall came down and communism dropped off the Earth.

"And we won."

TICKY FULLERTON: Unlike the Club of Rome's early computers, CSIRO is now armed with powerful software and massive databanks.

Their results are challenging.

Take Australia's gas resources.

In these waters off the North West Shelf lie billions of dollars of revenue -- 140 trillion cubic feet of natural gas, of which Australia uses just 1 trillion every year.

So, in August, when China agreed to pay $25 billion to Australian gas companies for a 25-year supply of gas, the deal was hailed as a coup.

JOHN HOWARD, PM: I am absolutely delighted.

It is so good for Australia.

This is the kind of outcome that will underpin the economic strength of this country.

TIM WARREN, CHAIRMAN, SHELL AUSTRALIA: It's a 50 per cent increase in Australian gas exports from the North West Shelf venture which started back in 1989 in terms of gas exports.

TICKY FULLERTON: However, it's reported that government pressed the Australian gas companies to shave their price to clinch the deal.

The scientists worry that Australia will be all out of gas by mid-century, and we will have sold the family joules on the cheap.

BARNEY FORAN: In 2050 or 2030 a joule is still a joule and it's really good if it's liquid, high-quality energy.

God knows what a dollar will be worth then.

CHRIS MURPHY: Well, with respect, I don't think that can be taken seriously.

I mean, presumably his argument is that he thinks that in 2050 that natural gas might be worth more than it is today.

Why should we put more weight on his predictions of what prices are going to be when he's not even included them in his model than people who have a commercial interest in those resources?

PROFESSOR WARWICK J McKIBBIN: The basic flaws is when you take a physical view of the world, you abstract from the human, the behaviour of people, and so when you're looking out into the future, we know that individuals and societies adjust when they get new information, when they see the price of something change, they change their behaviour.

SHELL ADVERTISEMENT: We believe it's possible to provide the energy the planet needs, without ignoring the needs of the planet.

TICKY FULLERTON: Shell is part of the consortium that is selling gas to the Chinese.

Its chief argues that Australia has plenty of time before technology needs to kick in.

TIM WARREN: You've got tens of years of potential consumption, and remember there is much more gas, I believe, to be discovered.

People aren't exploring for gas certainly in the north-west of Australia, because there are such abundant resources still to be commercialised.

BARNEY FORAN: While our results may appear rather dour, they're extremely optimistic in terms of technological innovation and finding more and more resources, and I guess the key thing is the rate at which we seek to expand exports against a stock that isn't increasing at the same rate.

MAN TALKING AT CSIRO MEETING: This is the area, the area of cereal, area of land used to grow cereals in Australia, over the history, over the last 150 years.

TICKY FULLERTON: What the Club of Rome got right was the depreciation of our land and water assets.

New work by CSIRO also supports this, attacking the accepted wisdom that exports of competitively-priced food can only be good news.

MAN TALKING AT CSIRO MEETING: Just pulled out one, this is one in Western Australia.

TICKY FULLERTON: It is estimated that 10 million hectares of arable land will be lost by 2050.

MAN TALKING AT CSIRO MEETING: The area of degradation mirrors the total area of land, but there's a delay of round about 60 years.

TICKY FULLERTON: Barney Foran argues that when we export grain, we're only paid for the product, not the fertility lost from the country's thin topsoil.

The long-term damage to the land means a growth in exports can't be sustained.

BARNEY FORAN: We will always be a good niche player in providing good quality food for particular markets, but feeding the world, feeding Asia --

..you've got to be joking.

ROD MADDOCK: Wow, um --

So, he suggests, what, the world price for grain doesn't include all of the costs of producing that sort of thing?

TICKY FULLERTON: Correct.

ROD MADDOCK: Well, if it is the case, I mean if farmers are degrading their soil, then we need to have a process to make sure that that doesn't happen.

TICKY FULLERTON: Why don't we have one, then?

ROD MADDOCK: Well, think about it at the moment.

If you were a farmer and your kid was probably going to live on the farm -- that's the sort of lifestyle people aspire to -- would you deliberately degrade the quality of your resource, your asset, your personal asset and your kids' asset?

It's a very, very interventionist sort of 'Canberra-driven' view of the world, it seems to me, that Barney Foran or whatever his name is knows better than the farmer as to how to sustain his property for the long term.

TICKY FULLERTON: Here, the facts don't support the economist.

The National Farmers Federation states that perhaps $65 billion is needed to repair agriculturally-degraded land -- a cost far beyond individual farmers.

As for water, 70 per cent of its usage is in irrigation, and most of its value is exported.

Balance of trade sums done in water rather than dollars don't add up.

BARNEY FORAN: Each year, in the sum total of the volume of stuff we send out on ships and planes embodied or included through the whole production chain, is something like 4,000 gigalitres net of water.

So we send out about 8,000 and 4,000 comes back in.

Uh, that's a lot of water, and we only give or supply about 3,000 gigalitres, at the moment, to our cities and towns.

TICKY FULLERTON: And we're not getting paid for exporting that water?

BARNEY FORAN: Absolutely not.

It is seen as a free good and many of these agricultural products, be they good quality and competitive on world markets, don't include the cost of refurbishing our inland river systems.

SENATOR NICK MINCHIN, MINISTER FOR FINANCE: No society in the world has kind of worked out how you factor in all the externalities.

That -- it's almost impossible.

But what happens is --

TICKY FULLERTON: That's the concern in Australia, though, because Australia is a relatively infertile country --

SENATOR NICK MINCHIN: Sure.

TICKY FULLERTON: ..and over time our arable areas are going to be reduced.

SENATOR NICK MINCHIN: Yeah, and I think that is a serious issue which, you know, the nation needs to be very mindful of -- that we don't have, you know, a lot of arable soil.

The soils we do have that are arable are not very rich --

TICKY FULLERTON: Minister Nick Minchin, a market economist by training, takes the report seriously.

But he argues that government reform has put a price on water.

As a result, water is moving away from wasteful flood irrigation to less thirsty crops.

Water now flows uphill to money.

SENATOR NICK MINCHIN: The assumption you could just give people cheap or free water that could go on forever was wrong and we're now correcting that by bringing market disciplines to bear.

You know, this is where the marriage of an understanding of physical limits and the disciplines of markets can marry beautifully.

CHRIS MURPHY: You don't need a regulator like Barney Foran deciding when resources should be used when there's an efficient market mechanism available which is much better informed than Barney Foran would be to make those kinds of assessments.

TICKY FULLERTON: However, some economists will admit that markets don't always solve the problem.

Pricing water can't fix the devastating salinity that land clearing and irrigation have caused in the Murray-Darling basin.

CHRIS MURPHY: OK, well, in that case you almost certainly do need market intervention.

OK, salinity's a serious problem and the Government is involved in putting dollars into trying to reverse it through things like tree-planting programs, through things like less water being used from the Murray-Darling basin for agriculture.

TICKY FULLERTON: A market-run economy like Australia, though, seems to have failed in a number of crucial areas for the environment.

PROFESSOR WARRICK J McKIBBIN: Well, that comes down to government failure.

TICKY FULLERTON: Government, though, faces uncomfortable choices.

Last month, another group of concerned senior scientists, including two from CSIRO, warned that food is heavily subsidised by the environment, and called for price increases on food to reflect the true costs.

But what politician could demand another 20 cents on a loaf of bread?

Barney Foran's dilemma is that economists believe scientists dabbling with economics will soon find themselves in deep water.

BARNEY FORAN: A lot of the good old boys who come to these presentations, certainly their blood pressure went up, and, er, you know, it was almost, um, at times as though I was being un-Australian in noting some of these issues.

TICKY FULLERTON: One of several 'un-Australian' ideas from CSIRO's report dares to question that economic growth is unconditionally good.

In a country that boasts over 3.5 per cent growth for most of the last decade, abandoning growth is economic heresy.

To economists, it means one thing -- unemployment.

ROD MADDOCK: In a stagnant economy, people tend to fight over what there is and that's destructive both for the social infrastructure, makes for very hard politics and very hard society, so that your growth is a very good lubricant, uh, socially.

SENATOR NICK MINCHIN: It comes back to, you know, if you want to be able to deal with environmental problems, you need a successful economy generating surpluses, that enable governments to spend money on solving the problems.

I mean, again I come back to this --

It's the poor countries of the world that are incapable of dealing with their environmental issues.

As a rich country, we can.

TICKY FULLERTON: It seems scientists and economists mix about as well as oil and water.

Each see themselves as rational and empirical and the other side as almost religious in zeal.

But both sides agree that a supermodel, merging physical resources and dynamic markets, is beyond their reach.

Is it not possible to build a supermodel?

CHRIS MURPHY: It would be very large, complicated.

No-one would understand it.

It'd be impossible to maintain.

BARNEY FORAN: Around the policy table is the place to do it.

DR ROGER BRADBURY, VISITING FELLOW, ANU: Over the last 100 years, economists have struggled to get a -- to get a place at the policy table.

And in the last 50 years of the 20th century, they actually got there.

And they became -- and still are -- the gurus, the people that --

that policy makers turn to when they want a rational answer to what the future's going to be.

Now, here's a bunch of people, in terms of the CSIRO scientists, who are saying, "Hey, we want a place at the table too.

"We've got a view.

"We've got a rigorous view and a scientific view."

And you can sense that, you know, the economists are not too happy to move over.

DR KEITH SUTER, CLUB OF ROME: Governments are appalling on scenario planning.

They don't like it.

A gov -- a politician, no matter who's in power, a politician has a mind-set which simply goes to the next election.

TICKY FULLERTON: Bob Carr is Australia's greenest premier.

He experiences first-hand the clash in ideologies.

BOB CARR, NSW PREMIER: I've often thought that economists have a lot of difficulty processing arguments about the environment.

They get -- you can see them get annoyed, almost angry, if you talk about something like the melting of the polar icecaps or the loss of Amazonia or the disappearance of frog species around the planet.

REPORTER: Can we have a few words, Senator?

SENATOR NICK MINCHIN: Do you mind if I just get rid of my gear?

REPORTER: No, not at all.

TICKY FULLERTON: Federal minister Nick Minchin also knows the tensions.

He's been, first, Science Minister and now Finance Minister.

SENATOR NICK MINCHIN: That's our job, to bring them together.

Now, people from the financial side, you know, will have less regard for the physical and vice versa.

And you can only hope to ensure the preservation and repair of the physical economy if you have the financial resources to do it.

TICKY FULLERTON: We can't even agree on what sustainable development actually is.

SENATOR NICK MINCHIN: One of the joys of a democratic nation.

TICKY FULLERTON: The most sensitive elements of the CSIRO report address an emotive question -- what population is best for Australia?

KEITH SUTER: It's raising an issue which the governments have been ducking, which is a question of what are we going to do about immigration numbers.

TICKY FULLERTON: The report is careful not to favour any population level.

But Barney Foran's warnings on the nation's resources have led to cries that this is Fortress Australia propaganda.

You've been called Hansonite, haven't you?

BARNEY FORAN: Yeah.

That one shocked me when it came across the policy table.

TICKY FULLERTON: People can't even agree if higher population levels really do harm the environment.

BOB CARR: Listen, there's no argument about the main driver.

It's population.

It's population growth.

We could not hold a population of 50 million without the wholesale urbanisation of what lies between the mountain range and the water's edge right along the east coast of Australia, from northern Queensland to --

to southernmost Victoria.

CHRIS MURPHY: The connection the Club of Rome tried to make between population growth and environmental outcomes just hasn't held up.

The -- the, you know --

What determines whether a country has a good environmental outcomes now is much more the sort of environmental policies it's pursuing, not whether its population happens to be stagnant or ticking over at 1 per cent a year.

TICKY FULLERTON: What do you think the carrying capacity of Australia is in, say, 2050?

ROD MADDOCK: Ah, well.

Uh -- carrying capacity.

There's been a whole argument about this, of course.

And somebody came out originally and said 6 million.

And somebody else says 50 million or 100 million.

The whole idea of carrying capacity is some sort of --

..assumes that there's a wall around Australia and we're not allowed to interact with other people and what could we sustain?

It's -- I don't think it's a very sensible question.

Sorry -- with due respect.

TICKY FULLERTON: Author Mark O'Connor begs to differ.

A long-time low population campaigner, he says CSIRO's report shows it's people who drive trade, which in turn runs down our natural assets.

MARK O'CONNOR, SUSTAINABLE POPULATION AUSTRALIA: The amount of imports you need, as they say, is directly related to population.

A given population at a given level of affluence sucks in so many imports.

So your balance of trade goes down as your population goes up, in general.

If you've got twice the population sucking in twice the imports, then you'll have to cut the coal out of the ground and sell it off faster than you otherwise would.

BOB CARR: There's no alternative to us exporting.

There's no alternative to us exporting the things we're good at producing.

That's -- that's --

TICKY FULLERTON: So how do we address this balance sheet?

BOB CARR: That's the way we pay for the importation of an environmentally --

..an environmentally superior motor vehicle, that is, superior to the ones we used to produce when Australia made a high share of its motor vehicles.

TICKY FULLERTON: It's also how we pay for environmentally very unfriendly imports just because we're consumers and we want a second car.

BOB CARR: Well, this is our challenge.

This is our challenge.

If there was an easy answer, we wouldn't be talking about it.

JOHN HOWARD: Within all of us, or within most of us, is a thing called aspiration.

TICKY FULLERTON: Six months ago, the Prime Minister launched the Business Council's vision for the future, Aspire Australia, favouring higher population.

The council's economist was Rod Maddock.

ROD MADDOCK: We're actually concerned about the quality of life.

We're actually concerned about human capital.

I mean, I suspect that the human capital in Australia is probably greater than the physical capital.

I don't know the answer, but I suspect that is the case, that investing in your education or your kids' education is one of the most important things we can do for the future of this country.

RADIO BROADCASTER: Those of us living in the Sydney basin woke up to shocking smog on Saturday and Sunday morning.

TICKY FULLERTON: Even if we don't grow our population, the CSIRO report says today's aspirational lifestyle is unsustainable.

Our cities face a toxic combination.

Urban landscapes trap smog while the ever-growing just-in-time economy delivers diesel fumes to the door.

Professor Tony McMichael is a world expert on urban air pollution.

He has bad news about city lifestyles.

PROFESSOR TONY McMICHAEL, NATIONAL CENTRE FOR EPIDEMIOLOGY, ANU: There are many more deaths being caused by urban air pollution than there are by car crashes.

We wouldn't have thought that 10 years ago.

The greatest hazard to human health, to the lungs and the heart, come from the particles that we refer to as the sub-2.5 micron particles.

These are very, very fine particles of the kind that are particularly produced by diesel engines.

TICKY FULLERTON: According to CSIRO's mid-population scenario, we can expect a 20 per cent increase in emission loadings over the next 20 to 30 years.

PROFESSOR TONY McMICHAEL: The report makes quite clear that even on a low population growth scenario, because of increasing patterns of car use and the rise in consumerism in general, and the increasing reliance of Australian cities, for the moment, on car-based transport, we're going to see an increase in exhaust gases as air pollutants.

TICKY FULLERTON: Even if the outlook for city air is dire, economists argue that CSIRO's report underestimates human inventiveness.

New technology means we don't have to make lifestyle sacrifices.

ROD MADDOCK: It sort of seems strange that today we should give up stuff for the people in the future, who almost certainly will be better off than people today.

TICKY FULLERTON: Can technology keep up?

BARNEY FORAN: I don't think so.

The one good thing you'd have to say about the low-population scenario is that a range of resource and environmental quality issues do stabilise and moderate.

And the one thing that we see for the stable target is that it's easier for technology to catch a stable target than a rapidly growing target.

ROD MADDOCK: He's projecting what the future might be like, assuming people don't adapt or something like that.

It's a very --

it really is a religious statement, and there's not much I can say about it.

I mean, I disagree.

JOHN HOWARD, PARLIAMENT, 16 JUNE, 1997: The targets you agreed to at Rio, if they are maintained, you will reduce Australia's gross domestic product by 1.5 per cent, that you will cost thousands of jobs and that you will do enormous damage to Australian industry.

TICKY FULLERTON: Global air pollution is the one area where scientists and economists have been forced to lock horns.

Government continues to refuse to sign the Kyoto Protocol on greenhouse gas emissions.

TONY BLAIR, BRITISH PRIME MINISTER: Kyoto is right, and it should be ratified by all of us.

DR DAVID KEMP, MINISTER FOR THE ENVIRONMENT: Our longer term national interests are in not ratifying the Protocol --

TICKY FULLERTON: Does it concern you that the CSIRO analysis shows that even under the lowest-population scenario, we are still going to fail to meet our greenhouse gas targets?

TIM WARREN: No, it doesn't concern me, um -- because I don't believe that you can predict those outcomes.

TICKY FULLERTON: You don't think it's going to happen?

TIM WARREN: No -- I think the responses will be there to avoid it happening.

TICKY FULLERTON: One response to greenhouse is to regulate by creating a new market -- to cap industry's rights to produce carbon emissions, but allow those rights to be traded.

PROFESSOR WARWICK J McKIBBIN: What we need to create now is not a bunch of hotchpotch policies like the Kyoto Protocol.

We need a clear establishment of property rights, well past 2012, which is where Kyoto currently ends, and we need to start increasing the price of carbon, but not by very much.

We want to give people long-term incentives to modify their behaviour.

And when we get more information on the state of the climate and the state of our response to these incentives, then we can start to change that price.

SHELL COMMERCIAL: He believes that almost half our energy could one day come from renewable sources, like solar panels and sustainable forests --

TICKY FULLERTON: Big business is also responding.

Shell has invested millions of dollars worldwide in wind, solar and hydrogen energy projects.

TIM WARREN: Anybody in the energy supply business, such as ourselves, would be extremely short-sighted if they didn't believe and invest in an alternative set of energies, which will certainly come to play a significant role in the period from 2030 onwards.

TICKY FULLERTON: But is this any more than PR to help flog the same old fossil fuels?

TIM WARREN: I -- I would certainly not agree with that, obviously.

The task of an energy company, at the end of the day, has to be to provide effective and efficient energy solutions for its customer base.

BARNEY FORAN: We're always throwing eggs at big industry.

Really, our work comes back to say it's us, it's you and me, that the degree to which energy and greenhouse, water and land disturbance is totally inculcated and embodied in our personal consumption patterns, uh, is frightening, really.

As our personal expenditure goes up, so does energy, water and land disturbance.

SENATOR NICK MINCHIN: I just don't think it's, um, the role of government to start lecturing people about their, uh, about their lifestyles.

I don't think we're on some sort of, you know, "We're all going to run over the cliff "because of our material aspirations."

I don't -- I don't see that at all.

TICKY FULLERTON: In Sydney's west, next to sprawling suburbia, lives a man who does have an almost religious devotion to the simpler life.

And this is the waterwheel?

TED TRAINER: Yeah, well, there's a group of waterwheels here -- different, a little one, a big one -- and some other types of pumps which are operated by water, and which pump water.

TICKY FULLERTON: And efficient?

TED TRAINER: Waterwheels of this kind, an overshot wheel with the water coming in the top, can actually be 80 per cent, 90 per cent energy-efficient.

It is about simplicity.

It's about simpler industry, simpler lifestyles, more use of local resources and so on.

TICKY FULLERTON: If the Club of Rome had its Cassandras, Ted Trainer is more Pollyanna.

In his world, pottery and bicycles would replace Foxtel and four-wheel drives.

The alternative way really is like living like the Amish, isn't it?

I mean, can you seriously suggest that the population of Australia today would actually want to be a part of that?

Even though they might think intellectually it's a great idea?

TED TRAINER: Well, that's the point.

You've got to firstly go back to the fact that there is no other option.

I think our situation is very grim.

And it is not at all obvious that we have the wit or the will to make the transition that's required.

MIKE MOBBS, DESIGN CONSULTANT: Hi, guys, welcome to my house.

If you come on down here and just stay here, I'll go behind the bush and we'll start the tour.

TICKY FULLERTON: In the heart of the metropolis, design consultant Mike Mobbs sells the message that there is another option -- the good life, as we know it, is both attainable and sustainable.

MIKE MOBBS: Well, it's on a site 5 metres wide, 30 metres deep.

The house was built in the 1890s.

It's an old terrace house.

Tough site, small.

Right in the heart of the city.

If sustainability depends on people changing their lifestyle, I think that the planet will fail.

These gutters up here are self-cleaning.

So what happens is during dry periods this covered gutter allows the wind to blow the pollution down and over.

TICKY FULLERTON: Solar power and a rainwater tank have cut energy and water bills from $2,000 a year to $300, although it takes a while to get your money back on today's up-front cost of $25,000.

Sewage and waste water are also fully recycled on-site.

MIKE MOBBS: Oh, gosh, this is tough moment for me.

You've got to come forward and humour me at least.

See all the worms?

But do you smell it?

MAN: No.

WOMAN: No.

MIKE MOBBS: So you're right near all that sewage and it doesn't smell.

It's because the system is aerobic.

TICKY FULLERTON: Six years ago, Mobbs had high hopes that others would follow when the Premier gave his prototype the thumbs up.

BOB CARR: I was somewhat astonished -- full of admiration -- but both feelings have multiplied as I've strolled through this house and seen what you've done here.

MIKE MOBBS: When the Premier launched this in 1996, he said all councils in NSW should encourage this sort of development.

Of the 30,000 or 40,000 houses and units built in Sydney each year, since, only 20 or 30 would be sustainable.

TICKY FULLERTON: Premier Carr insists he is making an impact on our urban mind-set.

BOB CARR: Homebush Bay for example, the Olympic suburb, was a solar-powered suburb and that's a stimulus for councils to set this up.

Across councils we've now got --

across Sydney we've now got councils allowing people to install water tanks.

That's a breakthrough.

TICKY FULLERTON: But we're not pushing councils to look at recycling of water, or --

BOB CARR: Oh, but I -- but -- but there's been a big change here.

We can't -- we can't make it look like everything's hopeless, otherwise people will despair.

MIKE MOBBS: So here's my sewage.

All that muck that you saw, just then, all those worms and things is produced to get this lovely water.

I'm not -- please don't drink this, but I just -- I'm going to pass it around for you to smell, and have a look at and hold it up to the light.

TICKY FULLERTON: This water is used for clothes washing, toilet flushing and on the garden, but even living like this doesn't necessarily mean we'd be greener, according to Barney Foran.

BARNEY FORAN: When I took on this task I had to become a bit cleaner and greener myself, so we fixed up the house, put the batts in the roof, put the solar hot water system on the roof, turned off the lights, turned off the water taps, and saved a lot of money on our monthly, or trimonthly bills, which we then blew by going on a, uh -- in energy terms anyway -- by going on a holiday to Cairns and blowing it all in jet fuel.

CHRIS MURPHY: If you go to the movies, Barney Foran's only interested in the emissions coming out of your car.

He doesn't put any value at all on the fact that you enjoyed the movie.

Or if you go on a holiday, he's only interested in --

in the emissions from the plane.

He doesn't put any value at all on your enjoyment from the holiday.

So it's a very one-sided view of looking at the economy.

TICKY FULLERTON: Foran argues that not only exports, but also the service economy gobbles up physical assets and must be costed.

Preliminary work done by CSIRO suggests that a staggering 20 per cent of our greenhouse gases comes from tourism.

SENATOR NICK MINCHIN: I don't reject that proposition at all.

It's not to say that tourism is bad.

It's -- but we need, in assessing its contribution to Australia, um -- to weigh up the costs and I think I agree with the CSIRO that we need to be conscious --

..that in planning our greenhouse gas policy we need to be conscious that tourism is a contributor to greenhouse gas emissions, um, to, uh, impacts on the environment and weigh them up against the benefits.

TICKY FULLERTON: Not all politicians, let alone bureaucrats, are open to Barney Foran's 10-year odyssey.

A concluding chapter in the report, asking challenging questions, was removed -- perhaps too blunt for a department that was footing the bill.

BARNEY FORAN: Often in Canberra you get hit with the eye -- between the eyes with, "The boss or the minister wouldn't like to hear that," but, uh -- and if we, uh --

..and I'm not talking about any boss or any minister in particular --

..but, um, in some ways I -- I have the feeling that people are so busy, uh, watching their arse in Australia that they're prone to walk straight over a cliff, and that is what our work is trying to avoid.

TICKY FULLERTON: The final draft of the report still canvasses extremely radical solutions to our future dilemmas -- halving our material consumption, reforesting our water catchments and halting the decline of arable land and fish stocks.

But most provocatively, it claims that solving two or three dilemmas in parallel is "outside the comprehension of contemporary policy development".

TED TRAINER: I'm sure the CSIRO people have got a fear of a lot of people ready to stomp on them pretty hard if they start raising these questions.

TICKY FULLERTON: Perhaps it's no surprise that the final draft of CSIRO's report has been sitting with the Department of Immigration since May.

A Government launch is now expected this week with a dissenting review from Chris Murphy.

CHRIS MURPHY: The sort of scientific modelling that Barney does, I think is -- is important, but it's just unfortunate that in a way he's let himself down by having such a weak economic side to his model.

TICKY FULLERTON: So what do you hope will happen with CSIRO's work?

BARNEY FORAN: I hope that Australia gets to understand it and at least see it and that both government and business grasp the nettle and really start to do something aggressively about it.

But then it comes down to us and I guess it comes down to the aspirational voter, a person who's prepared to take a long-term view -- a view that takes us up to and beyond our children's children.