(To be published in the Spring 2003 issue of Dissent magazine; A shorter and slightly mangled version of
this piece, together with a reply by economist Mark Wooden, appeared in the
Australian Financial Review on Sat Nov 23 2002 p 50)
The release last November of ‘Future Dilemmas’, a CSIRO report on the resource and environmental implications of three population growth scenarios for Australia flurried the media and rattled a few cages. There was a Four Corners program, an hour of Australia Talks Back, a spread in the Sydney Morning Herald and a bevy of shorter articles and letters.
Being close to, but not part of, the CSIRO team that produced it, I know what the report really said and how the report’s projections and scenarios were put together. I know its strengths and weaknesses. More pointedly, I know what the report did not say and what it was not trying to do.
Scenarios are not predictions. A prediction is an assertion that the future will be such-and such and the implication is that you can decide what to do on the assumption, at some level of probability, that such-and-such will come to pass.
Anyone who makes predictions about the nature of Australian society in 2050 needs counselling. Australian society is a complex adaptive system marbled with interconnected positive and negative feedbacks which no-one--scientists, economists, politicians, philosophers—can model with any confidence for more than a short distance into the future. It is fun to try but the only rich modellers are those who have persuaded someone with money that they need a model.
Enter scenarios, for want of something better. Make three different sets of plausible (sic) assumptions about processes and input-output relations in tomorrow’s society and cautiously extrapolate some proximate implications of these assumptions. That is what CSIRO did. Start with three possible population growth rates and some assumptions about how technologies and levels of consumption might change. It is a small step from there to projecting the different mid-century impacts of the scenario populations on such things as water use, air pollution and greenhouse gas emissions.
Just how useful this is to policy makers is an open question. It certainly stimulated discussion, particularly the large numbers that flow from the high-population scenario (which could never be politically feasible and should not have been used). Environmentalists generally welcomed the exercise after realising that the headlines which suggested that CSIRO favoured a population of fifty million Australians in 2050 were a sub-editor’s fantasy.
It was the economists, some eminent, who provided an interesting case study in defensive behaviour and total (wilful?) misunderstanding of this simple exercise that the CSIRO undertook for the Department of Immigration, Multiculturalism and Indigenous Affairs. One group were simply protecting those who feed them and launched preemptive strikes to head off any possibility of a reduced immigration rate becoming an idea in good currency. The other more interesting group convinced themselves that CSIRO were trying to predict (see above) the parameters of the 2050 economy and, in several cases, that CSIRO were trying to promote strong interventionism to stave off an environmental crisis.
To the extent that the CSIRO report was not written tightly enough to make such conclusions impossible then it was at fault. And to the extent that the CSIRO team could not convey the nature of their task to, especially, the economists who had been on the study’s reference group since inception, CSIRO failed again.
But it is the economists who have come out of this looking the more foolish. Apart from misunderstanding a simple exercise, they kept parroting the bleeding obvious that in a market economy what will happen will be largely determined in the market (you know, the one they have so much trouble predicting).
In the months since the report came out it has been in steady demand, although not infrequently from people with a strange idea of its contents. It has also unsettled some in the higher reaches of the federal bureaucracy; not so much for what it says, but for what it represents. Thus, woven into the latest proposals that it might be time to dismember CSIRO (remember Rex Connor and Chris Schacht?), ‘several Departmental heads’ have suggested that CSIRO might be ‘getting too close to the policy process.’
My own view is that the policy process has become somewhat chimerical, and hence difficult to get close to, but, leaving that aside, every scenario foreseeing socio-economic change will flush out those who would promote such change and those who would resist it. In CSIRO circles, the conservative perception of this reality is that the Organisation should stick to a ‘technological monkey’ role. My image is that of a bottom drawer containing a clever little beastie who is vocal on means but silent on ends. When the occasion demands, the Minister opens the drawer, waits while the monkey says ‘Abba dabba dabba’, then closes the drawer. My liking is for the model championed by former CSIRO chief John Stocker, namely that in researching matters with policy content, a spectrum of options should be laid out and the foreseeable consequences of each presented fairly---but not preferenced.
Beyond its possibilistic extrapolations of some material consequences of alternative immigration policies, the greater significance of the DIMIA-CSIRO exercise is that it had a 50 year time horizon. After all, as Treasurer Peter Costello once remarked, Australia is a country where the long term is anything the other side of Christmas.
That is a smidgin unfair. We have begun to have a debate about population ageing for example. Sure, it’s a debate which ignores basics like the fact that we have nothing more to fear than a European-type age structure and that at present growth rates we will have four times current GDP to prop up the wrinklies in 2050. Nevertheless, there is a highly competent superannuation group in Treasury who can inform such debates, just as the CSIRO study can. Defence also have to take a long view, given the cost and life expectancy of the platforms they lust after. But the engineers who think about long-lasting physical infrastructure must shudder at the national obsession with balanced budgets.
Still that is about it. We seem unconcerned about the sort of society in which our grandchildren will grow old, starting somewhere around 2050. Will Australia 2050 be a violent and divided society thrashing around in a polluted and degraded environment? A rich but empty society perhaps? Or will it be the sort of society that today’s grandparents want, one offering high quality of life to most Australians? As individuals we are concerned but collectively, no. As individuals we can all see and foresee roadblocks to and opportunities for slowly improving Australian society, and we talk about such. But the prevailing wisdom, fuelled by vested interests and dead philosophers, is that it is not possible to weld such perceptions into flexible long-run social goals backed up by programs for converging on those goals. In our parliaments, the nearest things we have to an institutional collective will, we rage mightily over eddies on the river of history and view economic growth as a paramount end rather than a limited means.
It is a mindset captured in the term economism. This is the philosophical stance that, because people are primarily strivers after material gain (sic), decisive importance should be given to economic considerations when making policy decisions. Market liberals make the further assumption that material gain will be higher in a fully marketised economy than under any other form of economic organisation. The collective role is to be reduced towards that of ‘night watchman’; there is no particular need for long-term thinking. This is the path being followed in Australian politics, with party differences being more about speed than direction.
Now, having set the scene, back to CSIRO. The National Futures Group which produced the DIMIA report has a modelling capability tailored to producing 50 year scenarios of the possible consequences, in economy-wide material flow terms, of various hypothetical structural and technological changes. It has a national data base, unique in the world, describing the physical (note, not monetary) dynamics of the Australian economy in stock and flow terms (eg changes in housing and vehicle stocks) since 1941. Informed by this data base, their models allow assumptions about varied aspects of the future economy to be trialled in ‘What if…?’ style scenarios. For example, what if primary energy use were capped at current levels? They explore shocks and innovations, fast trends and slow trends around such things as future consumption and investment levels, future population change, future technologies, future trade and future levels of primary production.
What these simple–minded but ginormous quantitative musings produce, apart from the totally unsurprising, are counter-intuitive intimations of capital humps, bottlenecks, infeasibilities in business-as-usual expectations, environmental timebombs and other warning signals. Plus a few positive suggestions for not being caught napping. Most of the unchoreographed surprises can be traced to a capacity to ripple decisions in one part of the economy to other sectors, using the same logic as more conventional input-output tables.
For example, in a capital and energy intensive economy, where you have got to in terms of product mix determines where you can quickly get to---the phenomenon of path dependence. If consumption is not to be pared (the ‘jam tomorrow’ strategy), it takes decades to climb the hump of capital-intensive investments which allow a markedly different product mix. It can similarly take decades for pollution effects or ecosystem losses to accumulate to an unacceptable level or for a non-renewable resource to be depleted to an unacceptable level. The strong implication is that economies, and their transition paths, need to be modelled over decades if tradeoffs between consumption possibilities and environmental possibilities are to be properly recognised.
What future then, what scenarios, can be foreseen for this type of research in an organisation better known for producing all sorts of clever technologies? My starting point is the judgement, unbiased I hope, that CSIRO’s major investment (over nearly ten years) in developing this capacity for modelling Australia's physical economy has paid off---in the sense that it has produced a tool with the potential to be marvellously useful for strategic policy making in the resource-environmental area. And, more narrowly, it is a tool which the ‘patient’ component of the private sector (capital markets, infrastructure, insurance…) will probably find useful if and when they discover it.
I can see two reasons why the research team would particularly welcome the latter scenario. One is the money. Despite the recent lifting of CSIRO’s 30 per cent external earnings target, its researchers are still under great pressure to bring in buckets of contract dollars. Also, getting paid by business to identify lurking long-term problems and opportunities would demonstrate something called relevance. The ease with which Mammon has joined Prometheus in the CSIRO pantheon is bemusing. Mind you, as ABARE (Australian Bureau of Agricultural and Resource Economics), recently discovered, such buckets can all too easily turn into poisoned chalices.
As the DIMIA project demonstrates, there will also be opportunities to work with government, sometimes directly but more often with the Research and Development corporations under ‘revolving door’ funding arrangements. The Fisheries R and D Corporation, for example, have warmly welcomed some commissioned CSIRO scenarios as they struggle to find a path to sustainability for an industry which is metaphorically on the rocks.
But getting a seat at any Departmental policy tables will be much harder, irrespective of what insights the CSIRO modelling capability might bring. Not only are there CSIRO’s in-house ‘nervous nellies’ to contend with, there are the bureaucrats and technocrats who feel threatened. There is an under-resourced policy making process which, increasingly sees no need to develop meaty policy options for ministers, particularly when the market mantra can always be appealed to. Overall, while accepting that as a strategy it is a bit thin, I can’t help feeling that these researchers’ best chance of surviving is to tell their friends and relations to keep asking two questions: What does this mean for our grandchildren? What are we doing for our grandchildren?
Doug Cocks is a Canberra-based human ecologist and a Divisional fellow in CSIRO Sustainable Ecosystems. His next book, Deep Futures: A Guide to Surviving Well, will be published by UNSW Press in August 2003. The above is a personal and not a CSIRO view.