The need for temporary economic stimulus presents an opportunity to prepare households and businesses for the carbon-constrained world we are building. If well designed and combined with appropriate pricing measures, a short-term investment in energy efficiency could prove a highly cost-effective means of reducing emissions.

If the government had a reliable way to measure emissions, and they wanted to reduce those emissions then they would most effectively spend the money by directly paying for emission reduction. That’s what they sort-of tried to do with their carbon credit scheme, except that… they discovered they could not really measure emissions, the formula for issuing carbon credits was unfathomable (I never got issued with any) and the process was based on principle that the biggest polluter gets the biggest windfall (ensuring that everyone is encouraged to be as bad as possible before the credits are issued so they can win the “most improved” award afterwards).

Using other types of investment incentive is fundamentally an admission that they have no idea how to measure emissions, and that carbon trading is too difficult. The result of this method is that some committee says, “we think X technology is green” then they dump money into X. After a short time, the industrial giants learn to stack those committees and teach them to say, “we think technology is green”. The environment doesn’t stand a chance.

The most urgent is the third point – stimulation of investment in measures to ameliorate climate change. Averting the collapse of the environment on which mankind depends puts everything eles in the shade!

Sounds nice, but we don’t actually know whether the environment is going to collapse, nor do we know which actions are the most effective ways to improve our environment. I’ve been watching people burn candles every “Earth Hour” and uselessly increase their carbon footprint. Now we have the big “say no to plastic bags” campaign where they try to get you to buy their “green bags” which are made out of spun polypropylene fibers (yeah, they are taking your plastic bags and giving you thicker and heavier plastic bags, good trick huh). The only action that is completely sure to improve the environment is population reduction and I don’t see too many people advocating that.

Meanwhile we have a government living in constant fear of the smallest fuel price rise, handing MY tax money to the motor car industry (presumably too many people were catching the train, not enough buying cars) and encouraging them to build vehicles vastly more powerful and heavy than anyone needs with heavy (and toxic) nickel/cadmium batteries (which are evolving into flamable lithium-ion batteries). We pretend to believe in the “free market” so we can’t force people to buy small cars or motorcycles, but when the car makers fail to turn a profit and when vehicle drivers don’t want to pay a tax on their CO2 generation, we abandon the free market and decide to support key union pressure groups instead.

Policies such as imposing a small carbon tax, and using this money to build cycleways and promote telecommuting would return a guaranteed reduction in CO2 at least from the perspective of burning less petrol (and people would also buy less cars). Direct investment into railway and bus infrastructure would have a similar return. We still wouldn’t know whether our environment was going to collapse, nor would we really understand the global CO2 cycle, nor would we know what effect that has on the weather, but we could at least give an accurate measure of how much fuel we were burning which might be a small step in the right direction.

What we will actually do (and this is guaranteed) is find a bunch of feel-good causes, and promote those to provide smokescreen for the lack of clear thinking on any real solution. Then hope that someone else finds an answer (unlikely because none of them are in any better position) and ultimately just deal with the consequences of whatever happens.

The former MP and current Monash academic is asking how we could get to a steady-state economy. The question is baffling. Of course we never could. But more to the point, we would never want to!

The only way we could reach a steady state is if all knowledge and all preferences stayed constant.

As you might expect, I am happy with deficit financing of investments in infrastructure and I accept the need for a highly cost-effective means of reducing emissions, although they are currently under review.

But there is one thing you have forgotten Nicholas. We already have three attacks from monetary policy (correct the price of money, attack on liquidity, atacking fear of adequate capital and solvency, including independent variants of quantitative easing). And you have included elements of fiscal policies.

What you overlook is the one thing you have been going on about for years – the complete breakdown of traditional information news, about ratings agency, real estate agents, risk assessment model, what bank books say, etc.

What can be done about accounting standards or required disclosures to help the stability of financial institutions? Can you give people greater incentive to improve their remunerations? What sort of regulatory changes are needed to address non-bank institutions? How do you give executives a greater incentive to plan longer term?

This is a big field – all ready for you.

As it is, Australians are contributing nowhere near enough to super and to reduce an already abysmally small percentage, will only serve to make things more difficult down the track.

If this recommendation was acted on, I would hope that many Australians would salary sacrifice the amount this amount instead. I certainly would!

One can only wonder why these people would even suggest such a weird thing, unless it is aimed at reducing future salary claims as the additional 3% artificially inflates their stated income.

The most urgent is the third point – stimulation of investment in measures to ameliorate climate change. Averting the collapse of the environment on which mankind depends puts everything eles in the shade!

No doubt the third point be further developed. For example, requiring builders to develop highly energy efficient designs within 12 months, with a subsequent ban on approval of any building application which failed those standards (the ban would be enforced using corporations powers). The development of design skills and the actual re-design would themselves generate employment. The standards would be based on the best practice world wide and subject to continuous improvement beyond the initial 12 months.

Beyond the three points of the open letter, I’d like to hear some thoughts on how to move to a steady-state/stationary economy.

Ken Coghill, Monash Governance Research Unit, Monash University (former MP & Speaker, Victoria)