About the Scenarios

This paper (#7 in the current series) presents global and general Australian scenarios only, without being specific about their effect on the Australian music sector. Paper #8, Music Sector Structure for Scenarios, describes the major features of the sector in 2015 in scenario-planning terms. This is required as a common origin for the four stories presented in paper #11, A First Set of Music Sector Scenarios. The three papers are intimately related and all need to be at least scanned for full understanding of the approach.1

Number six in the series, Ideas from Other Global Scenarios, compared three published global scenarios with the scenario model for the Australian music sector which we had developed independently. The insights benefited the initial draft scenarios below, and provided guidance to the subsequent papers. These presentations are thus a product of a lengthy iterative process, through which it became possible to produce scenario versions that could be more confidently thrown open for general discussion.

One thing became clear early: the scenarios had to paint a picture of, on the one hand, the power that nurturing a thriving culture brings to a nation’s economy and soul, and on the other hand the perils of starving and neglecting music and other arts and culture. Both represent credible futures in an uncertain world. The role of scenario planning is to present a range of plausible situations that could occur in a world which has become quite unpredictable. The lower limit of the range is determined by what “worst cases” appear feasible to anticipate and fix. The future is becoming more, not less, uncertain, and “worst cases” should be defined as threats that it should be feasible to warn and plan against. This would exclude world wars and other global catastrophes, but not the worst case in this set of scenarios.

The scenario process will benefit from the “other half” of this pioneering Music Trust project, which is to bring the statistical base for the music sector up to scratch – a task considered possible even after the 2014-15 Budget which caused the Australian Bureau of Statistics to severely reduce its cultural data collection. This regrettable event doesn’t prevent the “strategic conversation” about the scenario stories from starting shortly, but the update of available data planned for the third quarter of 2015 will provide a stronger base for the subsequent debate.

Steps in the Process

Since this is to the best of our knowledge the first-ever published scenario study focusing on an art form in a global macroeconomic context, it was reassuring to find that the driving forces we thought would be appropriate for the music sector model were compatible with those in the other global scenario models we examined, models ranging from the future of the European Union and the global financial system, to climate change. It has allowed us to go ahead with a final draft structure for the music sector, defining the critical uncertainties needed for the scenario stories (see “Capturing the Uncertainties” below).

One of the three reports we examined in the previous paper dealt with the future of the global financial system. It was undertaken by the World Economic Forum following the financial crisis of 2007-08, and included a diagram of an eight-step scenario process, redrawn with acknowledgement as Chart 1. It fits other imaginable contexts, including scenarios for music and arts. It also highlights the crucial step of nominating the critical uncertainties, which has now been taken.

Step one is the formulation of a central question defining what a given scenario is all about. It was implicit in the music sector flowchart (Chart 2), but can be formally expressed as follows:

What futures might the Australian music sector experience over the next two decades?

The driving forces (step 2) fall into two groups in our flowchart: “global change” and “Australian futures”. But scenarios need to apply to a broad range of favourable and unfavourable futures, and given that the future is unpredictable, the scenarios must merge the driving forces into sets of critical uncertainties (step 3).

The link between the driving forces (step 2) and the definition of critical uncertainties (step 3) is crucial to the scenario development process. According to Chart 1, both of them also influence the scenario framework (step 4). The comparison with other scenarios, however, motivated us to make an independent decision in favour of the four-quadrant structural matrix that allows for four scenarios arranged along two axes. This imposes the precondition on step 3 that two bundles of critical uncertainties must be defined there, uncertainties that besides being both highly important and highly uncertain must also be largely independent of one another. We can live with these conditions, and can therefore proceed to write the preliminary stories themselves (step 5), after defining the critical uncertainties.

Capturing the Uncertainties

Music is a global activity with highly open boundaries. International links and influences are plentiful. The first set of critical uncertainties is:

1 How progressive (in a general sense) will the world be?

Progression is defined to cover not just economic growth, which might actually work in a counterproductive way in the long term if this growth results in running short of essential and natural resources that are very difficult or expensive to replace, or climate change becomes uncontrollable, or key land, water and ecosystem resources are critically damaged. In fact, we must anticipate that economic growth will run into a ceiling set by a wide range of available resources — unless it is carefully planned and managed as a top priority from now onwards. There are some promising signs that this may happen in a best-case global scenario — that it does not necessarily follow that environmental sustainability can only come at the cost of economic growth.2

The emphasis is very definitely on good environmental and economic management across the globe — a best-case scenario. The perspective of running out of realistic choices without a paradigm shift in business and government thinking is likely to be more visible by the 2030s, if not before. These 20-year scenarios extend one-third into the 21st century — a period that will still tolerate some conventionally defined economic growth, but less as time goes unless business models change radically to give much more preference to what is sustainable in the long term. There is a great risk that any growth will be severely circumscribed decades before the end of the century, given the environmental damage already being inflicted despite efforts of leading corporations already underway in Asia (where the environmental damage is greatest) and elsewhere. This will raise some formidable geopolitical and economic issues unless the world starts to plan for such a situation — preferably now.

Economic growth became a fetish in the 20th century, especially after World War 2, and remains so in 2015. Inequality within and between nations remains a key issue which can at least partially be blamed on disparate economic growth rates, but having said that we have to add that growth is an essential but insufficient condition in the current global economy to alleviate the inequality. It makes it politically easier to achieve this, but it still depends on the will of the decision-makers.

It is difficult to see how this colossal change can be modified without a basic transformation of entrenched political economic thinking. For now we agree with IMF head Christine Lagarde that growth is essential for financial stability; rising inequality conflicts with growth; and the world must make it top priority to invest in health and education as a main tool to reduce inequality(2) This implies that only if a more promising path can be demonstrated towards achieving these objectives can the world start contemplating the prospect of a world with some economic growth. As Lagarde also said, GDP cannot yet be replaced as the main economic indicator, even though it fails to account for huge externalities such as the damage done to the environment (and culture).

The world may have 25 years to find a long-term solution and devise a path towards it, maybe less. It is a positive development that Asia and other parts of the world are awakening to the task, but it remains part of a best-case scenario. Convincing reductions of internal and international inequalities, assisted by an all-out effort to improve global education and health, are essential preconditions before serious international implementation can begin. The scenario model contains socio-cultural, technological, environmental, economic and political factors which is a big canvas, full of dependencies and mutual relationships.

The second set of critical uncertainties is:

2 What will be the status of culturally related policies in Australia?

While the music sector is globally connected, it would be hard to imagine that some key uncertainties are not home-grown. The second set of critical uncertainties puts Australian government policy in the centre. Although there are many overlaps in a complex society, there is a broad distinction between policies that are primarily economically related, and policies which have socio-cultural and environmental connotations.

Economic policy will invariably be critically important when the central process is the Budget which governs the national fiscal policy, and monetary policy is the domain of an independent Reserve Bank which works in harmony with other economic policies. Other policy areas are dominated to a greater or lesser extent by the government’s other actions and preferences, so each area may be assigned high or low priorities in a given governmental regime.

The term “cultural” can be widened to include other social policy areas. School music education and the curriculum would be one such area, as indeed would education generally. Furthermore, there appears to be a fair degree of correlation between the way some socio-cultural affairs are treated, and environmental policy. This explains the term culturally related policies, defined in these scenarios to cover cultural policies in the “narrow” sense, education and science, and ecological and other environmental policies.

Others interpret “culture” differently, but the purpose here is to identify policies that can be to some extent be postponed. Although policy priorities depend to a large extent on economic policy, which is driven by the overriding need for solid fiscal and monetary management, there are many options. Influences on the political process include lobby groups with diverse political and commercial interests and funds to promote these — often to the detriment of more discretionary areas including the arts, the environment and education. Other social policies such as health and welfare also change, but they appear more resistant to political manipulation — for example, there is more public clamour over inadequate hospital facilities than over inadequate schools and tertiary education, culture, and the natural ecology. So the hypothesis in these scenarios is that the latter constitute the areas where governments have most leeway in their short-term budgeting.

Chart 3 is based on the 11 driving forces defined in our scenario model in Chart 2 as currently important. These forces were listed and discussed in Global Risk Factors and Music in Australia. The subsequent paper, (Ideas from Other Global Scenarios), showed for the best case in one of the three scenario studies reviewed (Global Europe 2050) that each and every one of the 11 driving forces we had identified independently for the music sector had a positive future impact in the EU scenario report. The impact of each of these forces is considered to be high or at least moderate in its influence on how “progressive” or “reactionary” the global environment will turn out. The two columns of Chart 3 presents a thumbnail sketch of what these terms mean for each of the individual driving forces – the first hint to how the stories may develop in step 5.

The four-quadrant matrix which represents the scenario structure (step 4) is shown in Chart 4. The columns show the two dimensions of global critical uncertainties that were the subject of Chart 3: a “progressive” and a “reactionary” world. The two rows of the matrix show whether domestic culturally related policies are “strong” or “weak”. Each quadrant contains a brief summary which forms the basis for the draft scenario stories that follow.

The correlation between the global and domestic critical uncertainties is considered to be low. Chart 3 demonstrated that there are strong contrasts between the impacts on each of the 11 driving forces in a progressive and reactionary global environment, which suggests that the correlation associated with the driving forces would be low. Furthermore, Australian culturally related policies can be given low priority in a progressive world, and vice versa. Fiscal and other economic policies are by no means the sole influence in a complex society where social forces and powerful interest groups carry great weight at any time. Culturally related policies may suffer in a rich and materialistic Australian society if they are given low priority for any of a range of reasons. Even in the worst-case lower right-hand quadrant in Chart 4, dedicated artists may take their arts into unexpected territory – though the worst case is definitely one to be avoided as much as possible.

The main condition in any scenario planning effort is to keep each scenario plausible. They have to contain significantly different sets of conditions to cover the range of possibilities which can be influenced if identified in time, but they must be plausible. Each of them is also as likely to occur as the other three – because the future is so uncertain, it is impossible to assign different probabilities to each, and it shouldn’t be attempted.

Economic Growth Prospects in 2015

The scenarios show projections of global and Australian economic growth. Table 1 shows past and forecast growth rates for the countries and country groups most relevant for Australia, compiled by the International Monetary Fund and covering the period from 1980 to 2016. They have been added to this paper to back the plausibility of the scenario projections below.

The period 2000-07 was an outstanding growth phase, as measured by constant-price Gross Domestic Product data. During the eighties and nineties, global economic growth averaged a little more than 3% per annum, but it jumped to 4.5% in 2000-07, before the Global Financial Crisis hit. The actual global growth reverted to the previous average of just over 3% following the crisis; the IMF currently expects 3.6% for 2015 and 2016 but it has tended to reduce its previous projections as indeed it did between October 2014 and January 2015 when it cut its global growth projections by about 0.3 percentage points.

While the current global growth rate has reverted to the 1980s-1990s average, its distribution is changing from the advanced economies to the so-called emerging markets and developing economies gaining a larger share of the global economy because they are growing faster. This has accelerated since about 2000 but did occur through the previous two decades. China despite some recent slowing down remains the locomotive backed to an increasing extent by India and not too far behind by the “ASEAN 5”, Indonesia, Malaysia, the Philippines, Thailand and Vietnam. The one exception is Russia. The IMF as recently as January 2015 cut the projections back severely to show declines in Russia’s GDP in both 2015 and 2016.

The annual data on which Table 1 is built show one more indicator of potential interest — years of negative growth. The global average has not suffered a backward-moving year since 1980 though it came close in 2009. The advanced economies (the Eurozone, Denmark, Norway, Sweden, Iceland, Switzerland, Israel, Australia and New Zealand, the G7, and four recently industrialised Asian economies (Hong Kong, Singapore, Korea and Taiwan)) suffered one backward year as a group (2009), but each of its principal components (the Eurozone, UK, US and Japan) each had negative growth in five of the 37 years covered in Table 1. Australia did better with two years of GDP decline (1983 and 1991).

In contrast, the emerging markets and developing economies as a group had no year in which GDP declined, but the ASEAN 5 suffered one year of such decline in 1998 during what became known as the Asian economic crisis (coinciding with the collapse of the Soeharto regime in Indonesia). The main exception in this group of countries, however, is Russia, which if the IMF projections for 2015 and 2016 come true will experience eight years of economic decline since 1993, when these statistics became available after the collapse of the Soviet Union.

Four Scenario Stories

The stories presented below are intended to be reasonably final and are not specific to Australian music (they only give a few hints which should really relate to culture and the arts generally). A First Set of Music Sector Scenarios (paper #11 in the series) is where comments and suggested changes are especially welcome and important in the process of reaching an agreed framework.

The time has come, however, to begin putting the storylines together, based on the pair of critical uncertainties which we consider suitable. The first scenario has most detail because there is some repetition with two scenarios based on a progressive world and two on a reactionary one, and two on strong and two on weak culturally related policies in Australia.3

Culture Reigns

The world is progressive and Australia introduces a stronger suite of culturally related policies. Australia’s main Asian markets also recognise the importance of these policies, acknowledging a strong nexus between education, arts and culture. Mathematics and science are top priorities, but music and other arts are considered important parts of total learning.

Following the long difficult years in the aftermath of the Global Financial Crisis, the global economy recovers and 2017 sees above-trend growth in most countries and regions. In the longer term, China achieves an average annual economic growth rate of 7.5% up to 2025 (compare past growth in Table 1). It leads the “BRIC” countries (which also include Brazil, India and Russia) whose combined GDP had reached 25% of the global total in 2015.4 Indonesia and the rest of Southeast Asia, South Korea and Singapore also grow strongly. Japan benefits though at lower rates at its later stage of maturity. Latin America, led by Brazil and Mexico, recovers from the stagnation that hit in the mid-2010s. Russia is initially handicapped because the value of its crude oil and natural gas exports – two-thirds of its exports come from energy – declines as the supply of American shale oil booms, Middle East supply remains high and conflict with the rest of Europe takes its toll, but by 2019 diversification of its industries and more transparent business practices begin to make an impact.

Outside Asia, North America resumes growth with an above-trend annual rate of 4% in 2017, before settling down to a 3% average in subsequent years in a generally benign economic environment. The European Union lags behind in the recovery phase by a year or so, but works hard on dragging their Mediterranean member countries out of their respective quagmires.5 This is achieved to the satisfaction of most by 2018, which also sees new members including Turkey and Ukraine joining the EU, after the threat of Russia infiltrating Ukraine and the three Baltic EU members recedes.6

The rest of the world is more of a mixed bag. Some nations including Iran, Israel, Egypt, Morocco, Chile and Argentina share in the recovery and subsequent growth phase. Even the Sub-Saharan African nations benefit (some more than others), partly because they receive increasing support from international organisations ranging from the United Nations and the International Monetary Fund to NGOs and major private charity organisations (“philanthrocapitalists”)7 which have become an important source of foreign aid, and partly from tidying up their own economies and businesses. This assists badly needed major infrastructure investment ranging from roads and transport to schools and hospitals and health support generally, as well as much needed urban redesign in a continent where some cities grow to over 30 million and slums are abundant. Meanwhile, most African countries continue to embrace mobile digital technology, which is having an astonishing impact on commercial and personal communications, and through the social media helps to democratise their political practices.

The annual global GDP growth rate over the 20 years was increasingly buoyed by China, India and Southeast Asia, and Latin America. The box at the top of this section shows BRIC countries averaging 6.5% annual GDP growth between 2015 and 2025, followed by 5.5% in 2025-35. The rest of the world averaged 4.5% growth in 2015-25 and then – in truly emerging fashion – accelerating to 5.5% in the 10 years to 2035. The advanced economies of the European Community, North America, Japan and Australasia average 3%.8 Globally, this works out at annual growth being almost maintained: 4.45% from 2015 to 2025 followed by 4.22% in the ensuing decade, almost as high a rate as in the boom years 2000-07 (Table 1). It is plausible for a best-case scenario where the BRICs and other currently emerging markets and developing economies carry increasing weight. The global GDP in 2035 is 134% higher than in 2015. It more than triples in the BRIC countries (+221%) and more than doubles in the rest of the world (+130%). The total 20-year growth in the developed countries is 81%, causing their share to decline from 50% in 2015 to less than 39% in 2035. The BRIC share increases from 25% to more than 34%, and the share of the rest of the world from 25% to 27%, all in the second half of the scenario period.

Inequality between regions and countries is reduced, though a large gap remains in 2035 between the richest and poorest nations. Another relevant issue at the end of the scenario period in 20 years is that strong economic growth causes depletion of non-renewable resources. The rate of depletion is not proportional to the rate of GDP growth because relatively more services are consumed, there is more R&D going into innovative technology to reduce the use of physical resources, and better damage control is exercised. Nevertheless, there will be a ceiling to economic growth based on the availability of physical resources, and it will be more visible in 20 years’ time than in 2015. The planet just isn’t up to providing the basis for unlimited growth. The ceiling if recognised at all may appear reasonably flexible now, but it is not sensible to keep ignoring that it is hardening. This is a general caveat in these global scenarios, including the low-growth ones where less alleviating action is likely to occur so the rate of depletion will be more like the growth in GDP.

The wealth distribution within many countries becomes more equitable, assisted by more efficient tax laws, clampdowns on international tax havens and redistribution through increases in marginal tax rates on high incomes, subsidies to lower income earners and higher government pensions to the ageing population.9

The world continues to have its major trouble spots, but there is a trend towards reconciliation within nations and regions supported by increasing and gradually more equitable wealth and more democratic governments. International organisations are also strengthened, from the United Nations, World Bank and IMF to regional alliances like the OECD, EU and the cross-Pacific FTAAP-21 which becomes a reality in 2020.10

Climate control finally becomes the key concern in all but a handful of nations following the new-era international conference in Paris in December 2015 which cemented the belated cooperation that began in 2014 between China and the United States, leading to stronger and binding international agreements to reduce greenhouse gases. Solutions to the long-term threat offered in publications such as the 2014 report chaired by renowned climate change economist Nicholas Stern and former Mexican president Felipe Calderón demonstrating how further effects can be largely avoided through sensible management, with a positive effect on economic growth, were taken very seriously.11

Science was elevated to near the apex of academic prestige. Technology continued to accelerate across a broad front from drones over robotics and home automation to crowdsourcing and social media – and on to ground-breaking innovations like the gradual introduction of driverless trucks, additive manufacturing (also know as 3D printing) of devices as complex as aircraft engines, and great reductions in the cost of strong and light metals like titanium, aluminium and magnesium enabling them to become competitive in aircraft and vehicle construction, and generally taking market share from steel.12. Innovative technology continues to be a major contributor to growth and to people’s wellbeing. It is controlled to avoid major misuse by monopolistic organisations and antisocial users.

The social media, which were adopted with alacrity worldwide in the years up to 2015, though perhaps with the greatest enthusiasm in Asia, continued to play a positive role far beyond their narrow “social” function. Together with worldwide television, they provided access to and participation in public issues, including social justice and inequity. Global and national control measures were instituted to limit misuse of these powerful communication networks.

The Australian economy benefits from the improving international environment, especially its proximity to China, Japan, and Indonesia. Trade flourishes and becomes broadly based which prevents a return to the dual economy where a high Australian dollar inhibited general exports during the mineral boom years. Mineral exports remain important but other commodities and services make for a more balanced export pattern. Trade is generally free and international agreements are strengthened to protect local cultural products, including music. Australian manufacturing industries become more geared to refining our abundant raw materials rather than leaving this to other countries. Many manufacturers rely on factories in Southeast Asia to produce parts. Technological breakthroughs help reduce costs relative to competitors; an exchange rate not distorted by mineral exports is also helpful. Australian service exports boom, including education.

Australia achieves an above-trend 5% growth rate in the 2017 recovery year (after only 2.4% in 2015 and 2016) and settles down around an annual average of 3.2% thereafter. This increases its total GDP by 90% over the 20-year scenario period (above the advanced economies as a group), from $A1.62 trillion in 2015 to $A3.07 trillion in 2035. Immigration is encouraged in acknowledgement of its status as a nation of immigrants — it also successfully continues to actively work with and support the Indigenous population, with a main priority on education and cultural preservation. The Australian Bureau of Statistics “net migration plus growth” projection from 2013 to 2033, adjusted to cover 2015-35, is based on annual net migration of 280,000. The total population will then grow by one-third from 24 to 32 million in 20 years.

Despite an increase in the dependency ratio (the ratio of children up to 15 plus older people 65+, to the people of working age as this was defined in 2015) from 50% to 55% over the 20 years, GDP per head rises by 42.3% over 20 years, which is an average annual rate of 1.78%. The impact is boosted by a more equitable income distribution supported by tax reforms to stop loopholes and higher marginal tax rates on top incomes. “Grey power” is exercised vigorously by an ageing population. Welfare payments and pensions are significantly increased. More people, especially those with a professional background, stay longer in the workforce, many as part-timers who also benefit from higher age pensions. They live longer and healthier lives.

By 2018, climate change was becoming generally recognised as the major Australian risk factor requiring active and persistent control (beginning two years after the international 2015 convention in Paris at which Australia pledged to sign up). Development of major renewable energy projects becomes a top priority, especially solar which benefits from the abundant inland supply of sunshine. The cost of producing electricity from renewable sources has kept improving vis-à-vis electricity from coal-fired plants, partly from improved technology but also because coal finally gets taxed at a rate closer to compensating for its atmospheric pollution (coal exports meanwhile continue to China and other countries in decreasing quantities as they too continue to develop renewables based on major new cost-efficient technology). There is added cost to the Australian economy during the initial period of transition but the cost is insignificant compared with the damage from atmospheric pollution and environmental degradation which can by now be more convincingly estimated.

Active lobbying against a coal tax was of course prevalent, but the major corporations everywhere had long directed much of their R&D towards renewable technology. The transition was less damaging in the initial years than was feared previously.

The electricity grid was expanded to allow big solar energy plants to be situated in Central Australia (subject to strict cultural and environmental regulations) — solar electricity was even exported to a burgeoning Indonesia from 2025, greatly benefiting Australia’s balance of payments. In Australia and other countries, greater numbers professing to be “green” artists have augmented their influence and continue to promote the need to protect the environment.

The argument has become severely undermined that cultural capital should be ignored in economic analysis because it is difficult to measure. Indices of happiness or wellbeing are accepted alongside conventional measures of economic growth, and often return quite different trends — there is abundant evidence that a higher GDP does not automatically generate happiness and wellbeing in a complex society. A more equitable distribution of wealth in Australia has more effect than a rising GDP on people’s feeling of wellbeing.

The cultural value of the arts including music has been accepted, including their long-term positive benefits for national income. So has the mounting evidence from neuroscience that exposing children to music from an early age improves their general learning skills.

Details on the music sector are included in A First Set of Music Sector Scenarios, covering all four versions.

Rugged Individualism

The world is progressive. Australia’s main Asian trading partners are as determined as in “Culture reigns” to put maths and science education first, compared with other subjects including music and visual arts. Australia itself pursues other goals with lower priority given to culturally related policies (cultural, environmental, and educational). The scenario is labelled rugged individualism because the relative lack of policy support may encourage some artists to adopt strategies that wouldn’t happen if the arts were better supported — this may encourage some interesting initiatives but the main impact on cultural life is negative. This is just a label.

The global scenario is similar to “Culture reigns” including economic growth and general trends towards greater equality and international harmony (see box at the top of the previous section). By 2035 a world with finite resources will face similar prospects that there is a limit to economic growth so economic policy will require a thorough rethink. By then it will be an omen which will require action in subsequent decades, despite careful planning trying to deflect the growth ceiling through an emphasis on innovative technology .

The economy is dominated initially by the aftermath of the global financial crisis, which caused prices of iron ore and coal to be seriously reduced from 2011 onwards. With the rising global prosperity, however, commodity prices recover sufficiently for mining to keep dominating Australian exports. This is reflected in higher exchange rates which make agricultural, manufacturing and service exports less competitive, with adverse effects on the terms of trade.

Australia is bound by its international obligations to give some priority to climate policy, as it could hardly afford to drag its feet too much to damage its international reputation. Though the global prosperity benefits Australian exports (still dominated by minerals), its socio-cultural policies are adversely affected. The neglect of these policies prevails up to 2025, when the authorities become compelled to take more positive action – gradually.

Climate change remain as low a priority as is compatible with Australia’s need to preserve its international standing – which becomes more difficult as the issue becomes more critical. Active lobbying by the mining industry and other corporate interests succeeds in delaying the introduction of a coal tax until 2025. By that year, persuasive international efforts to have Australia play its proper part, buoyed by the accumulation of greenhouse gases in the atmosphere, make a direct tax mandatory in addition to continuing the general environmental protection policy which Australia has claimed as its climate change policy since 2014. The international criticism is substantiated by the fact that Australia benefits from the measures taken by other countries, which have substantial and demonstrable effects in reducing an otherwise galloping rise in greenhouse gases. But even after 2025, the coal tax remains as low as Australia can get away with, which gives the mining industry a competitive advantage to capture a rising share of the declining international market for coal, adding to its other strength as a producer and exporter of iron ore and other minerals.

Technological development is a key objective in Australia as in “Culture reigns”, but it is directed towards the growth industries rather than a general objective to improve wellbeing as well as industrial efficiency. Science is increasingly funded by big industry and subjected to its objectives.

The population is ageing, but “grey power” is up against stronger political ability of corporations to influence government policy. The attempt to increase welfare payments and pensions is partly successful but not to the same extent as in “Culture reigns”. Another victim of the cultural policy neglect is that the Australian Broadcasting Corporation, while still existing in 2035, remains relatively starved of funds catering for a “minority” and allegedly not reflecting the prevailing political view.

These are all serious developments which will dominate throughout the scenario period, though Australia either before or after 2035 is not isolated from a world where cultural life has had a better chance of flourishing. But getting more and more culture secondhand from other countries is damaging in itself. Australia lives to regret how much is lost by 2035 compared with how it could have benefited, both in general and within the cultural sphere.

Australia’s economic growth is lower than in “Culture reigns”, despite the general global environment which is as prosperous. 2015 and 2016 will again see below-trend 2.4% rates, 2017 a 4.5% recovery (not 5%). The distorted terms of trade is one factor causing growth to be reduced to an average of 2.9% from 2018, compared with long-term growth of 3.2% in the first scenario. It is also affected by the reduced priority given to socio-cultural and environmental policies, and by lack of measures to tackle the income and wealth inequalities, causing further reduction in annual growth from 2025 (to 2.8%). GDP increases by 77% over the 20 years to 2035 (from $1.62 trillion to $2.87 trillion), while the population still rises to 32 million with annual net migration averaging 280,000. GDP per head increases by 33.1% over the period (1.44% per annum).

Vested Interests Prevail

This world is generally reactionary — and vested interests prevail which affects Australia. Despite this, there is political recognition of the value of cultural capital in Australia, and importantly in other mainly middle-ranging countries too — a new force is emerging through the scenario period. In a less than ideal global environment, some positive culturally related policies are carried out in several countries. Associated with this, policies in Australia and other countries taking similar initiatives become more equitable — the political trend goes against excessive income and wealth accumulation, taxes become more progressive and incomes are redistributed to shield an ageing population and underemployed workers on low incomes against the worst effects of low economic growth.

Global economic growth is much reduced compared with the progressive world of the previous two scenarios. The advanced economies average 2% growth in their annual GDP compared with 4.5% for the BRIC countries to 2025 and then 3.5% from 2025 to 2035. China leads and Russia drags because it fails to put its house in order – it is no longer the leader in economic development that qualified it for the “BRIC club” during the first decade of the century (refer Table 1). The rest of the world maintains a 3% average but its member countries don’t emerge as major new growth engines within the horizon of these scenarios. The GDP of the developed countries increases by not quite half (49%), while the BRIC countries as a group more than double their output (+119%) and the rest of the world achieves an 81% rise. The total global GDP increases by 74%, compared with a 134% rise over 20 years in “Culture reigns” and “Rugged individualism”.

The share of the advanced economies declines from 50% to 42.7% (compared with 38.6% of the higher global GDP in the progressive world). The BRIC countries lift their share from 25% to 31.3% of global GDP (lower than the 34.3% of the higher GDP in the progressive global setting). The developing countries in the rest of the world show a slight increase in share from 25% to 26% of global GDP — as mentioned above, the developmental spurt for these which happens in the progressive world fails to materialise here within the next 20 years.

Even in China, the annual growth rate falls short of 6% between 2015 and 2025, before moving south of 5% in the decade to 2035. The growth of other BRIC economies (India, Brazil and especially Russia) is lower, though not much lower for India which benefits from the splendid tertiary educational institutions it has built up over several decades — India’s special strength in science and technology prove their worth as long-term growth agents. Part of the reason for the declining growth rate is the general sluggishness of the advanced economies, but massive environmental issues aggravate the problems of all four BRIC countries.

Globally, there is minimal action on climate change in the early part of the story; deniers continue to prevail until the early 2020s, by which time greenhouse gases in the atmosphere reach levels that alarm most people. No cost-effective breakthrough technology emerges in the first seven or eight years of the scenario period to circumvent what is happening to the atmosphere as the major energy sources continue to be fossil fuels — this problem is exacerbated by the low priority many economies put on major renewable energy technologies. The poorer world is less able to prioritise the proposed Stern/Calderón solution through structural economic change, though again a number of determined nations including Australia and New Zealand move against this constraint as far as they can. Looking beyond 2035 when economic growth might be expected to bump into an increasingly inflexible ceiling, these factors might have potentially serious long-term consequences, but again some countries have managed to review their priorities to lift the ceiling, especially from the mid-2020s. The need to reduce economic growth over the rest of the century in harmony with renewable energy technology development will continue to be one of the truly major challenges for policymakers, but while the progressive world of the first two scenarios should be a better technical and economical position to cope with this, enough impetus is created, initially by the new group of countries feeling they have to face this additional challenge.

This scenario in other words has some exciting features, not least because it signals a somewhat unexpected constellation of nations — middle-range rather than world leaders — to come forward. The largest of these countries is India with its 1.33 billion inhabitants in 2020, well on the way to become the world’s most populous nation. India has always taken different paths, not least by pursuing “small” green policies at local level as well as pursuing major projects and acting differently from its East Asian neighbours (occasionally followed by some concern from the rest of the world). But there are others going down unorthodox paths in Latin America (Chile, Peru, Costa Rica, Mexico), Europe (Finland, Norway, Sweden, Denmark, Poland, Estonia, Italy), and even Africa (South Africa, Kenya, Ethiopia). The list is representative rather than exhaustive.

Governance in the rest of the world is disadvantaged by continuing local and regional conflicts and weaker international organisations. In a world growing more slowly, poor nations for a long time receive little support except in crises which pose direct threats to other regions – similar to the 2014 Ebola epidemic which unhappily proves to be the forerunner of a swag of other deadly attacks but also helps mobilise an intensified effort from medical science. This is no new development in a world that saw the decimation for centuries or millennia of indigenous human populations previously without contact to European and Asian civilisations, but we have seen a new surge, including people everywhere, since the detection of AIDS in 1959. Bugs keep mutating to become more resistant to their eradication, and modern science finds it hard to keep up, and prevent the spread to other countries which was successfully achieved in the Ebola crisis.13

There is no improvement in the inequality between rich and poor countries in a world which is generally less prosperous, unhappier and more subject to risk than in the scenarios that benefit from a progressive global environment. Even a high GDP or high incomes within a society doesn’t guarantee happiness, but a sense of inequality and social injustice in a society is a likely cause of unhappiness. This world succeeds beyond expectations because some nations have enough political and societal fibre to fight against the economic sluggishness, and light can be seen at the end of the tunnel. Internally, the top income and wealth groups gain while the bottom groups suffer most from the lack of economic expansion, but policy measures are put in place to limit this effect. The social media continue to flourish in this environment — international and national abuse control might potentially lead to greater conflict both internationally and within nations, but the worst impact is deflected in Australia and other countries which back a new emerging cultural and societal order.

In many big countries, science becomes increasingly driven by commercial interests with less time given in western countries to the pure (“blue-sky”) research which is a major source of innovation. This includes America which in 2015 was the world leader in scientific research — of course this remains a dominant influence but not quite in the same sovereign position. Asia, in particular India, China, South Korea and Japan, takes a wider view of science as an agent of economic growth, and Australia (so close to Asia) joins them realising that a good core scientific education starting at school and progressing to tertiary level is important if international competitiveness is to be retained and enhanced. This in time tilts the balance further towards the countries that buck the trend towards a conforming world of inequity, and eventually forces the current dominant group of advanced economies to respond decisively to such a momentous wakeup call.

The sluggish international economy directly affects international trade and investment. Economic growth in Australia averages 2.1% per annum up to 2025, increasing to 2.2% to 2035 (still much below the 3.2% in “Culture reigns”, which benefited from a progressive global environment), reflecting its efforts to promote science and general education, and recognising that positive culturally related policies have a measurable impact on the rate of expansion, though this has been difficult to prove in the past from statistics because of the welter of other economic influences. Australia’s GDP grows by 53% over the 20 years to 2035, from $1.61 to $2.46 trillion. Looking forward from 2035, its GDP has been slightly but increasingly influenced over at least a decade and there are signs that the long-term impact will be stronger.

Though the impact of the government’s policy of redistributing income from wealthy to lower income groups including pensioners softens the blow, the sluggish economy with rising unemployment and underemployment affects the general tolerance of migrants which even positive culturally related policies can’t eliminate – “foreigners” are accused of taking jobs from the locals in Australia, although the sentiment is not as fierce as in Europe. The Australian Bureau of Statistics projection of the population in “a smaller Australia” reaches 30m by 2035, which is 25% higher than in 2015, rather than the 33% increase to 32m in the “progressive world” scenarios.14

The average growth in GDP per head in this scenario is much lower in this scenario despite being shared by a smaller population: 22.4% over the full period which translates to 1.02% per annum. This might have had more serious consequences but for the government’s active redistribution policies.

The climate change issue initially takes a back seat in Australia in a world which postpones mitigation as long as possible. Australia according to some politicians cannot do much on its own to reduce the increase in greenhouse gas formation. However, a greater sense of urgency is promoted by a flourishing local green movement, which is represented by a growing number of politicians at both federal and state level, further backed by active NGOs. The urgency intensifies after 2025 when the need for action becomes more generally recognised as acute, with Australia in a frontline position motivated by the tourism value of its reefs and more generally because an already hot country is becoming perceptibly hotter with more disturbed weather patterns. Global greenhouse gas emissions are not reduced as much as might be expected in a world growing only slowly, because the development of renewable technology is adversely affected in a poorer world. However, countries like Australia increase their priority to mitigate the impact of emissions as much as possible within their budget.

An Australian coal tax is introduced in 2020 despite the lobbying of the mining industry. This benefits the development of solar and other renewable energy technologies after 2025, though this remains constrained by lack of funding in an global and local economy handicapped by relative stagnation. The green movement is as active and as well represented as ever (and “green arts” are part of this important resource).

In a materialistic reactionary world, Australia moves against the trend on culturally related policies. It is inspired by nations like Estonia, Finland and South Korea (and other countries listed above which continue to prosper relatively) to conduct more efficient cultural and educational policies, in addition to its promotion of a safe environment despite unenthusiastic support from major western nations. Australia follows the example of China, India, Japan and South Korea in realising that the role of science, including pure “blue-sky” research as well as applied technology, is of long-term importance.

Australia continues to benefit from its location next to the main Asian economies, even at the lower growth rates in this scenario. Trade flourishes within this setting further assisted because the exchange rate and the terms of trade become less distorted as the share of minerals in total commodity and service exports declines. China, South Korea and increasingly India and Indonesia (among the countries closest to Australia) provide reasonable economic support, as does the more mature Japanese economy though its growth is not just low but dismally so in this scenario. Australia also retains, or regains, a leading position in selling its educational capabilities in Asian countries that despite their own developing capabilities in the educational field still value exposure to good-quality education delivered by other countries.

The intrinsic value of cultural capital becomes accepted by the majority of Australians and their representatives. GDP ceases to be the sole criterion of prosperity though it is of course so entrenched as the main indicator of macroeconomic growth that it retains its role there, despite attacks on its inconsistences such as counting everything attracting payment whether or not the goods and services involved are to the greater good. The Australian public in this scenario is well aware of the slower growth that has beset the world, but it also accepts that a high GDP does not automatically equate to happiness or wellbeing.15

Sliding Inexorably

A reactionary world badly affects Australia, by depressing its economy and indefinitely delaying the opportunity for culturally related political action in Australia. It is a sad outcome but this world turns reactionary (and drags Australia down with it) for several reasons. Some catastrophic events are clearly caused by climate change which has been inadequately acknowledged and acted upon. Regional conflicts proliferate, at least partially associated with a failure to deal adequately with the disparity between rich and poor countries. Social media fan the flames. China, India, Russia and Brazil (and others) fail to control their massive environmental problems. Inequalities, especially those associated with ethnic and religious groups, aggravate the internal situation in rich as well as poor countries. Moreover, these adverse factors are to some extent correlated, so they reinforce each other.

The world in 2015 was already in its eighth year of disappointingly low activity, and the fear of many was that the impact of the global economic crisis will continue as a protracted recession. The rate of economic growth in the BRIC nations, led by China, began to decline as early as 2011. Australia was one nation that felt the impact keenly in 2014, as prices of iron ore and other basic commodities plunged further, causing the ratio of export and import prices (the terms of trade) to tumble as well.

Twenty years later, in 2035, the feeling is widespread that the world is close to reaching zero GDP growth which many feel has to happen for a planet of finite natural resources. The trouble here is that there has been no planning for such a situation — and the world is much unhappier than if realistic concerted preparations for the “zero-growth” world had been carried out, or postponed decades into the future as happened in more favourable global scenarios.

International organisations including the United Nations have become weaker, there is insufficient renewal of the institutional framework which could otherwise have provided better support, such as the World Bank, IMF and smaller clubs such as the EU, NATO, OECD and ASEAN.

The above table tells the story. The global GDP increases by a total 47% in the twenty years to 2035, but the advanced economies can manage only 17% (0.8% per annum), the BRICs double their GDP at a slowing growth rate averaging 3.5%, and the rest of the world barely lifts its global share at a 2% rate. However, population growth slows too according to the medium variant of the United Nations’ projections, dating from 2012, providing no comfort but at least GDP per head still show some increase, tiny as it is. India, at a 0.9% annual rate of population growth, beats China by 2035 with 1,525 million people compared with China’s 1,449 million as its population stabilises, indeed goes backwards from 2030 according to the detailed projections. Of the advanced economies, the United States achieves a relatively high population growth rate of 0.7% between 2015 and 2035, above the growth in Britain (0.5%), not to mention Western Europe (a mere 0.1% per annum).

Australia’s GDP increases by 23% from $1.65 trillion to just over $2 trillion between 2015 and 2035, marginally above the growth in population from 25 to 30 million (20% or 0.9% per annum, the same rate as India). The outcome is a 2.5% increase in GDP per head, at a minuscule average annual 0.13% rate of growth – dramatically low when economic policy is geared to and the expectations of the community are for living standards to continue rising. Furthermore, the income and wealth disparity worsens as the unemployment rate doubles. Economic growth remains the guiding but thoroughly disappointing indicator through the 20 years of these scenarios.

This is obviously an Australia to avoid. But it is not an unavoidable Australia – just one to face as a future risk which is as likely to occur as any other scenario unless strategically recognised and then planned against.

Significance for Music Sector Scenarios

The next paper in the series, Music Sector Structure for Scenarios, provides a vital link to the scenarios for the Australian music sector in A First Set of Music Sector Scenarios. It identifies a set of four specific “drivers” which help explain the current status of the sector. Having established the current status we can then move on to determine its likely future status according to each of the four scenario stories which set the global and general Australian stage.

Another paper in the series, Valuing the Invaluable, demonstrates the close parallel between cultural and ecological research and explains the limitations to putting a true value on a cultural phenomenon such as music, as against measuring it with the available data. The paper is recommended reading for anyone wishing to grasp the full significance of the current scenario research project, due to culminate in the second half of 2015 when our statistical inquiry into the size of the music sector is scheduled to conclude.

Fortunately, the task of presenting the position of the music sector is simplified because the global and general Australian influences on the music sector have already been defined in this paper. These influences can be presented in summary form. Furthermore, Music Sector Structure for Scenarios describes the current (2015) status of the music sector which forms the common origin of the four scenario stories. It only needs outlining once.

It is assumed throughout that the basic structure of the economy and the music sector will remain reasonably intact. This is the only sensible assumption as there is no point in developing scenarios for a radically changed structure to which no mitigating policies can be applied.

In essence, the global scenarios cover:

  • The world is progressive/reactionary (the global critical uncertainty)
  • Economic growth and distribution
  • Trouble spots/conflicts/inequality
  • Attitudes to science and technology
  • Attitudes to the environment/climate change.

Add to these the general Australian influences:

  • Government budgets/culturally related policies (the local critical uncertainty)
  • Attitudes to immigration/population growth
  • Ageing population/workforce dependency ratios
  • Political forces/lobbies.

What is identified in Music Sector Structure for Scenarios is therefore the music-specific driving forces that add to the global and general Australian influences.

Articles in This Series

  1. Putting Numbers on Our Cultural Assets: Not Yet Possible   (27.3.2014)
  2. How to Explore the Cultural Future   (7.4.2014)
  3. Cultural and Creative Activity in Australia   (15.4.2014)
  4. Global Risk Factors and Music in Australia   (17.10.2014)
  5. Scenarios, Virtual History, and Chaos   (20.10.2014)
  6. Ideas from Other Global Scenarios   (8.12.2014)
  7. Four Global Scenarios Set the Stage   (18.12.2014)
  8. Music Sector Structure for Scenarios   (28.2.2015)
  9. Valuing the Invaluable   (5.3.2015)
  10. Some Big Possible Positives – Or?   (20.6.2015)
  11. A First Set of Music Sector Scenarios   (23.6.2015)
  12. Global Leadership Challenges: A Missing Link in the Scenario Planning   (31.10.2015)
  13. Present and Future Changes and Their Role in the Scenarios   (20.12.2015)
  14. Complex Adaptive Systems and Music   (9.1.2016)


Hans Hoegh-Guldberg, 18 December 2014. Updated and summarised 3 January 2015; scenarios revised 24 January 2015; final section added 31 January 2015, and the section on economic growth to 2015 on 8 March 2015. The numerical projections for Australia were updated on 12 March 2015 in preparation for the final stories in A First Set of Music Sector Scenarios.


  1. Paper #9, Valuing the Invaluable, was added to the series to show the difficulty of fully evaluating the value of cultural and natural capital — an important consideration when statistics are added to the scenarios, planned for mid-2015.↩︎
  2. Two recent examples: Mark L Clifford (2015), The Greening of Asia: The Business Case for Solving Asia’s Environmental Emergency, Columbia University Press, and Felipe Calderón and Nicholas Stern (chair and co-chair, September 2014), Better Growth, Better Climate: The New Climate Economy Report, The Global Commission on the Economy and Climate. Both are well-received major works that need careful study. They are described in scenario paper #10, 1↩︎
  3. General note: The classification of nations into “advanced” and “emerging and developing” refers to their defined status in 2015. By 2035 more nations and regions will become advanced. Another general note: all economic statistics, and their growth rates, are in constant values, net of price changes.↩︎
  4. The World Economic Forum scenarios on the future of financial institutions showed that in 2008, advanced economies accounted for about half the global GDP, the BRIC countries for about a quarter and all other emerging and developing economies for close to a quarter. In round figures, the estimated 50/25/25% split is close enough to provide an initial weighted average for 2015. Over the next 20 years more countries will move from “emerging economies” to “BRIC” status, which explains the accelerating growth rate in the rest of the world.↩︎
  5. The European Central Bank’s massive expanded asset purchase program announced on 22 January 2015 totalling €1.25 trillion over 20 months (€60 billion per month) takes time to work through the system.↩︎
  6. The developed countries in the WEF report were grouped as follows: North America, Japan+Australia+New Zealand, and Eurozone+UK, similar to the G7 plus Australasia, assuming “Eurozone” in this case includes all EU members defined by the IMF to be advanced economies in 2010. This still leaves out some small but prosperous countries including Norway and Switzerland, and Israel.↩︎
  7. See for example Matthew Bishop and Michael Green, Philanthrocapitalism: How Giving Can Change the World. A & C Black, London 2008.↩︎
  8. Australia grows slightly faster (3.2%), benefiting from its position as Asia’s neighbour. In this best-case scenario, the lack of environmental constraints on a constant 3% growth rate for developed countries up to 2035 may be plausible, but this rate must eventually slow down. Thomas Piketty, in his Capital in the Twenty-First Century (Harvard University Press, 2014), writes on the basis of different premises (p 572): “For countries at the world technological frontier — and thus ultimately for the planet as a whole — there is ample reason to believe that the growth rate will not exceed 1-1.5 percent in the long run, no matter what economic policies are adopted.” Some ecologists would think that even this projection is optimistic. Elsewhere (p 569) he writes the following on climate change: “It would probably be wise to choose a balanced strategy that would make use of all available tools” [including faster development of renewable energy sources and strict limits on hydrocarbon consumption.] “So much for common sense. But the fact remains that no one knows how these challenges will be met or what role governments will play in preventing the degradation of our natural capital in the years ahead.” This may be overstating the case, as there are some signs that the major governments have begun to cooperate to a greater extent. While the music scenarios do not require speculation on what might happen over the final two-thirds of the century, the century-long perspective is nevertheless worth retaining.↩︎
  9. Thomas Piketty’s treatise, quoted in the previous footnote, implies that inequality is a very difficult animal to slay, because of the “fundamental force for divergence” that r, the average annual return on capital, naturally exceeds g, the rate of economic growth. The story is complex, but most of the past 2-300 years have been characterised by increasing wealth inequality in Europe and the US.↩︎
  10. The long hoped-for 21-nation Free-Trade Area of Asia and the Pacific, still a somewhat distant dream in November 2014 according to a special report on the “Pacific Age” in The Economist, for the first time includes both America and China, as well as Canada, Mexico, Chile, Peru, Australia, New Zealand, Russia, and 12 other Asian countries. The Pacific truly becomes the engine room of world trade, led by the United States and China.↩︎
  11. Nicholas Stern and Felipe Calderón (co-chairs), Better Growth, Better Climate: The New Climate Economy Report. Global Commission on the Economy and Climate, 2014.↩︎
  12. If all US planes and cars used lightweight metals, it would cut carbon emissions by 5% and save 121 billion litres of fuel a year according to the METALS program of the US Department of Energy’s research arm ARPA-E. (‘Heavy metal is so last year’, New Scientist 28 February 2015.)↩︎
  13. Jared Diamond, Guns, Germs and Steel: A Short History of Everybody for the Last 13,000 Years, Chatto & Windus, London, and W. W. Norton, New York, 1997. The book is still considered an outstanding work on global societal development almost 20 years after its publication, though it is rightly criticised for underrating the spiritual element in indigenous cultures. The Dreamtime, so important for Australian Aboriginal culture, is dismissed in one sentence.↩︎
  14. The ABS projections cover 2013 to 2063 but the largest variations between the five published projections occur after 2033.↩︎
  15. An international survey of wellbeing found that the happiest country in the world is Costa Rica followed by Vietnam and Jamaica, and the USA was in 105th position of 151 countries (S. Abdallah, J. Michaelson, S. Shah, L. Stoll and N. Marks (2012), The Happy Planet Index: 2012 Report, A global index of sustainable well-being). The indicators were inequality-adjusted life expectancy, well-being, and ecological footprint. Costa Rica and Vietnam were also the countries with the highest straight happiness index (before the adjustment for inequality), with Jamaica in sixth position. The US lost rank in the Happy Planet Index for having the eighth-highest footprint. Australia did better with a 69th position in the ranking, with high life expectancy, a high index of wellbeing, and a lower but still considerable ecological footprint. It may be objected, of course, that the survey was ecologically biased, and other indices result in other rankings.↩︎

Hans founded his own consulting firm, Economic Strategies Pty Ltd, in 1984, following 25 years with larger organisations. He specialised from the outset in applied cultural economics — one of his first major projects was The Australian Music Industry for the Music Board of the Australia Council (published in 1987), which also marks his first connection with Richard Letts who was the Director of the Music Board in the mid-1980s. Hans first assisted the Music Council of Australia in 2000 and between 2006 and 2008 proposed and developed the Knowledge Base, returning in an active capacity as its editor in 2011. In November 2013 the Knowledge Base was transferred to The Music Trust, with MCA's full cooperation.

Between 2000 and 2010 Hans also authored or co-authored several major domestic and international climate change projects, using scenario planning techniques to develop alternative long-term futures. He has for several years been exploring the similarities between the economics of cultural and ecological change, and their continued lack of political clout which is to a large extent due to conventional GDP data being unable to measure the true value of our cultural and environmental capital. This was announced as a major scenario-planning project for The Music Trust in March 2014 (articles of particular relevance to the project are marked *, below).

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