News from the front desk No 478: There’s no shortage of optimistic commentary coming out urging us not to waste this crisis.
Suddenly, we have hours to kill in self isolation to reconsider existing economic, environmental and social policy, and ponder over better options. With any luck, we’ll seize the opportunity to embark on economic recovery that also solves some of our biggest problems, such as housing affordability and, of course, climate change.
In truth, there’s no way of knowing if economic recovery in Australia will be green, brown or some other funky shade (see regular TFE contributor Mike Brown’s realistic take on the current state of affairs).
In good news, The Fifth Estate’s pages are teeming with ideas that pair economic recovery with better environmental and social outcomes.
Going hard on affordable and social housing is one option. This week, Housing All Australians founder Robert Pradolin flagged leasing Crown land to private companies for build-to-rent leases as a economy-boosting, job-creating option waiting at the fingertips of the Commonwealth government (read more about it here).
Another interesting idea was floated by Committee for Sydney on Thursday – why not seize the opportunity afforded by near empty streets to fast-track the NSW government’s existing plans to expand its cycle network? The group proposes hitting fast forward on the plan to build it in three years rather than 40.
The federal government looks set to play the infrastructure card, with Infrastructure Minister and Deputy Prime Minister Michael McCormack telling the AFR on Thursday that he was wants to bring forward suitable projects in its $100 billion infrastructure program to help keep Australia’s economy alive and kicking.
But first, the government will need to eliminate that darned red and green tape that holds projects up. Concerningly, in the interview, McCormack said that the state governments were being uncharacteristically cooperative about removing these bureaucratic barriers.
In Camp Labour, an old favourite got a spruiking – high-speed rail along the eastern seaboard. It’s been labelled an obvious option by the party to recover from crisis, particularly as it will help revive regional areas.
If you’re not hopeful governments will opt for economic stimulus that kills two birds with one stone, then perhaps you’ll be more optimistic about murmurs that the virus will knock unsustainable companies off the perch entirely.
Investment specialist Fidelity set out to investigate whether companies with “good sustainability characteristics” demonstrate more resilience in a financial crisis than non-sustainable ones because they tend to have “more prudent and conservative management teams”.
“The data that came back supported this view,” Fidelity’s global head of stewardship and sustainable investing Jenn-Hui Tan said, as reported in the SMH.
The findings aligned with commentary from Pengana WHEB fund manager, Ted Franks, who pointed out that ESG investors tend to steer clear of high debt companies and opt to invest in companies with a long-term vision for sustainability.
The impact investor also said the crisis showed the writing on the wall for “structurally challenged sectors” such as oil and aviation, and warned governments thinking of bailing them out to reconsider.
“Sustainability is the future one way or another,” he said.
He also suggested that pandemic conditions – offering plenty of time to think – have got people in the mood to do good with their money.
The latest stats from Ipsos support this notion, with 65 per cent of people worldwide agreeing that it’s important to prioritise climate change in the post-COVID-19 economic recovery.
Perhaps unsurprisingly, Australians were the least likely to put the climate change in the same category of seriousness as COVID-19 (along with the US), with the Chinese respondents to the global survey the most likely to rank the climate emergency alongside the virus.
Still, more than half of Australians (59 per cent) were on board with the seriousness of climate change.
While support for a green-tinged recovery is strong, 50 per cent of Australians are happy for government action that jeopardises the environment if it means helping the economy recover.
But short-sightedness is set to come back to bite 50 per cent of Australians, with new data released by the Economist Intelligence Unit as part of Earth Day on Wednesday showing that Asia-Pacific economy will be 2.6 per cent smaller in 2050 due to lack of climate resilience.
The world is starring down the barrel of 3 per cent loss in GDP worldwide due to loss of infrastructure, lower crop yields, tourism losses and other climate impacts.
The region will not be the worst effected: Africa is the least resilient region and its economy is expected to contract by 4.7 per cent by 2050 due to climate change.
North America and Western Europe, by contrast, are expected to feel the heat the least (1.1 and 1.7 per cent, respectively).
According to the EIU’s country analysis director, John Ferguson, the index “reveals the vulnerabilities that exist in developing countries to the oncoming impacts of climate change.
“It’s important to remember that a 3 per cent loss of real GDP in 2050 is highly significant for the global economy, and that there will be economic losses in every year of the coming three decades.”