COVID19 Recovery Strategy - 1 May 2020 - Committee For Sydney
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COVID19 Recovery Strategy
1 May 2020
Summary
1. There will be a long transition period when the economy is partly open, partly closed.
2. During the time before global travel returns, we need to invite
Sydneysiders/Australians to revisit their own city/country in new ways.
3. The economy will be permanently changed by the recession, as some firms and some
industries will never come back to their former strength.
4. Government needs to unleash new firms and new industries in order to power back
the economy.
5. Australia’s success managing covid19 has highlighted its virtues as a well-managed, low
risk country, creating a unique opportunity for attracting global talent, business
investment, and students.
6. We are in the early stages of working through the long-term implications for city life.
The policy problem: A war with two fronts
How to manage public health and economic impacts simultaneously
Source: Source: McKinsey, ”Safeguarding our Lives and our Livelihoods”
Australia is flattening the curve, but at a high social cost
Source: Financial Times
Australia’s fiscal stimulus has been among the largest in the world
Source: Grattan Institute — https://blog.grattan.edu.au/2020/04/covid-19-australias-fiscal-response-is-now-among-the-biggest-in-the-world/
It will still be the biggest economic decline since the 1930s
Australian recessions by size
2020
IMF:
-6.7%
Source for previous recessions: Terry Rawnsley, SGS Economics and Planning
Every pathway for re-opening is fraught with peril
Ethically non-viable options for re-opening A. Stay in lockdown until there is a vaccine or treatment Would drive widespread immiseration Profound uncertainty about timeline; cure or a vaccine could be years away HIV and common cold still do not have vaccines Efficacy of treatments or vaccines not yet known B. Open up and let the virus run its course Would overwhelm hospitals Would cause unacceptable death rate
Culturally and technically unlikely options for re-opening C. Mass contact tracing Even Singapore couldn’t do this well enough to avoid lockdown Requires massive new apparatus for monitoring population Unclear if technically viable given the occurrence of “super spreaders” and high rate of transmission Evidence that voluntary apps do not attain high enough use to work D. Mass testing Would require testing virtually everyone in the country, repeatedly Would also require a massive expansion of public health capacity Unclear if technically possible to do this at the scale required E. Managed herd immunity Keep at-risk people in quarantine; gradually expose lower-risk people and let them return to work Unclear if people are truly immune after exposure based on reports of second infection Likely to lead to many deaths unless it emerges very gradually F. Immunity permits Based on prior infection or antibody test, grant people who are “safe” the ability to return to work Probably works best coupled with “herd immunity” strategy to expose high numbers of people Unclear if people truly immune or if testing will be able to detect antibodies
Best (or least-bad) options for reopening G. Try to eliminate the virus from Australia Stay in lockdown/quarantine until the last case dies out Would require high degree of border control to prevent new introduction H. Phased lifting of restrictions + adaptive triggering Open the economy gradually and monitor infection rate When/if virus re-surges reimpose social distancing Options G & H are mutually incompatible. Gradually lifting restrictions while the virus is still circulating means giving up on the possibility of eliminating it from Australia. Australia is converging on phased lifting of restrictions with adaptive triggering (option H). This has big implications for economic and social policy.
A phased reopening with adaptive triggers means we will be partly
open, partly closed for a long time
Source: Tomas Pueyo, “The Hammer and the Dance”Five phases of the pandemic
Denial Lockdown Transition Recovery New Normal
Public Growing awareness Build up the capacity to Manage “the dance” of Re-tool to respond to Institutionalise
test, trace, isolate, and gradually reopening future epidemics permanent pandemic
Health Public health experts
treat people society while managing monitoring and response
trying to convince
Focus everyone else to take
the pandemic within an capacity—nationally and
acceptable number of globally
action
cases
Hibernation Restart as much of the Emergence of new
Economic Mostly no impact with
economy as possible,
Use massive fiscal
industries; re-allocation
exception of China- Replace income of stimulus on the public
Mgt exposed industries businesses and while many sectors are side and remove all of labour force away from
still not able to return industries that never
Focus (universities, tourism) households so they can possible impediments to
come back; paying off the
survive till recovery private sector job
creation debt from the previous 3
phases
Urban Life goes on as normal Keep minimum necessary Retrofitting city life to
impose physical
Retrofits of essential Sort out temporary vs.
permanent changes
life support systems infrastructure to facilitate
Policy functioning distancing management of future
Focus pandemicsTransition phase = after lockdown but before a vaccine or
treatment
New
Denial Lockdown Transition Recovery
Normal
Economy is partly open, partly closed
Continual risk of shutting things down again if virus resurges
No international travel
No large gatherings
Probably limits on bars/restaurants
… in the context of a worldwide recessionThe idea: re-open as much as possible while keeping the transmission
rate below 1
Conceptual chart –
not specifically
what’s required for
RPrioritising what to reopen based on a combination of economic importance and impact on virus transmission Government is now starting to identify sectors to re-open. Source: McKinsey, “Winning the (Local) COVID19 War,” April 2020
Key policy actions for the transition period for Sydney (1/2) Done Progressing Needs Work 1. Create an order of opening for businesses Goal is to open as much of the economy as possible while keeping R below 1 2. Develop codes of practice for every industry With capacity to communicate, train, monitor, and enforce: certify businesses as “covid-ready” Early success with construction industry Larger companies and peak bodies now developing these as voluntary guidelines 3. Build up public health capacity to test, trace, isolate The better this gets, the more successful a phased approach with adaptive triggers will be Unclear if >50% of Australians will download and use the app More work needs to be done on supporting/monitoring quarantines 4. Retrofit urban spaces for social distancing Develop guides for retrofitting essential city infrastructure Airports, trains, supermarkets, public space… everywhere it’s needed — challenge for designers 5. Manage transport Likely mode shift toward driving; mitigated by continued working from home One key opportunity is rapid build-out of cycle network – could become the “3rd option”
Key policy actions for the transition period for Sydney (2/2)
Done Progressing Needs Work
6. Continue to provide social insurance for the sectors that remain closed
Depending on length/depth of recession added measures may be necessary
Key policy question: keep unemployed people in ”hibernation” vs. working to shift people into other parts of the
economy
7. Invest public funds heavily to power as much of the economy as possible
Develop infrastructure project/program list
Un-cap council rates to enable LGAs to keep people working
8. Remove barriers in the planning system to unlock private investment
Fast track major transit oriented developments
Finish planning reform efforts to reduce approval times across entire portfolio
9. Solve the disparate impacts of social disruption
Develop plans for vulnerable populations during the transition
Lay the foundations now for a just recoveryTransport during the transition: 3 key opportunities
Some shift of trips to driving is probably inevitable
1. Reduce peak trip volumes so mobility systems have enough capacity
- Leverage shift to working from home
- What would a fully scaled up Transportation Demand Management program look like — working with large
employers to de-synchronise trips?
- The still untapped potential of pricing to spread the peak
2. Accelerate the cycle network
- Current plan is to finish it in 2056. We propose building it in 3 years instead.
- Effective fiscal stimulus: relatively short time frames, work can be done by smaller firms
- Important enabler of social distancing
3. Reclaim high streets for public life
- Will be central to the economic recoveryThe real recovery begins after there is a vaccine
New
Denial Lockdown Transition Recovery
Normal
… or an effective treatment; or population level immunity
Likely not for 12-18 months
Still likely to be massive global disruption with many countries facing economic and/or public health collapse
But for Australia this is when the focus shifts to powering the economy back onThe economy will likely come back in a different form
The recession may accelerate trends that have been in motion for a long time
Primary resources
Likely to be devastated: Value Added
Culture and performance Australian exports by percentage of total export value At risk
Bars, restaurants, cafes
Visitor 1%
Other transport services 1%
Business events 1%
Sport Refined petroleum 1%
1%
Copper 1%
Likely to face slow recovery: Wool and other animal hair
1%
1%
Global business travel 1%
Global leisure travel Aluminium 1%
1%
Foreign students Telecom, computer and information services 1%
1%
Meat 1%
Possibility of widespread 1%
Copper ores and concentrates 1%
bankruptcies 2%
Beef 2%
Firms that no longer exist cannot re-
3%
hire Gold 4%
5%
Coal (Thermal) 5%
Previous problems remain Coal (Metallurgical)
8%
10%
Long-term decline of carbon exposed 10%
industries Iron Ore and concentrates 14%
0% 2% 4% 6% 8% 10% 12% 14% 16%
Source: Analysis by CFS based on Department of Foreign Affairs and TradeKey policy actions to enable a strong recovery Done Progressing Needs Work 1. Major investments in infrastructure Continue to fund projects with true long-term impacts on society and economy 2. Economic reforms Focused on underlying policy settings to make it easy to start and grow new companies 3. Fix the tax structure Shift from business/payroll tax to broader GST or equivalent Add fiscal capacity to pay back debt 4. Work through bankruptcies Enable entrepreneurs to start or restart companies after likely widespread failures 5. Retraining to help people through job dislocation Requires occupational reskilling at a scale never before attempted 6. Global talent attraction strategy
Key public infrastructure investments: CFS priorities Major projects ready to tender West Metro (moving forward!) Programs More Trains, More Services; Transport Access Program Fund LGA capital programs Social/affordable housing Small/medium new projects Build the 30-year Cycle Plan in 3 years High street renewal Longer term projects to keep moving forward Renewable energy infrastructure (Snowy Hydro 2.0 moving forward!) Fast rail to Newcastle/Wollongong/Canberra
Innovation economy priorities for the Committee
1. Invest government dollars in important R&D efforts.
E.g. Build on CSIRO ‘national missions’ to drive research
2. Make it easy to start new companies and create good jobs.
E.g. Expand start-up incubators, accelerators and maker-spaces
3. Make Sydney one of the best places on the Earth for talented people to live and work.
E.g. Nurture innovation precincts
4. Make it easy for talented people to come to Sydney.
E.g. Expand global talent visa schemes
5. Give Sydneysiders the skills they need to be successful.
E.g. Support the VET sector to adapt to agile reskilling
* Partial listSector strategies: culture and tourism What can be done during the period when Australia is ready to re-open but the rest of the world cannot come here? Develop codes of practice for how to operate during transition and recovery Along with phases for re-opening The big opportunity: make a new invitation to Sydneysiders/Australians to re-experience their own city/country “Great Australian Bucket List” Inbound trips to Australia (2019): 9,343,600 Outbound trips from Australia (2019): 9,917,000
Global talent attraction strategy: the key opportunity Skilled migration likely to be reduced Long quarantine periods Fewer temporary workers in the country during the lockdown and transition phases Generalised uncertainty about the future BUT: Australia could be in high demand as a destination for global talent Based on successful handling of covid: a safe, competent country A relatively open economy when other countries are still being ravaged The key opportunity: Focus on attracting highly sought after global talent that can reposition Australia’s economic potential Supports in-bound business attraction Supported by work on a new narrative ** Note: still a long-term risk to Australia’s global reputation based on weakness of climate policies. Global talent and investment strategy will need a change in direction on climate.
Other sector strategies in development
Universities
Leading source of export income can be recovered if they can run a strict 2-week supported quarantine program to
bring in foreign students
Can play even bigger role in Australia’s global talent strategy if graduates with job offers have a path to permanent
residency
University research capacity has strong links to innovation across all sectors, including advanced manufacturing
Advanced manufacturing
Australia can benefit from global rethink of supply chains
Opportunity to attract firms looking for stability
Opportunity to increase added value in export mix through “smart specialisation”We eventually discover how the pandemic changed us
New
Denial Lockdown Transition Recovery
Normal
After the recovery we will emerge into a new normal.
New economic drivers
New urban patterns
Geopolitical changes
Cultural changesPreparing for the “new normal” Sorting through what changed and what it means for the long-term future 1. The new economic drivers Which new industries will power the recovery? What do we need to do to enable them to thrive? 2. The new urban patterns How will cities change? Will people come back to public transport? Does design for social distancing need to become permanent or not? 3. The new governing institutions How do the democratic and governing institutions need to evolve? 4. The public health system Does Australia need to change anything? 5. The new global relationships Will geopolitical links change Australia’s role in the world? What does a world with less international travel mean for Australia?
Do cities need to change?
Temporary Permanent
Create space for people to move around safely
Tactical bike lanes Build the 40-year bike plan in 3 years
Tactical footpath widening Fund retrofits of Sydney high streets
Reduce speed to 30 km ped volumes are high
Reduce peak loads on mobility systems
Encourage working from home across week Travel demand program with major employers to
Develop loading capacities and management de-synchronize journeys
protocols for buses, trains, stations Congestion charge for CBD
Enable safe working environments
Develop codes of practice for safe operation New HVAC systems optimized for airborne
during covid for every industry diseases
Guidelines for floor spacing, elevators, etc Materials research for interior surfacesCommittee for Sydney’s role in the transition and recovery
Technical
Convening Research Communications Advocacy
Assistance
Bring the right people Develop actionable, Lead a conversation Bring actionable ideas Work closely as a
together to explore the realistic solutions that that can change the to government trusted advisor with
most important issues will solve problems at way people think government on
for the future of scale problems of
Sydney implementation
Recovery focus: Recovery focus: Recovery focus: Recovery focus: Recovery focus:
Industry sector Unleashing the future CFS Live Tax reform to unlock Industry sector
strategies economy Media presence growth strategies
Global knowledge Smart infrastructure R&D expansion Future transport
exchange Retrofitting urban Global talent attraction agenda
systems Infrastructure priorities Planning reform
Just recovery Public spaceCurrent advocacy priorities for the Committee: federal
1. Launch a global talent recruitment and business attraction campaign leveraging
Australia’s benefits as a less risky location over the long run.
2. Lower business taxes to match other social democracies that are key global
competitors, while broadening the base to keep fiscal capacity high.
3. Increase spending on R&D to 3% of GDP.
* Partial listCurrent advocacy priorities for the Committee: state
1. Repeal stamp duty and replace it with a broad-based land tax
2. Fast-track major privately-financed transit-oriented developments.
3. Continue high levels of infrastructure investment for the projects with significant long-
term beneficial impact, even those on long time frames.
4. Accelerate the 40-year bike as the best option to enable the mobility system to
function in a post-pandemic world.
5. Fund a high streets renewal program as a core strategy for economic recovery and an
enhancement to daily quality of life.
6. Un-cap council rates so they can maintain higher levels of service and keep people
employed.
7. Ramp up funding for social/affordable housing.
* Partial listCurrent industry-led priorities for the Committee
1. Enact codes of practice for every industry for safe operating during transition phase
when virus still in circulation.
2. Adapt the offerings of the “experience sector” to entice Sydneysiders/Australians to
rediscover their own city/country during the time when global travel is not possible.
3. Retrofit buildings for social distancing.
4. Major employers manage scheduling and working from home arrangements to shift
travel demand from the peaks.
… While all firms will be working on adapting their business models to the realities of the
new moment.
* Partial list“Only a crisis‐actual or perceived‐produces real
change. When that crisis occurs, the actions that are
taken depend on the ideas that are lying around.”
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