tag:theconversation.com,2011:/uk/topics/economic-recovery-85579/articlesEconomic recovery – The Conversation2023-07-06T12:27:55Ztag:theconversation.com,2011:article/2074772023-07-06T12:27:55Z2023-07-06T12:27:55ZUkrainian science is struggling, threatening long-term economic recovery – history shows ways to support the Ukrainian scientific system<figure><img src="https://images.theconversation.com/files/535892/original/file-20230705-23-k1mgkh.jpg?ixlib=rb-1.1.0&rect=73%2C155%2C5390%2C3432&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Russian attacks have destroyed much of Ukraine's scientific infrastructure, including university facilities like Karazin University's School of Physics and Technology, seen here.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/destroyed-laboratories-are-pictured-in-the-building-of-news-photo/1252673821?adppopup=true">Vyacheslav Madiyevskyy / Ukrinform/Future Publishing via Getty Images</a></span></figcaption></figure><p>The Russian invasion of Ukraine in February 2022 has done a lot of damage to the Ukrainian scientific system. The ongoing war has damaged physical infrastructure, thousands of Ukrainian scientists have fled their country to seek safety abroad, and the researchers who stayed have experienced significant disruptions to their work.</p>
<p>We are <a href="https://scholar.google.com/citations?user=Q7AWeM4AAAAJ&hl=en&oi=ao">three economists</a> who <a href="https://scholar.google.com/citations?user=M5kORqoAAAAJ&hl=en&oi=ao">study the benefits</a> of <a href="https://scholar.google.com/citations?user=r9kYIB0AAAAJ&hl=en&oi=ao">science and knowledge production</a>, and a <a href="https://scholar.google.com/citations?user=sRsUwtcAAAAJ&hl=en&oi=ao">medical researcher originally from Ukraine</a>. Two of us are also co-founders of <a href="https://scienceforukraine.eu/">#ScienceForUkraine</a>, a grassroots initiative that <a href="https://dx.doi.org/10.2139/ssrn.4139263">helps support Ukrainian scientists and students</a>.</p>
<p>Damage to a country’s science system – like what is happening in Ukraine – can harm <a href="https://www.imf.org/en/Publications/fandd/issues/2018/06/impact-of-science-and-technology-on-global-economic-growth-mokyr">economic growth for decades</a>. However, research shows that local and international policymakers can minimize this harm by providing direct funding to researchers, creating remote research positions and offering research opportunities abroad to Ukrainian scientists.</p>
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<a href="https://images.theconversation.com/files/535895/original/file-20230705-27-t3g4vb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A line of people at a train station." src="https://images.theconversation.com/files/535895/original/file-20230705-27-t3g4vb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/535895/original/file-20230705-27-t3g4vb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=429&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535895/original/file-20230705-27-t3g4vb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=429&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535895/original/file-20230705-27-t3g4vb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=429&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535895/original/file-20230705-27-t3g4vb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=539&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535895/original/file-20230705-27-t3g4vb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=539&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535895/original/file-20230705-27-t3g4vb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=539&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Around 10% of Ukraine’s scientists have been among the millions of people who fled the country due to the war.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/people-arriving-from-ukraine-by-train-are-seen-at-the-news-photo/1243624081?adppopup=true">Artur Widak/Anadolu Agency via Getty Images</a></span>
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<h2>How war harms Ukrainian science</h2>
<p>The most visible impact on Ukrainian science is the <a href="https://saveschools.in.ua/en/">destruction of universities or disruption of their services</a>. According to a report by the Ukrainian Ministry of Science and Education, 22% of research and higher education institutions <a href="https://drive.google.com/file/d/1cpn2M9_v7SK9idkiU42h1j9y8s2CFDAt/view">have been physically damaged in some way</a>. This includes five of the country’s top 20 institutions and <a href="https://conference.nber.org/conf_papers/f179872.pdf">20 of the top 100</a>.</p>
<p>Funding cuts are pervasive, too. The Ukrainian government has announced a 20% decrease in funding for <a href="https://mon.gov.ua/ua/news/derzhbyudzhet-na-2023-rik-vidatki-na-osvitu-ta-nauku">academic scholarships and national research grants</a> since the start of the war. Researchers have also faced <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4335098">significant decreases in salaries</a>.</p>
<p>Additionally, the <a href="https://www.weforum.org/agenda/2022/03/ukraine-scientific-community-scholars-at-risk">Ukrainian Ministry of Science and Education</a> estimates that 10% of the roughly 60,000 Ukrainian scientists have fled the country since the start of the war. In a <a href="https://zenodo.org/record/7380509">survey conducted by our nonprofit</a>, we found that nearly all of the researchers who left are female, as men aged 18 to 60 are generally not allowed to leave Ukraine due to martial law. This flow of scientists to neighboring countries has given rise to fears of a brain drain.</p>
<p>Some researchers have <a href="https://doi.org/10.1038/d41586-023-02031-8">started to return to Ukraine</a>. Encouragingly, roughly <a href="https://zenodo.org/record/7380509">one-third of researchers currently abroad say they plan to go back</a> as soon as the war ends, with another third considering returning in the future. In our survey, we found that more than half of researchers abroad remain on the payroll of their Ukrainian institution and still teach courses to Ukrainian students using remote methods or temporary visits.</p>
<p>One measurable result of all of these disruptions is that the number of research papers published by Ukrainian scientists in 2022 was <a href="https://conference.nber.org/conf_papers/f179872.pdf">down by 10%</a> compared to 2021.</p>
<h2>The consequences of scientific loss</h2>
<p>Scientists and the ideas they produce are important <a href="https://www.forbes.com/sites/katevitasek/2018/11/19/paul-romer-the-path-to-economic-growth-and-innovation/?sh=4d2fdf4a139d">for sustained economic growth</a>, and <a href="https://doi.org/10.1162/rest_a_01027">university research</a> is a catalyst for local innovation and employment. History has shown that the large relocation of scientists out of Ukraine and damage to the scientific system are likely to lead to long-term harm to Ukrainian science and hinder the country’s economic recovery after the war.</p>
<p>Austrian and German research institutions that lost their top talent before and during World War II <a href="http://doi.org/10.1162/REST_a_00565">hadn’t recovered their research productivity</a> even decades later. Losing skilled researchers has also been shown to undermine the training of <a href="https://doi.org/10.1086/655976">new generations of scientists</a>. A lack of scientists to train the next generation <a href="https://doi.org/10.1111/imig.12165">harmed many post-Soviet countries</a> after the collapse of the Soviet Union.</p>
<p>Finally, while buildings, infrastructure and generic equipment can be replaced, damage to <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3912401">highly specialized equipment or materials used for research</a> can be especially costly.</p>
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<a href="https://images.theconversation.com/files/535899/original/file-20230705-17-me9a83.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A large white stone building." src="https://images.theconversation.com/files/535899/original/file-20230705-17-me9a83.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/535899/original/file-20230705-17-me9a83.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535899/original/file-20230705-17-me9a83.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535899/original/file-20230705-17-me9a83.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535899/original/file-20230705-17-me9a83.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535899/original/file-20230705-17-me9a83.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535899/original/file-20230705-17-me9a83.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Members from a number of national academies of science met in the summer of 2022 at the Polish Academy of Science to devise a plan of international support for Ukrainian science.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Warszawa,_ul._Nowy_%C5%9Awiat_72-74_20170517_003.jpg">Tilman2007/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
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<h2>Active steps to support science in Ukraine</h2>
<p><a href="https://www.aps.org/publications/apsnews/202205/ukraine.cfm">Various</a> <a href="https://www.lms.ac.uk/policy/ukraine-response">scientific</a> <a href="https://ese.arphahub.com/article/84992/">organizations</a> have suggested means of helping Ukrainian scientists – most prominently the <a href="https://www.nationalacademies.org/news/2022/06/action-steps-for-rebuilding-ukraines-science-research-and-innovation">national academies of science</a> of Europe, Germany, the U.S., Ukraine, Poland, Denmark and the United Kingdom.</p>
<p>While there are many ways to help scientists affected by the war, three key interventions can be particularly effective.</p>
<p>First is monetary support to replace lost funding. For example, after the end of the Soviet Union in the 1990s, many Soviet scientists found themselves without funding or a salary. In response, the <a href="https://doi.org/10.1063/1.2808699">International Science Foundation provided grants</a> that helped the researchers continue their work and stay in science. Those who did not receive grants were <a href="https://doi.org/10.1257/app.20160180">40% less likely to be doing research 10 years later</a> than those who did. </p>
<p>Funding for Ukrainian scientists today – even small amounts – helps them not only survive, but it also allows them to <a href="https://drive.google.com/file/d/1BGeQRV9TLKP2phzNa0Yo5dXMbVAEgDy8/view">conduct experiments</a> abroad, submit articles to journals with fees and maintain memberships in academic associations.</p>
<p>The Simons Foundation in New York is one such group providing monetary support. Earlier in 2023, the foundation <a href="https://www.simonsfoundation.org/2023/01/25/simons-foundation-providing-support-to-researchers-in-ukraine/">announced</a> its “support of 405 Ukrainian mathematicians, biologists, physicists and chemists who remain in Ukraine” through research stipends lasting 12 months.</p>
<p>A second meaningful way that organizations can support Ukrainian science is through remote research positions. These allow Ukrainian researchers to stay in Ukraine while <a href="https://ukrainet.eu/non-residential-offers">doing research for</a> – and <a href="https://doi.org/10.1126/science.adg0797">getting paid by</a> – non-Ukrainian institutions. Two organizations that we work with, <a href="https://econ4ua.org/">Econ4UA</a> and <a href="https://scienceforukraine.eu/">#ScienceForUkraine</a>, are <a href="https://www.aseees.org/news-events/aseees-blog-feed/universities-ukraine-non-residential-fellowship-program">offering remote fellowship programs</a>, as is the University of Massachusetts Amherst through its <a href="https://www.isenberg.umass.edu/news/supporting-ukraine-through-academic-partnership">Virtual Scholars program</a>.</p>
<p>A third means of support that scientific institutions outside of Ukraine can offer is <a href="https://doi.org/10.1038/s41562-022-01387-7">resident research opportunities to Ukrainian scientists</a> abroad. Scientists who continue to do research abroad are able to create <a href="https://doi.org/10.1287/orsc.2022.1580">important connections</a> and learn new research methods that can help Ukraine <a href="https://doi.org/10.1038/d41586-023-02031-8">transition into a more modern and internationally integrated</a> producer of science once they return home. And if these researchers can keep professional ties with Ukraine, they <a href="https://doi.org/10.1016/j.respol.2012.04.005">may be more likely to return</a>.</p>
<p>The harms of war on Ukrainian science are ongoing and may be long-lasting. Yet history and research suggest that when organizations take steps to help a critical mass of scientists remain active, the science system can recover.</p><img src="https://counter.theconversation.com/content/207477/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael E. Rose is co-founder of #ScienceForUkraine. </span></em></p><p class="fine-print"><em><span>Oleksandra Ivashchenko is a co-founder of #ScienceForUkraine</span></em></p><p class="fine-print"><em><span>Ina Ganguli and Stefano Horst Baruffaldi do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The war in Ukraine has led to the destruction of scientific infrastructure, caused many Ukrainian researchers to leave the country and disrupted the work of those who have stayed.Ina Ganguli, Associate Professor of Economics, UMass AmherstMichael E. Rose, Senior Research Fellow, Max Planck Institute for Innovation and CompetitionOleksandra Ivashchenko, Medical Physicist, Netherlands Cancer InstituteStefano Horst Baruffaldi, Associate Professor in Economics and Management of Innovation, Polytechnic University of MilanLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1926592022-10-23T08:35:57Z2022-10-23T08:35:57ZNigeria’s 2023 budget is a plan of despair and won’t change the tempo of the economy<figure><img src="https://images.theconversation.com/files/490632/original/file-20221019-17-8yizmx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Nigeria's 2023 budget may not address food inflation. </span> <span class="attribution"><span class="source">Gettyimages/istock</span></span></figcaption></figure><p>Nigeria’s <a href="https://www.budgetoffice.gov.ng/index.php/resources/internal-resources/call-circular/2023">2023 budget</a>, recently presented by President Muhammadu Buhari to the National Assembly, has generated a furore. </p>
<p>There are concerns about the impact on the country’s <a href="https://www.reuters.com/world/africa/nigerias-public-debt-rises-103-billion-second-quarter-2022-09-20/">rising deficits and debt</a>, as well as its failure to address some of the structural deficiencies behind declining revenues and <a href="https://thenationonlineng.net/rising-deficit-declining-revenue-raise-concerns-over-n20-51tr-2023-budget/">rising inflation</a>.</p>
<p>The 2023 budget <a href="https://businessday.ng/opinion/article/full-text-of-president-muhammadu-buharis-2023-budget-speech/">expenditure</a> of 20.51 trillion naira (US$43.7 billion) is the highest ever. More than half of this is money the government doesn’t have and has to be financed with new debt. This will mean that the country exceeds the 3% of GDP threshold stipulated by the <a href="https://internationalbudget.org/wp-content/uploads/Nigeria-FiscalResponsibilityAct2007-English.pdf">Fiscal Responsibility Act of 2007</a> – a pointer to the worsening of the country’s fiscal health.</p>
<p>More than 60% of the 2023 budget will finance debt repayments (N6.31 trillion), personnel costs (N4.99 trillion) and overheads (N1.11 trillion). This leaves very little for spending to revitalise the economy and raise its growth potential.</p>
<p>Rather than being a budget of hope, Buhari’s proposal is a budget of despair. It won’t significantly change the tempo of the economy. Nor will it reduce the country’s high unemployment, poverty and inflation rates. </p>
<p>In fact it could worsen Nigeria’s cycle of deficits and debts, without the possibility of fostering structural transformation, diversifying the economy, promoting sustainable economic growth, and reducing unemployment and poverty. </p>
<h2>Endless cycle of deficits</h2>
<p>The budget is consistent with previous Buhari administration budgets. </p>
<p>Most importantly, it doesn’t address structural deficiencies in the Nigerian economy. These include the lack of diversification and non-oil sources of revenue. These have been responsible for the country’s cycle of high <a href="https://www.reuters.com/world/africa/nigerias-budget-deficit-will-widen-478-fuel-subsidy-end-2022-10-07/">budget deficits</a> and <a href="https://www.vanguardngr.com/2022/09/why-nigeria-is-in-debt-dmo-dg/">government debts</a>.</p>
<p>The 2023 <a href="https://thenationonlineng.net/roads-rail-varsities-priority-in-n20-5tr-2023-budget/">budget prioritises</a> investment in road and rail projects, power projects, clean water, construction of irrigation infrastructure and dams across the country, and critical health projects.</p>
<p>These are all well and good, but it’s unclear how they will reduce the <a href="https://theconversation.com/nigerias-economy-four-priorities-the-next-president-must-deliver-on-189022">high unemployment</a> and poverty rates in the country. These projects are not widespread and labour-intensive enough to absorb millions of unemployed Nigerians. </p>
<p>It is also unclear how many of the projects will be completed, given the propensity for successive governments in Nigeria to <a href="https://www.vanguardngr.com/2021/12/nigerias-56000-abandoned-projects/">abandon projects</a>. </p>
<p>The biggest problem is that the budget fails to address the issue of diversifying the economy. This is vividly reflected in its title: <a href="https://www.thecable.ng/n9-7trn-projected-revenue-n10-7trn-deficit-highlights-of-2023-budget-proposal">Fiscal Sustainability and Transition</a>. </p>
<p>One cannot have fiscal sustainability without structural transformation. This involves resources being reallocated from low-productivity to high-productivity sectors of the economy. The budget made only a tepid reference to the manufacturing sector. Yet this could deliver a number of benefits.</p>
<p>The first is jobs. Manufacturing uses more labour per unit of output and could absorb the <a href="https://guardian.ng/opinion/unemployment-and-a-nations-40-per-cent-of-hopelessness/">high number</a> of unemployed and underemployed Nigerians. Nigeria’s informal sector contributes about <a href="https://punchng.com/80-4-of-nigerian-employment-in-informal-sector-says-wbank/">80%</a> of the country’s employment, making it difficult to collect taxes. An increase in the number of Nigerians in formal sector jobs would raise more income taxes and reduce the need for borrowing. Manufacturing enterprises also tend to be <a href="https://businessday.ng/companies/article/how-manufacturing-industry-drove-company-income-tax-in-q1/">more stable</a>.</p>
<h2>Gaps</h2>
<p>Nigeria is having to borrow because of two key weaknesses – neither of which are addressed in the budget.</p>
<p>The first is the country’s lingering “dual-gap” economic problem. This refers to a situation in which domestic savings aren’t adequate to fund a country’s desired level of capital investment – the saving-investment gap. </p>
<p>In addition, the country doesn’t generate enough foreign exchange earnings to pay for its imports – the foreign exchange gap. It’s difficult to estimate the magnitude of the foreign exchange gap in Nigeria. But it’s manifested by the fact that foreign airlines in the country have been unable to repatriate about <a href="https://www.icirnigeria.org/trapped-funds-why-airlines-cant-repatriate-money-out-of-nigeria/">$450 million</a> in ticket sales because of acute shortages of foreign exchange. </p>
<p>Nigeria isn’t generating enough foreign exchange earnings to meet the economy’s requirements. This has led to a parallel market in foreign exchange, with most businesses and individuals turning to the parallel market to source major foreign currencies such as the US dollar.</p>
<p>The 2023 budget is based on an exchange of rate of 435.57 naira to US$1, compared to over <a href="https://www.thecable.ng/naira-hits-n742-at-parallel-market-as-fx-scarcity-bites-harder">700 naira</a> at the parallel market. Buhari made no mention of government intention to close this <a href="https://www.premiumtimesng.com/news/headlines/556088-nigerias-forex-crisis-deepens-as-gap-between-nairas-official-black-rates-widest-in-six-years.html">huge gap</a> between the official exchange rate and the parallel market rate. </p>
<p>The only sustainable way to close this gap is to raise the capacity of the economy to generate foreign exchange earnings.</p>
<p>The gap has serious implications for government expenditure outcomes. Many of the ministries, departments and agencies of government buy goods and services from companies that source their foreign exchange requirements from the parallel market. </p>
<p>This automatically makes expenditure estimates in the 2023 budget unrealistic, as the suppliers of goods and services will require a revision to their contracts to cover the higher costs of sourcing foreign exchange. This would then require supplemental budgets and additional borrowings, which in turn, make expenditure projections unreliable. </p>
<h2>Lingering fears</h2>
<p>The first and second quarters of 2023 will be dominated by <a href="https://inecnigeria.org/wp-content/uploads/2022/09/TIMETABLE-FOR-2023-GENERAL-ELECTION.pdf">elections</a> and political transitions. This may have the effect of disrupting economic activities and fuelling uncertainties, especially among domestic and foreign investors. </p>
<p>The economy may therefore fall short of the 3.5% growth rate assumed in the budget parameters, which would subsequently result in lower revenues and additional borrowings.</p>
<p>Nigeria’s overall <a href="https://tradingeconomics.com/nigeria/government-debt-to-gdp">debt to GDP ratio</a> of about 37% is <a href="https://theconversation.com/nigerias-debt-is-sustainable-but-dangers-loom-on-the-horizon-166372">sustainable</a>. However, the new round of budgeted borrowing sends the wrong signal to domestic and foreign investors. </p>
<p>Deficits and debts imply that taxes will be raised in the future to pay for debts, making investments less profitable. It may also prompt nervous investors to move their capital to more fiscally stable countries.</p>
<p>There are also fears that unrestrained borrowing could tilt the country’s debt portfolio into the realm of unsustainability, which may then lead to defaults in debt repayments and a steep decline in new loans. Government obligations to contractors and other investors would be jeopardised. </p>
<p>The lip service paid by the 2023 budget to structural transformation and sustained economic development will dampen investors’ optimism about the Nigerian economy. The lack of clarity about the future direction of the economy under a new administration, as well as the lingering security challenges in the country, will make matters even worse.</p><img src="https://counter.theconversation.com/content/192659/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Onyeiwu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Nigeria’s 2023 budget could worsen the country’s cycle of deficits and debts.Stephen Onyeiwu, Professor of Economics & Business, Allegheny CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1802382022-04-06T20:01:03Z2022-04-06T20:01:03ZPandemic pain remains as Australia’s economic recovery leaves the poor behind<p>“Our recovery leads the world,” treasurer Josh Frydenberg told Australia <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/speeches/budget-speech-2022-23">on budget night</a> last week. “We have overcome the biggest economic shock since the Great Depression.”</p>
<p>The government has repeatedly emphasised forecasts of the lowest unemployment rate since the end of the post-World War II economic boom, a time when “full employment” was the norm. </p>
<p>But a bigger story lies beneath the headlines. Our new report, titled <a href="https://www.acu.edu.au/-/media/feature/pagecontent/richtext/about-acu/community-engagement/_docs/scarring-effects-of-the-pandemic-economy.pdf?la=en">Scarring Effects of the Pandemic Economy</a>, shows Australia’s recovery has not been the rising tide that lifts all boats. </p>
<p>While JobKeeper and related policies cushioned the worst impacts of the crisis, the federal government has failed to address rising financial pressure or exclusion of the poorest and most marginalised in our community. </p>
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<a href="https://images.theconversation.com/files/455981/original/file-20220404-15-8begca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/455981/original/file-20220404-15-8begca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/455981/original/file-20220404-15-8begca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/455981/original/file-20220404-15-8begca.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/455981/original/file-20220404-15-8begca.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/455981/original/file-20220404-15-8begca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/455981/original/file-20220404-15-8begca.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/455981/original/file-20220404-15-8begca.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The report, launched this week, shows jobs and labour force participation are far from fully recovered in Victoria.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/despite-record-vacancies-australians-shouldnt-expect-big-pay-rises-soon-180416">Despite record vacancies, Australians shouldn't expect big pay rises soon</a>
</strong>
</em>
</p>
<hr>
<h2>An uneven economic recovery</h2>
<p>Based on two years of research, the report looks at the ongoing impact of the pandemic on social service providers in Victoria. That included organisations offering emergency relief such as food and clothing, temporary accommodation, or help for victims of family and domestic violence. </p>
<p>The report, launched this week, shows jobs and labour force participation are far from fully recovered in Victoria. </p>
<p>Melbourne had fewer jobs at the end of the Delta wave in late 2021 than before the pandemic. This problem was much worse for women already overburdened due to school and childcare centre closures and who were also more likely to be exposed to sectors with the highest job losses during lockdown, such as hospitality or retail trade. </p>
<p>A further sign of the recovery’s unevenness is the number of people registered with <a href="https://www.dese.gov.au/jobactive">jobactive</a> providers, which are supposed to provide services to the unemployed. This number was almost double pre-pandemic levels even before the Delta wave began in mid-2021. By early 2022, numbers remained over 50% higher than pre-pandemic levels.</p>
<h2>Unable to leave, unable to work, unable to get welfare support</h2>
<p>The social protection afforded by emergency government spending measures in 2020 were denied to hundreds of thousands of people on temporary visas. </p>
<p>This is far from a marginal issue. By the eve of the pandemic, every 18th worker in Victoria had arrived from overseas within the last five years; nearly half of these came from central or south Asian countries. As one social service provider told us:</p>
<blockquote>
<p>We had many international students from India and Bangladesh with no income, no family structures and no social safety net. Their resilience was limited.</p>
</blockquote>
<p>This provider’s experience was typical of the sector. Unemployment for workers from this region peaked at 24% – four times higher than peak unemployment for workers born in Australia. </p>
<p>Joblessness, border closures and government exclusion from JobKeeper and JobSeeker caused untold suffering, forcing many migrants to seek emergency relief for the first time in their lives. Many found themselves in an impossible situation – effectively unable to leave, unable to work, and unable to access welfare support.</p>
<p>In 2020, emergency relief providers reported up to a 13-fold increase in the proportion of their clients who had no income. This proportion is lower today but still yet to fall to pre-pandemic levels.</p>
<p>The cohort of clients with no income correlates strongly with migrants on temporary visas.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/455980/original/file-20220404-11-gudagm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/455980/original/file-20220404-11-gudagm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/455980/original/file-20220404-11-gudagm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/455980/original/file-20220404-11-gudagm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/455980/original/file-20220404-11-gudagm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/455980/original/file-20220404-11-gudagm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/455980/original/file-20220404-11-gudagm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/455980/original/file-20220404-11-gudagm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Joblessness, border closures and government exclusion from JobKeeper and JobSeeker forced many migrants to seek emergency relief for the first time in their lives.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>People still struggle long after the worst of the crisis</h2>
<p>Despite a brief fall during the peak of the first wave of the pandemic, thanks to JobKeeper and JobSeeker, the pandemic drove people to emergency relief providers in record numbers.</p>
<p>In Melbourne, demand for food increased by up to 2.5 times in 2020. </p>
<p>As volunteers withdrew due to lockdowns, the pressure on active volunteers increased. In 2021, hours per active volunteer increased by up to five times and did not decline by the end of the year, even after the Delta wave lockdown ended. One worker assisting victims of family violence told us:</p>
<blockquote>
<p>The burden has been huge. [Victims] were locked down with the person that’s abusing [them]. [In bound] calls have just continued to increase.</p>
</blockquote>
<p>These are just some of the “scarring effects” of the pandemic which the rhetoric of high growth and low unemployment do not address. </p>
<p>The report shows the impact of lost jobs and income are not one-off events but have effects which persist long after the worst of the crisis has ended. </p>
<p>In response to these lasting effects, the report reiterates widespread calls across the sector for new investment in public housing and a significant rise in the JobSeeker payment. This would help address working poverty.</p>
<p>The report also calls for renewed government attention to the challenges faced by social service providers trying to assist the poor and vulnerable. These organisations and the people they’re trying to help continue to struggle despite talk of economic recovery.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/things-look-worse-for-casual-workers-than-at-any-time-during-the-pandemic-175065">Things look worse for casual workers than at any time during the pandemic</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/180238/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The report on which this story is based was researched in partnership with Catholic Social Services Victoria, the peak body for over 40 organisations which collectively assist over 200,000 Victorians every year, and St Mary’s House of Welcome, a non-profit centre in central Melbourne which provides basic essential services to people experiencing homelessness, poverty and social marginalisation. The research was activated through the Stakeholder Engaged Scholarship Unit at ACU. This story is part of The Conversation's Breaking the Cycle series, which is about escaping cycles of disadvantage. It is supported by a philanthropic grant from the Paul Ramsay Foundation.</span></em></p>A new report on the ongoing impact of the pandemic on social service providers in Victoria found jobs and labour force participation are far from fully recovered.Tom Barnes, Senior Research Fellow, Institute for Humanities and Social Sciences, Australian Catholic UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1695762021-10-08T15:50:30Z2021-10-08T15:50:30ZYes, the latest jobs data may look disappointing, but leisure and transportation sectors give reason for cheer<figure><img src="https://images.theconversation.com/files/425513/original/file-20211008-27-1c1fpj0.jpg?ixlib=rb-1.1.0&rect=9%2C18%2C6221%2C4100&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">After recent supply chain difficulties, is there smooth sailing ahead?</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/cargo-ship-moves-under-the-bayonne-bridge-as-it-heads-out-news-photo/1345208277?adppopup=true">Spencer Platt/Getty Images</a></span></figcaption></figure><p>On first glance, <a href="https://www.bls.gov/news.release/empsit.nr0.htm">October’s jobs report</a> may not be anything to cheer about. Released on Oct. 8, 2021, it shows that just 194,000 jobs were added in the month – well short of the 400,000-plus figure that <a href="https://www.usatoday.com/story/money/2021/10/08/sept-jobs-report-194-000-jobs-added-unemployment-falls-4-8/6046559001/">many economists had predicted</a>.</p>
<p>But when you delve deeper, the latest employment data shows encouraging signs for the future of the U.S. economy. </p>
<p>Yes, job creation does appear to be slowing down. And this could be a result of ongoing <a href="https://www.cnbc.com/2021/09/01/are-covid-vaccines-becoming-less-effective-.html">concerns over the COVID-19 delta variant</a>, with companies unsure of where the pandemic will head next. But with the Food and Drug Administration’s approval of a booster shot and figures showing that cases for delta have begun to fall, the forecasts from companies may be turning rosier in the coming months.</p>
<p>And even with job creation slowing, the headline unemployment rate still fell to 4.8%, the <a href="https://www.cnbc.com/2021/10/08/september-jobs-report.html">lowest since February 2020</a>. Part of the problem is that some firms are finding it <a href="https://www.cnbc.com/2021/08/10/the-labor-shortage-isnt-main-streets-biggest-problem.html">difficult to find people</a> to take up vacant positions.</p>
<p>There were notable gains in the leisure and hospitality industry after rather flat figures for the sector in August and September. The same was true for storage and transportation companies, which will come as welcome relief to those concerned about the <a href="https://www.bloomberg.com/opinion/articles/2021-06-07/make-no-mistake-the-risk-of-inflation-is-real-mervyn-king#:%7E:text=Price%20stability%20is%20when%20people,decisions%20reflect%20genuine%20economic%20factors.&text=For%20the%20first%20time%20since,political%20resistance%20to%20the%20threat.">risk of inflation</a>.</p>
<p>Inflation has been increasing as a result of the stimulus but also due to a <a href="https://www.foxbusiness.com/lifestyle/bacon-supply-chain-disruptions-inflation">disruption in the supply chain</a>. That has led to supply being outpaced by demand, resulting in a surge in consumer prices.</p>
<p>The fact that storage and transportation companies – think truckers and shipping containers – are adding jobs is an indication that this supply chain bottleneck may be becoming unjammed. This should slow the pace of inflation.</p>
<p>October’s jobs figures were being eyed closely by economists to see if they would be strong enough to encourage the Federal Reserve to begin “tapering” – the process of reducing the volume of bonds and other securities it’s been buying to stimulate the economy. Since March 2020, the Fed <a href="https://fred.stlouisfed.org/series/WALCL">has purchased over US$4 trillion worth of assets</a> – mostly U.S. Treasury securities – which has helped keep interest rates low.</p>
<p>My take is that the jobs report was too weak to move the Fed’s hand. Central bankers will likely want to to see continued strength in terms of the labor market before changing its policy. In short, there just isn’t enough information yet to show that the economy is robust enough for the Fed to taper.</p>
<p>But overall, there is no reason to be pessimistic. The job growth isn’t what economists had hoped it would be, but there are plenty of positive trends. It will just take a little more time to make sure these trends are here for good before the Fed begins taking away the punch bowl of easy money.</p>
<p>[<em>Like what you’ve read? Want more?</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=likethis">Sign up for The Conversation’s daily newsletter</a>.]</p><img src="https://counter.theconversation.com/content/169576/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Edouard Wemy does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Job creation might well have slowed, but a deeper dive into employment data suggests the picture is actually pretty rosy.Edouard Wemy, Assistant Professor of Economics, Clark UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1644872021-07-15T19:26:14Z2021-07-15T19:26:14ZVital Signs: amid the lockdown gloom, Australia’s jobless rate hits decade low of 4.9%<p>In other circumstances Treasurer Josh Frydenberg might be dancing a jig.</p>
<p>But the pall of the Greater Sydney lockdown, which has now spilled over to Melbourne declaring its fifth lockdown, meant there was no room for smiling yesterday about the latest jobs figures, showing Australia’s unemployment rate in June fell below 5% for the first time in a decade.</p>
<p>The <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/jun-2021">labour force survey</a> data from Australian Bureau of Statistics shows 22,000 fewer Australians were unemployed last month compared to May. This pushed the unemployment rate down to an eye-catching (if not yet eye-popping) 4.9%.</p>
<p>Next month’s figures, of course, are unlikely to be so rosy. But these numbers still enable us to understand the progress the Australian economy is making with a number of important issues predating the COVID crisis.</p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/411399/original/file-20210715-32923-1wdgk2c.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/411399/original/file-20210715-32923-1wdgk2c.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=406&fit=crop&dpr=1 600w, https://images.theconversation.com/files/411399/original/file-20210715-32923-1wdgk2c.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=406&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/411399/original/file-20210715-32923-1wdgk2c.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=406&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/411399/original/file-20210715-32923-1wdgk2c.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=511&fit=crop&dpr=1 754w, https://images.theconversation.com/files/411399/original/file-20210715-32923-1wdgk2c.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=511&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/411399/original/file-20210715-32923-1wdgk2c.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=511&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
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</figure>
<hr>
<p>Importantly, the lower unemployment rate wasn’t due to a reduction in labour-force participation — sometimes known as the “giving up effect”, when folks just stop looking for work because they don’t expect to find a job. The participation rate was steady at 66.2%. In fact, the number of employed persons increased by 29,100 to 13,154,200.</p>
<p>There was even good news for younger Australians, with the youth unemployment rate down by 0.5 percentage points to 10.2%. This reflected a strong recovery from the pandemic, being 6.1 percentage points lower than a year ago in June 2020.</p>
<h2>Total hours worked</h2>
<p>The one statistic I always focus on is the total hours worked number. This is because the headline unemployment rate, as critics always point out, doesn’t tell us to what extent people are getting enough work. </p>
<p>On this measure there was slightly less good news. Total hours worked in June were down 1.8%, by 33.4 million hours to 1,781 million hours; and that’s seasonally adjusted, so its not just some “winter” thing.</p>
<hr>
<p><strong>Monthly hours worked in all jobs, seasonally adjusted</strong></p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/411407/original/file-20210715-32793-1bfzkr.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/411407/original/file-20210715-32793-1bfzkr.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=465&fit=crop&dpr=1 600w, https://images.theconversation.com/files/411407/original/file-20210715-32793-1bfzkr.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=465&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/411407/original/file-20210715-32793-1bfzkr.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=465&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/411407/original/file-20210715-32793-1bfzkr.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=584&fit=crop&dpr=1 754w, https://images.theconversation.com/files/411407/original/file-20210715-32793-1bfzkr.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=584&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/411407/original/file-20210715-32793-1bfzkr.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=584&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/jun-2021#media-releases">ABS Labour Force Survey, June 2021.</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<hr>
<h2>Slow wages growth</h2>
<p>In 2019 one could best characterise the Australian economy as barely growing in per-capita terms. Wages growth was stubbornly low, while unemployment and underemployment were unacceptably high.</p>
<p>Having recognised this — too late, mind you, but at least eventually — the Reserve Bank cut interest rates from 1.50% to 0.75% in an effort to get wages up, unemployment down, and inflation back into the central bank’s 2-3% target zone. Inflation has been outside its target band for the entirety of Philip Lowe’s governorship, which began in September 2016.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/vital-signs-why-has-growth-slowed-globally-it-has-something-to-do-with-technology-162848">Vital Signs: Why has growth slowed globally? It has something to do with technology</a>
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</em>
</p>
<hr>
<p>The pandemic pushed the RBA to drive the cash rate close to zero, and also buy government bonds to push down longer-term interest rates.</p>
<p>By looking at where unemployment, underemployment and wages growth stand relative to 2019 levels, we learn something about Australia’s pandemic recovery. </p>
<p>In doing so, we should not lose sight of fact the economy in general — and the labour market in particular — were not in good shape pre-COVID, and policies to address those issues have long been needed.</p>
<h2>Edging closer to where we need to be</h2>
<p>So, how’s that going? In some sense, pretty well. </p>
<p>June’s 4.9% unemployment rate is the lowest since June 2011. Getting down to something with a “4” in front of it edges Australia closer to reducing the slack in the labour market sufficiently to push wages up.</p>
<p>But the task is certainly not complete. </p>
<p>The aggressive monetary policy being used by the RBA and the “Frydenberg pivot” to aggressive fiscal policy at this year’s federal budget are both aimed at reducing unemployment and hence increasing wages.</p>
<p>However, no one really knows how low unemployment needs to get in Australia to getting wages moving again in earnest. The RBA’s official position is maybe 4.5%. Lowe has said it may well be a fair bit lower.</p>
<p>The smart path, arguably, is “let’s find out” — the central bank should keep using monetary policy and the treasury keep using fiscal policy until we see real wages growth at a sustained level. My own guess is that means getting the unemployment rate down to just below 4%.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/vital-signs-well-never-cut-unemployment-to-0-but-less-than-4-should-be-our-goal-149070">Vital Signs: we'll never cut unemployment to 0%, but less than 4% should be our goal</a>
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<hr>
<h2>Reigniting an immigration debate</h2>
<p>The backdrop for these improvements in the labour market is a closed international border. This is likely to become a hot debate — especially since Lowe fired the starter pistol last week by suggesting Australia’s historically high levels of immigration had been helping keep wages low.</p>
<p>Those were rather careless, or at least ill-advised, remarks from the central bank governor, contrary to <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2979671">solid academic evidence</a> pointing the other way. </p>
<p>He may say more on this at a future date — perhaps after some discussion and reflection. But, as he is so fond of saying, “only time will tell”.</p><img src="https://counter.theconversation.com/content/164487/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Holden is President-elect of the Academy of the Social Sciences in Australia.</span></em></p>The last time Australia’s unemployment rate was below 5% was June 2011.Richard Holden, Professor of Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1626082021-07-05T20:09:24Z2021-07-05T20:09:24ZTourism operators are reeling from lockdowns, but the barriers to a full post-COVID recovery go far deeper<p>With much of Australia in and out of lockdowns over the past month, tourism operators are reeling. </p>
<p>The current lockdown in Sydney has been disastrous for operators during what is normally one of the busiest times of the year — school holidays. Tourism and hospitality-related business are eligible for government <a href="https://www.abc.net.au/news/2021-06-29/nsw-covid-business-relief-for-lockdown/100251920">grants</a> up to $10,000, but for some, this still may not be enough. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1409270866924523522"}"></div></p>
<p>The same goes for tourism operators along the Western Australia coast, due to the snap lockdown in the Perth and Peel regions. <a href="https://www.abc.net.au/news/2021-06-30/perth-covid-lockdown-hits-regional-wa-as-school-holidays-loom/100253408">Said one lodge owner</a> in the resort town of Kalbarri:</p>
<blockquote>
<p>The lockdown for Perth will, I won’t say kill us, but it will hurt us really bad.</p>
</blockquote>
<p>When Victoria was plunged back into lockdown over a month ago, it threatened to derail the entire ski season. </p>
<p>Almost half of the businesses surveyed by the Victoria Tourism Industry Council (<a href="https://www.vtic.com.au/">VTIC</a>) estimated they would lose more than $1,000 in spoiled food and other expenses during a seven-day lockdown, while 45% estimated revenue losses of more than $5,000. </p>
<p>A real concern was that 20% would lose more than $50,000. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1281451041691627520"}"></div></p>
<p>Even after the lockdown was lifted, restrictions remained. Melbourne residents are <a href="https://www.abc.net.au/news/2021-06-17/restrictions-for-melbourne-residents-heading-to-the-snow/100220800">mandated</a> to have a COVID test within 72 hours of leaving the city and show the negative result on entry to the ski fields.</p>
<p>As a result of all of these stop-and-start lockdowns and ongoing restrictions, traveller confidence has declined and many people are no longer booking in advance, affecting cash flow. Many business owners are at an emotional and financial breaking point. As one Victoria business told VTIC:</p>
<blockquote>
<p>…this will be the financial end of us. We have fought so hard, pivoted, and haven’t had a day off in 12 months, no staff to allow us to, and now this. All losses are self-funded again, but this time it is worse as we have no JobKeeper. We won’t open. We can’t. We’re tired. We’re over it.</p>
</blockquote>
<h2>Staff shortages, skyrocketing insurance and mental anguish</h2>
<p><a href="https://www.vu.edu.au/about-vu/news-events/news/victorias-tourism-sector-faces-barriers-to-recovery">Our research</a> on the second Victoria lockdown in 2020 found that a one-size-fits-all approach to restrictions, recovery, and support does not work for the industry. One business told us,</p>
<blockquote>
<p>compensation needs to be proportional to business losses. A one-size-fits-all compensation approach is not effective. </p>
</blockquote>
<p>For example, businesses that rely on international and local business travellers in Melbourne and Sydney have been hit far harder than the sectors of the industry, such as caravan parks, that are bouncing back well with domestic tourism. Tourism and hospitality businesses in our CBDs need real support. </p>
<p>And despite government efforts to incentivise people to return to tourist areas — such as Victoria’s <a href="https://www.abc.net.au/news/2021-06-06/victoria-announces-$32-million-package-to-support-tourism/13375800">$32.2 million tourism support package</a> — our research shows there are deeper underlying issues preventing a full recovery for tourism operators. </p>
<p>According to our research, these issues in Victoria include: </p>
<ul>
<li><p>severe staff shortages, due to a lack of affordable housing in tourist destinations, the absence of international temporary workers and a loss of approximately 54% of casual staff during the pandemic. Many former employees have found work in other, more stable industries </p></li>
<li><p>Job Keeper was considered a “lifesaver” by 91% of businesses we surveyed, but replacement support options in successive lockdowns have not been accessible </p></li>
<li><p>unaffordable business insurance, with some premiums rising by up to 400% following the bushfires</p></li>
<li><p>the impact of the long-term strain on people, with 45% of tourism business owners and managers telling us they were suffering mental health concerns. Many were also unlikely or unable to reach out for help.</p></li>
</ul>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/vaccines-may-soon-make-travel-possible-again-but-how-quickly-will-it-return-and-will-it-be-forever-changed-150268">Vaccines may soon make travel possible again. But how quickly will it return — and will it be forever changed?</a>
</strong>
</em>
</p>
<hr>
<h2>Not just a Victorian problem</h2>
<p>The staff and accommodation shortages are more severe in Victoria, but are also being felt <a href="https://www.sbs.com.au/news/a-shortage-of-skilled-workers-from-overseas-is-threatening-the-recovery-of-australia-s-hospitality-sector">nationwide</a>. </p>
<p>In the last month, staffing shortages have been emphasised in <a href="https://www.theadvocate.com.au/story/7261898/tourism-and-hospitality-workforce-shortage-leads-to-calls-for-workers-to-return/">Tasmania</a>, <a href="https://www.abc.net.au/news/2021-05-10/chef-shortage-queensland-borders-skilled-migrants/100122150">Queensland</a> and <a href="https://www.gourmettraveller.com.au/news/restaurant-news/hospitality-labour-shortage-19164">New South Wales</a>, primarily because of the lack of backpackers and international students. </p>
<p>The lack of affordable accommodation options for tourism staff, who are typically casual and low-paid, is also an ongoing issue across Australia, especially in places like <a href="https://www.abc.net.au/news/2021-04-29/byron-bay-property-prices-push-workers-out-of-town/100104052">Byron Bay</a>. </p>
<h2>What can get the industry back on track?</h2>
<p>There is more that can be done to improve the outlook and resilience of the tourism industry, which adds <a href="https://www.tourism.australia.com/en/markets-and-stats/tourism-statistics/the-economic-importance-of-tourism.html">$60.8 billion</a> to Australia’s GDP every year and supports 5% of Australia’s total workforce. </p>
<p>Our recommendations to governments are to address both the short- and long-term issues arising from the pandemic. </p>
<p>For example, the problem of skyrocketing business insurance is a matter of urgency. This is a case of market failure — if the private insurance sector cannot offer a product that is affordable, regulatory measures must be introduced. </p>
<p>Other short-term measures are necessary, such as wage subsidies for tourism operators to retain their staff, as well as grants for business innovation and growth. And as regional housing prices escalate, social housing or subsidised accommodations for tourism workers are becoming increasingly important. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1411131136080809985"}"></div></p>
<p>The longer-term problems resulting from the pandemic require a more thoughtful, strategic approach in order to reduce the burden being felt by the industry. </p>
<p>To start, this means much better engagement and communication between governments and tourism operators so they fully understand the effects health regulations will have on their businesses and can plan accordingly. Recent bushfires have shown how effectively emergency services can work directly with communities. Similar models could be replicated in the tourism industry. </p>
<p>A comprehensive and nationally relevant workforce review is also needed to examine how the industry can attract workers into the future. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/tourism-desperately-wants-a-return-to-the-old-normal-but-that-would-be-a-disaster-154182">Tourism desperately wants a return to the 'old normal' but that would be a disaster</a>
</strong>
</em>
</p>
<hr>
<p>Most of all, there is a need to focus on developing resilience to all forms of crises, as highlighted by the recent Gippsland floods. </p>
<p>Our research shows that to build industry resilience, we need stronger risk management planning and leadership for both businesses and destinations. Promoting such planning, along with being accredited by industry bodies like VTIC, can lead to greater resilience to crises and speedier economic recovery.</p>
<p>Regional risk management also needs to be a part of strong regional tourism plans that are coordinated across local governments, regions and state borders. </p>
<p>Australia’s visitor economy is too important for economic recovery, job creation and the health of our communities to let it flounder as it has been over the last 18 months. If we, as a community, are going to reap the social and economic benefits of tourism again when we do open the borders, the industry needs support.<br>
Long-term development strategies are necessary to not just recover but to build resilience to the inevitable future shocks we are yet to face.</p><img src="https://counter.theconversation.com/content/162608/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gabrielle Lindsay-Smith receives funding from the Department of Education and Training. She collaborates with VTIC.</span></em></p><p class="fine-print"><em><span>Joanne Pyke receives funding from government research programs and is a member of the Victoria Tourism Industry Association. </span></em></p>Our research shows the government must help tourism operators address chronic staff shortages, skyrocketing insurance and developing better plans for future shocks.Gabrielle Lindsay-Smith, Research Fellow, Victoria UniversityJoanne Pyke, Director, School for the Visitor Economy, Victoria University., Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1628622021-06-17T04:09:41Z2021-06-17T04:09:41ZAustralia’s 2.5% minimum wage rise: there’s something in it for you, and the economy<p>Australia has a serious wage problem. Over the past decade wages for all but the top 20% of income earners have flat-lined. </p>
<p>This is part of the longer-term problem concerning productivity and wages identified by groups like the OECD – namely, workers have not shared in productivity gains, with “labour market flexibility” experiments mostly to blame.</p>
<p>So the decision of the Fair Work Commission – the guardian of what’s left of Australia’s historical approach to ensuring decent pay – to increase the minimum wage by 2.5% is significant.</p>
<p>The commission reviews the <a href="https://www.fwc.gov.au/awards-and-agreements/minimum-wages-conditions/annual-wage-reviews">minimum wage annually</a>. Last year it granted a 1.7% increase – the lowest in 12 years. This year’s 2.5% is less than the 3.5% wanted by unions, but more than the 1.1% sought by employer groups.</p>
<p>The increase directly affects only about a fifth of Australian employees. It will, however, have indirect benefit for workers earning more, and aid economic renewal.</p>
<h2>Higher wages are good for employment</h2>
<p>The 2.5% increase is more than what Treasury and the Reserve Bank forecast for average wages over the coming year, but also something these conservative institutions would welcome. </p>
<p>Sluggish wage growth does not just result in greater wage inequality. It effectively retards demand, a key determinant of employment. </p>
<p>Unemployment and underemployment have affected about one Australian worker in eight (12-13%) for more a decade. Only expansive monetary, fiscal and wages policy offer any hope of boosting employment.</p>
<hr>
<p><strong>Unemployment and underemployment in Australia</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/401832/original/file-20210520-23-um1zu9.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/401832/original/file-20210520-23-um1zu9.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/401832/original/file-20210520-23-um1zu9.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=307&fit=crop&dpr=1 600w, https://images.theconversation.com/files/401832/original/file-20210520-23-um1zu9.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=307&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/401832/original/file-20210520-23-um1zu9.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=307&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/401832/original/file-20210520-23-um1zu9.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=386&fit=crop&dpr=1 754w, https://images.theconversation.com/files/401832/original/file-20210520-23-um1zu9.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=386&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/401832/original/file-20210520-23-um1zu9.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=386&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Per cent, seasonally adjusted.</span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release#key-statistics">ABS Labour Force</a></span>
</figcaption>
</figure>
<hr>
<p>Most immediately, the decision will benefit up to 200,000 workers paid the national minimum wage rate (which will increase to $20.33 an hour) and about 2.2 million employees that rely on awards whose conditions reflect the minimum conditions (that is, they aren’t covered by an enterprise agreement or other contract that guarantees them more). </p>
<p>The commission has ruled the increases won’t apply to most retail workers before September, and for those in aviation, tourism, fitness and a few retail sectors before November. </p>
<p>With these exceptions, the flow-on will be immediate for workers employed by reputable employers subject to union scrutiny. It may be slower in more informal enterprises where award compliance is more variable. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/resistance-to-raising-the-minimum-wage-reflects-obsolete-thinking-158622">Resistance to raising the minimum wage reflects obsolete thinking</a>
</strong>
</em>
</p>
<hr>
<h2>Indirect impacts</h2>
<p>There will be flow-on affects to other workers, though less than in the past.</p>
<p>Up to the early 1990s, movements in one part of the award system rippled through to other job classifications in a very direct way. This has not been the case since workers – especially those on middle and upper incomes – have been required to bargain at enterprise level for wages. </p>
<p>Such “bargaining”, however, has been supressed for more than a decade, due to:</p>
<ul>
<li><p>chronic and significant unemployment and underemployment</p></li>
<li><p>the crippling of union bargaining capacity through restraints on collective industrial action entrenched in the Fair Work Act</p></li>
<li><p>the imposition of legislated caps on wage increases for public-sector workers since the early 2010s, which have also helped suppress private-sector wages. </p></li>
</ul>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/394424/original/file-20210412-13-vqbrie.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Quarterly change in the Australian Bureau of Statistics' wage price index, seasonally adjusted." src="https://images.theconversation.com/files/394424/original/file-20210412-13-vqbrie.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/394424/original/file-20210412-13-vqbrie.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=307&fit=crop&dpr=1 600w, https://images.theconversation.com/files/394424/original/file-20210412-13-vqbrie.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=307&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/394424/original/file-20210412-13-vqbrie.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=307&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/394424/original/file-20210412-13-vqbrie.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=386&fit=crop&dpr=1 754w, https://images.theconversation.com/files/394424/original/file-20210412-13-vqbrie.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=386&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/394424/original/file-20210412-13-vqbrie.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=386&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<hr>
<p>That said, having a publicly defined wages norm of 2.5% is helpful to all workers. It provides a benchmark for what is reasonable to claim in enterprise bargaining or negotiating an individual contract. </p>
<h2>A hint of prices and wages accord</h2>
<p>The Fair Work Commission tacitly noted it could have granted more. </p>
<p>Its decision, it said, was influenced by legislated changes to income tax that have benefited low and middle income earners. It also acknowledged the importance of the Superannuation Guarantee Levy increasing by 0.5% from July. </p>
<p>In weighing these factors there are elements of a tacit incomes policy – something Australia hasn’t had since the Hawke-Keating era of the 1980s and early 1990s.</p>
<p>During that period the federal government made agreements (known as prices and incomes accords) with the trade union movement to explicitly coordinate “industrial wages” (that is, actually wages) and the “social wage” (that is, provisions such as Medicare and superannuation that effectively increased living standards). In exchange for increases in the social wage, unions curbed their demands for industrial wage rise, which helped the government tackle inflation.</p>
<p>There are echoes of those ideas in this decision. Indeed Fair Work Commission president Ian Ross, who was in charge of the wage review, was a key official at the Australian Council of Trade Unions in the last years of the accords.</p>
<h2>Getting the balance right</h2>
<p>Institutions like the Fair Work Commission and its annual wages review are rare globally. It is the legacy of Australia’s pioneering system of regulated wages and employment conditions that began in 1904 with the Commonwealth Court of Conciliation and Arbitration. The court’s first landmark decision in 1907 (known as the Harvester decision) was to define and set a “living wage”.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/a-national-living-wage-is-on-the-table-now-lets-talk-about-a-global-living-wage-112300">A national living wage is on the table. Now let's talk about a global living wage</a>
</strong>
</em>
</p>
<hr>
<p>Over the decades this arbitration system has adjusted wages in light of changes to economic and social conditions. More often than not it has got the balance right – ensuring improved labour standards for workers in economically sustainable ways. </p>
<p>Even with the push for “labour market flexibility” since the 1980s, things – especially at the bottom of labour market – would certainly be worse were it not for the award system and its current custodian, the Fair Work Commission. </p>
<p>This decision reveals the commission can still provide important leadership in supporting recovery from a deep economic crisis. More will be needed if we are to “build back better”.</p><img src="https://counter.theconversation.com/content/162862/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Buchanan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Fair Work Commission has shown it can still provide important economic leadership.John Buchanan, Professor, Discipline of Business Information Systems, University of Sydney Business School, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1592262021-05-11T10:36:16Z2021-05-11T10:36:16ZCuts, spending, debt: what you need to know about the budget at a glance<figure><img src="https://images.theconversation.com/files/399672/original/file-20210510-20-12bg0v5.png?ixlib=rb-1.1.0&rect=191%2C0%2C3640%2C2000&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">AAP/Shutterstock/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>After twenty years of rhetoric from both sides of politics focusing on getting back to surplus, this year’s budget continues pandemic spending in the hope of getting the economy back on track as the pandemic starts to settle.</p>
<p>The projected deficit is $161 billion for 2021-22, but rather than tackling this in the next four years, the government’s focus is instead on payments and long-term serviceable debt.</p>
<hr>
<iframe src="https://flo.uri.sh/visualisation/6091520/embed" title="Interactive or visual content" frameborder="0" scrolling="no" style="width:100%;height:600px;" sandbox="allow-same-origin allow-forms allow-scripts allow-downloads allow-popups allow-popups-to-escape-sandbox allow-top-navigation-by-user-activation" width="100%" height="400"></iframe>
<div style="width:100%!;margin-top:4px!important;text-align:right!important;"><a class="flourish-credit" href="https://public.flourish.studio/visualisation/6091520/?utm_source=embed&utm_campaign=visualisation/6091520" target="_top"><img alt="Made with Flourish" src="https://public.flourish.studio/resources/made_with_flourish.svg"> </a></div>
<hr>
<p>The government is projecting a bump in real GDP growth in the next financial year, before growth settles again over the near future.</p>
<hr>
<iframe src="https://flo.uri.sh/visualisation/6073910/embed" title="Interactive or visual content" frameborder="0" scrolling="no" style="width:100%;height:500px;" sandbox="allow-same-origin allow-forms allow-scripts allow-downloads allow-popups allow-popups-to-escape-sandbox allow-top-navigation-by-user-activation" width="100%" height="400"></iframe>
<div style="width:100%!;margin-top:4px!important;text-align:right!important;"><a class="flourish-credit" href="https://public.flourish.studio/visualisation/6073910/?utm_source=embed&utm_campaign=visualisation/6073910" target="_top"><img alt="Made with Flourish" src="https://public.flourish.studio/resources/made_with_flourish.svg"> </a></div>
<hr>
<p>Part of the reason the government can afford to keep spending high is the low cost of international debt. This means that while net debt will continue to increase beyond the next four years the budget estimates cover, net interest payments should remain low.</p>
<hr>
<iframe src="https://flo.uri.sh/visualisation/6073923/embed" title="Interactive or visual content" frameborder="0" scrolling="no" style="width:100%;height:500px;" sandbox="allow-same-origin allow-forms allow-scripts allow-downloads allow-popups allow-popups-to-escape-sandbox allow-top-navigation-by-user-activation" width="100%" height="400"></iframe>
<div style="width:100%!;margin-top:4px!important;text-align:right!important;"><a class="flourish-credit" href="https://public.flourish.studio/visualisation/6073923/?utm_source=embed&utm_campaign=visualisation/6073923" target="_top"><img alt="Made with Flourish" src="https://public.flourish.studio/resources/made_with_flourish.svg"> </a></div>
<hr>
<p>And another major factor in the budget’s performance – despite the big spending – is the impact of a very high iron ore price, in the midst of a global pandemic. </p>
<p>The chart below shows the difference between policy decisions and other factors, generally beyond its control. </p>
<hr>
<iframe src="https://flo.uri.sh/visualisation/6092055/embed" title="Interactive or visual content" frameborder="0" scrolling="no" style="width:100%;height:600px;" sandbox="allow-same-origin allow-forms allow-scripts allow-downloads allow-popups allow-popups-to-escape-sandbox allow-top-navigation-by-user-activation" width="100%" height="400"></iframe>
<div style="width:100%!;margin-top:4px!important;text-align:right!important;"><a class="flourish-credit" href="https://public.flourish.studio/visualisation/6092055/?utm_source=embed&utm_campaign=visualisation/6092055" target="_top"><img alt="Made with Flourish" src="https://public.flourish.studio/resources/made_with_flourish.svg"> </a></div>
<hr>
<p>With a major focus on business and infrastructure spending to revive the economy, extensions to tax benefits and announced packages for childcare, there are many spending announcements in this year’s budget and very few cuts or savings.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/frydenberg-spends-the-bounty-to-drive-unemployment-to-new-lows-159229">Frydenberg spends the bounty to drive unemployment to new lows</a>
</strong>
</em>
</p>
<hr>
<p>The difference is so great that we have drawn out some of the major spending announcements and included all significant cuts in our headline figures for this year’s budget.</p>
<hr>
<p><iframe id="tc-infographic-585" class="tc-infographic" height="400px" src="https://cdn.theconversation.com/infographics/585/480ea5f82962dd39218ca38486f6623d86d313ee/site/index.html" width="100%" style="border: none" frameborder="0"></iframe></p><img src="https://counter.theconversation.com/content/159226/count.gif" alt="The Conversation" width="1" height="1" />
Short on time? Here’s everything you need to know about the 2021-2022 federal budget in 5 nifty charts and infographics.Alexandra Hansen, Deputy Editor and Chief of Staff, The Conversation AUNZWes Mountain, Social Media + Visual Storytelling EditorChynthia Wijaya-Kovac, Social Media Producer, The Conversation AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1593322021-05-11T10:27:27Z2021-05-11T10:27:27ZFewer hard hats, more soft hearts: budget pivots to women and care<figure><img src="https://images.theconversation.com/files/400007/original/file-20210511-21-1xnsz3b.jpg?ixlib=rb-1.1.0&rect=1132%2C320%2C3226%2C1917&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">WHYFRAME/Shutterstock</span></span></figcaption></figure><p>Last year’s post-budget photo ops were all heavy machinery and hard hats. But this year we can expect soft-focus shots with children and the elderly. </p>
<p>The big story of the budget is not just that the government is spending tens of billions more as we emerge from the recession; it is also the major shift in what the money will be spent on.</p>
<p>The change in fiscal strategy – from a “construction-led recovery” last year to a concerted emphasis on women and the care sector this year – is based on solid <a href="https://theconversation.com/top-economists-back-boosts-to-jobseeker-and-social-housing-over-tax-cuts-in-pre-budget-poll-146914">economic advice</a>. </p>
<p>It has also come at the best possible time for a government that has been in the spotlight for underfunding aged care and mental health, and under pressure to do more to support women’s economic participation.</p>
<p>The treasurer was understandably eager to emphasise the Government’s new spending initiatives. And the shift is notable. </p>
<p>But while there is welcome progress, the budget falls short of delivering big structural reforms that are needed for child care, aged care and mental health.</p>
<h2>Budget delivers on social spending</h2>
<p>For childcare, the government has announced an extra $1.7 billion over three years starting from July 2022, a modest boost to the $9 billion the government spent last financial year. </p>
<p>We proposed a <a href="https://grattan.edu.au/report/cheaper-childcare/">more ambitious package</a>, which would have spurred big economic gains from higher female workforce participation. </p>
<p>The budget falls short of that, but it is still <a href="https://theconversation.com/the-coalitions-child-care-subsidy-plan-how-it-works-and-what-it-means-for-families-and-the-economy-160173">well targeted</a> at the families that face the most crippling out-of-pocket childcare costs: those with two or more children under six in care.</p>
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<p>For aged care, there is an extra $17.7 billion over four years, a significant increase to the $22.5 billion the government spent last financial year. </p>
<p>While not enough to deliver the Aged Care Royal Commission’s vision of a full rights-based model – where every Australian is entitled to the care they need – it still offers improvements. </p>
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Read more:
<a href="https://theconversation.com/budget-splashes-cash-with-17-7-billion-for-aged-care-and-a-pitch-to-women-159227">Budget splashes cash, with $17.7 billion for aged care and a pitch to women</a>
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<p>The 80,000 new home care packages will help to reduce waiting times, and the boost to front line care minutes and the Basic Daily Fee provides additional support to those in residential care. </p>
<p>The accompanying focus on attracting, training, and upskilling staff is particularly welcome given that the Royal Commission anticipates future staff shortages, although the Budget doesn’t have much specific to say about pay in the sector.</p>
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Read more:
<a href="https://theconversation.com/view-from-the-hill-frydenberg-finds-the-money-tree-159225">View from The Hill: Frydenberg finds the money tree</a>
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<p>For mental health, a sector whose problems have been laid bare by increased demand for services during the pandemic, there is an extra $2.3 billion over four years.</p>
<p>Funding is targeted towards expanding access to mental health services and bolstering suicide prevention, but it <a href="https://grattan.edu.au/submissions/redesigning-mental-health-care/">falls short</a> of the system reform required.</p>
<h2>A women-centric makeover</h2>
<p>The budget flags $3.4 billion over four years for women’s measures (including childcare). Outside of childcare, the biggest are for women’s health ($365 million) and spending on women’s safety including and violence prevention ($1.1 billion).</p>
<p>These measures, particularly the increased spend on front line and response services for family violence are important and significant.</p>
<p>But the more significant shift for women comes with the recognition that job-creating budgets need to invest in a broader range of jobs including in services sectors. About 80% of Australians work in services (and 90% of working women), so investing in these jobs ensures a broader recovery than the previous hard-hat focus.</p>
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<a href="https://theconversation.com/frydenberg-spends-the-bounty-to-drive-unemployment-to-new-lows-159229">Frydenberg spends the bounty to drive unemployment to new lows</a>
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<p>While last year’s Budget ran hard on infrastructure and investment tax breaks that favour capital-intensive sectors, this time around there is a stronger focus on care economy jobs through the spend on aged care, child care and mental health.</p>
<p>Even the extended JobTrainer scheme receives a care-centred makeover, with an additional 33,800 low fee and free training places set aside to support future aged care workers.</p>
<p>Services sectors hit hard by COVID also receive some cash including the already announced $1.2 billion support package for the aviation and tourism sector and $300 million for the creative and cultural sector. Universities again miss out but private education providers also receive additional supports.</p>
<h2>The long-term challenge</h2>
<p>Other major measures in the Budget include the rollover of the Low and Middle Tax Offset (the ‘lamington’) for another year – delivering <a href="https://blog.grattan.edu.au/2021/05/keeping-up-with-the-lamingtons-your-budget-2021-tax-guide/">up to $1080</a> into the hands of low- and middle-income taxpayers next year – and extension of two key business tax measures: instant expensing and loss carry backs – focused on bringing forward business investment.</p>
<p>The challenge is that much of this increased spending is permanent. </p>
<p>And when combined with the impact of COVID on migration and on the size of the economy, this leaves the medium-term forecasts looking markedly different to the (<a href="https://grattan.edu.au/news/treasurer-should-hold-off-on-budget-victory-lap/">probably unrealistic</a>) ones that voters were served up before the 2019 election.</p>
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<p>But, as the Parliamentary Budget Office suggested a fortnight ago, even with this shift, Australia’s debt levels are sustainable and are likely to remain so. Net debt is forecast to stabilise and then fall over the medium term, even with continuing deficits.</p>
<p>This doesn’t mean that long-term structural challenges disappear, but it does mean that there is more breathing space for the government to let voters see its softer side. As an economic as well as political strategy, it makes a lot of sense.</p>
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<p><iframe id="tc-infographic-585" class="tc-infographic" height="400px" src="https://cdn.theconversation.com/infographics/585/480ea5f82962dd39218ca38486f6623d86d313ee/site/index.html" width="100%" style="border: none" frameborder="0"></iframe></p><img src="https://counter.theconversation.com/content/159332/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The Grattan Institute began with contributions to its endowment of $15 million from each of the Federal and Victorian Governments, $4 million from BHP Billiton, and $1 million from NAB. In order to safeguard its independence, Grattan Institute’s board controls this endowment. The funds are invested and contribute to funding Grattan Institute's activities. Grattan Institute also receives funding from corporates, foundations, and individuals to support its general activities as disclosed on its website.</span></em></p><p class="fine-print"><em><span>Danielle Wood does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There’s much more new spending on aged care than there is on infrastructure. That’s a change.Danielle Wood, Chief executive officer, Grattan InstituteTom Crowley, Associate, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1592252021-05-11T09:57:33Z2021-05-11T09:57:33ZView from The Hill: Frydenberg finds the money tree<figure><img src="https://images.theconversation.com/files/399988/original/file-20210511-17-1b4jy7r.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Wes Mountain/The Conversation</span></span></figcaption></figure><p>Josh Frydenberg’s third budget aims to give Australia a post-pandemic soft landing, using revenue windfalls for spending and tax cuts rather than for slashing the deficit.</p>
<p>Its philosophy is very much gain, not pain, for a population that has endured the stress of the pandemic, albeit not the devastation experienced by so many other countries.</p>
<p>There are plenty of winners, and minimal direct losers in a budget that lays the ground work for an election that is still expected next year rather than this.</p>
<p>Hard decisions have been eschewed. Prime Minister Scott Morrison is trying to avoid offending voters.</p>
<p>The political prism of this budget is very much in the moment. As such, it leaves Opposition Leader Anthony Albanese little room. Excessive criticism, and he risks sounding carping. Demands for too much more, and he might be accused of irresponsibility.</p>
<p>The $7.8 billion extension of the low and middle income tax offset is a carrot for Labor’s core constituency. Frydenberg told reporters the recipients were “the tradies and the truckies,” and “the teachers and the nurses”. </p>
<p>The budget dodges major reform, with the notable exception of aged care, which the royal commission’s scathing findings made unavoidable.</p>
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Read more:
<a href="https://theconversation.com/budget-splashes-cash-with-17-7-billion-for-aged-care-and-a-pitch-to-women-159227">Budget splashes cash, with $17.7 billion for aged care and a pitch to women</a>
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<p>The deficit for the coming financial year is forecast to be $106.6 billion, only marginally below the December budget update forecast of about $108 billion.</p>
<p>Tens of billions of dollars in windfall revenue (from the faster-than-expected economic recovery, and high iron ore prices) have been distributed, rather than going to the bottom line.</p>
<p>At the end of the budget period, in 2024-25, the deficit will be an estimated $57 billion. Indeed, there is no surplus in sight in a decade.</p>
<p>Without a policy U-turn, Frydenberg as treasurer will likely never deliver that “back in black” budget. Indeed, by the time there is a surplus, he might have served as prime minister, been in opposition, and departed politics.</p>
<p>But of course, after the next election, at some point there will be a change of policy, towards fiscal consolidation.</p>
<p>Frydenberg presents an optimistic picture for the economy in the coming financial year, with the caveat that the pandemic lurks and therefore so does uncertainty.</p>
<p>The budget forecasts unemployment falling to 5% next year and dropping to 4.5% by June 2024. Growth peaks at 4.25% next financial year, but slows after that.</p>
<p>Critics will say that given the state of the economy, and the amount of revenue, budget repair is being delayed too long. That won’t, of course, be the judgement of the public.</p>
<p>We can apply many measuring sticks to the budget, beyond the spending-versus-repair one.</p>
<p>The most obvious is its response to the aged care royal commission. The government is putting some $17.7 billion into the system, and there will be 80,000 additional home care packages (the waiting list is 100,000).</p>
<p>The experts will argue over the money and probably conclude it is not enough. Equally, the test must be whether the initiatives adequately address improving regulation and achieving a larger, better trained and remunerated workforce. The government makes the right noises but the judgement can only come later. The workforce issues are particularly challenging.</p>
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Read more:
<a href="https://theconversation.com/frydenberg-spends-the-bounty-to-drive-unemployment-to-new-lows-159229">Frydenberg spends the bounty to drive unemployment to new lows</a>
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<p>The size of the task is enormous, with a planned new funding model to improve quality and a goal of cultural reform. Health Minister Greg Hunt on Tuesday described it as a “once in a generation” reform. The program will take five years.</p>
<p>As foreshadowed, there are many initiatives for women – on safety, health and economic security. Reforms to child care benefit families, but women especially will be making comparisons with the more generous, less targeted Labor scheme.</p>
<p>Many individuals and businesses will be scrutinising the budget for what it says about opening Australia back to the world.</p>
<p>The message is that it will be a slow path.</p>
<p>Migrants, temporary and permanent, will gradually start to come from mid next year.</p>
<p>Late this year, “small phased programs” of international students will start.</p>
<p>Inbound and outbound travellers will remain low for the next year.</p>
<p>But hey – it’s assumed “a population-wide vaccination program is likely to be in place by the end of 2021”. Let’s hope this is so – but it’s only an assumption.</p>
<p>By the end of next year, barring a fresh assault by the pandemic, we might – just might – be looking at more normality. And then we will be facing a more “normal” budget too, with its share of nasties.</p>
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<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There are plenty of winners and few direct losers in a budget that lays the groundwork for the next election - still more likely to be next year than this.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1592302021-05-11T09:51:13Z2021-05-11T09:51:13ZBudget 2021: the floppy-V-shaped recovery<figure><img src="https://images.theconversation.com/files/400044/original/file-20210511-17-1n8cgkr.jpg?ixlib=rb-1.1.0&rect=556%2C544%2C3142%2C1897&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Lukas Coch/AAP</span></span></figcaption></figure><p>I don’t often feel sorry for politicians. But having to manage a process that produces forecasts about the next four years of an economy still clawing its way out of a pandemic, and then having to publicly defend those forecasts, is no easy task.</p>
<p>That said, our compassion for the plight of Treasurer Josh Frydenberg shouldn’t stop us judging his budget forecasts. And, like all forecasts, those rest heavily on the assumptions that underpin them.</p>
<h2>Core budget assumptions</h2>
<p>The core budget assumptions about unemployment and economic growth are relatively rosy. Unemployment is forecast to be down to 4.75% by 2023-23 and 4.5% the year after – both well below pre-pandemic levels. </p>
<p>Real GDP growth is expected to rebound to 4.25% in 2021-22 and then settle down to about 2.5% thereafter. Given we are unlikely to have the population growth of the pre-COVID era, that’s a pretty high rate.</p>
<p>Taking a look graphically at actual and forecast GDP makes it clear why folks are talking about a “V-shaped recovery”. But even the fairly bullish assumptions reveal a recovery where the V isn’t really sharp enough. Call it a “floppy-V-shaped recovery.” </p>
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<p>That’s rather disappointing, especially given Frydenberg has fundamentally shifted Liberal party fiscal strategy away from “debt and deficits” and dalliances with austerity, to one that sees government spending at more than 26% of GDP in steady state.</p>
<p>But what is more disappointing is that this increased spending isn’t forecast to translate into stronger employment and wages growth.</p>
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Read more:
<a href="https://theconversation.com/frydenberg-spends-the-bounty-to-drive-unemployment-to-new-lows-159229">Frydenberg spends the bounty to drive unemployment to new lows</a>
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<p>The budget forecasts an unemployment rate of 4.5% in 2023-24 and 2024-25. That’s better than pre-pandemic levels, but not all that close to the 4%-or-lower number many economists (including RBA governor Philip Lowe) think might be required to get wages growing meaningfully for the first time since 2013.</p>
<p>The budget forecasts reflect this, with wages growth of 2.25% in 2022-23 and 2.5% in 2023-24 both equal to forecast inflation in those years. That is, real wages growth is not even forecast to begin again until 2024-25—and even then, only barely.</p>
<p>Non-mining business investment is forecast to grow by 1.5% in 2021-22 and then jump by a massive 12.5% in 2022-23. That might reflect a post-COVID investment boom driven by a widely mRNA-vaccinated nation and a raft of government incentives. Or it might just be wishful thinking.</p>
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Read more:
<a href="https://theconversation.com/view-from-the-hill-frydenberg-finds-the-money-tree-159225">View from The Hill: Frydenberg finds the money tree</a>
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<p>As to immigration, we can expect our borders to be largely shut for the foreseeable future. This is reflected in the budget’s forecast population growth of “around 0.1% in 2020-21, 0.2% in 2021-22 and 0.8% in 2022-23.”</p>
<p>Whether immigration does actually pick up significantly in 2022-23 depends crucially on our vaccination rollout. </p>
<p>If we can reverse the bungled execution to date, overcome vaccine hesitancy, and secure enough Pfizer and Moderna doses (including for boosters) immigration might grow strongly again. </p>
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Read more:
<a href="https://theconversation.com/fewer-hard-hats-more-soft-hearts-budget-pivots-to-women-and-care-159332">Fewer hard hats, more soft hearts: budget pivots to women and care</a>
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<p>But there are a number of things that have to go right for that to happen. And the government has a poor track record to date on those things.</p>
<p>And then there’s one notable assumption that makes news in every budget: the iron-ore price. The budget papers themselves highlight the importance of it, noting: </p>
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<p>“The recent strength in key commodity prices, particularly iron ore, has seen a significant resurgence in Australia’s terms of trade […] As a result, nominal GDP is expected to grow by 3¾% in 2020-21, by a further 3½% in 2021-22 and by 2% in 2022-23.”</p>
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<p>The budget assumes the iron-ore price will decline from its current level of over US$200 a tonne, to US$55 a tonne by March 2022. This incredibly pessimistic assumption basically gives the government a buffer on the headline deficit figure. If the forecast of a $99.3 billion deficit in 2022-23 is beaten significantly, it will likely be due to iron ore prices staying high. </p>
<h2>The biggest assumption of all</h2>
<p>The core economic assumptions discussed above underpin the budget bottom line – a number that used to receive considerably more attention when there was a question of “when” the budget might be back in surplus.</p>
<p>Those days are gone.</p>
<p>Frydenberg has engineered a remarkable shift in Liberal party economic philosophy. While maintaining their brand as “the party of lower taxes, not higher taxes”, they have jettisoned budget-balance fetishism.</p>
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Read more:
<a href="https://theconversation.com/cuts-spending-debt-what-you-need-to-know-about-the-budget-at-a-glance-159226">Cuts, spending, debt: what you need to know about the budget at a glance</a>
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<p>Good. It’s about time.</p>
<p>But the biggest assumption of all in the out years of the budget is that the government – should it be reelected – sticks to this new strategy. If they do it holds the promise of being transformative.</p>
<p>It would represent a modest but welcome transformation of the economy, and a dramatic transformation of the Liberal Party brand. </p>
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<p><iframe id="tc-infographic-585" class="tc-infographic" height="400px" src="https://cdn.theconversation.com/infographics/585/480ea5f82962dd39218ca38486f6623d86d313ee/site/index.html" width="100%" style="border: none" frameborder="0"></iframe></p><img src="https://counter.theconversation.com/content/159230/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Holden does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Looking graphically at actual and forecast GDP makes it clear why some speak of a ‘V-shaped recovery’. But even the fairly bullish assumptions reveal a recovery where the V isn’t really sharp enough.Richard Holden, Professor of Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1592292021-05-11T09:40:23Z2021-05-11T09:40:23ZFrydenberg spends the bounty to drive unemployment to new lows<p>Never before has a budget spent so much to supercharge the economy after the worst of a recession has already passed.</p>
<p>The economy bounced back from last year’s COVID recession far more sharply than the treasury (or just about anyone else) expected.</p>
<p>The bounty from the higher-than-expected tax collections that flowed from more people than expected in work, a much higher-than-expected iron ore price, and lower than expected unemployment benefits, should amount to A$26.8 billion this financial year, $15.5 billion the next, and $18.6 billion the year after that.</p>
<p>But rather than bank those riches and improve the budget bottom line, as the Coalition’s budget strategy used to require it to do, the government has instead decided to spend the lot.</p>
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<p>It will spend $21 billion of this year’s $26.8 billion; it will spend or give up in new tax concessions $26.9 billion — far more than next year’s $15.5 billion bounty, and so on. </p>
<p>Treasurer Josh Frydenberg has come good on his historic promise to keep spending way beyond the crisis, to drive the unemployment rate down below where it was when the pandemic started.</p>
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<a href="https://theconversation.com/view-from-the-hill-frydenberg-finds-the-money-tree-159225">View from The Hill: Frydenberg finds the money tree</a>
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<p>The budget predicts an unemployment rate of 4.75% by mid-2023 and 4.5% by mid-2024.</p>
<p>If delivered (and the treasurer’s revised strategy published in the budget requires him to keep spending until it is), it will mark what the budget papers describe as, “the first sustained period of unemployment below 5% since before the global financial crisis, and only the second time since the early 1970s”.</p>
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<p>In the same way as Australia emerged from the early-1990s recession with a dramatically lower inflation rate because the Reserve Bank was determined to salvage something from the carnage, Frydenberg has decided to exit the COVID recession with an ongoing lower floor under unemployment.</p>
<p>Both the treasury and Reserve Bank believe Australia can sustain much lower unemployment than the 5-6% it has grown used to. The treasury’s estimate is 4.5%; the Reserve Bank’s is nearer 4%. Before COVID, the United States managed 3.5%.</p>
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Read more:
<a href="https://theconversation.com/fewer-hard-hats-more-soft-hearts-budget-pivots-to-women-and-care-159332">Fewer hard hats, more soft hearts: budget pivots to women and care</a>
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<p>If achieved, it will mean hundreds of thousands more Australians providing services, drawing paycheques, and paying tax. And no longer on benefits.</p>
<p>A dramatic budget graph tracking the fortunes of every Australian whose payroll was reported to the tax office throughout 2020 shows the biggest victims of the COVID recession — by far — were those without post-school education. At the deepest point of the COVID recession in May, they were almost three times as likely to have lost their jobs as Australians with degrees.</p>
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<span class="attribution"><a class="source" href="https://budget.gov.au/2021-22/content/bp1/download/bp1_bs4.pdf">Budget Paper 1, Statement 4: The labour market through COVID-19</a></span>
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<p>The budget provides an extra $400 million for low-fee or no-cost training for jobseekers, to be matched by the states; an extra $481 million for the transition to work employment service directed at Australians aged 24 and under; and a further $2.4 billion to the Boosting Apprenticeship Commencements program.</p>
<p>But most of what it intends to do for jobs is the indirect result of a barely precedented expansion in spending and tax concessions in all sorts of areas.</p>
<p>The extra $17.7 billion it is spending on aged care over four years ought to create many jobs, as should the extra $13.2 billion it is spending on the National Disability Insurance Scheme. </p>
<p>The $1.7 billion it is spending on making childcare more affordable should both create jobs in the sector and free up more parents to return to work.</p>
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Read more:
<a href="https://theconversation.com/cuts-spending-debt-what-you-need-to-know-about-the-budget-at-a-glance-159226">Cuts, spending, debt: what you need to know about the budget at a glance</a>
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<p>An extra $20 billion in business tax concessions should help as well.</p>
<p>The budget’s break with the past isn’t its dramatic expansion of discretionary spending. That’s common in recessions. What’s unusual is that spending is being ramped up when we are not in recession. </p>
<p>In the words beloved of economists, the spending is “pro-cyclical” rather than “counter-cyclical”. It is designed to supercharge our exit from recession rather than merely bring it about.</p>
<p>And there’s little sign of the spending stopping. </p>
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<p>If this government or the next achieves success in driving the unemployment rate down to 4.5%, it will want to go further. It will keep going further right up until we get inflation near the top of the Reserve Bank’s 2-3% target band and wage growth in excess of 3%, neither of which this budget foresees in forecasts going out four years.</p>
<p>Government debt, anathema to the Coalition when Labor ran it up during and after the global financial crisis, isn’t much of a constraint. </p>
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Read more:
<a href="https://theconversation.com/josh-frydenberg-has-the-opportunity-to-transform-australia-permanently-lowering-unemployment-156175">Josh Frydenberg has the opportunity to transform Australia, permanently lowering unemployment</a>
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<p>The Reserve Bank holds much of the government’s debt (it didn’t during Labor’s time) and is buying as much as it needs to to keep interest rates low. Recently, interest rates have been rising, but not for most of the government’s borrowings, which are long-term. </p>
<p>The budget papers show that even with net government debt at 34% of GDP and heading to 44%, interest payments on that debt are much less of a drain on the budget than they were back in the mid 1990s when net debt hit 18% of GDP.</p>
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<p>And the times have changed. Worldwide, few nations have an aversion to government debt, especially not the United States. In Australia, the only side of politics that used to complain about debt is in currently in office.</p>
<p>Before COVID, the fiscal strategy spelled out in the budget as part of the Charter of Budget Honesty required the government to eliminate net debt.</p>
<p>Frydenberg’s revised strategy merely requires him to stabilise and then reduce net debt “as a share of the economy”.</p>
<p>His priority is driving down unemployment. If that helps expand the economy and so drives down net debt as a share of the economy so much the better. But he wants to do it regardless.</p>
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<p><iframe id="tc-infographic-585" class="tc-infographic" height="400px" src="https://cdn.theconversation.com/infographics/585/480ea5f82962dd39218ca38486f6623d86d313ee/site/index.html" width="100%" style="border: none" frameborder="0"></iframe></p><img src="https://counter.theconversation.com/content/159229/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Never before has a budget done so much to supercharge the economy after the worst of a recession has passed.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1592272021-05-11T09:37:06Z2021-05-11T09:37:06ZBudget splashes cash, with $17.7 billion for aged care and a pitch to women<figure><img src="https://images.theconversation.com/files/399984/original/file-20210511-14-ramyh9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">AAP/Mick Tsikas</span></span></figcaption></figure><p>The Morrison government has brought down a big-spending, expansionary budget that forecasts Australia’s unemployment rate will fall to 4.75% in two years time. </p>
<p>But Australia’s international borders won’t be properly open for at least a year, according to the budget’s assumptions. </p>
<p>“Australia is coming back,” Treasurer Josh Frydenberg told parliament on Tuesday night. </p>
<p>“Employment is at a record high, with 75,000 more Australians in jobs than before the pandemic.</p>
<p>"This budget will help to create more than 250,000 jobs by the end of 2022-23,” Frydenberg said.</p>
<p>“This budget secures the recovery and sets Australia up for the future.” </p>
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Read more:
<a href="https://theconversation.com/frydenberg-spends-the-bounty-to-drive-unemployment-to-new-lows-159229">Frydenberg spends the bounty to drive unemployment to new lows</a>
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<p>The deficit for next financial year is expected to be A$106.6 billion, with cumulative deficits of $342.4 billion over the forward estimates. </p>
<p>As the government continues to spend to underpin the recovery, net debt will increase to 30% of GDP at the end of June, before peaking at 40.9% at June 30, 2025. </p>
<h2>Aged care centrepiece</h2>
<p>The centrepiece of Frydenberg’s third budget – which had been largely pre-announced by the government – is a $17.7 billion aged care package, spent over five years and including 80,000 extra home care packages. </p>
<p>Frydenberg said this would make a total of 275,000 packages available. The present waiting list is 100,000.</p>
<p>The aged care package is designed as long term structural reform after the royal commission found the system in a parlous state and needing a comprehensive overhaul. </p>
<p>“We will increase the time nurses and carers are required to spend with their patients,” Frydenberg said. </p>
<p>“We will make an additional payment of $10 per resident per day to enhance the viability and sustainability of the residential aged care sector.</p>
<p>"We will support over 33,000 new training places for personal carers, and a new Indigenous workforce. </p>
<p>"We will increase access for respite services for carers.</p>
<p>"We will strengthen the regulatory regime to monitor to monitor and enforce standards of care.”</p>
<p>In other major initiatives, there is $2.3 billion for mental health, while the earlier-announced adjustment to the JobSeeker rate will cost nearly $9.5 billion over the budget period. </p>
<h2>Tax cuts and a focus on women</h2>
<p>Some 10.2 million low and middle income earners will benefit from the extension of the tax offset for another year, at a cost of $7.8 billion.</p>
<p>As Morrison seeks to repair his image with women, there is a range of measures on women’s safety, economic security, health and wellbeing totalling $3.4 billion. </p>
<p>This includes $1.7 billion for changes to child care, $351.6 million for women’s health, and $1.1 billion for women’s safety. </p>
<p>There will be another $1.9 billion for the rollout of COVID vaccines. </p>
<p>Quizzed at his news conference on the future of Australia’s closed border, Frydenberg hedged his bets. “When it comes to international borders, it’s an imprecise business.” </p>
<p>The budget papers assume a gradual return of temporary and permanent migrants from mid-2022, and small arrivals of international students, starting late this year and increasing from next year. </p>
<p>“The rate of international arrivals will continue to be constrained by state and territory quarantine caps over 2021 and the first half of 2022, with the exception of passengers from Safe Travel Zones. </p>
<p>"Inbound and outbound international travel is expected to remain low through to mid-2022, after which a gradual recovery in international tourism is assumed to occur,” the papers say. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/budget-2021-the-floppy-v-shaped-recovery-159230">Budget 2021: the floppy-V-shaped recovery</a>
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<p>The budget is heavy on continued help for business, with more than $20 billion extra in support. </p>
<p>With the country facing a skill shortage and skilled workers not able to enter, Frydenberg said the government would create more than 170,000 new apprenticeships at a cost of $2.7 billion. </p>
<p>“We will help more women break into non-traditional trades, with training support for 5,000 places,” he said </p>
<p>There will be 2,700 places in Indigenous girls academies to help them finish school and enter the workforce. </p>
<p>More STEM scholarships will be provided for women. </p>
<p>Another 5,000 places are being made available in higher education short courses. </p>
<h2>Housing and support for retirees</h2>
<p>The budget’s housing package includes another 10,000 places under the New Home Guarantee for first home buyers who build or buy a newly-built home. It will also increase the amount that can be released under the First Home Super Saver Scheme. </p>
<p>From July 1, 10,000 guarantees will be provided over four years to single parents with dependants to build or buy a home with a deposit as low as 2%. </p>
<p>Retirees will benefit from a measure to encourage them to downsize. </p>
<p>Older people will no longer have to meet a work test before they can make voluntary contributions to superannuation. People aged over 60 will be able to contribute up to $300,000 into their superannuation if they downsize. </p>
<p>Given the housing shortage, this is aimed at freeing up more housing for younger people. </p>
<p>The government will also enhance the Pension Loan Scheme by providing immediate access to lump sums of $12,000 for single people and $18,000 for couples. </p>
<p>Although modest, one measure that will help women, who retire on average with much less superannuation than men, is that the government will remove the $450-a-month minimum income threshold for the superannuation guarantee. </p>
<p>Frydenberg said the government was committing another $15 billion over a decade to infrastructure, including roads, airports and light rail. </p>
<p>There is also $1.2 billion for multiple measures to promote the digital economy. </p>
<h2>Labor says it’s ‘just more of the same’</h2>
<p>The opposition was dismissive. Anthony Albanese said, “Australians have endured eight long years of flat wages, insecure work and skyrocketing cost of living under the Liberals and Nationals – and this budget does nothing to change that.</p>
<p>"It’s just more of the same from a tired old government.”</p>
<p>The Business Council of Australia welcomed the budget, saying it “strikes a prudent balance between growth and fiscal discipline by making sensible investments in the levers of growth”.</p>
<p>But the ACTU said while the Coalition’s rejection of austerity was welcome, “the government has failed to use the spending in this budget to tackle the underlying problems of low wages and insecure jobs”. </p>
<p>Instead, it was “handing billions of dollars to business including in the critical areas of aged care, mental health and vocational training, with little accountability or strings attached”.</p>
<p>The Australian Aged Care Collaboration, which represents more than 1,000 providers, congratulated the government on agreeing to implement most of the royal commission’s 148 recommendations.</p>
<p>AACC representative Patricia Sparrow said “after 20 government reviews in 20 years, this budget, and the government’s response to the royal commission’s recommendations, finally addressed many of the challenges facing aged care”.</p><img src="https://counter.theconversation.com/content/159227/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Morrison government has brought down a big-spending, expansionary budget.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1587042021-04-11T19:53:29Z2021-04-11T19:53:29ZAs Australia’s vaccination bungle becomes clear, Morrison’s political pain is only just beginning<figure><img src="https://images.theconversation.com/files/394362/original/file-20210411-21-1eko8gs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Mick Tsikas/AAP</span></span></figcaption></figure><p>Among many surprising things about 2020 was how a novel coronavirus drove an equally novel upending of Australia’s political orthodoxy.</p>
<p>The hackneyed election straightener, “it’s the economy, stupid”, got shoved aside for a refreshing new imperative, “it’s the community, stupid”. Australians unhesitatingly turned to government, embraced expertise, and willingly abided by society-wide deprivations in the interests of the whole.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/australian-vaccine-rollout-needs-all-hands-on-deck-after-the-latest-astrazeneca-news-mass-vaccination-hubs-included-158519">Australian vaccine rollout needs all hands on deck after the latest AstraZeneca news, mass vaccination hubs included</a>
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<p>Reluctantly at first, centre-right politicians fell into line. Those who had built their careers on the virtues of small-government and gruff fiscal discipline, flipped to become big spending hyper-Keynesians.</p>
<p>Necessarily, political combat took a back seat to problem-solving. In an atmosphere of policy-not-politics, voters backed incumbent governments, marking them favourably for doing their jobs. Every election since the crisis began has returned the incumbents: in the Northern Territory, ACT, Queensland, and Western Australia. In the latter case, Labor’s Mark McGowan — arguably the country’s most aggressively parochial premier — <a href="https://theconversation.com/labors-thumping-win-in-western-australia-carries-risks-for-both-sides-156301">was endorsed so strongly</a> in March that the Liberal opposition officially ceased to exist.</p>
<p>Federally, Prime Minister Scott Morrison reaped the dividends of Australia’s tandem run of good management and good luck. While our closest allies, the United States and United Kingdom, descended into death and division, Australia closed its international borders early. It then compartmentalised further with the states episodically insulating their own populations and their own hospital systems.</p>
<p>Of course, there were mistakes. But the aggregate impact of these measures, high public trust, and the deliberately consensual mechanism of Morrison’s national cabinet has served the country well.</p>
<h2>2021 brings new pressures</h2>
<p>But 2021 has been a whole new ball game, and one for which a prime minister not accustomed to pressure, has proved far less equipped.</p>
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<img alt="Prime Minister Scott Morrison, Health Minister Greg Hunt and health authorities at a Canberra press conference." src="https://images.theconversation.com/files/394363/original/file-20210411-23-ftkucg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/394363/original/file-20210411-23-ftkucg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/394363/original/file-20210411-23-ftkucg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/394363/original/file-20210411-23-ftkucg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/394363/original/file-20210411-23-ftkucg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/394363/original/file-20210411-23-ftkucg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/394363/original/file-20210411-23-ftkucg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Prime Minister Scott Morrison and Health Minister Greg Hunt have found themselves in crisis-management mode over the vaccine rollout.</span>
<span class="attribution"><span class="source">Mick Tsikas/AAP</span></span>
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</figure>
<p>The vaccine rollout — which remember, <a href="https://www.abc.net.au/news/2021-02-17/australia-covid-vaccine-rollout-lessons-from-other-countries/13155128">started stubbornly late</a> — is in disarray. A promised four million inoculations by the end of March and completion by the end of October proved wildly unrealistic. </p>
<p>As of Sunday, the government says <a href="https://www.theguardian.com/society/2021/apr/11/coalition-admits-a-lot-of-unknowns-could-derail-plan-to-vaccinate-australia-by-end-of-year">it hopes</a> all Australians could receive at least one dose of vaccine by the end of the year. But as Morrison posted on Facebook, the government has no plans for any new targets because</p>
<blockquote>
<p>it is not possible to set such targets given the many uncertainties involved. </p>
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<p>Through the second half of last year, as it became clear there would be effective vaccines, Morrison, Health Minister Greg Hunt, and health authorities assured worried Australians the government was up to the global competition. And that Canberra was being sufficiently front-footed about procuring vaccines. </p>
<p>As Morrison boasted in a <a href="https://www.pm.gov.au/media/new-deal-secures-potential-covid-19-vaccine-every-australian">press statement</a> on August 19,</p>
<blockquote>
<p>Australians will be among the first in the world to receive a COVID-19 vaccine, if it proves successful, through an agreement between the Australian Government and UK-based drug company AstraZeneca.</p>
</blockquote>
<p>In November, he <a href="https://www.health.gov.au/ministers/the-hon-greg-hunt-mp/media/australia-secures-a-further-50-million-doses-of-covid-19-vaccine">also said</a>,</p>
<blockquote>
<p>Our strategy puts Australia at the head of the queue.</p>
</blockquote>
<p>This was always unconvincing. That claimed “agreement” turned out to have been an over-egged letter of intent. Even ordinary observers could see demand from wealthy countries would be strong, and binding contracts would need to be signed quickly if Australia was to secure early adequate supplies.</p>
<p>It is now clear Australia’s risk-averse pandemic management — much of which was driven by premiers — has been followed by an insufficiently risk-aware vaccine contingency, controlled by the Commonwealth. And so we see another bizarre inversion: Australia being trounced by Britain and America, countries that had persistently botched their infection response. </p>
<p>Post-Trump America is now vaccinating <a href="https://www.cnbc.com/2021/04/03/covid-vaccinations-hit-another-record-average-now-above-3-million-daily.html">three million people</a> a day, and has gone <a href="https://www.washingtonpost.com/nation/2021/04/05/coronavirus-covid-live-updates-us/">above four million</a> at least once. Covid-ravaged Britain is also roaring ahead. More than <a href="https://www.theguardian.com/society/2021/mar/20/uk-covid-vaccine-milestone-as-more-than-half-of-adults-have-had-first-dose">half of adults</a> have had their first jab. </p>
<h2>Textbook vaccination program?</h2>
<p>What is not clear is why Morrison et al insisted the absence of urgency was an advantage because — combined with our judicious “portfolio” approach to multiple acquisitions — our health authorities could plan and execute a textbook public vaccination program. </p>
<p>Trouble is, the states have complained about a lack of genuine cooperation in the rollout, critical supply problems have been obscured, and the much vaunted broad “portfolio” approach has had its narrowness exposed. </p>
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Read more:
<a href="https://theconversation.com/blood-clot-risks-comparing-the-astrazeneca-vaccine-and-the-contraceptive-pill-158652">Blood clot risks: comparing the AstraZeneca vaccine and the contraceptive pill</a>
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<p>Clearly, the slow and steady approach failed to build in redundancy for the wholly imaginable interruptions to supply from international competition and technical limitations in production and transporting. Then there is straight-out vaccine nationalism, as has been the cause of a blocked shipment from Italy. </p>
<p>Australia’s approach rather relied initially on two locally producible vaccines primarily with Pfizer (and later Novavax) as a back-up — the University of Queensland one which fell over in December, and AstraZeneca which is now “not preferred” <a href="https://theconversation.com/new-setback-for-vaccine-rollout-with-astrazeneca-not-advised-for-people-under-50-158661">for under 50s</a>. While the AstraZeneca clotting risk is hardly a public health disaster — it has been compared to that of <a href="https://www.thetimes.co.uk/article/covid-vaccines-are-safe-and-save-lives-insists-boris-johnson-7b7schtth">long-haul flights</a> — it is certainly a disaster for an already fractious vaccine confidence.</p>
<h2>Morrison now faces multiple, serious threats</h2>
<p>Coupled with a poorly managed <a href="https://theconversation.com/morrison-takes-big-personal-hit-in-newspoll-after-missteps-on-womens-issue-158033">political crisis</a> over the treatment of women, Morrison’s 2021 has been tin-eared. A sharp decline of public trust in government, in expertise, and in institutional competence looms as a clear and present danger for Morrison’s popularity.</p>
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<img alt="Brittany Higgins walks through the crowd at the women's march in Canberra." src="https://images.theconversation.com/files/394364/original/file-20210411-13-12vvfy8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/394364/original/file-20210411-13-12vvfy8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/394364/original/file-20210411-13-12vvfy8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/394364/original/file-20210411-13-12vvfy8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/394364/original/file-20210411-13-12vvfy8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/394364/original/file-20210411-13-12vvfy8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/394364/original/file-20210411-13-12vvfy8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The prime minister has taken a hit to his approval ratings over his recent handling of gender issues.</span>
<span class="attribution"><span class="source">Lukas Coch/AAP</span></span>
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<p>Business-as-usual politics is already making a comeback with Labor’s Mark Butler toughening up of <a href="https://www.news.com.au/lifestyle/health/health-problems/complete-mess-butler-slams-pm-over-canavan-vaccine-rollout-delays/news-story/bc2b8bed47f36325510e06d71d6a95a9">criticism of the rollout</a> and calling for more transparency and a greater sense of urgency. Labor has little choice. Voters themselves see other countries are surging ahead while Australia inches along, tempting the fate of another outbreak, and delaying the economic recovery dependent on vaccination.</p>
<p>And that’s the next inversion we’re likely to see. Business and Coalition hardliners were outspoken last year against state border closures, lockdowns, and other restrictions, on economic grounds. </p>
<p>Expect to hear those voices too in coming weeks as the penny drops about a whole extra year lost to the pandemic.</p><img src="https://counter.theconversation.com/content/158704/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Kenny does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>This year is a whole new ball game for pandemic politics. For a prime minister not accustomed to pressure, Scott Morrison is proving far less equipped.Mark Kenny, Professor, Australian Studies Institute, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1560582021-02-25T18:21:07Z2021-02-25T18:21:07ZFurlough scheme: UK has to extend it, but there are serious risks<figure><img src="https://images.theconversation.com/files/386458/original/file-20210225-13-1k43z5u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Surplus to requirements. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/groups-tables-chairs-stacked-chained-together-112787647">Carlos Caetano</a></span></figcaption></figure><p>Finance ministers usually rejoice when businesses and employees alike both plead for a signature scheme to be extended. But for UK chancellor Rishi Sunak, demands to continue the country’s Coronavirus Job Retention Scheme, AKA the furlough, beyond March are as financially uncomfortable as they are politically hard to resist.</p>
<p><a href="https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme#employees-you-can-claim-for">Originally launched</a> in April 2020, the scheme <a href="https://www.gov.uk/government/topical-events/plan-for-jobs">has broadly paid</a> 80% <a href="https://www.haroldbenjamin.com/site/blog/harold-benjamin-blog/the-furlough-scheme-changes-from-10-june#:%7E:text=Coronavirus%20Notice-,The%20Furlough%20Scheme%20%2D%20Changes%20from%2010%20June,31%20October%202020%20%2D%20and%20Beyond&text=The%20Coronavirus%20Job%20Retention%20Scheme,end%20on%2031%20October%202020">of wages</a> for up to 10 million employees prevented from working during the pandemic. This is largely why <a href="https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/mgsx/lms">UK unemployment</a> was 5.1% in the last quarter <a href="https://theconversation.com/young-ethnic-minorities-bear-brunt-of-recessions-and-its-happening-again-heres-how-to-stop-it-155902">of 2020</a>, which is comparable with <a href="https://www.macrotrends.net/countries/GBR/united-kingdom/gdp-growth-rate">boom years</a> like 2001-02 and 2006-07, despite the <a href="https://obr.uk/overview-of-the-november-2020-economic-and-fiscal-outlook/">worst economic slump</a> for over three centuries. Contrast this with furlough-less America, where <a href="https://www.bls.gov/news.release/pdf/empsit.pdf">unemployment jumped</a> from below 4% to 15% in the first coronavirus wave. </p>
<p>Sunak is <a href="https://www.cityam.com/rishi-sunak-to-extend-business-rates-relief-and-furlough/">duly expected</a> to extend the scheme one more time at his budget announcement on March 3. But the immediate political reward brings high economic risks. </p>
<h2>The £70 billion gamble</h2>
<p>The furlough, and accompanying income support for the self-employed, <a href="https://obr.uk/efo/economic-and-fiscal-outlook-november-2020/">is forecast</a> to cost £71 billion in the financial year ended April. It was one of the biggest single contributors to the record £271 billion of public sector net borrowing in the first ten months of 2020-21. </p>
<p>To justify such largesse, the chancellor must ensure a high proportion of furloughed employees return to a privately paid job – which they would otherwise have lost – when public funding is withdrawn. The strategy will look particularly inspired if the economy roars back to growth in the second half of 2021, as shoppers freed by vaccination hit the high street with money they couldn’t spend under lockdown.</p>
<p>Bank of England chief economist Andy Haldane <a href="https://www.bbc.co.uk/news/business-56035488">has likened</a> the economy to a “coiled spring”, which could rapidly reverse 2020’s <a href="https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpfirstquarterlyestimateuk/latest">9.9% GDP drop</a> once the pandemic subsides. Unlike the 2007-09 downturn, many households have been able to strengthen their finances in lockdown – by <a href="https://www.ftadviser.com/opinion/2021/02/18/are-we-on-the-cusp-of-an-almighty-recovery/">£125 billion to £250 billion</a> on the Bank’s estimates. </p>
<p>The furlough can ensure that a spending boom has productive results, by ensuring that staff in shuttered manufacturing, retail, hospitality and transport businesses are quickly back in place to meet the demand. This would give the Treasury some immediate payback via tax revenues. </p>
<h2>Zoom vs zombie economy</h2>
<p>But if jobs don’t return for long enough to repay their furlough cost, Sunak will be accused of spending lavishly just to postpone unemployment for a year – and freezing many workers in pre-pandemic posts that <a href="https://www.mckinsey.com/featured-insights/employment-and-growth/technology-jobs-and-the-future-of-work#">may soon be</a> displaced by rapid technical change. </p>
<p>Even before the pandemic, a <a href="https://www.theguardian.com/business/2019/may/06/zombie-firms-a-major-drag-on-uk-economy-analysis-shows">significant number</a> of “zombie firms” were being kept alive by the rock-bottom interest rates in the years after the 2007-09 financial crisis. Furlough <a href="https://theconversation.com/attack-of-zombie-companies-dont-let-them-eat-bailouts-that-are-vital-to-restore-the-economy-139177">has arguably further</a> propped them up when a shakeout <a href="https://www.allianz.com/en/economic_research/publications/specials_fmo/17062020_Labormarket.html">would have been</a> healthier. The outlay could instead have been focused on firms whose markets are sure to return, and the <a href="https://www.ft.com/content/aa5b8d62-1f16-4ee4-bbbd-aa35b85fa5de">many self-employed workers</a> unable to access government funding, who may not stay afloat long enough to see their markets reopen. </p>
<p>To the extent that furlough keeps established employees in place, it also limits opportunities for school and university leavers, on top of a year’s disrupted study. Youth unemployment had <a href="https://publications.parliament.uk/pa/cm201213/cmselect/cmworpen/151/15105.htm">already returned</a> as a problem after 2007-09, and 18-24-year-olds – along with low-paid and minority-ethnic employees – <a href="https://www.resolutionfoundation.org/publications/jobs-jobs-jobs/">have suffered the worst</a> pandemic job losses. The longer he furloughs older workers, the more Sunak will also have to spend on training and recruitment subsidies to help their children and grandchildren into work.</p>
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Read more:
<a href="https://theconversation.com/young-ethnic-minorities-bear-brunt-of-recessions-and-its-happening-again-heres-how-to-stop-it-155902">Young ethnic minorities bear brunt of recessions, and it's happening again – here's how to stop it</a>
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<h2>An MMT gesture?</h2>
<p>Given these risks, the chancellor is fortunate to be running unprecedented <a href="https://www.newstatesman.com/2020/05/uk-budget-deficit-reach-highest-level-1945-obr-says">peacetime deficits</a> at a time when new public debt can be issued at <a href="http://www.worldgovernmentbonds.com/country/united-kingdom/#:%7E:text=The%20United%20Kingdom%2010Y%20Government%20Bond%20has%20a%200.729%25%20yield.&text=Normal%20Convexity%20in%20Long%2DTerm,last%20modification%20in%20March%202020">near-zero interest rates</a>. Private investors still buy it because the Bank of England can keep absorbing previously issued government bonds via quantitative easing, with <a href="https://www.omfif.org/2021/01/the-bank-of-england-nearly-financed-the-deficit-does-it-matter/">£290 billion</a> added to the central bank balance sheet in 2020.</p>
<p>The Bank has already <a href="https://www.bbc.co.uk/news/business-20268679">handed back</a> the interest it was owed by the Treasury, and could write off more government debt in future. <a href="https://www.youtube.com/watch?v=WS9nP-BKa3M">Modern money theory (MMT)</a> argues this is permissible because governments can always meet obligations in their own currency because they can print more of it. This now has cross-party political appeal, even if still treated with trepidation in the Treasury.</p>
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<p>Yet governments are traditionally expected to borrow to invest for the long term, not for short-term employment subsidies. Mitigating climate change and dealing with its effects <a href="https://www.gov.uk/government/publications/final-report-the-economics-of-biodiversity-the-dasgupta-review">may require</a> an unprecedented level of public investment, which could become harder to finance when net public debt <a href="https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/previousReleases">is already close</a> to 100% of GDP and rising. </p>
<p>To ensure enough finance for reconstruction, governments have held down private consumption after previous crises that caused comparable increases in debt. That’s why, for example, <a href="http://news.bbc.co.uk/onthisday/hi/dates/stories/july/4/newsid_3818000/3818563.stm">post-war rationing</a> continued into the 1950s. The rationale was that a big consumption rebound might drive up inflation, necessitating higher interest rates and raising the cost of private and public investment. This is reflected in Labour leader Keir Starmer’s flagship proposal for a “<a href="https://www.independent.co.uk/news/uk/politics/keir-starmer-british-recovery-bond-b1804033.html">recovery bond</a>”, aimed at channelling some of the lockdown saving into government investment. </p>
<p>Today’s inflation remains significantly below the official 2% target. And even if prices do start rising faster, this might be the least painful way to ease the debt burden – both for the government and for the UK’s still <a href="https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddebtingreatbritain/april2016tomarch2018">over-indebted households</a>. </p>
<p>This makes it unlikely that the chancellor intends, in this budget, to raise taxes enough to prevent a post-pandemic spending party. He needs a strong enough boom to ensure the re-opening of jobs that ends the need for further furloughs, before a <a href="https://www.investorschronicle.co.uk/comment/2019/11/26/companies-dependency-culture/">corporate “dependency culture”</a> starts to undermine his treasured enterprise culture. If one more extension of the scheme is granted at this stage, the aim will be to see it fade away before more billions are added to its cost.</p><img src="https://counter.theconversation.com/content/156058/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Shipman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Protecting jobs that will be lost anyway is money that could be spent on building the green economy.Alan Shipman, Senior Lecturer in Economics, The Open UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1535842021-01-20T18:24:52Z2021-01-20T18:24:52ZFact check US: Did some Americans really get richer during the pandemic?<figure><img src="https://images.theconversation.com/files/379537/original/file-20210119-17-1hv7ohy.jpg?ixlib=rb-1.1.0&rect=0%2C2%2C1497%2C927&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The New York Stock Exchange.</span> <span class="attribution"><span class="source">Angela Weiss/AFP</span></span></figcaption></figure><p>Last December, the <em>New York Times</em> published an op-ed titled <a href="https://www.nytimes.com/2020/12/14/opinion/sunday/the-people-who-actually-had-a-pretty-great-year.html">“The People Who Actually Had a Pretty Great Year”</a>, discussing the Americans who haven’t really been impacted by the economic downturn, and have even seen their bank balances rise. It’s food for thought on the impact of Covid-19 on the United States. Has it really been that painless for an entire section of the population?</p>
<p>First of all, it’s worth remembering that whenever a new recession hits, economists go back to <a href="https://www.bbc.com/news/business-52450854">singing their ABCs</a> when discussing the future shape of the recovery. The Covid-19 crisis in the United States is no exception. As always, the most optimistic <a href="https://www.reuters.com/article/us-health-coronavirus-usa-economy-idUSKBN2402TF">have been dreaming</a> (<a href="https://www.cnbc.com/2020/12/06/record-highs-are-justified-because-economy-will-boom-ed-yardeni.html">and still are</a>) of a V-shaped recovery, bouncing back just as quickly as it dropped. Others <a href="https://www.cnbc.com/2020/07/17/rising-coronavirus-infections-risk-a-w-shaped-recovery-economists-warn.html">fear</a> that repeated lockdowns will cause a W-shaped recovery, rising only to fall again when new restrictions are imposed.</p>
<p>Some economists are concerned about the long-lasting structural effects of this crisis. They say it could irreparably damage the American economy, with small and medium-sized businesses unable to make it through successive lockdowns. <a href="https://www.wsj.com/articles/why-the-economic-recovery-will-be-more-of-a-swoosh-than-v-shaped-11589203608">This would make recovery much slower</a> and require long-term transition for parts of the economy. This would mean a U-shaped recovery, or even a “swoosh” recovery, one that’s even slower than a U. (Here we’ve moved beyond letters, as this crisis is too complex to be summed up by a simple shape.) The most pessimistic are <a href="https://www.cnbc.com/2020/10/28/insana-likelihood-growing-for-an-l-shaped-economy-with-no-growth.html">betting</a> on an L-shaped recovery, with the economy stagnating for a long time, similar to what happened during Japan’s “lost decade” in the 1990s.</p>
<h2>Multiple American realities and the risk of a K-shaped recovery</h2>
<p>In actual fact, any hope of a V-shaped recovery for the American economy is dwindling. Despite better results in the third quarter of 2020, job creation in the United States well and truly <a href="https://www.nytimes.com/issue/todayspaper/2020/12/05/todays-new-york-times">slowed down at the end of the year</a>. More than 10 million jobs were lost, perhaps forever. The idea that the economy will quickly recover because the downturn is due to politicians trying to save lives through lockdown measures, rather than the result of fundamental economic flaws, is yet to be proven.</p>
<p>A “swoosh” recovery seems far more likely. But that doesn’t explain why so many observers and economic stakeholders in the United States seem to think that large parts of the population and of the industry are doing just fine.</p>
<p>There’s actually a <a href="https://www.uschamber.com/series/above-the-fold/what-the-k-shaped-recovery">remarkable contrast</a> between those industries that have suffered the full force of the pandemic and lockdowns, like the air travel, tourism, food service and hotel industries, and those that had already begun to adapt to the demands of digitalization and the Fourth Industrial Revolution, such as the technology sector and parts of retail. Other sectors like <a href="https://www.wsj.com/articles/the-covid-economy-carves-deep-divide-between-haves-and-have-nots-11601910595">hardware, interior design and food delivery</a>, as well as any industry based on consumer home goods more generally, have also experienced significant growth. Americans who still had a disposable income during the crisis have breathed life and prosperity into the second category, without ever being able to use the services of the first, thereby accentuating this contrast.</p>
<p>Similarly, there is striking contrast between certain groups. On one side, there are those who profited during the pandemic from the <a href="https://www.visualcapitalist.com/how-every-asset-class-currency-and-sp-500-sector-performed-in-2020/">stock markets’ spectacular performance</a> (particularly for tech companies, who came out on top during lockdown) or were able to hold onto their job or quickly find a new one in late spring when local economies reopened. On the other, there are those who were reliant on economic sectors that have taken a beating during the Covid-19 pandemic. The second category is mostly <a href="https://www.wsj.com/articles/the-covid-economy-carves-deep-divide-between-haves-and-have-nots-11601910595">made up</a> of disadvantaged parts of the population and minorities, who often don’t have the qualifications nor the necessary skills to ride the wave of the recovery or reinvent their professional identity.</p>
<p>It should also be noted that since last summer, <a href="https://www.washingtonpost.com/business/2020/12/16/poverty-rising/?campaign_id=134&emc=edit_db_20201217&instance_id=25159&nl=debatable&regi_id=105497811&segment_id=47253&te=1&user_id=cb349ad422cb8f6ecae6011684f6c47a">8 million Americans have fallen into poverty</a> and <a href="https://www.washingtonpost.com/business/2020/12/07/unemployed-debt-rent-utilities/?campaign_id=134&emc=edit_db_20201217&instance_id=25159&nl=debatable&regi_id=105497811&segment_id=47253&te=1&user_id=cb349ad422cb8f6ecae6011684f6c47a">12 million renters</a> have racked up over $5,000 of debt to their landlords. Job creation was <a href="https://www.nytimes.com/issue/todayspaper/2020/12/05/todays-new-york-times">ticking along but has not caught up</a>, and this development takes on a whole new meaning when you remember that the pandemic is likely to accelerate the transition of an entire section of the labor market. This transition effort will not demand the same things from sectors that have been permanently affected by Covid-19.</p>
<p>What’s also clear is that it’s not only wealthy or upper-middle class Americans who benefited. Americans who were able to take advantage of the organizational changes affecting work and companies, and <a href="https://www.nytimes.com/2020/12/14/opinion/sunday/the-people-who-actually-had-a-pretty-great-year.html">move</a> to other parts of the country where the cost of living is lower (especially rent), fared significantly better. But not every sector experienced these changes. It was only possible for jobs where remote working was an option and in sectors where companies and the workforce had already adapted to new digital tools, for example.</p>
<p><a href="https://www.axios.com/coronavirus-recession-stocks-housing-unemployment-1e26bba5-f800-4ff6-a615-7cfeb751ae81.html">Inequalities in professional outcomes</a> emerging from this crisis are undeniable. Covid-19 is only partly responsible, given that the sectors and populations who are doing the best had already started to transition before the pandemic hit. Nevertheless, it has certainly escalated the disparities between certain sectors and groups – enter “K,” a new letter in the debate on what form the recovery will take. This kind of recovery means that part of the economy will be able to adapt and even prosper during the crisis, while the other will likely suffer from ongoing difficulties.</p>
<p>With the country politically divided, the American economy is at risk of following suite.</p>
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<p><em>Translated from the French by Rosie Marsland for <a href="http://www.fastforword.fr/en">Fast ForWord</a>.</em></p>
<p><em>The Fact check US section received support from <a href="https://craignewmarkphilanthropies.org/">Craig Newmark Philanthropies</a>, an American foundation fighting against disinformation.</em></p><img src="https://counter.theconversation.com/content/153584/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeremy Ghez ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>With a rising stock market and a booming economy in some industries, not all Americans have been negatively impacted by Covid-19. Which parts of the population have come out on top?Jeremy Ghez, Professor of Economics and International Affairs, HEC Paris Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1487022020-12-08T16:28:21Z2020-12-08T16:28:21ZSARS didn’t prepare the hospitality industry for the prolonged impact of COVID-19<figure><img src="https://images.theconversation.com/files/373166/original/file-20201205-17-pvv2k1.jpg?ixlib=rb-1.1.0&rect=32%2C0%2C5400%2C3046&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Fairmont Royal York Hotel in Toronto. After the SARS pandemic in 2003, Toronto hotels faced a recovery period.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>A virulent virus, worried travellers and a tourism sector on the brink. Sounds like 2020? In fact, this was the experience in a few global cities in 2002 and 2003. </p>
<p>Toronto was one of them. The city’s battle against a deadly virus — and the struggle for the rehabilitation of its damaged tourism sector — offers lessons for cities wondering how they will navigate a post-COVID world. And even plan for the next crisis, whenever it arrives. </p>
<p>Hotels, as places of refuge, pleasure, business and also contagion, are important places to explore how the tourism sector pilots its way through pandemics. The experience with SARS offers sobering lessons for Toronto and urban tourist destinations globally.</p>
<h2>Similar impacts of SARS and COVID-19</h2>
<p>How are the tourism crises of 2002-03 and today similar, and how do they differ? Both public health crisis resulted in <a href="https://globalnews.ca/news/6710543/ontario-covid-19-measures-layoffs/">sudden, dramatic declines in hotel occupancy</a>. However, while all travel came to a sudden stop globally in 2020, the 2002-03 events centred on a few cities, with Toronto, Singapore and Hong Kong under the microscope. </p>
<p>Hotel occupancy rates in these cities recorded steep declines, as travellers headed elsewhere, businesses suspended events <a href="https://www.who.int/csr/sars/travel/airtravel/en/">and worried airlines and public health authorities</a> explored protocols such as the now-ubiquitous face masks.</p>
<p>The collapse in travel in winter 2020 occurred at a point when the overall economy and the travel sector were in robust shape and recording record profits. In 2002-03, circumstances were very different. Global travel had slowed due to the <a href="https://abcnews.go.com/Business/story?id=86672&page=1">Iraq War</a>. Increasing documentation requirements and lingering concerns over security after 9/11 reduced cross-border traffic between Canada and the United States. </p>
<h2>Toronto hotels and SARS</h2>
<p>The arrival of SARS dealt a body blow to Canada’s largest city.</p>
<p>Both SARS and COVID-19 have had a severe impact on tourism and travel. Hotels are barometers of Toronto’s economic condition, and reveal the unequal impacts pandemics have on employment. Marginally employed people — immigrants and low-income workers — are over-represented among hotel workers. They lose their jobs quickly in the face of reduced demand. </p>
<p>Seasonal employment prospects also dim in the face of disruption. As in summer 2020, student summer employment was impacted in 2003, especially as Toronto entered the crucial summer months back, briefly, on the <a href="https://www.cmaj.ca/content/cmaj/168/11/1434.full.pdf">World Health Organization’s SARS travel advisory</a>. The blow dealt to the tourism sector locally was hard but, as it turned out, by no means fatal.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/373205/original/file-20201206-19-1bowie8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A woman in a black suit with a blue suitcase uses an Air Canada check-in kiosk at the airport. A sign with the text SARS is in the foreground." src="https://images.theconversation.com/files/373205/original/file-20201206-19-1bowie8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373205/original/file-20201206-19-1bowie8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=423&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373205/original/file-20201206-19-1bowie8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=423&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373205/original/file-20201206-19-1bowie8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=423&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373205/original/file-20201206-19-1bowie8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=531&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373205/original/file-20201206-19-1bowie8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=531&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373205/original/file-20201206-19-1bowie8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=531&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A passenger checks in as a warning sign gives information about SARS at Pearson International Airport on May 30, 2003.</span>
<span class="attribution"><span class="source">CP PHOTO/Kevin Frayer</span></span>
</figcaption>
</figure>
<p>Toronto’s experience with SARS suggests that once a place appears safe, reassured travellers return — with some coaxing and a lot of co-ordinated planning. In late spring 2003, Toronto businesses developed a co-ordinated response to recovery. Travel packages that included accommodation, restaurant reservations, sporting events and theatre tickets began to lure tourists back. This promotion was accompanied by an aggressive and <a href="https://www.cbc.ca/news/business/gas-chains-cutting-prices-to-encourage-toronto-travel-in-anti-sars-promotion-1.411220">co-ordinated roll-back of gasoline prices</a>. </p>
<h2>After SARS, a celebration</h2>
<p>The SARS crisis also led to the creation of a body for the tourism and hospitality sector, chaired by Tourism Toronto, which aimed to restore the city’s reputation. Local and provincial governments committed funds for advertising to reassure prospective tourists that Toronto was safe. The federal government also announced additional funds to promote Canada as a destination in international markets. </p>
<p>The most famous part of the reputation rehabilitation strategy was the hosting of the July 30, 2003, SARS benefit concert. Several hundred thousand fans cheered a lineup of world-famous musicians, headlined by the Rolling Stones. The results of <a href="https://www.cbc.ca/archives/the-2003-concert-that-rocked-toronto-after-sars-1.5650768">that mega-event</a> are hard to measure in terms of impact, <a href="https://www.cbc.ca/news2/background/sarsbenefit/">despite the large and enthusiastic crowds that it drew</a>. Such an event is unimaginable today, with the timeline for the COVID-19’s defeat far off, and the certainty that doubts will linger about the wisdom of such boisterous, large-scale assemblies for a long time to come.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/qena0QraBHE?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">A CBC report on the 2003 SARS benefit concert.</span></figcaption>
</figure>
<p>In 2003, good news for the tourism sector arrived quickly. In fact, by late 2004, hotels were recording pre-SARS occupancy levels. It seemed as if the sector had dodged a bullet. But it had also dodged a critical opportunity to reflect on how new technologies and standards might reduce the impact of a future pandemic. And this is perhaps where the comparison proves most illuminating.</p>
<h2>After COVID-19?</h2>
<p>The hotel sector faces dramatically different conditions today. It is in the midst of a global pandemic affecting all sectors of the economy. SARS resulted <a href="https://www.who.int/csr/sars/country/2003_07_11/en/">in far fewer deaths</a>, over a shorter period of time, in a small number of major cities. </p>
<p>While the story of hotels’ recovery is inspiring, the pace was so fast that few paused to ask is larger lessons would be learned: What vulnerabilities might have been disguised in the rush to restore Toronto’s dynamic tourism sector? How could new technologies, systematic contingency planning and early detection systems might have become integrated into hotel management post-2003? </p>
<p>The greatest lesson of SARS may be how, amid the excited focus on recovery and a return to normalcy, so little thought was given to structurally prepare for the prospect of future crises. We need to keep these lessons in mind as we plan our emergence from COVID-19, and the resumption of travel.</p><img src="https://counter.theconversation.com/content/148702/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kevin James receives funding from the University of Guelph COVID-19 Research Development & Catalyst Fund.</span></em></p><p class="fine-print"><em><span>Jose Gabriel Alonzo receives funding from the University of Guelph COVID-19 Research Development & Catalyst Fund.</span></em></p><p class="fine-print"><em><span>Mark Holmes receives funding from the University of Guelph and SSHRC. Holmes is also a Board Member for the Canadian Travel and Tourism Research Association.</span></em></p>After SARS in 2003, an effort was made by Toronto’s tourism and hospitality industries to stimulate the sector’s recovery. But measures weren’t put in place for future pandemics.Kevin James, Professor, History, University of GuelphJose Gabriel Alonzo, Masters student, History, University of GuelphMark Holmes, Assistant Professor, Business and Economics, University of GuelphLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1499832020-11-18T21:53:46Z2020-11-18T21:53:46ZAustralia is lagging on climate action and inequality, but the pandemic offers a chance to do better<figure><img src="https://images.theconversation.com/files/369750/original/file-20201117-15-1sq9ft2.jpg?ixlib=rb-1.1.0&rect=133%2C0%2C4134%2C3709&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">DEAN LEWINS/AAP</span></span></figcaption></figure><p>As Australia plans its recovery from COVID-19, our strategies should be based on a broader set of priorities than we have used in the past. </p>
<p>The <a href="https://sdgs.un.org/goals">Sustainable Development Goals</a> (SDGs), agreed to by all countries at the United Nations, provide a set of objectives and targets that can serve as a blueprint to “build back better” after the pandemic.</p>
<p>This week, <a href="https://www.sdgtransformingaustralia.com/">a report card</a> is being released on Australia’s progress toward achieving these goals. It also highlights the potential impact of COVID-19 on our ability to meet our SDG targets by 2030. </p>
<p>The report shows Australia is performing well in health and education but failing in climate, environment and areas linked to social inequality.</p>
<p>The good news is that <a href="https://www.democracy2025.gov.au/documents/Is%20Australia%20still%20the%20lucky%20country.pdf">trust in government has risen significantly</a> since the pandemic began, no doubt reflecting in part Australia’s relatively good response to the crisis. </p>
<p>Australians are proud of what we have been able to achieve, and this trust and optimism will be needed as we try to tackle some of the stubborn challenges highlighted in the report.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/we-can-build-a-more-inclusive-government-and-economy-out-of-the-pandemic-this-blueprint-shows-us-how-147004">We can build a more inclusive government and economy out of the pandemic — this blueprint shows us how</a>
</strong>
</em>
</p>
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<h2>Why targets are critical</h2>
<p>In <a href="https://sustainabledevelopment.un.org/content/documents/21252030%20Agenda%20for%20Sustainable%20Development%20web.pdf">adopting the SDGs</a>, all countries (including Australia) recognised the need to take a long-term and integrated approach to national planning informed by data and evidence. </p>
<p>Central to this approach is the setting of economic, social and environmental targets for 2030, which help to provide clear signposts for where we want to go.</p>
<p>Targets are critical. They set the priorities and level of ambition, encourage a shift from short- to long-term thinking, provide investment certainty and mobilise people to collaborate to solve problems. </p>
<p>They also enable a clear picture of where we are on track or off track, and the scale and pace of change needed.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australia-falls-further-in-rankings-on-progress-towards-un-sustainable-development-goals-99737">Australia falls further in rankings on progress towards UN Sustainable Development Goals</a>
</strong>
</em>
</p>
<hr>
<p>With only 10 years left to achieve the SDGs, <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Foreign_Affairs_Defence_and_Trade/SDGs/Report">Australia still lacks national targets for many of the specific goals</a> and this is undermining our ability to plan effectively for our future.</p>
<p>The report card makes three important contributions: </p>
<p>1) it proposes an initial set of 2030 targets for Australia across economic, social and environmental indicators</p>
<p>2) it assesses Australia’s progress towards these targets over the past two decades, highlighting where we are falling behind and where accelerated action is needed</p>
<p>3) it evaluates the affects of COVID-19 on Australia’s capacity to achieve the SDGs.</p>
<h2>Where Australia is falling behind</h2>
<p>Our key findings in this week’s report show where Australia needs to focus its energies to meet our SDGs.</p>
<p><strong>Social challenges</strong></p>
<ul>
<li><p>Australians are living longer but are more obese and, since the pandemic, <a href="https://www.anu.edu.au/news/all-news/alcohol-consumption-increases-during-covid-19-crisis">drinking more alcohol</a>.</p></li>
<li><p>Domestic violence has <a href="https://www.aic.gov.au/publications/sb/sb28">increased during COVID-19</a>.</p></li>
<li><p>Homicide rates have halved since 2000, yet the prison population has increased by 32% since 2006, with Indigenous Australians vastly over-represented.</p></li>
<li><p>Women have been <a href="https://pursuit.unimelb.edu.au/articles/who-s-hit-hardest-by-the-covid-19-economic-shutdown">disproportionately</a> <a href="https://pursuit.unimelb.edu.au/articles/who-s-hit-hardest-by-the-covid-19-economic-shutdown">affected</a> by the pandemic, experiencing more psychological distress and a greater chance of job disruption.</p></li>
</ul>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/369751/original/file-20201117-21-1ccbve.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/369751/original/file-20201117-21-1ccbve.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=386&fit=crop&dpr=1 600w, https://images.theconversation.com/files/369751/original/file-20201117-21-1ccbve.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=386&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/369751/original/file-20201117-21-1ccbve.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=386&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/369751/original/file-20201117-21-1ccbve.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=485&fit=crop&dpr=1 754w, https://images.theconversation.com/files/369751/original/file-20201117-21-1ccbve.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=485&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/369751/original/file-20201117-21-1ccbve.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=485&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Indigenous prisoners account for just over a quarter of the total Australian prisoner population.</span>
<span class="attribution"><span class="source">Peter Rae/AAP</span></span>
</figcaption>
</figure>
<p><strong>Environmental challenges</strong></p>
<ul>
<li><p>Australia’s greenhouse gas emissions have declined only marginally since 2000 and little progress has been made since 2013. Australia is not on track to meet a 2030 emissions target consistent with the Paris Agreement objective to keep global warming to well below 2 degrees Celsius.</p></li>
<li><p>Australia’s per capita material footprint is one of the highest in the world — more than 70% above the OECD average — and rising. </p></li>
<li><p>Hard coral cover on the Great Barrier Reef has declined and the number of species now threatened has increased since 2000.</p></li>
</ul>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/369755/original/file-20201117-17-1dw0xkk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/369755/original/file-20201117-17-1dw0xkk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/369755/original/file-20201117-17-1dw0xkk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/369755/original/file-20201117-17-1dw0xkk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/369755/original/file-20201117-17-1dw0xkk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/369755/original/file-20201117-17-1dw0xkk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/369755/original/file-20201117-17-1dw0xkk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Marine heat waves resulted in severe bleaching events on the Great Barrier Reef in 2016 and 2017.</span>
<span class="attribution"><span class="source">Stringer/AP</span></span>
</figcaption>
</figure>
<p><strong>Economic challenges</strong></p>
<ul>
<li><p>Women, young people and those without high school qualifications are <a href="https://pursuit.unimelb.edu.au/articles/who-s-hit-hardest-by-the-covid-19-economic-shutdown">more likely</a> to have had their employment disrupted by COVID-19.</p></li>
<li><p>Australia’s relatively low levels of government debt will help in the COVID-19 recovery, yet household debt is well above the OECD average.</p></li>
<li><p>Wealth inequality is getting worse with the share of household net worth of the bottom 40% of the population declining by 30% since 2004.</p></li>
<li><p>Since 2012, middle-class wages and incomes have stalled.</p></li>
<li><p>COVID-19 has stymied trade, foreign investment and skilled migration, prompting the need for new drivers of growth.</p></li>
</ul>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1325843839471546373"}"></div></p>
<h2>An opportunity for major policy changes</h2>
<p>This report comes at a pivotal moment. All countries are facing a series of complex and related crises — a global health emergency, climate change, growing inequality, unemployment and biodiversity decline. </p>
<p>COVID-19 has reduced <a href="https://www.weforum.org/agenda/2020/04/coronavirus-covid19-air-pollution-enviroment-nature-lockdown/">pollution</a> and <a href="https://www.theguardian.com/environment/2020/aug/31/australian-greenhouse-gas-emissions-fall-to-lowest-level-since-1998-under-covid-restrictions">greenhouse gas emissions</a>, but emissions are now <a href="https://www.scientificamerican.com/article/carbon-levels-surge-again-as-countries-emerge-from-lockdown/">returning to pre-COVID-19 levels</a>. </p>
<p>And increased public deficits and debt may constrain governments’ abilities to address social and environmental challenges in the coming decade.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-more-housing-stimulus-will-be-needed-to-sustain-recovery-148003">Why more housing stimulus will be needed to sustain recovery</a>
</strong>
</em>
</p>
<hr>
<p>On the other hand, COVID-19 has given governments the chance to undertake much more significant interventions than previously thought possible. </p>
<p>Australia has a huge opportunity to design a recovery strategy that strengthens our resilience to future shocks, addresses many of the challenges of sustainable development that we have not properly dealt with, and ensures the country’s long-term, sustainable prosperity.</p><img src="https://counter.theconversation.com/content/149983/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Thwaites is Chair of Monash Sustainable Development Institute and ClimateWorks Australia which receive funding for research, education and action projects from the Commonwealth and state governments as well as from philanthropy and industry. The Transforming Australia Update 2020 received funding from the Lord Mayor's Charitable Foundation. He is the former Deputy Premier of Victoria (1999-2007)</span></em></p><p class="fine-print"><em><span>Cameron Allen is a Senior Advisor with the United Nations Sustainable Development Solutions Network Thematic Research Network on Data and Statistics.</span></em></p>Australia has a huge opportunity to design a recovery strategy that strengthens our resilience to future shocks and ensures the country’s long-term, sustainable prosperity.John Thwaites, Chair, Monash Sustainable Development Institute & ClimateWorks Australia, Monash UniversityCameron Allen, Adjunct Research Fellow, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1491942020-10-31T10:13:22Z2020-10-31T10:13:22ZFact check US: Is the US economy recovering, as Donald Trump claims?<p>His eye on the upcoming election, Donald Trump keeps repeating that the US economy is on an upswing and the “phenomenal job” of his administration did is responsible. “So we built the greatest economy in history… we close it down because of the China plague… and now we’re reopening, and we’re doing record business,” he alleged during the <a href="https://eu.usatoday.com/story/news/politics/elections/2020/09/30/presidential-debate-read-full-transcript-first-debate/3587462001/">first presidential debate</a> with Joe Biden on September 29. According to Trump, his administration put 10.4 million Americans back to work in just four months.</p>
<h2>Some positive signs</h2>
<p>In terms of the short-term job numbers, the claim is correct: The <a href="https://www.bls.gov/eag/eag.us.htm">Bureau of Labor Statistics</a> indicates an upturn since May, bringing hope that the current recession, which is of historic proportions, may be short-lived.</p>
<p>This hope is fueled by some encouraging economic news. Before the 2019 outbreak of the pandemic, the country experienced an <a href="https://www.wsj.com/articles/the-higher-wages-of-growth-11600298577?mod=MorningEditorialReport&mod=djemMER_h">increase in median household income</a> that to a certain extent also benefited poorer Americans. So the current economic woes should not overshadow the progress made – a result, claim Trump supporters, of the administration’s deregulatory measures and the controversial <a href="https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017">“Tax Cuts and Jobs Act”</a> of 2017.</p>
<p>The rebound in stock values raised morale in some quarters, <a href="https://www.nytimes.com/2020/10/28/business/stock-market-coronavirus.html">at least temporarily</a>. Americans’ net worth in 2020 <a href="https://www.axios.com/americans-net-worth-increase-stock-prices-b35a85c3-e162-474b-a291-586bf888405b.html">increased by nearly 7% in the second quarter</a> – the biggest rebound in the country’s history. It is now known that some well-off Americans used the money they received from the federal government’s stimulus package to <a href="https://www.cnbc.com/2020/05/21/many-americans-used-part-of-their-coronavirus-stimulus-check-to-trade-stocks.html">invest in stocks</a> rather than make purchases, which is the point of any stimulus package.</p>
<p>Trump’s job-creation claim is also misleading: According to the same source, 22 million jobs were lost when the pandemic hit in the spring, so that the net result is still a loss of nearly 12 million jobs. The figure also masks the fact that many other jobs may be <a href="https://www.businessinsider.fr/us/trump-economy-hardship-recovering-quickly-statistics-coronavirus-stimulus-unemployment-evictions-2020-8">temporarily or even permanently lost</a>. According to <a href="https://www.axios.com/unemployment-open-jobs-every-state-48fd702c-146b-4d62-8088-16aa7c3463dc.html">recruitment agency Indeed</a>, job postings in New York and California, two states that at the heart of the US economy, are down 30% compared to 2019.</p>
<h2>The end of the longest economic boom</h2>
<p>After a short-lived upswing, other regions are seeing a drop in job offers again. US worker mobility helped correct labor-market imbalances in the past, but it is less effective in the face of a nationwide pandemic. The possibility of a lasting job-creation slowdown seems more than likely; hard-hit sectors include aviation, which has been hit with <a href="https://www.forbes.com/sites/danielreed/2020/10/01/airline-layoffs-american-united-southwest/#519e51ad6d27">waves of layoffs</a>, and tourism, as illustrated by Disney’s laying off <a href="https://www.cnbc.com/2020/09/30/disney-leads-companies-announcing-layoffs-big-airline-job-cuts-loom.html">28,000 employees</a>.</p>
<p>According to <a href="https://www.axios.com/september-jobs-report-coronavirus-7346c656-4278-4152-a455-7d3371f25891.html">UBS economist Brian Rose</a>, as many as 5 million Americans may have lost their jobs permanently. In October, the US economy created <a href="https://www.axios.com/september-jobs-report-coronavirus-7346c656-4278-4152-a455-7d3371f25891.html">fewer than 700,000 jobs</a>, a sure sign of the ongoing labor-market slowdown observed since May. This shows the limited impact of the stimulus package.</p>
<p>So the president’s pre-election enthusiasm should not obscure the fact that in view of the uncertain economic outlook, the road to a true recovery could be very long. Using a stimulus package in an attempt to the public is less effective at a time of deep political division and a health crisis caused by a deadly virus. Those who were hoping for a <a href="https://www.investopedia.com/terms/v/v-shaped-recovery.asp">V-shaped recovery</a>, with a swift rebound when the health restrictions have been lifted, now fear <a href="https://www.weforum.org/agenda/2020/05/z-u-or-nike-swoosh-what-shape-will-our-covid-19-recovery-take/">it will be more of a “swoosh”</a>, with a massive drop followed by a slow and uncertain recovery.</p>
<p>Even worse is the prospect of a <a href="https://www.uschamber.com/series/above-the-fold/what-the-k-shaped-recovery">K-shaped recovery</a>, with the wealthy coming out on top thanks to their accumulated capital and the stock market, and more vulnerable sectors and minority groups durably impacted by the pandemic. This is confirmed by the <a href="https://www.axios.com/retail-sales-recovery-coronavirus-pandemic-5de2395f-5c61-4bbf-9d1e-11dc208e4b58.html">Census Bureau’s figures</a> on retail and food services. Similarly, the <a href="https://www.visualcapitalist.com/understanding-the-disconnect-between-consumers-and-the-stock-market/">disconnect between stock markets and the US consumer-confidence index</a> suggests that many Americans, particularly those who are most vulnerable, may not benefit from a recovery.</p>
<p>The economic crisis triggered by the Covid-19 pandemic brought an <a href="https://www.nber.org/cycles/june2020.html">abrupt end</a> to the longest economic expansion in US history – <a href="https://www.nber.org/cycles/cyclesmain.html">128 months of growth</a>, eight more than the previous record, between the Cold War and 9/11. If the recovery is slow and uneven – and <a href="https://edition.cnn.com/business/us-economic-recovery-coronavirus">data indicate that that may well be the case</a> – it could profoundly damage the president’s chances of reelection.</p>
<hr>
<p><em>The Fact check US column is supported by <a href="https://craignewmarkphilanthropies.org/">Craig Newmark Philanthropies</a>, an American foundation fighting disinformation.</em></p>
<p><em>Translated from the French by Sally Laruelle for <a href="http://www.fastforword.fr/en">Fast ForWord</a></em></p>
<hr><img src="https://counter.theconversation.com/content/149194/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeremy Ghez ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>Six months into the Covid-19 crisis, the president is boasting that the US economy is back on its feet. While the figures show that some job losses have been cut, there is little room for optimism.Jeremy Ghez, Professor of Economics and International Affairs, HEC Paris Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1481672020-10-15T19:08:51Z2020-10-15T19:08:51ZSome say neoliberals have destroyed the world, but now they want to save it. Is Scott Morrison listening?<figure><img src="https://images.theconversation.com/files/363604/original/file-20201015-15-fkmfms.jpg?ixlib=rb-1.1.0&rect=45%2C0%2C5961%2C4007&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The International Monetary Fund this week delivered a somewhat surprising message. It warned Earth was on course for “potentially catastrophic” damage under climate change, and called for green investment and carbon prices to put the global economy on a stronger, more sustainable footing. </p>
<p>Of course, the message itself makes a lot of sense. The surprising part is that the IMF is the outfit delivering it. </p>
<p>The Washington-based IMF cannot be dismissed as a bunch of latte-sipping leftists. The organisation has traditionally been a bastion of free market economics and fiscal austerity, long detested by socialists.</p>
<p>It’s now abundantly clear Australia’s climate policies are at odds with even the most conservative approach to economic management. Increasingly, the Morrison government is an outlier on the world stage. </p>
<figure class="align-center ">
<img alt="Person with umbrella walks past IMF building" src="https://images.theconversation.com/files/363606/original/file-20201015-15-fpluot.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/363606/original/file-20201015-15-fpluot.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=461&fit=crop&dpr=1 600w, https://images.theconversation.com/files/363606/original/file-20201015-15-fpluot.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=461&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/363606/original/file-20201015-15-fpluot.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=461&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/363606/original/file-20201015-15-fpluot.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=580&fit=crop&dpr=1 754w, https://images.theconversation.com/files/363606/original/file-20201015-15-fpluot.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=580&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/363606/original/file-20201015-15-fpluot.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=580&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The IMF has called for a green-led pandemic recovery.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>IMF calls for climate action</h2>
<p>The IMF’s biannual <a href="https://www.imf.org/en/Publications/WEO/Issues/2020/09/30/world-economic-outlook-october-2020">World Economic Outlook</a> projected a deep recession for 2020, as a result of the COVID-19 pandemic. Global economic output is expected to shrink by 4.4% this year.</p>
<p>The IMF noted while the recession has reduced emissions, the decline is temporary. It warned policies to reduce greenhouse gas emissions were “grossly insufficient to date” and global temperatures could increase by up to 5°C by the end of this century. This would lead to “physical and economic damage, and increasing the risk of catastrophic outcomes across the planet”. </p>
<p>It said “an initial green investment push, combined with steadily rising carbon prices, would deliver the needed emissions reductions at reasonable output effects”. It went on:</p>
<blockquote>
<p>The package would initially boost global GDP, supporting the recovery from the COVID-19 crisis, but then weigh on global activity for a period, as the impact of the investment push wanes and carbon prices continue to rise.</p>
<p>In the second half of the century, the reduction in emissions would place the global economy on a stronger and more sustainable path.</p>
</blockquote>
<p>So in other words, the IMF recognises that now is a good time to undertake green investment, because it has long-term benefits <em>and</em> can act as a useful short-term stimulus. </p>
<p>The outlook suggests the stimulus effect of the investment push fades after the first decade. But any slowing in annual economic growth is trivial. The longer term economic benefits of avoiding catastrophic climate change far outweigh any transitional costs.</p>
<p>And in a transition to a low emissions economy, fears of net job losses appear misplaced. The IMF says says “the evidence indicates that environmental policies have succeeded in reallocating jobs from high- to low-carbon sectors”.</p>
<figure class="align-center ">
<img alt="Solar panels" src="https://images.theconversation.com/files/363608/original/file-20201015-19-1qrpmcw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/363608/original/file-20201015-19-1qrpmcw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/363608/original/file-20201015-19-1qrpmcw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/363608/original/file-20201015-19-1qrpmcw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/363608/original/file-20201015-19-1qrpmcw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/363608/original/file-20201015-19-1qrpmcw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/363608/original/file-20201015-19-1qrpmcw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The transition to a low-carbon future will not lead to net job losses, the IMF says.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>What is the IMF proposing?</h2>
<p>The IMF’s proposed package involves the following tools:</p>
<ul>
<li><p>an 80% subsidy rate for renewable energy production</p></li>
<li><p>a 10-year green public investment program in renewable energy, low-carbon transport and energy efficient buildings</p></li>
<li><p>carbon pricing, calibrated to achieve an 80% reduction in emissions by 2050, after accounting for emission reductions from the green fiscal stimulus</p></li>
<li><p>compensation for poor households whose purchasing power is dampened by a carbon price.</p></li>
</ul>
<p>The IMF says the plan is “growth friendly”, especially in the short term. The policies are designed to increase the price of fossil fuel energy relative to low-carbon energy, and reflect the harm fossil fuels cause through air pollution and global warming. </p>
<p>The IMF is not alone in its thinking. Some <a href="https://www.ft.com/content/e9fd0472-19de-11e9-9e64-d150b3105d21">27 Nobel laureates</a> in economics have endorsed a price on carbon. And <a href="https://theconversation.com/carbon-pricing-works-the-largest-ever-study-puts-it-beyond-doubt-142034">recent research</a> has conclusively found carbon pricing lowers growth in greenhouse gas emissions.</p>
<figure class="align-center ">
<img alt="Skyline filled with polluting industries" src="https://images.theconversation.com/files/363610/original/file-20201015-17-1c7tedh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/363610/original/file-20201015-17-1c7tedh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/363610/original/file-20201015-17-1c7tedh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/363610/original/file-20201015-17-1c7tedh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/363610/original/file-20201015-17-1c7tedh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/363610/original/file-20201015-17-1c7tedh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/363610/original/file-20201015-17-1c7tedh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The IMF has called for a price on carbon.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>An unexpected turn</h2>
<p>The IMF has <a href="https://link.springer.com/chapter/10.1007/978-94-6091-561-1_1">long been</a> a cheerleader for neoliberalism – a belief in free markets, free trade and small government. </p>
<p>But in this case it’s calling for market interventions: a new tax and government subsidies for certain industries. It’s not the first time the IMF has looked to be <a href="https://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm">questioning</a> its own neoliberal agenda, but it’s a twist nonetheless.</p>
<p>The IMF’s calls contrast starkly with the approach of the Coalition government. It dismantled the Gillard government’s carbon price <a href="https://www.abc.net.au/news/2014-07-17/carbon-tax-repealed-by-senate/5604246?nw=0">in 2014</a>, and has remained opposed to the measure ever since. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/china-just-stunned-the-world-with-its-step-up-on-climate-action-and-the-implications-for-australia-may-be-huge-147268">China just stunned the world with its step-up on climate action – and the implications for Australia may be huge</a>
</strong>
</em>
</p>
<hr>
<p>The Morrison government has <a href="https://www.abc.net.au/news/2020-09-20/scott-morrison-refuses-to-commit-net-zero-carbon-emissions-2050/12682714">refused to commit</a> to net-zero emissions by 2050, nor will it target any further increases in renewable energy beyond this year. </p>
<p>Most recently, it is pushing for a “<a href="https://theconversation.com/no-prime-minister-gas-doesnt-work-for-all-australians-and-your-scare-tactics-ignore-modern-energy-problems-146196">gas-led</a>” recovery from the pandemic. This month’s federal budget included A$52.9 million to support the gas industry – including opening up five new gas basins.</p>
<p>It also allocated money to refurbish the Vales Point coal-fired power station in New South Wales, and A$50 million for carbon capture and storage technologies. Investment in renewable energy was scarce.</p>
<figure class="align-center ">
<img alt="PM Scott Mlorrison" src="https://images.theconversation.com/files/363611/original/file-20201015-15-rvwr1x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/363611/original/file-20201015-15-rvwr1x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/363611/original/file-20201015-15-rvwr1x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/363611/original/file-20201015-15-rvwr1x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/363611/original/file-20201015-15-rvwr1x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/363611/original/file-20201015-15-rvwr1x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/363611/original/file-20201015-15-rvwr1x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Morrison government’s federal budget included money for gas and coal.</span>
<span class="attribution"><span class="source">Lukas Coch/AAP</span></span>
</figcaption>
</figure>
<h2>Australia adrift</h2>
<p>As the IMF notes, limiting global temperatures will require a global effort. Calls to address climate change though a global green-led recovery have come from far and wide, including <a href="https://institutional.anz.com/insight-and-research/Jun-20/a-green-led-recovery">banks</a> and <a href="https://www.aap.com.au/calls-for-virus-recovery-to-be-green-led/">investors</a>.</p>
<p>South Korea has seizing the opportunity presented by the pandemic recovery, through a US$61.9 billion <a href="https://theconversation.com/south-koreas-green-new-deal-shows-the-world-what-a-smart-economic-recovery-looks-like-145032">green plan</a> aiming to create 659,000 jobs by 2025. China <a href="https://theconversation.com/china-just-stunned-the-world-with-its-step-up-on-climate-action-and-the-implications-for-australia-may-be-huge-147268">recently committed</a> to net-zero emissions by 2060, and the European Union’s <a href="https://www.forbes.com/sites/davekeating/2020/10/05/eus-new-2030-climate-target-could-mean-exit-from-coal-by-2030/#429ac1151ac5">new climate target</a> may see it exit the coal industry by 2030. </p>
<p>Democratic US presidential candidate Joe Biden, the election favourite, is running on a highly ambitious US$2 trillion <a href="https://www.theguardian.com/us-news/2020/jul/14/joe-biden-climate-jobs-plan">climate platform</a>, leaving Scott Morrison <a href="https://theconversation.com/under-biden-the-us-would-no-longer-be-a-climate-pariah-and-that-leaves-scott-morrison-exposed-144870">exposed.</a></p>
<p>It’s clear Australia is being left on the wrong side of history. And when even the IMF starts calling for dramatic climate action, Australia starts looking more isolated than ever.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/backwards-federal-budget-morrison-government-never-fails-to-disappoint-on-climate-action-147659">'Backwards' federal budget: Morrison government never fails to disappoint on climate action</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/148167/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Hawkins does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The IMF wants government intervention on climate change. It’s now abundantly clear Australia’s climate policies are at odds with even the most conservative approach to economic management.John Hawkins, Senior Lecturer, Canberra School of Politics, Economics and Society, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1477272020-10-13T13:25:52Z2020-10-13T13:25:52ZWill it be a ‘V’ or a ‘K’? The many shapes of recessions and recoveries<figure><img src="https://images.theconversation.com/files/363035/original/file-20201012-21-2kyvcs.jpg?ixlib=rb-1.1.0&rect=98%2C81%2C2122%2C1419&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A 'V' recovery is seen as the best way to bounce back from a recession.
</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/canada-geese-flying-in-formation-royalty-free-image/88198774">Steve Stone/Moment via Getty Images</a></span></figcaption></figure><p>Recessions – <a href="https://www.investopedia.com/terms/r/recession.asp">typically defined</a> as two consecutive quarters of declining economic output – are always painful in terms of how they affect our economic well-being. Like all bad things, fortunately, they eventually end and a recovery begins. </p>
<p>But not all recoveries or recessions look the same. And economists have a tendency to compare their varying paths with letters of the alphabet.</p>
<p>For example, during the current situation, you may have the heard the direction the recovery might take compared with a “<a href="https://www.marketwatch.com/story/that-v-shaped-economic-recovery-forecasters-have-been-calling-for-dont-hold-your-breath-11602174696">V</a>,” a “<a href="https://www.freepressjournal.in/business/rbi-governor-says-it-is-not-k-v-u-l-or-w-but-three-speed-recovery-what-does-all-these-letters-mean">W</a>” or <a href="https://www.salon.com/2020/09/09/the-us-is-experiencing-a-k-shaped-economic-recovery-heres-what-that-means/">even a “K.”</a></p>
<p>As <a href="https://scholar.google.com/citations?user=B744wv0AAAAJ&hl=en&oi=ao">a macroeconomist</a>, I know this alphabet soup can be confusing for a lay reader. So here’s a guide to some of the most commonly used letters.</p>
<h2>‘V’ for victory</h2>
<p>While recessions are never a good thing, the “V-shaped” recovery is deemed the best-case scenario. In a recession with a V shape, the decline is rapid, but so is the recovery. </p>
<p>A good example of this type of <a href="https://www.nber.org/cycles.html">recession took place in 1981 and 1982</a>. That recession occurred after then-Federal Reserve Chair Paul Volcker <a href="https://www.washingtonpost.com/politics/2019/12/12/paul-volcker-won-his-fight-inflation-battle-regulate-big-finance-is-ongoing/">rapidly raised interest rates beginning in 1979</a> in an effort to curb high inflation. This caused a sharp recession – leading to what was then the <a href="https://www.bls.gov/opub/mlr/1983/02/art1full.pdf">highest unemployment rate in the U.S. since the Great Depression</a>.</p>
<p>But outside of economic circles, this recession is little remembered. Why? Primarily because the recovery was so rapid. After Volcker began cutting interest rates in the second half of 1982, the economy entered a recovery as sharp as the recession. </p>
<p><iframe id="d0A15" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/d0A15/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>‘U’ and a long bottom</h2>
<p>Conversely, a “U-shaped” recession generally has a longer duration, both for the downturn and the recovery period. The 2001 recession that followed the dot-com bubble and the 9/11 attacks fits into this category.</p>
<p>In some ways, the post-dot-com recession was a mild one. The fall in employment from the job market’s peak in February 2001 until the trough in August 2003 was only slightly less than 2%. Yet it took over two years of decline for the economy to bottom out, and it took another year and a half for the number of jobs to exceed the pre-recession peak. Furthermore, the amount of time spent near the bottom of the recession was relatively long.</p>
<p><iframe id="VlldB" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/VlldB/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>The reclining ‘L’</h2>
<p>The last U.S. recession, which coincided with the financial crisis of 2008, was especially brutal.</p>
<p>Economists call it an “L-shaped” recession because there was an initial sharp downturn, but a very plodding recovery. To see the L, you need to imagine the letter sort of reclining backward on its end.</p>
<p><iframe id="4gVii" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/4gVii/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>The economy declined rapidly after the September 2008 failure of Lehman Brothers, and employment plunged about 6.3% from its pre-recession peak before reaching its low point. The pace of job creation in the recovery was very slow. <a href="https://fred.stlouisfed.org/series/PAYEMS">It took almost 4½ years</a> to recover all the jobs lost. </p>
<h2>‘K’ and a two-track recovery</h2>
<p>It may be hard to see how a K could be applied to data on a graph, but it’s the letter <a href="https://www.msn.com/en-us/money/news/why-some-economists-warn-of-a-k-shaped-coronavirus-economic-recovery/ar-BB16Otro">increasingly being used</a> to describe the path of the current recession and eventual recovery.</p>
<p>Fed Chair Jerome Powell didn’t call it a “K” <a href="https://www.npr.org/2020/10/06/920770414/feds-jerome-powell-calls-for-more-economic-aid-warning-weakness-feeds-on-weaknes">but that’s basically what he meant</a> when he discussed the current economic trajectory in a recent address. He expressed concerns that the U.S. will experience a “two-track recovery” in which things get better quickly for some people, while staying bad for others. </p>
<p>Is that the kind of recession we’re in? </p>
<p>It’s unclear. So far, looking at the whole economy, the U.S. has what has been called a <a href="https://www.lpl.com/news-media/research-insights/weekly-market-commentary/prospects-for-swoosh-shaped-recovery.html">“checkmark” or “swoosh” recession</a>. It began to look something like a V, with a sharp drop in employment and then the beginnings of a rapid increase. But that recovery has begun to stall – though not for everyone. </p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p>
<p>As <a href="https://www.rev.com/transcript-editor/shared/EyhjNkF3lL5sTIMB3u24p5CawMHAZmLvUjYV89JPo8JY5mtx6LMDFBpimV3Hz5nmoGEfsx-mF9vwoVqAbS3oiJxOL88?loadFrom=PastedDeeplink&ts=608.09">Powell suggested</a>, the recovery could look different to various groups. White-collar workers may see a “V,” as their jobs are more capable of being done remotely. Blue-collar workers are seeing something closer to a U or L. <a href="https://www.businessinsider.com/k-shaped-economic-recovery-chart-low-wage-workers-pandemic-economy-2020-10">One analysis shows</a> that medium- to high-wage workers have gained back virtually all the jobs lost during the shutdown earlier this near. Conversely, employment of lower-wage workers is still more than 20% below its pre-COVID-19 peak.</p>
<p><iframe id="ReXKj" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/ReXKj/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Recessions are tough for anyone to live through. However, the shape of the recovery can make it more or less bearable.</p><img src="https://counter.theconversation.com/content/147727/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>William Hauk does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some economists have begun to compare the current recession and recovery with a ‘K,’ while others see a ‘V.’ Which is it, and what does it mean?William Hauk, Associate Professor of Economics, University of South CarolinaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1470042020-09-29T06:21:09Z2020-09-29T06:21:09ZWe can build a more inclusive government and economy out of the pandemic — this blueprint shows us how<figure><img src="https://images.theconversation.com/files/360485/original/file-20200929-22-uts80b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>When the COVID-19 pandemic transformed our lives earlier this year, our political leaders joined hands and said we were all in this together — and for a while we saw glimpses of a different kind of politics. </p>
<p>But as things got tougher, the cohesive National Cabinet became more fractious. The blame game and “politics-as-usual” took over and distracted from finding new solutions to tough problems. </p>
<p>With the country facing an <a href="https://www.smh.com.au/politics/federal/how-do-you-judge-a-budget-like-this-look-beyond-the-jobless-rate-20200928-p55zyb.html">uncertain economic future</a>, the <a href="https://www.sydney.edu.au/sydney-policy-lab/">University of Sydney’s Policy Lab</a> has brought together community and climate groups, unions and business groups to identify strategies for creating a different way of making policy and building a new economy coming out of the crisis.</p>
<p>The product is our “<a href="https://www.sydney.edu.au/sydney-policy-lab/news-and-analysis/news-commentary/a-real-deal.html">Real Deal</a>” report released this week. </p>
<p>The Real Deal isn’t a typical policy document that outlines a magic bullet to the problems the pandemic has created. </p>
<p>We tried to break with the old battlegrounds and ideologies that have failed us over the last century. Instead of calling for unfettered free markets or big welfare states, or simple solutions like budget surpluses or endless stimulus packages, we are calling for a new relationship between the markets, government and civil society. </p>
<p>At the centre of this, we are arguing for a more collaborative approach and for mass community participation to be valued in public life.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/360487/original/file-20200929-16-gd3w33.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/360487/original/file-20200929-16-gd3w33.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/360487/original/file-20200929-16-gd3w33.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/360487/original/file-20200929-16-gd3w33.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/360487/original/file-20200929-16-gd3w33.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/360487/original/file-20200929-16-gd3w33.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/360487/original/file-20200929-16-gd3w33.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">There is another way forward that isn’t ‘politics as usual’.</span>
<span class="attribution"><span class="source">Mick Tsikas/AAP</span></span>
</figcaption>
</figure>
<h2>So how would we do that?</h2>
<p>Collaboration works when different groups have the authority and ability to negotiate solutions. </p>
<p>We saw this during the second wave of the pandemic in Victoria when United Workers Union members at a Coles distribution warehouse were able to <a href="https://overland.org.au/2020/04/the-struggle-of-the-invisible-essential-worker/">quickly push to make their workplace more COVID-safe</a> by using the Occupational and Safety Act. While initially reluctant, management introduced a series of changes, including a deep clean of machinery and temperature checks upon entrance.</p>
<p>Compared to hot spots like the <a href="https://www.afr.com/companies/agriculture/fresh-questions-over-cedar-meats-cluster-20200508-p54r2x">Cedar Meats warehouse</a>, these workers minimised the transmission of the virus, securing a better deal for themselves and kept food on supermarket shelves.</p>
<p>Novel solutions emerge when unusual partners collaborate. In Queensland, for instance, a diverse coalition of religious organisations, unions and community organisations called the <a href="https://www.qldcommunityalliance.org/">Queensland Community Alliance</a> has worked with researchers and state and federal governments to create a strategy to combat loneliness. </p>
<p>Their solution wasn’t about spending a lot of money, but reshaping how people use the state health system. They created a new health department role called a “<a href="https://www.qldcommunityalliance.org/keep_funding_our_ways_to_wellness_social_isolation_project">link worker</a>” that could help people navigate the maze of services available to them, saving time and money.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/after-covid-well-need-a-rethink-to-repair-australias-housing-system-and-the-economy-145437">After COVID, we'll need a rethink to repair Australia's housing system and the economy</a>
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<p>Policy is also better when it involves the full participation of everyday people. </p>
<p>In the Hunter Valley, Australia’s largest coal-mining region, local unions, environmental groups, community members and businesses have <a href="https://www.hunterrenewal.org.au/roadmap_to_renewal">formed an unusual alliance</a> to find solutions for the regional economy, which is threatened by the closure of mines due to climate change concerns.</p>
<p>Having <a href="https://www.hunterrenewal.org.au/we_knocked_on_thousands_of_local_doors">door-knocked residents</a> to ask their opinions, the new group <a href="https://www.hunterrenewal.org.au/roadmap_to_renewal">proposed plans</a> for new industries and jobs to create economic security for local residents. </p>
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<p>Participatory policy-making like this is easier when the government treats people as co-producers of solutions, not distant observers or barriers to change. It works best when it is built from the lived experiences of people who will be affected by these policies. </p>
<p>This was a weakness during the pandemic when policymakers often overlooked how their policy responses would affect different groups, such as
<a href="http://www.blackdoginstitute.org.au/wp-content/uploads/2020/04/20200319_covid19-evidence-and-reccomendations.pdf">those with mental illness</a>,<a href="https://flemkenlegal.org/latest-news/2020/7/4/our-statement-on-the-hard-lockdown-of-the-public-housing-hi-rise">the residents of public housing towers in Melbourne</a> or <a href="https://theconversation.com/why-temporary-migrants-need-jobkeeper-135688">temporary migrants</a>. </p>
<p>The lesson is that effective policy-making puts affected people at the centre of these discussions — much in the way the <a href="https://www.ucpress.edu/book/9780520224810/nothing-about-us-without-us">disability sector</a> has long advocated a “nothing about us without us” approach.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/our-lives-matter-melbourne-public-housing-residents-talk-about-why-covid-19-hits-them-hard-142901">Our lives matter – Melbourne public housing residents talk about why COVID-19 hits them hard</a>
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<h2>Five benchmarks for the solutions we need</h2>
<p>In building the “Real Deal” report, we put these ideas into practice. We began our research not with books, but with the lived experience of leaders in civil society — listening to their stories and responding to the challenges their members were facing. </p>
<p>We took this research to a panel of Australian and international economists and academics, then began a slow process of writing a new framework together. We sought case studies — real solutions — tested in the field by our collaborators, like the ones outlined above. </p>
<p>The process took months, but that time enabled genuine collaboration and participation. </p>
<p>The <a href="https://www.arealdeal.org/">report</a> offers five benchmarks for measuring whether policy-making is contributing to the solutions we need. These include: </p>
<ul>
<li><p>an awareness that reshaping how the state serves the people is even more vital than big stimulus packages </p></li>
<li><p>a focus on addressing pre-existing inequalities and injustices laid bare by the pandemic</p></li>
<li><p>a bold vision that matches the scale of our economic and climate crises </p></li>
<li><p>the active participation of people in decisions that affect them</p></li>
<li><p>a deeply collaborative process. </p></li>
</ul>
<p>Central to a real deal is that people make a difference. We are the ones who can make the deals for regional economic development in the face of climate change or create a new health system based on people’s needs.</p>
<p>There is a growing lament in Australia that politicians let us down. But the lesson from the pandemic is we have the power to change our economy and politics, and if we do, we might emerge from these crises stronger.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/healthcare-minerals-energy-food-how-adopting-new-tech-could-drive-australias-economic-recovery-146410">Healthcare, minerals, energy, food: how adopting new tech could drive Australia's economic recovery</a>
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</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/147004/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amanda Tattersall is a member of her union, the National Tertiary Education Union. </span></em></p>There is a growing lament in Australia that politicians let us down. But the lesson from the pandemic is that we, the people, have the power to change our economy and politics for a better future.Amanda Tattersall, Research Lead Sydney Policy Lab, Postdoctoral Fellow Geography, Host of ChangeMakers Podcast, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1470482020-09-29T05:57:41Z2020-09-29T05:57:41ZGovernment’s $800m Digital Business plan will let you access myGov with facial recognition<p>An A$800 million <a href="https://www.pm.gov.au/media/digital-business-plan-drive-australias-economic-recovery">JobMaker Digital Business Plan</a> has been released this week to support economic recovery in the wake of COVID-19. Treasurer Josh Frydenberg said the package is:</p>
<blockquote>
<p>targeted at building on this digital transformation of Australian businesses to drive productivity and income growth and create jobs.</p>
</blockquote>
<p>The plan includes a controversial Digital Identity system the government says will make it easier to engage “with government services, and in future, the private sector”. </p>
<p>The big question is how ready the government is to handle the responsibility associated with such a scheme — and how it fits with similar schemes already announced by other departments, such as the Australian Tax Office.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/our-cybersecurity-isnt-just-under-attack-from-foreign-states-there-are-holes-in-the-governments-approach-137403">Our cybersecurity isn't just under attack from foreign states. There are holes in the government's approach</a>
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<h2>The breakdown</h2>
<p>You can read the press release <a href="https://www.pm.gov.au/media/digital-business-plan-drive-australias-economic-recovery">here</a> but some of the measures include: </p>
<ul>
<li><p>$256.6 million to develop a ‘digital identity system,’ for example, to enable access to government services with facial recognition </p></li>
<li><p>$419.9 million to the “modernising business registers” program which would help companies move online by allowing electronically signed documents and virtual shareholder voting</p></li>
<li><p>$29.2 million to accelerate the rollout of 5G</p></li>
<li><p>$22.2 million to expand a <a href="https://www.business.gov.au/expertise-and-advice/australian-small-business-advisory-services-asbas-digital-solutions">digital advisory</a> service for small businesses (however the target is to help 10,000 small businesses, and there are <a href="https://www.asbfeo.gov.au/sites/default/files/Small_Business_Statistical_Report-Final.pdf">2 million</a> such businesses in Australia).</p></li>
<li><p>$3.6 million towards mandating the adoption of electronic invoicing for all federal government agencies</p></li>
<li><p>$2.5 million to connect workers and small and medium sized businesses to digital skills training.</p></li>
</ul>
<p>The plan follows the recent $4.5 billion NBN <a href="https://theconversation.com/nbn-upgrades-explained-how-will-they-make-internet-speeds-faster-and-will-the-regions-miss-out-146749">upgrade announcements</a>.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/healthcare-minerals-energy-food-how-adopting-new-tech-could-drive-australias-economic-recovery-146410">Healthcare, minerals, energy, food: how adopting new tech could drive Australia's economic recovery</a>
</strong>
</em>
</p>
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<h2>Facial recognition, the Digital Identity program and you</h2>
<p>Among the more <a href="https://www.innovationaus.com/troubled-digital-id-scheme-gets-another-250m/">controversial</a> aspects of the plan is the $256.6 million proposal to expand the Commonwealth Digital Identity program, in a bid to supposedly simplify and reduce costs of interacting with government. </p>
<p>This would be done by creating a biometric identification system using facial recognition software. And the scheme will include identification for myGov and the Australian Tax Office’s myGovID.</p>
<p>Many technical and policy issues relating to digital identity have already dogged the federal government this year. </p>
<p>For instance, accounting firm <a href="https://www.itnews.com.au/news/deloittes-son-of-mygov-platform-build-price-jumps-another-5-million-552871">Deloitte was awarded</a> a $9.5 million contract in March to develop a platform to eventually replace the current myGov portal.</p>
<p><a href="https://www.innovationaus.com/deloitte-contract-with-dta-triples-to-28-1m/">According to reports</a>, this contract’s value increased to $28 million this month. A threefold increase in budget in six months suggests the proposed funding of $256.6 million may not be enough.</p>
<p>Also, cybersecurity researchers have identified a relatively simple phishing method by which the ATO’s myGovID login system can be compromised. Researchers from the the Australian National University and Melbourne University approached the ATO with a <a href="https://www.thinkingcybersecurity.com/DigitalID/">description of the issue</a>. </p>
<p>Reports <a href="https://www.zdnet.com/article/ato-declines-to-fix-code-replay-flaw-within-mygovid/">claim</a> the office has <a href="https://www.itnews.com.au/news/researchers-show-successful-mygovid-code-replay-attack-553601">yet to address the flaw</a>.</p>
<h2>We need joined-up policies that complement each other</h2>
<p>Last week, the ATO <a href="https://www.tenders.gov.au/Atm/Show/373323c0-87dd-40a7-8a53-750b783e3e29">issued a tender</a> for a digital “liveness solution”. This will use facial recognition software to prove people accessing the ATO’s online services are physically present at their devices.</p>
<p>It’s not clear whether the ATO intends to continue with its own identity solutions, or if it will partake in the government’s initiative to expand the Commonwealth Digital Identity program. </p>
<p>It’s odd to see a whole-of-government approach to digital identity announced three days after the ATO publicised <a href="https://www.tenders.gov.au/Atm/Show/373323c0-87dd-40a7-8a53-750b783e3e29">its own aforementioned tender</a>. The rate of Australia’s current digital transition requires joined-up policies which complement, rather than clash with, each other.</p>
<p>It’s true stimulating business capacity in the digital economy will likely help small businesses adapt to the “new normal” brought on by COVID-19. But with this comes the challenge of understanding what this “new normal” will be.</p>
<p>New funds allocated under the JobMaker Digital Business Plan suggest this challenge may not be met by government, after all. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/frydenberg-is-setting-his-budget-ambition-dangerously-low-146855">Frydenberg is setting his budget ambition dangerously low</a>
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</em>
</p>
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<img src="https://counter.theconversation.com/content/147048/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rob Nicholls receives funding from the International Association of Privacy Professionals.</span></em></p>More than half of the allocated funds will go towards making ‘digital government’ easier to do business with.Rob Nicholls, Associate professor in Business Law. Director of the UNSW Business School Cybersecurity and Data Governance Research Network, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1453052020-09-24T04:20:54Z2020-09-24T04:20:54ZNew Zealand companies lag behind others in their reporting on climate change, and that’s a risk to their reputation<figure><img src="https://images.theconversation.com/files/359691/original/file-20200923-24-1qb02zu.jpg?ixlib=rb-1.1.0&rect=53%2C143%2C5937%2C3709&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock/sdecoret</span></span></figcaption></figure><p>New Zealand’s top 30 corporations do a poor job reporting on climate change compared with similar Australian and Fortune Global 500 companies, according to <a href="https://www.emerald.com/insight/content/doi/10.1108/JCOM-06-2019-0092/full/html">our research</a>. </p>
<p>The fact that most big businesses in New Zealand provide limited or no information on climate change was one of the drivers for a <a href="https://theconversation.com/new-zealand-will-make-big-banks-insurers-and-firms-disclose-their-climate-risk-its-time-other-countries-did-too-146392">proposed policy</a> to introduce <a href="https://www.beehive.govt.nz/release/new-zealand-first-world-require-climate-risk-reporting">mandatory reporting of climate risk</a> across the financial system. </p>
<p>The policy’s focus on large financial institutions will have knock-on effects on the private business sector as banks and insurers will require companies to assess their own climate risk and improve reporting. </p>
<p>This will create a more accurate, consistent and transparent climate change reporting infrastructure. </p>
<h2>Corporations ignore climate change</h2>
<p>Top businesses in New Zealand, Australia and those in the Fortune Global 500 group generally don’t report well on climate change. Our study shows a minority report on observed or future patterns of greenhouse gas emissions (17%), business greenhouse gas contributions (25%) or business responsibility to respond to climate change (32%) and whether their emission reduction targets are aligned with science (14%). </p>
<p>We studied New Zealand’s top 30 corporations and found they use key terms such as climate change, carbon, greenhouse gas and global warming 13 times on average, compared with an average of 48 times by Australian and Fortune Global 500 companies. The low frequency is an indication that climate change is not a priority for New Zealand businesses. </p>
<iframe title="Reporting on climate change among corporations" aria-label="chart" id="datawrapper-chart-cen2G" src="https://datawrapper.dwcdn.net/cen2G/1/" scrolling="no" frameborder="0" style="border: none;" width="100%" height="400"></iframe>
<p>A previous <a href="http://www.mcguinnessinstitute.org/wp-content/uploads/2018/07/20180727-Working-Paper-201803.pdf">study</a> also shows only 5–16% of the 200 largest corporations in New Zealand report climate risks, emission-reduction targets or climate-related initiatives in their annual reports or financial statements. </p>
<p>This suggests a gap between the scientific evidence and business planning and a lack of strategic alignment between corporations’ pledges and performance. </p>
<p>One of the most important factors that shapes corporate action on climate change is <a href="https://www.cdp.net/en/policy-and-public-affairs/policy-briefings/accelerating-corporate-climate-action">regulatory uncertainty</a>. Chief executives who want to introduce measures to reduce emissions are discouraged because their efforts are <a href="http://www3.weforum.org/docs/WEF_The_Net_Zero_Challenge.pdf">not rewarded</a> internally or by external stakeholders.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/a-bit-rich-business-groups-want-urgent-climate-action-after-resisting-it-for-30-years-145302">A bit rich: business groups want urgent climate action, after resisting it for 30 years</a>
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<h2>What’s in it for businesses</h2>
<p>Last month, New Zealand’s first <a href="https://www.mfe.govt.nz/climate-change/assessing-climate-change-risk">national climate change risk assessment</a> identified ten areas that need urgent action. </p>
<p>The risk assessment provides an <a href="https://www.mfe.govt.nz/sites/default/files/media/Climate%20Change/national-climate-change-risk-assessment-main-report.pdf">overview</a> of how New Zealand may be <a href="https://www.newshub.co.nz/home/politics/2020/08/national-climate-change-risk-assessment-report-identifies-10-areas-needing-urgent-action.html">affected by climate change hazards</a>. The three risk areas most significant to the business sector are:</p>
<ul>
<li><p>risks to the financial system from instability caused by extreme weather events and ongoing, gradual changes</p></li>
<li><p>risks to governments from economic costs associated with lost productivity, disaster relief expenditure and unfunded contingent liabilities</p></li>
<li><p>risks of maladaptation due to practices, processes and tools that do not account for uncertainty and change over long time frames.</p></li>
</ul>
<p>We rightly focus on physical and transitional risks associated with climate change for businesses, but reputational risks are equally important. </p>
<p><a href="https://theconversation.com/theres-evidence-that-climate-activism-could-be-swaying-public-opinion-in-the-us-123740">Consumer activism</a> on climate change is <a href="https://www.edelman.com/news-awards/two-thirds-consumers-worldwide-now-buy-beliefs">on the rise</a>, particularly among a <a href="https://www.vox.com/the-goods/2019/10/7/20894134/consumer-activism-conscious-consumerism-explained">new generation</a> of consumers and investors. </p>
<p><a href="https://static1.squarespace.com/static/5bb6cb19c2ff61422a0d7b17/t/5f5016845171b25a9d011179/1599084189333/Managing+climate+risk+in+New+Zealand+in+2020.pdf">Litigation risks</a> associated with inaction are likely to become more prominent in the future. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/new-zealand-will-make-big-banks-insurers-and-firms-disclose-their-climate-risk-its-time-other-countries-did-too-146392">New Zealand will make big banks, insurers and firms disclose their climate risk. It's time other countries did too</a>
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</p>
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<h2>Public support for climate action</h2>
<p>Our recent <a href="https://mro.massey.ac.nz/bitstream/handle/10179/15566/Aotearoa-New%20Zealand%20Public%20Responses%20to%20COVID-19%20and%20Climate%20Change.pdf?sequence=1&isAllowed=y">national survey</a> shows most New Zealanders support a green COVID-19 economic recovery. More than 70% agree industries receiving substantial emergency financial assistance should be required to lower their carbon emissions.</p>
<p>More than half of New Zealanders say they are likely to shift to more environmentally friendly behaviours in the next 12 months, even if it costs more or is inconvenient. A majority also say they are confident people like them, working together, can affect business and government action on climate change.</p>
<p>Another <a href="https://www.sbc.org.nz/insights/2020/guest-blog-iag-climate-change-survey-2020">survey</a> conducted by the IAG insurance company shows most New Zealanders want businesses to talk about risks climate change poses to their business and customers. Many believe corporations are responsible for climate action. </p>
<p>Only ten out of 90 top corporations we analysed reported on the scientific consensus about climate change. Of the New Zealand corporations, only 3% did so, compared to 13% of Australian companies and 17% of those among the Fortune Global 500.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/super-funds-are-feeling-the-financial-heat-from-climate-change-146191">Super funds are feeling the financial heat from climate change</a>
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</em>
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<p>This lack of acknowledgement is a missed opportunity to instil public confidence, manage stakeholder expectations and institutionalise corporate social responsibility.</p>
<p>Communicating the fact that experts agree on climate change <a href="https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0118489">increases public support for mitigation policies</a>. Businesses can reinforce this message to increase consumer support for ambitious, even costly, climate actions. </p>
<p>Reporting on climate risks is important but not sufficient. Traditionally, businesses have highlighted climate risks more than their responsibilities, thereby portraying themselves as victims fighting to protect the economy. </p>
<p>Between 1990 and 2018, New Zealand’s net emissions <a href="https://www.mfe.govt.nz/climate-change/state-of-our-atmosphere-and-climate/new-zealands-greenhouse-gas-inventory">increased by 57%</a>. The <a href="https://www.mfe.govt.nz/climate-change/zero-carbon-amendment-act">Zero Carbon Act</a> aims to reduce net emissions from all greenhouse gases to zero by 2050, except for methane from animals, which it aims to reduce by 24-47% (below 2017 levels). </p>
<p>Communication is a commitment to act. New Zealand corporations have a long road ahead to match the “clean” image of the country with their own communication on climate change.</p><img src="https://counter.theconversation.com/content/145305/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Massey University funded this research.</span></em></p>More than 70% of New Zealanders agree that industries receiving substantial financial assistance as part of the COVID-19 recovery should be required to lower their carbon emissions.Jagadish Thaker, Senior Lecturer, School of Communication, Journalism and Marketing, Massey UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1464102020-09-21T19:59:05Z2020-09-21T19:59:05ZHealthcare, minerals, energy, food: how adopting new tech could drive Australia’s economic recovery<figure><img src="https://images.theconversation.com/files/359005/original/file-20200921-16-1s21uza.jpg?ixlib=rb-1.1.0&rect=27%2C44%2C1070%2C686&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">CSIRO</span>, <span class="license">Author provided</span></span></figcaption></figure><p>Over the next few years, science and technology will have a vital role in supporting Australia’s economy as it strives to recover from the coronavirus pandemic.</p>
<p>At Australia’s national science agency, CSIRO, we’ve identified <a href="https://www.csiro.au/en/Do-business/Futures/Reports/Innovation-and-business-growth/COVID-19-recovery-resilience">opportunities</a> that can help businesses drive economic recovery.</p>
<p>We examined how the pandemic has created or intensified opportunities for economic growth across six sectors benefiting from science and technology. These are food and agribusiness, energy, health, mineral resources, digital and manufacturing. </p>
<h2>Advanced healthcare</h2>
<p>While some aspects of Australian healthcare are currently digitised, system-wide digital health integration could improve the quality of care and save money. </p>
<p>Doctors caring for patients with chronic diseases or complex conditions could digitally coordinate care routines. This could streamline patient care by avoiding consultation double-ups and providing a more holistic view of patient health.</p>
<p>We also see potential for more efficient healthcare delivery through medical diagnostic tests that are more portable and non-invasive. Such tests, supported by artificial intelligence and smart data storage approaches, would allow faster disease detection and monitoring.</p>
<p>There’s also opportunity for developing <a href="https://www.csiro.au/en/Do-business/Futures/Reports/Future-Industries/Advanced-manufacturing-roadmap">specialised components</a> such as 3D-printed prosthetics, dental and bone implants.</p>
<h2>Green energy</h2>
<p>Despite a short-term plateau in energy consumption caused by COVID-19 globally, the demand for energy will <a href="https://www.iea.org/reports/global-energy-review-2020">continue to grow</a>.</p>
<p>Through clean energy exports and energy initiatives aligned with <a href="https://www.industry.gov.au/strategies-for-the-future/australias-climate-change-strategies">decarbonisation goals</a>, Australia can help meet global energy demands. Energy-efficient technologies offer immediate reduced energy costs, reduced carbon emissions and less demand on the energy grid. They also create local jobs.</p>
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Read more:
<a href="https://theconversation.com/it-might-sound-batshit-insane-but-australia-could-soon-export-sunshine-to-asia-via-a-3-800km-cable-127612">It might sound 'batshit insane' but Australia could soon export sunshine to Asia via a 3,800km cable</a>
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<h2>Innovating with food and agribusiness</h2>
<p>The food and agribusiness sector is a prominent contributor to Australia’s economy and supports regional and rural prosperity. </p>
<p>Global population <a href="https://ourworldindata.org/future-population-growth">growth</a> is driving an <a href="https://ourworldindata.org/meat-production">increased demand for protein</a>. At the same time, consumers <a href="https://newsroom.accenture.com/news/covid-19-increasing-consumers-focus-on-ethical-consumption-accenture-survey-finds.htm">want</a> more products that are sustainable and ethically sourced.</p>
<p>Australia could earn revenue from the local production and export of more sustainable proteins. This might include plant-based proteins such as pea and lupins, or aquaculture products such as farmed prawns and seaweed.</p>
<p>We could also <a href="https://pir.sa.gov.au/__data/assets/pdf_file/0005/287699/Market_Opportunities_Functional_-_Gluten_Free_Foods.pdf">offer</a> more high-value health and well-being foods. Examples include fortified foods and products free from gluten, lactose and other allergens.</p>
<h2>Automating minerals processes</h2>
<p>Even before COVID-19 struck, the mineral resources sector was <a href="https://www.csiro.au/en/Do-business/Futures/Reports/Energy-and-Resources/METS-Roadmap">facing</a> rising costs and declining ore grades. It’s also dealing with climate change impacts such as droughts, bushfires, floods, and social pressures to reduce environmental harm.</p>
<p>Several innovative solutions could help make the sector more productive and sustainable. For instance, increasing <a href="https://stockhead.com.au/resources/the-move-to-automated-mining-is-on-but-whos-really-ready-to-join-the-robot-revolution/">automation</a> and <a href="https://www.mining-technology.com/features/sizing-syama-worlds-first-fully-automated-mine/">remote mining</a> (which Australia already excels in) could achieve improved safety for workers, more productivity and business continuity.</p>
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Read more:
<a href="https://theconversation.com/the-coronavirus-has-thrust-human-limitations-into-the-spotlight-will-it-mark-the-rise-of-automation-139198">The coronavirus has thrust human limitations into the spotlight. Will it mark the rise of automation?</a>
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<p>Also, investing in advanced technologies that can generate higher quality data on mineral character and composition could improve yields and minimise environmental harm.</p>
<h2>High-tech manufacturing</h2>
<p>COVID-19 has escalated concerns around Australia’s <a href="https://theconversation.com/why-your-local-store-keeps-running-out-of-flour-toilet-paper-and-prescription-drugs-135786">supply chain fragility</a> – take the toilet paper shortages earlier in the pandemic. Expanding local manufacturing efforts could create jobs and increase Australia’s earning potential. </p>
<p>This is especially true for mineral processing and manufacturing, pharmaceuticals, food and beverages, space technology and defence. Our local manufacturing will need to adapt quickly to changes in supply needs, ideally through the use of advanced designs and technology. </p>
<h2>Digital solutions</h2>
<p>In April and May this year, Australian businesses made huge strides in adopting consumer and business digital technologies. One study estimated <a href="https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-covid-19-recovery-will-be-digital-a-plan-for-the-first-90-days">five years’ worth of progress</a> occurred in those eight weeks. Hundreds of thousands of businesses <a href="https://www.abs.gov.au/statistics/economy/business-indicators/business-indicators-business-impacts-covid-19">moved their work online</a>.</p>
<p>Over the next two years, Australian businesses could become more efficient and adaptable by further monetising the data they already collect. For example, applying mobile sensors, robotics and machine learning techniques could help us make <a href="https://data61.csiro.au/en/Our-Research/Our-Work/Future-Cities/Planning-sustainable-infrastructure/Digital-Innovation">better resource decisions</a> in agriculture.</p>
<p>Similarly, businesses could share more data throughout the supply chain, including with customers and competitors. For instance, increased data sharing among renewable energy providers and customers could improve the monitoring, forecasting and reliability of energy supply.</p>
<p>Making the right plans and investments now will determine Australia’s recovery and resilience in the future.</p><img src="https://counter.theconversation.com/content/146410/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Katherine Wynn works for the CSIRO, which receives funding from the Australian Government.</span></em></p><p class="fine-print"><em><span>James Deverell works for the CSIRO, which receives funding from the Australian Government.</span></em></p><p class="fine-print"><em><span>Max works for the CSIRO, which receives funding from the Australian Government.</span></em></p><p class="fine-print"><em><span>Mingji works for the CSIRO, which receives funding from the Australian Government.</span></em></p>Digitising healthcare and exporting more sustainable protein alternatives are just some ideas that could help Australia’s economy return to form.Katherine Wynn, Lead Economist, CSIRO Futures, CSIROJames Deverell, Director, CSIRO Futures, CSIROMax Temminghoff, Senior Consultant, CSIROMingji Liu, Senior Economic Consultant, CSIROLicensed as Creative Commons – attribution, no derivatives.