COVID-19: Just Recovery
The COVID-19 crisis is compelling us to kick-start investment in a regenerative and zero-carbon future. We were bold enough to act quickly to stop the virus - can we now chart a course for a just recovery? Has the crisis finally made leaders, citizens, and banks bold enough to drive a transition to a more fair, sustainable, and resilient economy?
Healthy Ecosystems for Human Wellbeing
Economists and ecologists, Māori leaders, scientists, and NGO advocates are speaking with increasing unanimity about the need for a climate and ecosystem ‘responsible’ world to emerge from this planetary pandemic. Such calls include demands for fairer housing and livelihoods, rehabilitated waterways and forests, regenerative land use, and even more participatory rangatiratanga (self-determination).
The evidence is clear that the destruction of nature and biodiversity are significant contributors to the emergence, virulence and spread of COVID-19. In a recent piece on The Conversation - Coronavirus is a wake-up call: our war with the environment is leading to pandemics- the authors outline that “now is the time to put in place the settings for planetary health. We live in an interdependent world in which there are no borders to a virus.”
Humanity is progressively marching back the frontier between human habitation and jungle and forests for farms, plantations, and energy and mineral extraction. This and global warming are both destabilising the established cycles of previously resilient biodiverse habitats and species.
This is placing unprecedented strain on wildlife, leading to a sixth mass extinction event forcing animals to move rapidly into new areas that were previously not suitable for habitation.
In this process, viruses from wild animals are increasingly interacting with food crops, and domestic animals and are seeking new hosts outside of diminishing wild animal populations. They are finding these new hosts in people - leading many scientists to warn of an increased likelihood of outbreaks of novel pathogens as our encroachment on wilderness areas continues.
Are we are serious about avoiding disaster and charting a new course for humanity in balance with the natural world? If so, we need to address the destructive patterns of land use and extractive economics leading to these interconnected crises.
Girl protesting at Aotearoa Youth Climate March, 2019
How will we address the major environmental issues we face to ensure future generations can live without fear of deadly novel outbreaks and climate-related disaster?
One major piece in the puzzle of these crises will involve addressing the cycles of intergenerational debt and inequality that drive unsustainable practices. We live in a global society with unprecedented levels of both private and public debt and increasing inequality. The poverty and indebtedness of nations in the Tropical regions where most of the Novel outbreaks of recent times have emerged places increasing pressure on nature. As Laura Spinney even points out "inequality doesn't just make pandemics worse – it could cause them".
As a nation, New Zealand must decide whether we are happy to allow indebtedness and poverty to further entrench climate change, pandemics and ecosystem destruction. Our policies and actions at home have consequences abroad, and they can drive or diminish such harmful outcomes in our highly connected world.
So far, the New Zealand Government has taken a relatively humane and precautionary response to the COVID-19 pandemic, by allowing the economy to retract, possibly significantly, in order to save lives. There has been increased spending on our crumbling health infrastructure, and a focus on ensuring that the most vulnerable members of our society are protected from the effects of the virus itself.
On 17 March, the Government announced a $12 billion COVID-19 Response package, with the subsequent Imprest Supply Bill giving scope to borrow up to $52 billion - the largest stimulus package in peacetime. Specific assistance for Māori includes $40 million allocated to support outreach into vulnerable Māori communities with enhanced support to Māori health providers. Government agencies are stepping up as best they can. The Ministry for Social Development, for example, is providing additional assistance to buy food for those that need it.
In addition, a ‘finance guarantee’ offered by the Government means that businesses with annual revenue of up to $80 million can apply to their bank for a loan of up to $500,000 for 3 years. The Government is guaranteeing up to 80% of the risk on these loans, effectively working with the banking sector to deliver significant support to businesses to stay afloat.
Is the current economic model likely to lead to a resilient and adaptive nation in the face of global threats we face?
New Zealand Finance Minister Grant Robertson
While this business support is important for crisis management, we question this banking-centred approach as a sound strategy for long-term recovery.
Delivering aid through the banking sector increases the banks' profits and continues the cycle of indebtedness and growth. This may set the scene for businesses to continue as usual, but does this position us to rebuild an economy that is resilient and adaptive in the face of threats such as climate change, economic collapse, and future pandemic outbreaks?
The underlying logic of capitalism assumes that we can continue to “grow the pie” indefinitely so that those who are poorest have a greater share, and society sees better social outcomes. However, free-market policies over the last four decades have in fact resulted in ever-increasing inequality - the poor never catch up and governments remain pressured to generate still more growth in an eternal cycle.
Since the seminal Club of Rome report - “Limits to Growth” in the 1970s, this “impossible idea of infinite growth” has been seen by many leading economists as incompatible with the planet’s natural constraints. Increasing the economy indefinitely through resource extraction and growth is simply no longer an option for humanity.
A leading example is economist Professor Sir Partha Dasgupta of Cambridge University. In a guest lecture at Victoria University on The Economics of Biodiversity last year, Sir Dasgupta outlines how we are overshooting the renewable capacity of earth’s biomass and urgently need to recalibrate the global economy.
An ‘eternal growth’ focused recovery also assumes there will be a return to the ‘business as usual’ global economy. However, as Adam Tooze writes for Foreign Policy Magazine, this normal economy is never coming back. The US economy is currently experiencing the steepest free fall ever - a decline four times faster than during the Great Depression of the 1930s. As a result Tooze suggests that “the old economic and political playbooks no longer apply.”
Will this economic crash signal the end of the old carbon and biodiversity intensive economy and the birth of a new economic paradigm more suited to the post-COVID-19 world?
The Challenge: A Just Transition
Regent Street, Christchurch during the COVID-19 Lockdown Photo: RNZ
How can we continue to grow the pie for everyone whilst maintaining economic stability within planetary boundaries?
Persistent and intergenerational inequality remains a serious problem in Aotearoa. This particularly affects Māori and Pasifika communities – but also those who are disabled, beneficiaries, and low-income workers and their families. Existing disparities are exacerbated by insecure and low paid employment with short term contracts, no sick leave or entitlement to be paid when not working.
These disparities will only be exacerbated further by COVID-19 Inequality is predicted to grow as a result of the coming economic crash. Unemployment is predicted by Treasury to hit double digits in New Zealand as a result of the COVID-19 economic fallout, but this could well turn out to be a conservative estimate.
This situation will necessitate a new approach to economic investment focused on core ‘social functions’ and an ethic of care and responsibility as a means to achieve productivity and support better social outcomes.
The New Zealand Government has already taken an important step in this direction by adopting a wellbeing lense for its economic outlook in 2018. In the Budget Policy Statement 2020, released in 2019 ahead of this May’s announcement, the Government opens with the ambitious priority of:
“Just Transition - Supporting New Zealanders in the transition to a climate-resilient, sustainable and low-emissions economy”
The timing of the 2020 Wellbeing Budget is challenging, as the machinations of a global economy in crisis are difficult to predict. However, it presents the greatest opportunity ever for the Government to invest in strengthening our national resilience and shoring up our ability to meet our needs locally regardless of global outcomes.
Before the COVID-19 crisis, it was unlikely we could have achieved such a ‘just transition’ by continuing with a ‘business as usual’ model, but under current global conditions, we certainly can not.
What are some of the innovative new approaches and solutions New Zealand might look to adopt in order to drive this just transition to an environmentally and socially responsible economy?