Reporting from New Zealand: COVID-19 - Just Recovery

Betsan Martin, Michael Pringle, avril 2020

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 all 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, and 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.

Intergenerational Debt

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 solving 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.

Global Warning

Is the current economic model likely to lead to a resilient and adaptive nation in the face of global threats we face?

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 freefall 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

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?

Rebuilding Natural, Social and Cultural Infrastructure

This just transition can, however, be achieved by refocusing the economy on the values of life, community, and relationships. As Dame Anne Salmond commented this week, We need more than shovels to rebuild NZ post-COVID-19. Salmond challenges us to adopt a renewed economic framework focusing on rebuilding our natural, social, and cultural infrastructure.

In order to ensure our natural, social, and cultural infrastructure, the road to recovery will mean taking bold action on decarbonising the economy and reducing extractive industries. A post-carbon economy would need to address challenges such as scaling up regenerative agriculture, adopting renewable energy systems, and ensuring nutritious food, adequate livelihoods, and affordable and sustainable housing for all New Zealanders.

Yesterday on RNZ, Green Party Co-leader and Climate Change Minister, James Shaw stated that the country’s economic rebuild must take a more climate-friendly approach. Shaw argued that many countries now see intertwined environmental and economic progress as the best way forward.

A ‘Climate Justice’ Lens

A ‘climate justice’ lens seeks to ensure that the transition to a post-fossil fuel economy is done in a way that is fair for all – including Māori, farmers, motorists, the disadvantaged, and most crucially, future generations. As was outlined in a letter to the Prime Minister from the Ecumenical Climate Justice network last week, economic settings for human and ecosystem health require coordinated investment and strategies across multiple sectors.

Māori will likely suffer the worst effects of climate change and COVID-19, so Te Tiriti o Waitangi must be central to climate justice discussions moving forward. There is great potential for the adoption of transformative solutions in collaboration with Māori in response to COVID-19. Many are already being mobilised through the New Zealand Māori Council offering support packages, and Iwi Leaders, Iwi and hapū authorities.

A truly Māori-led recovery can be achieved by extending successful projects and schemes already in place before the crisis and enabling greater tribal autonomy. Reform of land and water ownership is on the political agenda, aiming to restore productive assets to Māori self-governance and restore greater iwi control over land and setting priorities. This could provide greater opportunities for self-employment, offering Māori an escape from historical deficit cycles resulting from land dispossession.

Successful innovations for Māori are generally focused on traditional values such as a community and family focus, co-living, collective ownership of land, and cooperative sustainable enterprise. How can we ensure innovative solutions based on such values are also made available to other disadvantaged communities across Aotearoa? Could the adoption of Māori influenced collaborative and community-focused values in our wider economy enable a widespread escape from intergenerational debt?

A Green Recovery

Transformative outcomes could be achieved across the wider national community by recalibrating the economy to support social wellbeing and ecosystem health. This will have mutually reinforcing benefits across society but will require the Government to implement the correct investment and policy settings at central and local government levels.

Investment in preserving the ecology will provide much-needed jobs to many who are already, or soon to be unemployed as well as addressing our environmental deficit. Dame Anne Salmond, for example, proposes that investment in regenerative agriculture, ecological infrastructure, and indigenous forests, will bring life back to polluted and depleted waterways and create jobs.

Diversifying agriculture away from intensive livestock farming can be achieved in a just way, in order to maintain and improve regional livelihoods and reduce carbon outputs and pollution of land and waterways. Policies could be put in place to incentivise the expansion of local plant-based food and fibre production alongside de-intensified organic livestock practices.

Opening up under-utilised or degraded land to communities for use in regenerative small agricultural businesses and cooperatives would also have positive economic and social outcomes.

Greenpeace New Zealand has recently announced a plan for a Green COVID-19 Response aimed at reducing our dependence on fossil fuels and creating employment. This well researched and communicated proposal advocates that we can achieve these important goals through the following policy interventions:

• Implementing a universal income support scheme.

• Investing in warming up every uninsulated home,

• Investing in regenerative farming

• Fencing and planting every waterway on our farms,

• Bringing forward state sector clean energy programmes

• Providing interest free loans to buy solar for every house,

• Reviving the feebate scheme to help people to buy electric cars; and

• Expanding cycleways and public transport.

• Community Oriented Housing

How can emergent solutions benefit our housing crisis by encouraging affordable green housing through a community housing model?

Māori housing policy can also be encouraged by Iwi gaining greater control over land. The Papakāinga approach is a community housing approach centred around Māori values and principles. As Jade Kake writes for the Spinoff, “Whānau and hapū-led papakāinga and whenua development initiatives are persevering and even thriving despite the barriers and challenges to doing so.” This approach could be rapidly expanded with the correct support in place.

Pacific communities are also thriving through an upsurge in initiatives for housing and services. The Tongan Matanikolo social housing project in Māngere provides housing for thirty fanau through a collaboration between communities, the local church and Housing New Zealand.

Such models could be scaled up as a way to unburden lesser-resourced communities from years of fundraising and provide proper tools for building quality homes and facilities. The papakāinga model could also be used as a model to rejuvenate housing in other diverse communities across the country.

In the post-COVID-19 world, social housing and low-income housing needs could be met by repurposing some of the assets of the hospitality sector into sustainable community housing through leasing or purchasing arrangements. This would allow vacant hotels, motels, and hostels to be transformed through connection to public transport, and the addition of energy efficiency, insulation, and communal amenities such as gardens and communal spaces. This could also create urban and regional employment by redeploying some skilled hospitality and construction staff.

Investing For Growth, and Wellbeing

What will we invest in for growth and how will the benefits of increased productivity be shared?

Despite increasing and more entrenched inequality, the staunchly neoliberal policy, ideology, and monetary values of our Government over recent decades have strongly resisted any attempts at introducing serious redistributive policies to address this problem.

The most obvious example of this is Government inaction on the 2019 recommendations of the Welfare Expert Advisory Group calling for fundamental, far-reaching changes in the way we deliver support to New Zealand’s most vulnerable citizens. Benefits have been increased by $25 a week in March’s emergency budget, but this is nowhere near enough to meet the recommendations of the WEAG.

Overall, a more nuanced and sustainable approach to economic growth will be important for the COVID-19 recovery if we are to ensure a just transition and increased wellbeing for communities.

Economic Policy Interventions

How should we provide immediate economic relief to those at the bottom of the socio-economic pile?

In the last great financial crisis in 2008, trillions were spent to support the banking sector and enable it to continue to operate in the logic of financial markets and debt-driven growth. Nothing was done to enhance planetary resilience in order to lessen that the impacts of future devastating shocks such as the one we are now living through. As Nesrine Malik cautions on The Correspondent, “We failed to fix a broken system after the 2008 financial crisis. Let’s not make the same mistake now.”

Leading emergent economic innovations proposed thus far in response to the economic effects of COVID-19 include tax relief or a Universal Basic Income (UBI).

The discussions of redistribution through tax in the recent ‘Future of Tax’ report published in early 2019, were shut down by vocal public and political opposition. The Capital Gains Tax policy it recommended will perhaps become a hot topic again in the post-COVID-19 environment since it is a major factor driving our housing crisis. This isn’t the only route to redistribution, a Wealth tax is also an option, removing tax on the first $14,000 is another. Taxing fossil-fuel loaded fertilizer inputs and incentivizing lower emissions land use are other options ripe for policy development.

The UBI proposal has been mooted in many Nations around the world over the past few weeks, but it has drawn both criticism and support in New Zealand.

Bernard Hickey argues that it is the quickest and fairest way to maintain income stability. The arguments for UBI are that costs would be at least partially offset by the significant gains to be had by moving people out of poverty. Such benefits to society as a reduction in crime, ill-health and poor educational and vocational outcomes have been overlooked in traditional economic reckoning to date, but are increasingly difficult to ignore under the Government’s wellbeing-based approach.

Max Rashbrooke countered that view recently, arguing that the cost of giving everyone a liveable income, say, $21,000 each per year, is completely unaffordable. The only way it could be paid for would be by increasing our borrowing, which only enriches foreign bankers.

Rashbrooke argues for a wealth tax as the most effective way to tackle inequality – thereby moving towards redistributive policies. For now, he says, we can double the base benefit levels and invest in some of the Green Growth proposals Greenpeace advocates. This would provide jobs and build up sorely needed ecological resilience.

Economist Keith Rankin, however, argues that the unaffordability argument is flawed and believes an adapted and targeted form of universal income is not only possible, but necessary. Further, Rankin states that it would not require any additional bureaucratic input. Perhaps, given the likely scale of the economic effects we will face, a combination of both wealth redistribution through taxation, and some form of basic income may be required.

Responsibility – Navigating Recovery

Will we choose now to fully embrace transformational social and environmental goals as a path to achieving growth and greater social wellbeing across society?

Growth can emerge from investment in regenerative resource use as outlined by Rashbrooke or from increasing public spending capacity through UBI or redistributive taxation. However, it must come from building greater capability for an economy calibrated to the renewable capacity of earth’s biomass.

Announcements of intention to pursue “shovel ready” infrastructure projects once lockdown is over, meaning motorways, with some public transport and housing, do not augur well for transformational change. Now is the political moment to move on making economic transformation a reality, but doing so will require thinking bigger and acting much more boldly.

This crisis provides another opportunity to push for a major shift towards responsible systems of production and consumption that bring together human and planetary health. Not only do we need to cease the relentless pressure on our biodiversity which puts us in contact with viruses in nature, we need to move entire societies onto more sustainable pathways and reduce the overconsumption and inefficiency that accompanies disproportionate wealth in every corner of the globe.

The COVID-19 virus opens a window to figure out solutions for staving off catastrophic changes in the global climate. This is an important opportunity to pursue, as these changes will damage existing patterns of food production, wildlife habits, and flood vast densely inhabited coastal areas. COVID-19 also makes apparent the public health and social disruptions this will cause. The response to this pandemic has shown that we can move quickly when the danger is clear and present.

Both indigenous peoples and ecologists have implored us repeatedly that our human destiny is intimately tied to the health of the biosphere. COVID-19, is reinforcing the urgency of this message.

Can we design a system for living well with the Earth to avoid the potentially far worse impacts of the climate and ecosystem crisis we now face?

Help us develop a new narrative for the post-COVID-19 world.

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