Future-focused, sustainable investment will get us out of the immediate crisis, and the one that follows, writes Mike Burrell of the NZ Sustainable Business Council
Covid-19 has transformed our lives and the world we live in on a magnitude we could never have imagined. New Zealand’s initial response has rightly prioritised our nation’s health and financial sustainability.
While it looks as though New Zealand might have avoided the worst of the health crisis that has swept large parts of the world, the economic crisis is shaping up to be very significant.
Economists are predicting the global economic impact of Covid-19 is likely to lie somewhere between the serious recessions of the 1970s and 80s, and the Great Depression of the 1930s. This will mean unemployment in New Zealand will hit double figures for the first time in nearly 30 years. We are already beginning to see the devastating impact on some business sectors, including tourism, travel, retail and hospitality.
The government has acted quickly to head off the worst excesses of the crisis through a combination of fiscal stimulus and quantitative easing. This was the right thing to do to ensure we don’t slip into an even deeper recession.
Likewise, theannouncement of a package of shovel-ready infrastructure projects should ensure at least some of those who will lose their jobs and businesses during this recession will have other opportunities. Most of these projects will have already been in the pipeline, and this is appropriate, given how quickly we need to respond.
The Covid-19 crisis has also given us a taste for what the climate change crisis could look like. Our current climate trajectory predicts the crash of economies, the fight for resources, high unemployment and the loss of life.
But while we will recover from this current economic crisis in a few years, we may not be as fortunate when it comes to climate change, where, unless we take action, the crisis will be measured in decades not years.
And it will be the next generation – our children and grandchildren – who will bear a double cost. They are the people who will need to pay back this massive debt we are (rightly) accumulating in the interests of economic stimulus, and we will saddle them with an ongoing climate crisis if we don’t act now.
This is why we need to confront these dual crises together – standing up projects quickly that will stimulate jobs and growth, while at the same time looking for opportunities to accelerate the transition towards a zero-carbon economy.
The enormous economic stimulus required to drive us out of recession by growing businesses and creating jobs means there is an opportunity for much of the investment to be channelled into future-focused projects and actions.
We have a New Zealand Inc opportunity for an enduring recovery
We cannot work on this in isolation. A partnership between government and private enterprise is critical to reimagining and building a sustainable future for New Zealand.
The Sustainable Business Council will work with the Government and other business organisations to ensure as much of the Covid-19 recovery package is invested in future-focused projects. This is our chance to identify infrastructure and large-scale investments that are truly sustainable. Bringing forward long-term investments will accelerate the pathway towards our zero-carbon targets.
Finance Minister Grant Robertson put it plainly recently on a BusinessNZ webinar with business leaders saying, “Just because we are bringing forward infrastructure projects doesn’t mean we should abandon our long-term sustainability objectives.”
Like everyone, we want to see that the investment in Wave 3 of New Zealand’s recovery is fiscally responsible and is not wasted. The three fundamental strands that underpin this are an enduring economic recovery, broad-based growth, and accelerated progress towards zero-carbon through careful investment.
Towards this, our view is we should build off the bipartisanship of the Zero Carbon Act and look for actions and projects that can attract cross-party support.
Collaboratively we can develop a series of projects, policies, partnerships and R&D that will ensure we kickstart the actions required for the first decade (2020-2030) on the road to zero-carbon by 2050.
These actions will cover the main emissions areas of transport, energy, industrial heat, waste, and agriculture.
Some of these actions will be relatively straightforward and can be embarked on in the short-term, such as electrifying the private and government transport fleets and investing in the charging infrastructure that will be required.
Others will take longer to get off the ground as they will require a significant design phase, such as renewable energy projects.
Others will be much more challenging and will require international collaboration and very significant investment in coordinated R&D such as action on alternative aviation fuels and reduction in agricultural methane emissions.
There will be opportunities for action on the international stage too. We need only look at New Zealand’s response to Covid-19 and our international collaboration to develop a vaccine to see a model for how we might work with like-minded countries to accelerate work on those gnarly problems that will require innovation and very significant investment.
Now, more than ever, we have an opportunity for New Zealand Inc to position ourselves towards a sustainable, zero-carbon future. Let’s take it.
If Covid-19 is teaching us anything it is that rapid, bold and ambitious action is possible when required.
We owe it to the generations who will pay for this recovery to use it to avoid a second crisis.
Mike Burrell is Executive Director of the Sustainable Business Council (SBC), which, with its more than 100 member companies aims to make sustainability mainstream within New Zealand businesses.