Welcome to Coronavirus Government Global Briefing, Mandarin Premium’s morning update on everything in local and global government responses to the COVID-19 outbreak.
World Economic Forum launches ‘The Great Reset’
On Wednesday, the World Economic Forum (WEF) launched ‘The Great Reset’ as both the theme of the January 2021 annual meeting and a broader program aimed at rebuilding global economic and social foundations “for a more fair, sustainable and resilient post-COVID future”.
Emerging from the forum’s 1,000 organisation-strong COVID Action Platform, the initiative was launched in a virtual meeting led by Prince Charles and WEF founder and executive chair Klaus Schwab along with addresses from UN Secretary-General António Guterres, IMF Managing Director Kristalina Georgieva, General Secretary fo the International Trade Union Confederation Sharan Burrow, and a host of other supporters.
A virtual and in-person twin summit, the 2021 meeting will connect key global governmental and business leaders in Davos with a global multi-stakeholder network in 400 cities led by young people. Those virtual hubs, to be known as ‘the Global Shapers Community’, will have an open house policy to integrate all interested citizens into their dialogue, “making the Annual Meeting open to everyone”.
Additionally, in the run-up to the annual meeting, the forum will host a virtual series — a joint initiative of the World Economic Forum and Prince of Wales called ‘The Great Reset Dialogues’ — and launch a series of interconnected research and opinion papers.
In his opening article, Schwab emphasised how the pandemic has exacerbated existing climate and social crises — both by disproportionately affecting poorer communities and through active exploitation and profiteering, i.e., Donald Trump rolling back environmental protections, Republicans passing tax cuts that overwhelmingly benefit millionaires, US billionaires increasing their wealth by almost half a trillion dollars — but equally shown a level of cooperation and ambition required to restructure social and economic systems:
“In fact, one silver lining of the pandemic is that it has shown how quickly we can make radical changes to our lifestyles. Almost instantly, the crisis forced businesses and individuals to abandon practices long claimed to be essential, from frequent air travel to working in an office.
“Likewise, populations have overwhelmingly shown a willingness to make sacrifices for the sake of health-care and other essential workers and vulnerable populations, such as the elderly. And many companies have stepped up to support their workers, customers, and local communities, in a shift toward the kind of stakeholder capitalism to which they had previously paid lip service.”
To that end, Schwab outlined three main agenda components for The Great Reset:
- Steer the market toward fairer outcomes. Improve coordination (for example, in tax, regulatory, and fiscal policy), upgrade trade arrangements, create conditions for a ‘stakeholder economy,’ and implement “long-overdue reforms that promote more equitable outcome”, i.e., changes to wealth taxes, withdrawal of fossil-fuel subsidies, and new rules governing intellectual property, trade, and competition. “At a time of diminishing tax bases and soaring public debt, governments have a powerful incentive to pursue such action.”
- Ensure that investments advance shared goals, such as equality and sustainability. Schwab notes that large-scale spending programs that governments are already implementing represent a major opportunity for progress, i.e., the European Commission’s €750 billion recovery fund. “Rather than using these funds, as well as investments from private entities and pension funds, to fill cracks in the old system, we should use them to create a new one that is more resilient, equitable, and sustainable in the long run. This means, for example, building ‘green’ urban infrastructure and creating incentives for industries to improve their track record on environmental, social, and governance (ESG) metrics.”
- Harness the innovations of the Fourth Industrial Revolution to support the public good, especially by addressing health and social challenges. Here, Schwab ponders the possibility of replicating collaborations between governments, companies, universities, and others to develop diagnostics, therapeutics, and possible vaccines; establish testing centres; create mechanisms for tracing infections; and deliver telemedicine.
The Great Reset to include refugees, LGBTIQ+ people, entrepreneurs, the media, etc.
Since Wednesday’s launch, the WEF has published a number of articles under The Great Reset label, including themes from the day — i.e., ‘Why The Great Reset also means fighting racism’ — as well as new reports including but not limited to:
- ‘How digital entrepreneurs will help shape the world after the COVID-19 pandemic’, by Alibaba Group’s vice president of global initiatives, Brian A Wong
- ‘Refugees: the entrepreneurs that society must support’, by Techstars’ Middle East and Africa regional manager Ahmad Sufian Bayram
- ‘Great Reset: Why LGBT+ inclusion is the secret to cities’ post-pandemic success’, by Open For Business founder Jon Miller
- ‘COVID-19 has upended the media industry. This is how it can come back stronger’, by WEF’s head of media, entertainment and information industries, Cathy Li, and community curator Hesham Zafar.
That last article summarises a WEF-Accenture white paper also released Wednesday, The Media, Entertainment and Culture Industry’s Response and Role in a Society in Crisis, a massive document that touches on everything from media companies’ financial, innovative and mental health responses to increasing levels of institutional trust to lasting implications of the media’s response to COVID-19.
Will COVID-19 accelerate the transition from fossil fuels?
In her address at The Great Reset launch, IMF Managing Director Kristalina Georgieva threw the weight of her organisation behind the clean energy transition and, specifically, the goal of ending fossil fuel subsidies:
“We now have to step up, use all the strength we have, which in the case of the IMF is $1 trillion,” Georgieva said.
“I’m particularly keen to take advantage of low oil prices to eliminate harmful subsidies.”
The call, which elicited support from another member of the virtual meeting, BP CEO Bernard Looney, comes after an IMF 2019 working paper estimated that annual fossil fuel subsidies in 2017 came in at $5.2 trillion, or 6.5% of the global economy.
On our end, divestment group Market Forces estimates that Australia provides more than $12 billion a year in tax-based subsidies alone, on top of direct state and federal contributions and public financing systems like Export Finance Australia.
What if we just keep throwing money at fossil fuels?
Even without reforming subsidies, there’s evidence to suggest the financial impact of the pandemic — which is expected to create a relatively-mild direct reduction in global emissions — could accelerate the financial inevitability of transitioning from fossil fuels.
We know from the IEA’s Global Energy Review 2020 that, while demand for every other energy source fell — and oil prices even fell below zero — the global use of renewable energy increased by about 1.5% relative to the first quarter of 2019.
And while demand for fossil fuels will presumably rebound, new analysis from financial think-tank Carbon Tracker, Decline and Fall: The Size & Vulnerability of the Fossil Fuel System, finds that the pandemic has only accelerated peak demand.
As The Guardian explains, the report predicts that a 2% fall in demand for fossil fuels per year could slash profits from oil, gas and coal from $39 trillion to just $14 trillion.
Further, that falling demand, lower prices and rising investment risk could create that US$25 trillion drop only increases the risk and likelihood of stranded assets, a significant threat to global financial stability.
The four main consequences of lower prices are explained in a chart below:
- Lower rents: the largest quantum of change is the fall in the amounts of rent, which means less money for the governments of petrostates;
- Lower profits: profits fall not just for the high cost companies, but right across the system;
- Totally stranded assets: when prices fall below variable costs, assets become totally stranded; and
- Lower capex: as companies struggle to survive and figure out that growth is over, so they reduce their capex.
The report, in conclusion, recommends accelerating transition pathways fo fossil fuel workers and economies:
“The decline of the fossil fuel economy poses a significant threat to global financial stability. The report warns investors there is far more risk in the fossil fuel system than is conventionally priced into financial markets. Investors need to increase discount rates, reduce expected prices, curtail terminal values and account for the clean-up costs.
“For policymakers the implication is the urgent need to put in place an orderly wind-down of assets rather than trying to rebuild the unsustainable.”
On the home front: Tasmania outlines $1.8 billion infrastructure package
Yesterday, the Tasmanian government announced a two-year, $1.8 billion infrastructure package it estimates will support an estimated construction value of $3.1 billion across the next two years.
The package includes:
Housing (to deliver a total construction value of an estimated $792 million)
- 2295 new dwellings, including social and affordable houses
- $100 million to deliver an additional 1000 new social houses, in partnership with community housing providers;
- $24 million in additional and brought forward funding for 220 houses under the affordable housing strategy;
- Improving the HomeShare program to revise eligibility thresholds, helping to reduce the initial cost of buying a house and the monthly cost of owning it. It is estimated uptake would result in 150 home purchases, including 75 new builds over two years; and
- $20 million to support the delivery of 1000 homes by extending the successful $20,000 First Home Owners Grant initiative to all owner-occupier build applications for 2020; this means if a resident contracts to build a house this year, they will receive a $20,000 grant whether it’s their first home or not. Detailed guidelines and eligibility criteria will be available on Tuesday 9 June.
Roads and irrigation infrastructure (delivering a construction value of ~ $55 million)
- $40 million for state road safety upgrades in 2020-21 and 2021-22, and $40 million to be brought forward through an accelerated procurement tender process.
- The first tranche of projects under this package are now out to market, including safety upgrades on Highland Lakes Road at the ‘Pub with No Beer’ corner, improved turning facilities on the Bass Highway at Boat Harbour, and road widening and improved turning facilities on the Arthur Highway at Eaglehawk Neck; and
- A further nine projects will be put to market under this process and will include bridge strengthening works, the upgrade of Binalong Bay Road, the Bruny Island landside infrastructure, and road widening works on Midland Highway between Powranna and Tunbridge.
- $15 million to prioritise the $28.51 million Don Irrigation scheme and to meet the increased demand for Tasmania’s next five irrigation schemes. The Don Irrigation scheme is expected to commence construction early 2021 and deliver 130 direct and indirect jobs.
Essential services (with a total construction value of ~ $42.1 million)
- An additional $10 million to upgrade regional health centres and ambulance facilities.
- $7 million will be invested to undertake refurbishments to the Launceston Police Station.
- $3.5 million will be invested in a new Emergency Services State Operations Centre.
- $8.7 million will be provided to upgrade the final 29 Police Houses across the state.
- $5.9 million of the $15 million Burnie Court upgrade will be brought forward.
- An additional $7 million for Child and Family Learning centres as part of the $28 million investment. The government will fast-track five of the six committed centres across the state, including East Tamar, Waratah Wynyard, Glenorchy, Kingborough and West Ulverstone. Sorell will begin construction in 2022-23 in line with the $25 million redevelopment of Sorell School.
Community Infrastructure (total construction value of ~ $167.5 million)
- $68.5 million for the upgrade of the Derwent Entertainment Centre, including $20 million for a community four court multi-sport facility. Subject to a final agreement on terms being reached, the upgraded DEC will host a Tasmanian National Basketball League team and NBL games.
- $12 million Cooee will be provided for the Wynyard Coastal Pathway between Cooee and Wynyard.
- An additional $20 million for refurbishments to public buildings and other publically owned assets has been allocated. This funding is in addition to the $50 million that was brought forward and announced as part of the government’s initial economic and social support measures. This $70 million program will continue to provide support for regional employment and trades.
- $10 million for Improving the Playing Field, enabling grants for sporting organisations and clubs for facility and amenity upgrades. Grants of between $25,000 and $250,000 will be available.
- $4 million for the Royal Tasmanian Botanical Gardens for new infrastructure and upgrades to existing infrastructure to meet growing visitor numbers.
- Investment of $3 million towards a new visitor centre for the Cascades Female Factory in South Hobart. This project has already received Heritage Council and Hobart City Council approvals.
RBF $200 million Tasmanian Economic and Social Investment Fund (total construction value of $200 million)
- As the government brings nearly $2.1 billion in its Retirement Benefits Fund, with the vast majority invested outside of the state, they will bring at least $200m of that back for investment in the state.
- Treasury will implement arrangements, whereby up to 10 per cent of the fund’s investments will be invested in Tasmania and the Premier’s Economic and Social Recovery Advisory Council will consider options to provide an economic and social return for the state.
- The fund will be used to identify suitable investments outside of government in the private sector that can be supported across the economy to increase economic activity, create jobs and strengthen social outcomes.
Education and Skills (total construction value of ~ $10.5 million)
- An additional $7 million to develop the $14 million Trades and Water Centre of Excellence, for jobs in the construction and civil contracting industries including water and sewerage. The centre will have its own industry-based board, to ensure operations and training align with the skill needs of employers.
- $3.5 million will be brought forward to commence works on the Devonport High School as part of the $10.5 million major redevelopment.
Tasmania will begin a state-wide skills roundtable in coming weeks to discuss skills and training options.
- Queensland announced a new support hotline for Aboriginal and Torres Strait Islander businesses during COVID-19, ‘Open for Business’.
- Following agreement from the federal government to remove Commonwealth Biosecurity restrictions, Western Australia will today lift travel restrictions across the Kimberley, Shire of Ngaanyatjarraku and parts of the East Pilbara.
- The Victorian government struck agreements with 15 councils to support more than 1,000 new public hygiene and land maintenance jobs under the ‘Working for Victoria’ fund.
- Finally, the ACT government announced plans to reduce the stamp duty for eventual owner-occupiers on the purchase of:
- New land single residential blocks to zero
- Off-the-plan apartment and townhouse* purchases up to $500,000 to zero
- Off-the-plan apartment and townhouse* purchases between $500,000 and $750,000 by $11,400