The COVID-19 pandemic is profoundly affecting all Australian jurisdictions and sectors. The economic fallout is ongoing, unresolved, and the full extent of the impacts are unknown. While immediate actions by governments are focused on minimising the severity of short term shocks, states and territories can also lay the groundwork for a recovery to full employment and higher standards of living.
Prudent recovery packages provide a timely boost to aggregate demand and employment, while also increasing long run productivity and income growth.
The packages announced in the coming months and years will shape Australia’s economy between now and 2030. By this point, significant emissions reductions are needed for states and territories to achieve their targets of net zero by 2050 in a prudent manner. Furthermore, most of the assets that are built this decade will still be in use in 2050, and most of the individuals who undertake education and training in this period will still be working in 2050.
Considering emissions outcomes in recovery efforts will allow states and territories to seize the opportunity to prepare the economy and workforces for the transition to net zero emissions.
This resource identifies government investment opportunities that will meet key recovery objectives of job creation and productivity growth, while also making material progress towards net zero emissions. These investments are in transport and energy infrastructure, natural capital, education and training, and upgrades to businesses and homes. Specific opportunities include electric vehicle charging infrastructure; land restoration funds; residential, commercial and industrial energy efficiency and electrification retrofits; and renewable energy training.
The resource also identifies opportunities to develop nascent low-carbon industries that can capture Australia’s competitive and comparative advantages. These industries include lithium battery manufacturing, cobalt production, low-carbon steel, circular economy industries, renewable hydrogen and ammonia, biofuels, and anti-methane livestock solutions. These industries have an estimated value of over $500 billion and a potential to generate over 400,000 jobs by 2050.
Recover and Reduce is a companion to Climateworks’ agenda-setting Decarbonisation Futures work. The resource draws upon the capital investment data of scenarios modelled in Decarbonisation Futures that are aligned to net zero by 2050, and combines this with leading economic research to identify priority investments for states and territories.
The resource makes recommendations for how to maximise the potential of these investments by leveraging private sector involvement, pairing them with structural and market interventions, and collaborating with other jurisdictions. Employing complementary measures in this way can generate increased returns to scale: the policies are more effective than they would be if deployed in isolation.
If states and territories invest prudently, they can achieve multiple outcomes from economic recovery measures: generating short term jobs and demand, boosting long term productivity, and making material progress toward their stated objectives of achieving net zero emissions by 2050.
Note: Climateworks’ analysis of Australia’s economic recovery is ongoing, and will continue to evolve as the COVID-19 pandemic and Australia’s response to it develops.