More Australian children condemned to poverty without urgent action
The latest report in CEDA's Disrupting Disadvantage is out now.
The COVID-19 pandemic has made it abundantly clear how combating the climate crisis and supporting economic growth depend on each other. The long-term economic benefits of climate action have been accepted for some time. Economic authorities such as the RBA, ASIC and APRA have all highlighted the importance of climate action to maintain economic stability. The pandemic has now tipped the short-term balance also.
COVID-19 has triggered the steepest rise in unemployment in Australia’s recorded history, destroying almost 850,000 jobs in the three months to June. Unemployment has reached a 22-year high of 7.4 per cent, and this rises to 13.3 per cent after accounting for the half-million Australians who have stopped looking for work entirely. State and federal governments have moved at once to arrest the economic decline, committing a total of about 3.5 per cent of GDP to COVID-19 stimulus and support packages. More government spending will likely be needed to avoid a longer recession.
AlphaBeta Australia’s Clean Jobs Plan, developed with the Climate Council, identifies practical opportunities for Australia to respond to climate change and stimulate the post-COVID economy. We have proposed 12 policy opportunities that could directly create 76,000 jobs in three years. In addition to immediate job-creation, the Clean Jobs Plan will improve Australia’s long-term outlook by enabling clean energy and investing in the infrastructure, ecosystems, and skills we need to thrive in a low-emissions world.
The Clean Jobs Plan was designed around three criteria: policies needed to create jobs at scale (high impact), create jobs rapidly (timely), and target people and communities most in need (targeted). As economists, we prioritised “bang for buck”, leveraging private investment opportunities and Australia’s existing capabilities in renewable energy, agriculture, construction, and professional services sectors. For example:
On average, the Clean Jobs Plan could attract $1.10 in private funding for every public dollar spent. It would create 7.2 jobs per $1 million of public spending, which is about as efficient as global clean stimulus programs and significantly more efficient than previous Australian construction programs.
Together, the 12 policy opportunities require less than 0.5 per cent of GDP in public funding – a fraction of the COVID-19 stimulus that has already been announced. Some may say that enough stimulus has already been committed. For comparison, unemployment rose only half as quickly during the Global Financial Crisis of 2007-2008; Australia spent around two per cent of GDP on post-GFC stimulus and jobs still never completely recovered.
As illustrated by the above two policy examples, most work created by the Clean Jobs Plan will be in sectors hardest hit by the COVID-19 crisis: sectors like administration and construction that have collectively lost more than 80,000 jobs to date. Around 70 per cent of jobs will be created in those sectors, which in turn drive activity in manufacturing, retail, hospitality, and other industries.
New jobs also skew towards lower skilled opportunities that unemployed Australians can quickly access. One in three jobs will require minimal training. Jobs will be created across the country, with between 2.5 and four jobs created per 1000 residents in all states and territories, and across cities and regional areas.
Importantly, the Clean Jobs Plan is not a band-aid solution but an opportunity to reboot the economy.
As our colleague Dr Andrew Charlton wrote in the Australian Financial Review, the engine of our economy was rusty even before the COVID-19 crisis hit. Decades of partisanship and stalled reforms have left our economy falling behind on almost every objective measure. Productivity growth has fallen to half the long-term average, while workforce casualisation has left more than a tenth of workers seeking more employment. Australia ranks far below its peers for innovation and economic complexity, dampening its long-term competitiveness and resilience.
An effective stimulus program could improve Australia’s economic outlook by diversifying our industries and developing the technologies and skills we will need to succeed in a low-emissions world. Now is the time to rebuild. The Clean Jobs Plan begins that work – quickly, thoughtfully, and in a way that sets Australia up for a better, more resilient future.
 RBA (2020) ‘The Reserve Bank's Policy Actions and Balance Sheet’