PLANNING, PROGRESS, AND PRODUCTIVITY POST-PANDEMIC

The Hon Rob Stokes MP is NSW Minister for Planning and Public Spaces. Addressing The Sydney Institute on Thursday 29 April 2021 – in the Institute’s first face-to-face meeting following COVID-19 social distancing regulations were relaxed – the minister gave a wide-ranging speech on the transformation of global urban development up to 2020, alongside the challenges he saw for international CBDs to rework their design following a global pandemic. In his words: “The same factors that constrain the ability of the body to recover from COVID-19 apply to the resilience of a city in rebounding from the pandemic. Fitness, not fatness, is the key.”

PLANNING, PROGRESS, AND PRODUCTIVITY POST-PANDEMIC

ROB STOKES

What kind of world will emerge from COVID 19?  What kind of world will we need to make sense of?  What kind of challenges and opportunities will we face?  British philosopher John Gray once observed that our “first, and hardest task, is to understand the present.  It’s easy to speculate about the future or to pontificate about the past, but it is immensely difficult to understand the present”.

Our present is a challenging place.  A generation ago – just 30 years – the teleological progression of Western liberal democracy that began in the wake of the Second World War seemed inevitable.  The defeat of fascism and the demise of colonialism, coupled with the rise of the welfare state, led Daniel Bell to declare the dawn of the 1960s as “the end of ideology”, with the global north achieving a broad consensus on political values and an exhaustion with grand ideological debates. Thirty years later Francis Fukuyama declared an end to history, essentially finding that Karl Marx was right about the eschatological inevitability of human progress, but wrong on which economic system would prevail.

Rather than the command and control totalitarianism of communist practice, liberal democracy was the adaptation that natural selection chose in the economic evolution of human society. The American Peace had begun, and contemporary globalisation was unleashed, just at the dawn of Jeremy Rifkin’s third industrial revolution – powered by new energy and communication technologies.  Global cities, newly defined by Saskia Sassen, emerged as the eyelets through which the threads of global trade were connected and directed. As George H Bush declared in 1990 – a New World Order of globalism and multilateralism in international relations, trade and investment had begun.

Over the past 30 years, this new world order has been shaken. The terrorist attacks of 9/11 and the war on terror, 2008 and the global financial crisis, the Arab Spring, Trump and Brexit.  Yet, through all the turmoil, multilateral institutions have remained intact.  Free Trade Agreements have been negotiated, executed and largely respected.  The global movement of ideas, goods and people – trade, travel and truth – the lifeblood of globalisation, accelerated.  All until 11 March 2020, when the World Health Organisation declared that a new form of coronavirus, COVID-19, that had emerged in China two months earlier, had become a global pandemic.  Since then, there have been almost 150 million cases of COVID-19 recorded globally, and more than 3.1 million deaths.

Suddenly, each element of globalisation and the new world order was under assault.  Everywhere, and all at the same time. National borders have slammed shut across the world; even State and provincial borders have closed in federated nations. Global supply chains have been severed as national survival prevails over the interests of free trade. The free movement of people and of goods – the very lifeblood of globalisation – has been tourniqueted and it will not be long until limbs begin to decompose. As globalisation withers, its great opponent, nationalism, is re-energising. The rattle of sabres is being replaced with the rattle of keyboards as state‑sponsored cyber attacks open a new front in gunboat diplomacy. Bellicose rumblings around the world are awakening dormant militarism, making the world less stable and less able to communicate productively.

So, wither globalisation?  That is certainly the conclusion of some commentators.  We certainly need to take note when the champion of neoliberalism – the Economist leads with the heading “Goodbye Globalisation” on the cover of its 16 May 2020 edition. Steven Walt, Professor of International Relations at Harvard has declared that COVID-19 “will create a world that is less open, less prosperous, and less free”.  Canadian economist Jeff Rubin, observing the invocation of the Emergency Procedures Production Act to manufacture ventilators at an abandoned car factory in Michigan, noted, “Don’t leave it up to the market when you really need [things] done. That’s the bottom line here. I don’t think people are going to forget that… It shouldn’t have taken a bat peeing on a pangolin to bring this into focus.”

Certainly, globalisation will change. It already has. In response to what the IMF has labelled “The Great Lockdown”, nations around the world have imposed export prohibitions on goods as essential as medicines and medical supplies in defiance of the General Agreement on Tariffs and Trade. National and subnational governments have issued 107,563 travel related measures since COVID-19 was declared a pandemic, with almost 29,000 characterised as entry restrictions. Restrictions on our economic, personal and social lives, strictures that pre-COVID would have been unthinkable are viewed as normal and necessary. Democracy has been delayed – most notoriously in Hong Kong. But also everywhere, with 78 national and subnational governments deciding to postpone elections and referendums owing to the pandemic.  The progress that seemed inevitable in 1991 is now uncertain.

Of course, John Gray would have us believe that human progress is illusory.  That “the modern myth in which humanity is marching to a better future is mere superstition”.  This is a thesis that earned him the title of “the philosopher of pessimism” from the New Statesman. I choose to believe otherwise. That human progress is possible, albeit not inevitable.  As Edward Carr put it, “Change is inevitable, progress is not.” But in the context of our present, where, in Australia, droughts, floods, fires, plagues (of mice) and pestilence have shaken our faith in global institutions and frameworks, what does the broader global dislocation augur for Sydney?  Having defined the present – what does it mean for us?  How should we respond?

Patrick Geddes, long regarded as a founder of the planning profession, and acolytes such as Ebenezzer Howard, likened a city to an “organism”, less an object or an assemblage of buildings and more an embodiment of the humanity – past, present and future – which created, sustained and defined it.  In the same way that our bodies are a complex network of interlocking and interdependent systems and processes – a skeletal system; a circulatory system; a respiratory system; a central nervous system; and an integumentary system, to name a few – so too can a city be characterised as a series of processes rather than as an object. Just as a virus like COVID-19 can ravage a human body, so too can a protracted pandemic wreak devastation on a city.  Adopting Geddes’ metaphor of city as organism, I argue that the same disciplines and reforms that can make our bodies resilient to COVID-19 can similarly make Sydney resilient to the impacts of the pandemic.

COVID-19 is an infectious disease caused by a new form of coronavirus. It chiefly affects the lungs, with most of those infected by the disease experiencing mild to moderate respiratory illness. However, it can cause serious illness and death in older people, or those with existing health conditions, such as cancer, diabetes, or cardiovascular or chronic respiratory disease.

While the vast majority of COVID-19 patients recover from the immediate effects of the disease, it can cause enduring consequences. These include lasting weariness and depression, and scar tissue from lung damage resulting in long-term breathing difficulties. There can also be impacts on anatomical processes apart from the respiratory system, including the nervous system and the circulatory system, with some patients (including those with only mild symptoms) suffering lasting damage to the heart muscle, and others suffering brain injuries such as seizures, strokes, and increased risk of Parkinson’s and Alzheimer’s diseases.

The World Health Organisation suggests that the best response to COVID-19 is to become well-informed about the virus, the disease it causes and how to prevent its transmission. Aside from avoiding the disease and limiting its spread, there are a number of risk factors over which we all have a measure of control that can increase human resilience in rebounding from COVID-19.

Fitter people have a number of advantages in dealing with the challenges posed by COVID-19. Physical activity can improve the clinical conditions that are most frequently associated with severe COVID-19. Active people have better control on high-risk co-morbidities that increase susceptibility to severe COVID-19.

While being fitter can improve the body’s resilience to COVID-19, being fatter has the opposite effect. Obesity, for example, is linked to impaired immune function, reduced lung capacity and reserve and increased risk of hospitalisation due to COVID-19 infection. The higher a patient’s body mass index, the higher the risk of intensive care intervention, mechanical ventilation, and death.

The same factors that constrain the ability of the body to recover from COVID-19 apply to the resilience of a city in rebounding from the pandemic.  Fitness, not fatness, is the key.

Recent debates about the future of Australia have focussed on our size – should we aim for a “Big Australia”. Indeed, the story of our nation’s modern growth and development has been linked inextricably to the expansion of our population. The post-war economic boom was fuelled by the post-war immigration boom. It was population growth through immigration that helped Australia steer successfully through the GFC and beyond.

The link between prosperity and population has long been controversial, split between cornucopian conceptions of endless growth and Malthusian predictions of resource constraints. Such debates led Robert McNamara, erstwhile president of the World Bank, to declare that population is “the most delicate and difficult issue of our era … overlaid with emotion. It is controversial. It is subtle. Above all, it is immeasurably complex”.

For Australia, the debate has moved from theory to reality. COVID-19 has closed our borders to the immigration that has traditionally fuelled the economic growth machine. In New South Wales alone, our population projections have been radically redrawn. By 2031, we are now projecting a state population a million fewer than we were anticipating at the beginning of last year, opening up a decadal difference in the population we were expecting and the population we will have. Each day international borders stay shut, the demographic consequences mount.

According to traditional economics, this means our growth will be irrevocably affected – that as population growth slows so too will production, capital accumulation, employment, incomes and savings. Therefore, we have no choice but to change the way we think about economic growth and change. We cannot any longer simply rely on immigration as the feedstock for economic development. We have to first recognise and then utilise other tools to power our economy. In the absence of strong population growth to boost the number of workers and consumers in our economy we instead need to provide existing workers and consumers with more opportunities to increase their productivity and more confidence to invest and innovate.

The ideal way to boost productivity is through education. The best way to provide more opportunities for investment and innovation is through new technology. Both of these tools are best forged in our great colleges and universities. Here is the irony: just as population growth has relied on importing migrants, tertiary education has relied on importing students. Immigration and education have been two of the terrible economic casualties of the pandemic. The challenge that has generated our economic predicament by disrupting the prevailing model of growth has also presented us with the solution to the problem. Rather than focusing the strategic gaze of our great universities offshore, we need them to look at home first.

In one sense, this should be self-evident – that our universities and colleges should exist in order to support the needs of the Australian community. It is sad that federal funding decisions have forced our public universities to reorientate their business model to serve the needs of foreign students rather than those at home. The pandemic provides the opportunity for us to use our universities in smarter ways – to boost the productivity and opportunity of our community to produce a long-lasting economic benefit, rather than to prop up a fundamentally unsustainable business model over the short term. Along with education and technology, the other levers to promote economic growth in the absence of strong population growth are tax reform and regulatory reform. Lower, more efficient taxes can drive confidence and investment to boost productivity, as can regulatory reform to make it easier to invest and to increase workplace flexibility.

These are the levers we have to promote a stronger, thriving economy in the absence of enhanced population growth through immigration. These are the tools we must use to face the reality of a pandemic-induced slowdown. Just as a patient needs to change their diet after a health scare, so do we need to change our economic prescription in light of COVID-19. Rather than a lazy economic approach of promoting productivity by getting bigger, we need to promote productivity by getting fitter. Now that the “Big Australia” proposed by Kevin Rudd is a faded dream, we need a “fit Australia” to ensure that we recover from this shock and are match-ready for the next round.

The fit not fat prescription applies to urban policy too.  Our city has changed over the last 12 months.  Suburban high streets are prospering, offices are bustling with energy, public spaces are alive with activity.  Suburban economies are strong. Commercial, industrial and residential real estate markets are buoyant, with limited stock and strong demand powering prices to new highs.  Streets that were once empty are full again.  Yet, buses that were, pre-pandemic, full of commuters heading to offices in the CBDs of North Sydney and Sydney, are now half empty.

While our suburbs are full of life and activity, Sydney CBD has been depopulated, its night-life diminished, its beautiful public spaces vacant. Office buildings and their owners face an uncertain future, downtown shopping centres are seeing subdued trade, hotels are crying out for guests with no international tourists in sight.

In one sense, the pain endured by the city is salved by the gain to suburban and regional centres, but negative impacts on the value of CBD real estate will create negative impacts for millions of Australian families.  Commercial property accounts for almost a tenth of the assets held by Australian superannuation funds.  The income generated by these assets underpin the retirement income that millions depend upon.  And not just investors, but small businesses in the CBD – cafes, creatives, all are at risk.  As US urbanist Ed Glaeser puts it, “If pandemics become the new normal, then tens of millions of urban service jobs will disappear”.

That’s why the NSW Government has provided a package of more than $50 million to breathe life back into the Sydney CBD and support those urban service sectors that have had the most challenging year since World War II. But government investment alone is not enough. The way we work in cities is changing, and changing for good. COVID-19 has sponsored the “doughnut effect” driving residents and businesses to the larger spaces and remote working in the suburbs, with videoconferencing and cloud-based sharing making workplace flexibility a permanent feature of the labour market. Impacts on our CBD are profound, and, without intervention, permanent.  Civic life as we know it is under threat, with everything from home working to home delivery and home cinema undermining the public realm.

While the future of our city will look different, we have an opportunity to build back better. Government is investing a further $30 million with councils across NSW to bring back our central business districts without bringing back the traffic, congestion, or pollution. We have an opportunity to give people more choices than just privately owned motor vehicles, and to rethink our streets as shared spaces joining communities together, rather than as roads separating and segregating us on different sides. And rather than just swapping our combustion engines for electric vehicles, we have the chance to shape our towns to need private cars less.

Our CBD building owners have to be part of the solution. The old certainties of steady commercial rental returns have evaporated. Floor plates need to be reconfigured, more natural ventilation and fewer touch points will be required in building refits. More thought needs to go into enabling a blended model where people might choose to work big hours in the CBD two or three days per week, and then spend the next four or five days working more flexibly from a home that could be anywhere from a half hour commute, to a three or four-hour commute away.  We will need more small apartments in central CBD locations with a greater diversity of tenure types. Some may be owned outright, some may be serviced, some may operate using a dual leasing model, with one tenant leasing Monday to Wednesday and the other Thursday to Saturday. Car parking will be less significant, and more options for household services in the CBD, and not just the suburbs, will be required.

There is a darker potential consequence of the rise of workplace flexibility. In the New Geography of Jobs, Enrico Moretti criticised the notion that globalisation would lead to a dispersal of jobs away from cities – provided that CBDs became innovation districts where high knowledge-based workers gather in agglomerations of inventive and entrepreneurial energy. Now that knowledge-based workers are agglomerating virtually and not physically, then surely a professional working from a home office in Roseville or Rozelle can be replaced by a professional working from a home office in Manilla or Mumbai. The economic disruption that decimated the retail sector can just as easily dislocate the services sector.

And while global supply chain disruptions increase opportunities for locally produced goods, we need to appreciate that a welcome boost to local jobs and investment will bring with it some of the forgotten externalities of manufacturing: industrial and logistics landscapes, increased energy consumption and polluting emissions. Rising living standards has increased our demand for goods, but domestic deindustrialisation has separated our population from the processes by which those goods are produced.  More local manufacturing means that more of us will see, to adopt Bismarck’s observation, how the sausage is made.

The fact that the pandemic has promoted the decentralisation of our population from dense centres to sprawling satellites also raises some troubling questions. While it should come as no surprise – the pandemics of the early twentieth century similarly sponsored the rise of the bungalow and the garden suburb – but what does it mean for our investment in transportation, utilities and services designed to facilitate urban consolidation? What additional pressure will be created for urban expansion in the wrong places – at the cost of biodiversity and at risk from bushfire? Could changing settlement patterns induced by COVID-19 exacerbate risks of future zoonotic pandemics as disruption of ecosystems increases the likelihood of transfer of viruses from animals to humans?

The reason I point to these challenges is not to deflate confidence but rather to call for it. Ultimately, confidence for all of us is a decision. It is easy to be confident when things look rosy but it is important to be confident when faith in the future is a little harder to justify. As in crises of the past, history tells us that we will rebound. There will be a recovery – in many ways it is happening right now – but we will rebound to a new normal. Things simply will not go back the way they were before. The economic model that has sustained growth in Australia of simply importing more people to support demand and supply skills has collapsed as border crossings have collapsed. While of course we will need to find a way to support the free movement of people, it will be different. The most optimistic demographer will see that a return of mass migration and a restoration of Australia’s population trajectory has been derailed for years to come.  As borders open, migration demand will likely rush to Australia. Now is the time to develop a population policy to guide the decisions we will then have to make.

A higher education system underwritten by a vast and growing supply of international students is simply not feasible. Even current efforts to reintroduce overseas students via a lengthy quarantine process will be expensive and only amount to a trickle of what is needed to go back to a model that is now demonstrably broken. Our universities will need to export ideas, rather than import students, to balance their books.

The implications of the China sword policy for local manufacturing now stands as a prophecy of how local manufacturing must respond to supply chains that are disrupted and, consequentially, distrusted. The optimism of free trade must now be conditioned by the lived experience of economic nationalism and the need to ensure that our people are not exposed to a shortage of necessary goods trusting in the infallibility of laws regulating international trade.

Equally, the stark separation of uses in our cities and towns between residential and employment districts needs to be revisited in light of the need to make it easier for people to work from home or closer to home. Agglomeration of industries and workers needs to be achieved through technological connectivity and not just spatial density.

There is nothing natural about a vibrant, thriving city. The great centres we love around the world are a result of people, buildings, exchange, and movement, however there is nothing permanent or inherent about them. The pandemic has taught us that we need to work hard to constantly reinvent the urban experience that makes Sydney such an amazing global city.

When a body recovers from a disease, the immune system is changed, and stronger.  Research indicates that those who recover from Covid-19 may mount a much faster and more effective defence against the infection if they encounter the virus again.  Our cities are the same.  We need to support one another through this pandemic and keep our urban processes functioning.  The fitter our cities – our education system, our property sector, our system for funding and building new industries and services – the quicker we shall recover, and the stronger we shall be to withstand future shocks. But we need to train harder still to identify the opportunities from the new economic order that will emerge when the world reopens.

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