Business will play a key role in our post pandemic recovery, but what has to change?

The global COVID-19 pandemic has been the defining event of the early 21st Century. How well Australia as a nation and the world as a community of nations manages both the pandemic and the economic and social rebuild it forces will critically influence the prospects of current and future generations.

The issues raised by the pandemic are many and varied. One, which has understandably received less public focus to date, relates to the role business should play as we look into the future.

To explore these issues, ADC Forum and the Australian National University’s Public Policy and Societal Impact Hub came together to host a roundtable of business, government and academic experts – part of a broader series we have been having on Australia’s future. This is what we learned.

In thinking about the role of business in the future, five dynamics emerge as important.

First is that the impact on business has had little to do with the overall performance of business itself or the underlying economic fundamentals. It has been a true shock – born not of unbalanced economic forces, but of a pandemic virus, and has affected both weak and strong businesses. The fundamental nature of the disruption means that things will not simply snap back to the way they were. The initial impact of the pandemic on people-facing businesses (tourism, restaurants, the arts) has morphed into a deep and widespread recession. While support measures from government are holding our current economic structure largely in place, change is inevitable as we emerge from the pandemic.

Second is the rapid change we are seeing in the way people live and work. In a heartbeat, business shifted on-line and people started working from home — a burst of workplace innovation unimaginable in normal times. Whether this results in a sea-change, step-change or a slow evolution remains to be seen. But change is certain and could reshape our cities, lives and workplaces.

Third is the rise of supply chain risk as an issue. Long held views about the benefits of global supply chain management as a source of corporate advantage have been shaken. This has triggered serious consideration within business about the location and structure of operations. More broadly, shortages of (mainly) medical equipment have also triggered familiar calls to replace imports with support for Australian manufacturing.

Fourth are the security implications of our reliance on communication networks. The pandemic has brought home the deep dependence Australia’s economy and society has on the systems that make up cyberspace. This, combined with a less certain global environment, has heightened concerns about the potential for, and impact of, disruptions.

Finally, is the impact of the pandemic on the social fabric of the nation. Generally, sound policy decisions to save jobs means that reliance on government provided incomes has never been higher. Pre-existing problems in our care systems, aged care in particular, have come to the surface. And the promise to leave a better life for those entering the workforce today looks increasingly difficult to keep. Confidence in business as a source of income and a deliverer of essential services will likely need to be rebuilt as the pandemic recedes.

No panacea exists for reversing the reduction in global growth wrought by the pandemic. We are in a serious global recession. And, in the short term at least, it appears national prosperity will rely more on the actions of government than of business.

Looking forward, there is confidence within the business community that it can again thrive and support the lives and livelihoods Australians hold dear. But the future does not look the same as the past. In particular, three strategic questions seem likely to define the role of business moving forward.

Question one relates to Australia’s interaction with the rest of the world. The pandemic has reinforced existing stress fractures in the global system. Around the world we have seen a rise in nationalism, both political and (to a degree) economic. Domestically, the pandemic has quickly led to protectionist calls in the name of securing supply lines.

A quick return to a normal interaction with the rest of the world seems unlikely. People movements in particular seem destined for a long period of disruption. And the deeper currents around globalism suggest that a temporary (at least) high-water mark in global cooperation may have been reached.

In this context, policies on the ongoing people flows, supply chains and cybersecurity are important and may need to differ from those of the past. But it is critical these decisions recognise the great benefits Australia gains from being an active part of the global economic system. It is not in our collective interests for the pandemic to rekindle a modern form of protectionist state.

Question two relates to how best to create a more dynamic Australia’s economy. The economic road ahead looks difficult. A more fractured world economy and ongoing management of the pandemic look likely to continue to hamper growth. Doing what we have done in the past will not be enough replace the jobs and income lost in the recession.

As with any change, new opportunities for individual businesses and for Australia, as a nation, will emerge. To capture these, Australia needs a dynamic business sector and innovation from both business and government.

Policies across tax, energy, workplace relations, environment, education and business regulation all have a potential role to play in creating a more dynamic future. In defining these policies, it will be important that forward looking analysis of Australia’s position and needs drives change. Past reform ideas and orthodoxies are valuable only to the extent they suit the future that is in front of us.

A key criterion for policy will be that it creates the dynamism needed to support growth in difficult times. But an equally important test for policy will be the extent to which policy translates into better incomes and lives for Australian workers, not just business owners. Another will be how benefits are spread across generations and geography.

The third question relates to the respective roles and responsibilities of government and the private sector. The deep role government is currently playing in our lives will inevitably shift again. But a complete return to the past seems unlikely. Pressure on government to increase support for (and possibly direct provision of) a range of care services is likely to continue, for example.

Business is the traditional engine room of our economy and nothing that has happened will change this. Without a strong business sector (large and small) Australia will not create the incomes and jobs we desire. But trust in business remains at a low ebb – driven by ongoing public concern over business behaviours in areas as diverse as banking, environmental management and aged care.

As it stands today, the debate about business seems stuck in old paradigmatic views with little room for healthy evolution. This is unhelpful. It is, of course, too much to expect that a single view will emerge on the right roles for business and government. But taking the time and effort to have a reasoned discussion of the future roles and responsibilities of business and government in our society might prove a wise investment in our future.

Sean Innis is inaugural Director of the Public Policy and Societal Impact Hub at The Australian National University. He was formerly Special Adviser to Australia’s Productivity Commission.

Matthew Faubel is Chair of the Program Committee at the ADC Forum. He has had extensive career in public sector management and urban development and advises organisations in Australia and internationally on strategic policy.

This article originally appeared in The Mandarin