Industry codes to limit risks and reopen the economy 

Mark Frost - Chief Economist, Business NSW 

29 April, 2020

Lockdown measures seem draconian but were needed to shock ourselves into a completely new way of living. So far they have paid off. As new social norms develop, we should embrace simple common sense by implementing industry codes to contain risks and reopen the economy.

Contemporary Australia has never seen anything like COVID-19. Australians have not ever had to self-regulate in the way that COVID-19 requires. This coupled with the narrow window of time we had to respond justified the response which so far seems to have worked.

The challenge for policymakers

The principles behind social distancing measures are not complex and may even be described as common sense: keep physical distance, protect from potential infection (by doing things like washing hands) and contain spread between groups of people (such as household units, workplaces or even countries).

The challenge for policymakers is to embed these principles and reduce risk at least cost to society.

We could continue with current restrictions, but they are unsustainable over the longer term and they would result in costs which are far greater than the virus itself.

At the same time we would be unwise to open up and rely on the resolve of individuals. The economic benefits would be less than we might expect as many would be reluctant to engage in economic activity if they don’t trust they are adequately protected. Worse still, even if only a small number stopped taking it seriously, the virus may quickly get out of control requiring even more costly measures and longer shutdowns.

What’s the solution?

Policy shouldn’t seek to maximise economic outcomes at all costs but rather to maximise economic outcomes for a given level of risk. Implementing more targeted strategies offers the best opportunity to do this.

When the time comes, we will need a policy framework which provides a credible commitment that common sense is being followed as businesses reopen. This will allow us to reopen sooner and more comprehensively than what might otherwise be the case.

This is why it is so important for Australians to embrace novel solutions such as the COVIDSafe app which will allow the authorities to respond more quickly in the event another outbreak emerges.

Policy responses should encourage businesses, communities and industries to identify what they can do to limit risks. Central authorities have poor visibility over the best strategies to mitigate risks which is why industry or location-specific solutions must be identified from the bottom‑up.

What would work in your industry? We’d be curious to know.

Communicating and demonstrating that certain benchmarks are being met will be crucial for people to engage in economic activity again. The airlines know consumers value safety which is why it has become a very visible part of the travel experience. Industry codes developed in partnership with the health authorities would allow businesses to demonstrate their procedures are informed by best practice.

There is no one-size fits all approach and targeted measures which deal directly with risks will be more effective and less costly than blunt approaches such as shutting down entire sectors of the economy.

Tell us what would work in your industry? 


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