By Mark Evans and Mark Kenny

This article was originally published by The Canberra Times.

When Angela Merkel outlined Germany's social and economic restrictions on March 7, she emphasised the need for full disclosure in public decision-making.

"Open democracy is about explaining our political decisions and making them transparent," she said.

She had learned Europe's great lesson from the Global Financial Crisis: governments that hoard the data, thinking they know best, do so at their own peril.

Populists in the wake of the GFC, had benefited from English, German, Hungarian, Italian and Spanish resentment, their success arising in part from the failure of the established political class to reach-out, persuade and empower disaffected citizens.

It turns out that wide participation in problem recognition and solution finding during an economic crisis is fundamental to recovery. The watchwords are involvement, communication, openness, and ownership.

While still too early to predict the depth of economic dislocation caused by this pandemic, most economists expect a contraction sharper and longer than the 2008 financial meltdown.

The need to shut down fast in the face of the pandemic was widely acknowledged, but the abrupt halt brought with it a tail of enduring economic pain in every region of Australia.

Agreeing on the right policy settings to manage the recovery will be more problematic, and more politically fraught.

Fiscal stimulus is the starting point but opinions divide on the length of government assistance required and on the speed of austerity measures designed to achieve budget repair.

The crucial point here is that Canberra remains especially vulnerable even in a recovering national economy.

The downturn, spiced with heightened public debt anxiety, threatens a triple whammy effect on the ACT's output and employment because of its heavy reliance on the badly hit sectors of the federal public service, higher education, and tourism/hospitality.

Despite efforts at diversification, Canberra's public sector footing has actually broadened in the last two-and-a-half decades, particularly through the higher education sector. One in six Canberrans work or study at a tertiary institution, adding $3.3 billion and 20,000 full-time jobs to the territory's economy, an increase of 20 per cent since 2015.

The ACT accounts for a third of all federal employment in Australia and around 40 per cent of all full-time employment in the ACT. Any reduction in the size of the federal public service will not only directly affect the ACT economy but indirectly impact through flow-on effects on other linked sectors of the economy, particularly housing and hospitality.

A regression analysis using data for the period between 1990 and 2018 shows a reduction of every 1000 employees in the ACT, would see a decline in ACT gross product of $99 million (in current prices, the likely range is between $54 million and $125 million).

Famously derided as a Labor and public-service town, Canberra is also vulnerable to ideological decision-making which could make any recession longer than in other Australian cities.

The federal government can be expected to pursue decentralisation such as using its largest agency, Services Australia, as an instrument for relocating more public servants to the frontline in every state and territory.

When austerity measures take hold nobody should expect a federal bail-out because it will be the federal government doing the cutting.

The ACT government needs to get on the front foot here by recalibrating its priorities, re-configuring its revenue, stimulating local activity, and, working with state and federal governments to create employment opportunities with the aim of driving economic recovery rather than retrenchment.

At the same time, action is required to ensure that public trust in Territory administration remains strong and this is best achieved by being up front about the economic challenge and the spending and policy choices adopted.

This is particularly important after nearly two decades of one-party dominance given that large numbers of ACT residents have cast their ballot papers unsuccessfully. A 'participatory' budget would ensure that the outcomes from the recovery process are derived inclusively and are seen to reflect the general will of the people.

Thirty-one years ago Olvio Dutra, the newly elected mayor of the southern Brazilian city of Porto Alegre, worked with community groups to empower citizens to directly propose and vote on local investment projects to be funded by the municipality. Participatory budgeting was born.

Since then, participatory budgeting has spread across the globe, and is lauded by international organizations as a "best practice" to be replicated. The rise of citizen assemblies in the UK and participatory budgeting initiatives in cities like Paris and Madrid, are testaments to the latest wave of direct citizen participation in budgetary decision-making. The recently published Participatory Budgeting World Atlas claims more than 11,000 cases of this approach now exist throughout the world.

There are precedents in Australia as well. In 2014, the City of Melbourne used it to create its first ever 10-year financial plan, worth $5 billion. And the City of Greater Geraldton conducted a successful community summit to prioritise 99 non-mandatory services worth over $8.5 million within budget constraints of $6 million in 2013-14.

What is important is that we deliver world's best practice in participatory budgeting in the nation's capital. Drawing on the successful Irish model, this minimally requires the creation of an assembly consisting of a one-third, two-thirds mix of politicians and randomly selected lay citizens supported by experts, and chaired by the Chief Minister, to ensure governmental follow-through.

Participants should be free from political constraints.

A plurality of viewpoints and engagement methods should be used to increase the range of perspectives that contribute to the assembly's recommendations facilitated through quality process design.

It is not sufficient that the ACT government seeks the views of those most vocal in their communities (the "noisy minority") or the technocratic elite. Representation must be inclusive, equal and diverse and give voice to the majority of citizens. The final recommendations should be transmitted to the Legislative Assembly for scrutiny and ratification.

Above all, the notion of citizen participation should be accepted as a founding value of democratic governance in the ACT. Recognition that there is more to democracy than voting and that post-pandemic recovery calls for a new way based on engagement with those most affected.

Mark Evans is a professor of governance at the University of Canberra's Insitute for Governance and Policy Analysis and director of Democracy 2025.

Mark Kenny is a professor at the Australian Studies Institute, ANU.