By Roger Childs

A long way to go

If the election was held tomorrow, the Labour Party would probably win, even being able to rule alone as the Government is getting plenty of credit for swiftly halting the Covid-19 virus spread. However, the transition from Level 3 to Level 2 lockdown still means some of the economy will be closed down, and one of the biggest sectors — tourism — will not recover quickly. 

The September election is the Government’s to lose as they will be calling the financial and economic shots with the Budget next week, while the National Party endures the frustrating impotence of opposition. But if the Government’s strategy falters the Nats will benefit with a right-wards shift in September.

Public money to spend

Grant Robertson 1Once the lockdown was imposed, the government provided subsidies to businesses which could demonstrate they had suffered loss and a weekly handout for their employees who couldn’t work. That will run out in June. When the country returns to Level 2, various sectors — shops, services and others — which have been unable to operate fully will be back in business, but how fast can they recover?

Labour is fortunate in having two capable ministers in key roles: Grant Robertson and David Parker. The Finance Minister is respected across the political spectrum and is sensibly saying that all options are on the table. Robertson is also fortunate in having a large amount of cash available, as NZ has a low public debt to GDP ratio compared with many countries in the OECD.

Helicopter moneyOne suggestion being made is a so-called “helicopter money” handout — giving everyone up to a certain income a “gift” of say $1,500 to go and spend (Australia did this during the Global Financial Crisis of the late 2000s.) Small businesses could get a share of it too.

Employment, tourism and infrastructure

Unemployment is already high and likely to go much higher as businesses fold. The government will be anxious to keep it below a double figure percentage of the workforce, but can that be done? 

As mentioned, tourism is the big loser from the Covid-19 crisis as foreign tourists have long departed for their homelands and the borders have been closed to prevent any more entering.  Jobs have been shed like autumn leaves. Can the sector pick up? Some 40% of tourism in normal times is domestic, so it makes sense to soften Level 2 rules to allow inter-regional travel. This should help, in a small way, centres highly dependent on tourist dollars like Rotorua, Taupo, Kaikoura, Wanaka, Akaroa and Queenstown.

Some overseas tourism should resume over the winter if the Australians embrace the ‘shared bubble’ concept. This could subsequently be extended to Singapore, Taiwan and South Korea. Aussie oldies, golfers and snow sports enthusiasts in particular, are regular tourists in the second half of the year.

Transmission Gully

the ‘big ticket’ Transmission Gully highway project.

It is good news that David Parker is all set to clip the red tape of the Resource Management Act and speed up the process of approving new projects — which Judith Collins of National says is Labour stealing their clothes. Local councils have been asked to put in wish-lists for local infrastructure development, which ironically will get the green light, or otherwise, without district, city or public scrutiny. This public works sector of the economy is an obvious one for providing jobs to some of the present and future unemployed.

The tertiary education sector will also need to adjust to cope as more adults will want to retrain, and the government will need to help with paying the fees. The universities, in particular, have lost thousands of foreign students, and Kiwis could fill some of the shortfall as they embark on new courses. 

Sustaining businesses and greater self-sufficiency

VinyardsThe country is fortunate that some of its primary industries are in excellent shape. Forestry has a full order book and it is just a matter of getting the logs on ships bound for East Asia. In the agricultural sector there has been a record harvest of kiwifruit and a bumper season for wine making.  Looking ahead, the government will no doubt aim at getting more added value for our timber and other raw materials. 

Down the track there is likely to be some restructuring in farming to best meet local demand and whatever export opportunities eventually arise. The same applies in manufacturing where a decline in imports availability offers opportunities to make them domestically. It was interesting to see how quickly some industries were able to produce items like hands sanitizer and PEP gear during the lockdown.

As Grant Robertson has mentioned, post-Covid New Zealand offers the opportunity for new enterprises to emerge as we move into an economic environment with the aim of becoming more self-sufficient. Increasing funding for research and development would be logical, even financing efforts to find a vaccine to counter all Coronaviruses.

The way ahead – pulling together

Kiwis are resilient, enterprising and innovative people, well shown at the start of Level 3 when the hospitality sector exhibited imagination in delivering everything from coffees and scones to full meal takeaways. With Level 2 there will be determination to get the country moving again on the road to economic recovery.