Finance Minister Grant Robertson will have no end of advice and support in developing a response to the impact of Covid-19, but he has little time to play with. Photo / Mark Mitchell
Finance Minister Grant Robertson will have no end of advice and support in developing a response to the impact of Covid-19, but he has little time to play with. Photo / Mark Mitchell
COMMENT:
The timing of Jacinda Ardern's final meeting of the Business Advisory Council could hardly have been worse.
Formed in 2018 when the Prime Minister struggled to cope with a plunge in business confidence, it had never been clear what the council was really meant to do, other than improvecommunication with a Government with limited links to captains of industry.
On Thursday the council was disbanded at a time when the coalition needs open lines of communication with employers far more urgently than it did 18 months ago.
No one can say with confidence what the impact of Covid-19 on the economy will be, the fact that exporters have been hit hard and suddenly means a wider impact is coming.
How long it will last is unknown because the spread is so rapid, but we must brace against it and assume that whatever the impact is, it will be temporary.
Time is of the essence, and the more damage is inflicted now, the harder it will be to recover.
Logging crews and drivers are sitting idle as ships stop sending forestry products to China. Without intervention, workers will soon look elsewhere meaning that if demand returns, production may not.
More concerningly is that ships not getting into China means ships are not coming back, so imports will soon be disrupted, possibly in a significant way, affecting many more businesses.
General delays are causing concerns that New Zealand simply may not be able to get enough refrigerated containers to carry perishable goods to market in the coming months, especially if ports are disrupted beyond China.
Tourism and hospitality operators in Queenstown are facing severe drops in customers because of travel bans, and a likely downturn in travel more generally.
At a time which was meant to be peak demand, many will be losing money. Those with little capital in reserve may have weeks to stay afloat and feel duty bound to shed staff rather than risk insolvency.
Logging crews and drivers are sitting idle as ships stop sending forestry products to China. Photo / File
If the employment markets of Queenstown and Rotorua are decimated now, they may not be the destination they were when tourists return.
Other measures should be considered immediately, such as the Government ordering all of its various arms to pay bills far more quickly than they do now. Any spending that can be brought forward, should be brought forward.
When May's Budget comes around, tax cuts, even temporary ones such as a lowering of GST to boost business margins, should at least be on the table.
Beyond the immediate impact, the outlook for New Zealand is good.
With low unemployment, low government debt and an economy still growing (at least until recently) the country is well-positioned to do as much as possible to ensure disruption is minimised.
On Wednesday Australian Treasurer Josh Frydenberg tried to hype a stimulus package he is planning to cope with the fallout from Covid-19. "It is going to have a 'b' in front of it that is for sure."
Whoop-de-doo. The "upgrade" Ardern released in January is for a $12 billion infrastructure package, and we are a fraction the size of Australia. She said it gave New Zealand a "head start" on Thursday and she is right.
If it looked positive at the time, it is certainly ageing well, especially if steps can be taken to bring forward projects if demand in the economy generally slides.
Although her business advisory council is gone, her de facto deputy, Grant Robertson, is meeting senior economists and is expected to see bank chief executives soon.
For all of New Zealand's scepticism about the abilities of Wellington's bureaucracy, an army of New Zealand's brightest people is being deployed to urgently work out how to cope with both a potential health and economic shock.
Many of New Zealand's major companies are logistics experts, giving our products the best chance they have of continuing to be delivered even if supply chains are extensively disrupted.
But decisive action to provide short-term support for particular sectors, and to support confidence more generally needs to come quickly, and certainly before May's Budget.
Robertson has the resource, both human and financial, to respond. What he has little of is time.
