Moves to boost apprenticeships are among the best this the Government has done in response to the virus. Photo / File
Moves to boost apprenticeships are among the best this the Government has done in response to the virus. Photo / File
COMMENT:
This column was completed early Thursday morning before it was clear how serious or widespread the latest outbreak of community transmission of Covid—19 in New Zealand is. We did not get to the favourable position we were in earlier compared with the rest of the world by sheer chance.We went very early, and certainly harder, than almost any others. At least as important, the Government ignored siren calls from many quarters to ease off early or to rush into bubbles. Those calls already seem so long ago and so foolish.
As Jacinda Ardern, Dr Ashley Bloomfield and a small army of epidemiologists kept reminding us, we faced a high likelihood of a second wave of the pandemic. Gerry Brownlee, relying perhaps on his long unused carpentry skills, told us that was not the case. Judith Collins said it was scare tactics.
Thank goodness the Government listened to wiser heads in taking a precautionary approach, preparing for a second outbreak. Fighting this virus is more like a guerrilla war than crushing a car.
While dealing with further outbreaks, we still need to plan a course towards a full economic recovery. The worst idea so far is to encourage people to raid their KiwiSaver funds to move into small businesses with a high risk of failure.
That mirrors the proposal to continue to starve the New Zealand Superannuation Fund of future contributions in order to build roads and tunnels of dubious benefit and often unknown cost.
Put those two ideas together and you have a recipe for a poorer future for many Kiwi mums and dads when they become elderly kiwi grandmas and grand-dads.
The current Government has poured multiple billions of dollars into propping up jobs and the economy during the lockdown period and since. Some of the programmes have been underspent, particularly the large contingency fund.
No doubt some of that will now be required to support businesses and workers through whatever the next phase of the pandemic brings.
The impact on gross Government debt may still be less than the original forecast that it would increase to where it was in the early 1990s. We should beware of shock and horror stories about that. Such a debt level would still be much better than many developed countries before the pandemic. In any case, two factors make the comparison highly misleading.
The first is that the Government's cost of borrowing is now a fraction of what it was 30 years ago. All the signs are that will remain the case for the foreseeable future. The annual cost of servicing the new debt is reduced correspondingly.
The second factor is that the Government now has far greater financial assets than it did, notably in the ACC's fund and the NZ Superannuation Fund. The latter could be much bigger if the previous National Government had followed Treasury advice and continued contributions into the fund through the global financial crisis and its aftermath. These two funds help reduce future fiscal pressures.
Prime Minister Jacinda Ardern arriving with Dr Ashley Bloomfield for their Covid-19 response update at Parliament. Photo / Mark Mitchell
While continuing to prop up jobs in this second phase, important though that is, we should continue to prepare for the future. Of the announcements made by Jacinda Ardern so far in that respect, the one that excited me the most was that for certain trades and occupations where we have long had a chronic shortage of labour, people who become jobless in the sectors most affected by the pandemic's effects will qualify for free apprenticeships.
This, hopefully, will prove the first serious move away from our longstanding obsession with getting any old degree, supposedly vocationally oriented, but often not leading to rewarding employment. This mismatch of the skills needed and those we produce I tried to attack in 2006-07, but the incoming Government reverted to minor fiddling and a misplaced faith in a school-leaver market with very imperfect information about job opportunities.
It also seems reasonably clear that the small business sector is going to need ongoing support in order to help fill the jobs gap that we face. The announcement last Saturday of the Flexi-wage scheme is geared towards the right target: New Zealanders who are disadvantaged in the labour market and at the risk of long-term benefit dependency. This is not a new scheme, but a substantial expansion and adaptation of a proven programme.
The challenge will be to make sure that, while it delivers value for money, the tendency of the bureaucracy to tie everything up in complicated compliance is avoided. Helping small businesses to survive and employ those most at risk for some time to come is part of a varied and flexible policy toolbox to deal with the effects of this pandemic's possibly recurring effects. Nobody ever said it would be a party.
