The Government’s Covid-19 “own goal” this week highlighted the biggest factor in New Zealand’s economic recovery. And it’s not fiscal or monetary policy.
OPINION: Jacinda Ardern and Dr Ashley Bloomfield did a stellar communications job in persuading a team of 5 million to sacrifice a lot back in March and April to ensure Covid-19 was eradicated quickly and the economy could rebound earlier.
Then finance minister Grant Robertson and Reserve Bank of New Zealand governor Adrian Orr did a stellar job with a range of initiatives to keep cash-flow moving around the economy – between banks, firms, households, and the Government – to speed up the economic recovery.
Our success in conquering the virus from China and keeping the economy going paid dividends with business confidence rebounding from record lows in April to improve through May and June.
With business confidence improving and restructuring plans set to be behind us by the end of the year, things were looking good for a significant rebound in 2021.
All that ended with the Government’s Covid-19 “own goal”. Their smug complacency at controlling Covid-19 has turned to bite them on the bum with revelations of the Health Ministry’s complete ineptitude in managing quarantine controls at the border.
Health minister David Parker ducking for cover and throwing the people’s hero Dr Ashley Bloomfield under the bus didn’t help either.
The resulting economic setback reveals the biggest factor in New Zealand’s economic recovery is not fiscal policy or monetary policy, but border policy.
When wage subsidies run out, businesses will only keep staff on if they can see light at the end of the tunnel. That light has just gotten dimmer and better economic times now look a lot further away.
In the blink of an eye the Government’s Covid-19 “own goal” just delayed our economic recovery, increasing the chances of the feared wave of layoffs when the wage subsidy ends, and making banks less willing to lend.
Jacinda Ardern was the perfect person to rally the nation through the depths of the Covid-19 crisis, as she did in the aftermath of the Christchurch mosque shootings.
But now comes the hard job of managing the economic recovery, and her team is woefully short on management experience.
By my reckoning, a full 75% of Cabinet are ex-trade unionists, teachers, bureaucrats, civil servants and career politicians. Only 25% have a business background, and some of that is what one might politely describe as “light”.
As far as I’m concerned, our politicians have just one job…
Fix. The. Border.
Image: Land Information New Zealand (LINZ) and licensed by LINZ for re-use under the Creative Commons Attribution 4.0 International licence CC BY 4.0