Economic crisis will be a health crisis

Sir John Key is warning that the economic crisis as a consequence of Covid-19 will be far worse than the health crisis.

“We are in the very early part of what is going to be a very significant contraction of the economy here in New Zealand and globally,” Key said.

The former National Party leader and three-term prime minister said consumer confidence and buoyant equity and property markets were being propped up by low interest rates and were not a true reflection of the real economy.

“Don’t underestimate how weak some parts of the sector are.”

The wage subsidy is also masking potential business failures and unemployment.

Key, who is chairman of ANZ bank, said that in New Zealand about a quarter of all its customers had experienced a 20 per cent or more reduction in their income due to Covid-19.

About 10 per cent had their income reduce to zero, he said. . . 

Some people who have lost jobs have found others paying a lot less, some are working more than one part-time job for poorer pay and some have not been able to find new jobs.

Treasury and the Reserve Bank should be more involved in day-to-day conversations around the Covid-19 response in the same way the Ministry of Health held daily briefings, he said.

New Zealand needed to do everything it could to prevent community transmission but that did not mean the borders needed to be closed to everyone except returning New Zealanders, he said.

“I am not advocating that we recklessly open the borders and allow people in. That would be crazy for our economy.”

But New Zealand could do a lot more by quarantining on a much larger scale, he said.

Covid-19 must be kept at the border but that doesn’t mean that we can’t let more people in it means looking at ways to let them in safely.

This could include much cheaper options than the flash hotels that are currently being used.

It is possible there are disused buildings that could be repurposed and how hard would it be to locate purpose-built prefabs somewhere secure? The military should be able to advise on this.

The government threw all it could at the potential health crisis, it has failed to put nearly enough attention and resources into minimising the economic crisis .

That failure will lead to a different health crisis – increases in stress related illnesses, alcohol and drug dependency and other conditions exacerbated by poverty and unemployment. It will also result in less money to fund health services and that will lead to delays in diagnosis and treatments that will affect quality of life, ability to work and reduced life expectancy.

The government told us it took battling Covid-19 so seriously, not just to prevent a health crisis but failing to deal with it would have a disastrous economic impact.

It must now take an equally serious approach to the looming economic crisis to stave off the health crisis that will result if it doesn’t.

5 Responses to Economic crisis will be a health crisis

  1. adamsmith1922 says:

    Reblogged this on The Inquiring Mind.

  2. Roj Blake says:

    Some people who have lost jobs have found others paying a lot less, some are working more than one part-time job for poorer pay and some have not been able to find new jobs.

    This is the economy functioning the way it was designed to function. Depress wages, casualise work, eliminate holiday and sick leave. This is Thatcher writ large.

    This will not change until the economy is changed to put the people front and centre.

    That failure will lead to a different health crisis – increases in stress related illnesses, alcohol and drug dependency and other conditions exacerbated by poverty and unemployment. It will also result in less money to fund health services and that will lead to delays in diagnosis and treatments that will affect quality of life, ability to work and reduced life expectancy.

    What is your proposal to prevent this? It’s easy to say “get the economy moving”, but how do you propose to do that?

    Poverty and unemployment have always been with us, and always will be with us as long as it is a government policy choice.

    The government can eliminate unemployment by guaranteeing a job for everyone. When private enterprise does not create sufficient work, the government takes up the slack and provides good paying jobs to do the work the nation needs to be done. As this money filters through the economy, demand for goods and services will rise, creating more work in the private sector, who will then bid up the price of labour to attract the workers it needs.

    Announcing the same roading project three times is not an economic policy.

  3. Gravedodger says:

    Now there is an elephant in the room and it eats a pile of food.
    It has long been proved time and again there are a number of people who just will not work because welfare makes it unnecessary for their survival and Poverty is now accounted for.
    So explain just how those people will turn up for that Government provided work.
    Talk to a roading contract manager and they will explain the often impossibility of finding people to use a walkie talkie and switch a lollypop around. Transport and protective clothing supplied but they have to get out of bed, there it breaks down.

  4. Roj Blake says:

    Talk to a roading contract manager and they will explain the often impossibility of finding people to use a walkie talkie and switch a lollypop around.

    Maybe the work is too boring. Could you do that for an 8-hour shift? There is technology that can do this job. Or maybe the pay is too low, given the working conditions. Boredom. Heat. Snow. When there is a shortage in supply, doesn’t your market theory of economics declare there will be an increase in price? Why does that never happen?

  5. Gravedodger says:

    Had any contact with those trying to fill such job vacancies, Yes it is “Boring”, I find mindless socialist theorising attempting to avoid the salient fact there are people who choose to avoid any paid employment because they can occupy a couch with a screen and electronic entertainment, that in my world is a far more boring issue.
    Remind us again how did Shane get on getting his Nephews off their couch to Plant trees, last reports , not so great.

    That is why many stop go controls are now automated.

    I have done some bloody boring jobs in my time but as I was making progress for myself I just did it. Examples Grubbing nassella tussock, nodding thistles, gorse, pulling broom, dagging sheep, digging post holes, yet I am certain sitting on a couch with a play station would have me screaming faster than $20 an hour listening to pod casts while sitting out in the weather ever would.

    Oh BTW sometimes when flexibility and location require a human element to manage changing traffic numbers beyond an ideal with automated light systems I know of pay over $250 a day for lolly pop people and that should be regarded as a well paid opportunity in my world.
    Sometimes a nice secure government job masks what the real world delivers for others?

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