New Zealand is being permitted to go to Level 2ish at midnight on Wednesday.
Much of the economy will open including restaurants, malls, cinemas, shops, health services, and hairdressers. People will be able to socialise with others and travel around the country, as well as playing team sports.
The following Monday – May 18 – schools and early childhood centres will open.
Finally on Thursday May 21 bars will be allowed to reopen. . .
While gatherings would be allowed they would be limited to ten people, Ardern said – even for weddings or funerals. This has been changed from a limit of 100 last week.
Bookings for restaurants and the like will not be allowed for groups larger than 10.
A time limit of two hours for gatherings is mentioned on the Covid-19 website, but a spokeswoman for the Prime Minister’s Office said this was not intended to cover private gatherings.
These rules would be reviewed in another two weeks time on May 25. . .
This still won’t be business as usual, or what usual used to be and National leader Simon Bridges says the focus must now be on economic recovery:
“We need to focus on the other wave coming on us: having dealt with the Covid-19 wave, we now have got to be thinking about the real suffering that comes from 1000 people a day going on the dole and growing,” he said.
“We’ve flattened the curve, we’ve got to make sure we don’t flatten the economy in the process and we get it and jobs up and running.”
As the country faced a looming, deep recession, Bridges said he wanted to ensure that the economic hole gouged out by the pandemic wasn’t deeper than necessary.
“We’ve got some banks and economists saying this could be $100bn in debt – that takes it to over 50 per cent of GDP and we want to make sure that whilst there’s investment going into jobs, there’s not a bunch of other low-priority, untargeted things.
“Because ultimately if there is, that’s $50,000 a household that has to be paid back at $100bn dollars, that’s inevitably more taxes and that’s a legacy of debt on our children and grandchildren.”
Despite hospitality businesses getting the green light to reopen – with restrictions – from Thursday, Bridges acknowledged that many won’t make it through the next month.
“Whether it’s retail or hospitality, from restaurants and cafes through to bars, the costs have risen with the rules and requirements and in fact their revenue may be down, so it is tough for them.” . .
Murray Sherwin, Productivity Commission chair, is also worried about the economic outlook:
The die is cast. We won’t see the official numbers for quite a while, but it is already apparent that New Zealand is headed into the sharpest and deepest recession in 100 years.
We know we will experience unemployment at, and perhaps above, levels not seen since the late 1980s, company failures and large income losses across the economy. Amongst the bits we don’t know are just how deep the emerging recession will prove to be and how long it will last. . .
The policy choices we make and how well we execute them can cushion the downturn, accelerate the recovery and shape the nation that we eventually emerge as.
What we learn from previous recessions is that they carry lasting impacts on firms and employees. The Productivity Commission’s recent inquiry into technology and the future of work showed that workers who lose their jobs can be subject to significant “scarring” even when they get back into work – meaning that they may experience a loss of future earnings over an extended period of time – especially if they are young and with lower skills.
In high-performing economies, a major source of productivity growth comes from workers shifting from low productivity firms to high productivity/high growth firms. For that to happen, and to reduce the risk of long-term disadvantage, workers need easy access to training and upskilling.1 Alongside that, firms need a policy environment that encourages them onto a high productivity path that can support high productivity and high-income jobs.
But the impact of recession is not felt just by workers. We should expect some proportion of firms that are closed during the lockdown phase will not re-open in the future – another form of scarring. With firms, as with workers, a dynamic environment that encourages the movement of labour, capital and other resources from low to high productivity entities is an essential element in a successful future. . .
That environment is one which reduces regulations that add costs and complexity to business; one that makes it easier to employ the right people and let the wrong ones go; one that values the private sector and encourages it to invest and innovate.
It is not an accident that since 1991 Australia has been riding the longest unbroken phase of economic growth recorded amongst OECD economies – a growth cycle only now being broken as Australia slips into recession like the rest of us. When we review that 30 year growth cycle alongside New Zealand’s experience we see that New Zealand is more vulnerable to economic downturns. Where Australia has ridden though shocks such as the 1997 Asian economic crisis, the GFC and others, suffering a growth slowdown, but avoiding recessions, New Zealand has dropped into recessions. On each occasion, NZ slips perhaps 2% or 3%. And while we may quite quickly get back to a growth path matching (and at times exceeding) Australia’s, we never do well enough, for long enough, to close the gap.
The lesson to take from this is that how well we manage our way through shocks has real and lasting effects. And right now we are hitting the biggest shock in a century. The quality of the policy response – over the next decade or more – will determine the living standards of New Zealanders for at least the next couple of generations. It will determine our capacity to make real choices about income distribution, environmental standards, housing quality, income distribution, the capacity and capability of our health and education systems and our progress towards climate change goals.
Nothing will undermine our capacity to achieve high standards on those fronts more than an underperforming, low productivity economy.
Productivity is the key.
Increasing that will reduce the harm and repair the damage faster.
That will take a government that understands its role is to get the policy environment right, keeps its role to the areas best left to government and allows the private sector to get on with the work that is needed to rebuild the economy.