Saving Our Economy Will Require A NZ Inc Approach
For the last 20 years I have been asking, no pleading, for us to get better at how we do economic development in New Zealand. I’m pleased to say we have improved slowly. However, in a crisis it is easy to return to old habits, to do what has worked in the past, to do what you know to be true from your own experiences and knowledge and to be driven by bushfires. Unfortunately, that’s not good enough.
The Covid-19 virus is novel, variant and complex. So are the economic effects. For example, it is different in some ways to the Global Financial Crisis but similar in others. Two recent OECD reports (COVID-19 International Trade: issues and actions and Covid-19: SME Policy Responses) said that it is different in that it is ‘Not just about confidence effects, economic activity is being shut down. Widespread across many sectors, simultaneously and sometimes instantaneously.’ And, ‘This crisis is having a disproportionate impact on MSMEs’ (Micro, Small and Medium Enterprises) causing ‘Greater disruption to production leading to pressure on supply chains.’
It is similar, and possibly because we are using the same macro and fiscal tools to address this crisis, in that, ‘A significant concern from the last crisis [GFC] was that bailouts benefitted large corporations more than ordinary people. This exacerbated existing trends towards greater inequality of wealth, income and – most importantly – of opportunity within countries around the world (OECD, 2017). It will be critical to ensure that support given now is – and is seen to be – targeted at the public interest, rather than vested interests, and at public welfare, rather than corporate welfare’ (ibid). These are serious concerns for us to consider as we seek to recover.
The crisis is also having differential effects by region and by industry across New Zealand. And, while economists argue over the shape of the global recessionary curve (V, U or L), I for one really don’t care who turns out to be right, I’m far more interested in what we do now.
We must be connected, responsive, adaptive and fleet footed to emerge relatively unscathed. And, it must be a joined-up NZ Inc approach.
In reading Fran O’Sullivan’s piece on the weekend Rob Fyfe: Preparing us and Business for a life after Covid-19 and lockdown some things stood out: he landed at ground zero, got the lay of the land and rang up a few of his high-level business mates to enlist their support. He then leveraged private sector agility and innovation to respond to immediate health needs. Brilliant. And, about time. But a quote jumped out to me as it is familiar territory: ‘… it also highlighted the fact there was no easy way for them to interface with the Government, and to enable the Government to leverage their capacity, financial resources and international connections.’ That is because we didn’t have the mechanisms in place to do this, and it’s not the way we have and currently do things.
In a recent report Powering up the Regions: Improving the mechanisms to achieve a Productive, Sustainable and Inclusive Economy I outlined this deficiency in our economic development efforts. We need to get serious about how we respond economically as a nation to Covid-19. It will lead to better practices in the future.
I shudder when the primary advice on Covid-19 is led by epidemiologists. They are experts in one field, which is extremely helpful but far from enough. Dr Bloomfield, as a public health expert, knows that there are trade-offs. He knows the value of examining issues from varying perspectives. For example, the health “costs” of poverty, or foregone attention to other chronic health conditions when concentrating on stamping out Covid-19. Professor Martin Berka, Massey University, has nicely summarised some of these trade-offs with the data on why NZ should relax its coronavirus lockdown from Thursday and as Deputy PM Winston Peters said there is no value in saving people if greater social damage is caused.
We are all aware of the pressing need to fire up the economy, and as these trade-offs are negotiated moving to level 3 and subsequent levels 2 and 1, we want to be able to rebound to a stronger more competitive economy quickly. We should have plans and teams in place to take advantage of each stage of recovery now.
But before Government agencies start manoeuvring themselves into a Wellington-based team consider the need for the right expertise in the right place at the right time and the right level. Government (central, regional and local), business, Maori, health, social development, the civic sector and economic development professionals will all have a part to play. This requires a new way of thinking about governance and economic development. Leadership and expertise that is fit-for-purpose with the mechanisms in place to implement decisions speedily. Government as part of the team, as facilitators and enablers, but not the only part.
I can already hear you asking; yeah but how? That’ll be the day. Well, if we start with well supported principles of good governance for economic development we can get going. There will be strategies, agencies, projects and ideas aplenty, but the trick will be in moving quickly to implement the best ones, adapting and adjusting as we go. This is all about getting things done and putting the right mechanisms in place to respond.
Take the appointment of Rob Fyfe to the Covid-19 National Response Team, that was a good start, now it is time to move to the next level. Create an aligned Covid-19 National Economic Recovery Team, support it and operationalise it. Operationalise both nationally and regionally with Regional Economic Recovery Teams (some regions are already down this track). Their job is simple; implement a National Economic Recovery Plan supported by Regional Recovery Plans (also underway in some regions). A two-way conversation about national and regional priorities.
We need to be better organised for economic recovery. It can’t all be done from Wellington, by the Governor of the Reserve Bank, the Finance Minister, or from within departmental and ministry silos. We need to draw on many balance sheets and many sectors of society and the economy. We need a NZ Inc approach, a plan and the ability to implement the plan. Rob, I’m sure, can lead the development and implementation of the plan but he will need our best and brightest supporting him.
David Wilson is founder of Cities and Regions Ltd an independent research consultancy, immediate past chair, director and fellow of Economic Development NZ, a member of the Independent Advisory Panel for the Provincial Growth Fund and director of Be.Lab. He holds a BA in Psychology and Social Policy, a Master’s in Public Policy (1st class Hons) and a PhD in Governance and Regional Economic Development.