Election Over – What Now?
It’s time to address the economic elephant in the room
With the election finally over after an especially long and trying year for many, now is no time to simply roll over into 2021. In fact, it’s time to spur the creative policy thinktank into action, says economist Dr Oliver Hartwich, executive director of The New Zealand Initiative.
“No matter what interesting policy ideas any party had, the election was the stop on everything. So, with the election done, let’s work on a way to get out of this crisis. We should be talking about growth-inducing policies – and we never heard any of that in the election campaign,” he explains.
A shift away from fixated thoughts on public health, needs to happen, says Oliver.
“Thousands of Kiwis haven’t felt first-hand toughened economic effects – in fact in a pre-election opinion poll, more than 70% of respondents wanted to keep our borders shut indefinitely until we get a vaccine – but from an economy perspective, it’ll kill us,” he explains. “So, first measures should be to safely open the border and become a lot more generous handing out our visa ticket to international worker sand students, and make the most of our COVID-free haven. Capitalise on overseas people who want to work from home, here in New Zealand. Believe it or not we’re actually running 30% under our isolation capacity at the border – we can afford to let in an extra 2000 people a month if we get our management systems in order.”
Opening ourselves up as a country to greater opportunities on an international playing field will not only aid our economic recovery – but our reputation.
“In the mid-term, we have to get ourselves off these emergency funding measures – the Reserve Bank is printing an awful lot of money – altogether $20,000 per person in New Zealand. On the current trajectory, the Reserve Bank will hold about half of government debt by 2024, and that’s just not healthy,” he says. “We’re starting from a deeply negative net international investment position – we’re one of the most indebted countries to the rest of the world, because of our combination of public and private debt. We have to be very careful because at some stage, if we’re not, international capital markets might say New Zealand’s just too big a risk for us – we’re getting out.”
Participation in the world economy shouldn’t be a ‘maybe do’, it should be our ‘must-do’, advises Oliver.
“We have one of the world’s strictest foreign direct investment regimes – and we made it even stricter in the pandemic. In a time when the whole world is struggling to get capital into economies, we are making it really hard for businesses to come here – it’s insane,” he says. “We need to link international investors and link New Zealand companies with an international value chain.”
Flexibility in our labour market over the next few years – and longer term, greater investment in our education sector – are both key areas that can help steer us in a better economic direction too, says Oliver. “Economic recovery isn’t a wait and see – it’s an act now.”