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  • Sat, 2, May, 2020 - 5:00:AM

After Covid: what happens next?

So what happens next?

What happens when there’s no 1pm Jacinda-and-Ashley Show? When there’s no wage subsidy? When we’re allowed to go out to restaurants, or travel to Australia, but fewer of us are able to because we’ve lost our jobs and have vastly reduced incomes? Leaving aside infection rates and test results for a moment, I’ve been thinking about what happens after the initial challenges of controlling COVID-19 are overcome.

There’s no denying that Level 4 was an incredible show of national unity. The relatively small number of breaches during the lockdown period shows that most New Zealanders were willing to get on board and “stay home to save lives”. Now that we’re in Level 3, however, the cracks of that unity are starting to show. 

Large, non-socially-distanced queues at fast food outlets are just one visual representation of how keen people are to get some normality back into their lives. As the restrictions drag on, compliance will continue to decline as people become fed up with their freedoms being curtailed. I suspect that by Mother’s Day, more and more New Zealanders will be popping their bubbles prematurely.

And really, can we blame them? With increasingly gloomy predictions about impending economic devastation emerging almost daily, there’s a growing desire to get things moving again. Many of us have a lot of time on our hands to spend worrying, an endless stream of questions and few answers to put our minds at ease. 

What, for example, will happen when large businesses start to fall over? We’ve seen Air New Zealand forced to lay off thousands of staff. Burger King is in receivership. Others will follow. When tens or hundreds of thousands of jobs are lost, what happens? 

While it’s certainly not news that unemployment brings about a whole raft of unpleasant events and side effects, we’ve had steadily high employment rates for long enough that the ravages of joblessness have been out of sight, out of mind for many. Sadly, the reality of deprivation is about to become abundantly clear. 

Increased rates of depression, anxiety and other mental health problems, worsening physical health, homelessness, family and relationship breakdowns, increased family violence and other crime rates, social isolation, shame, stigma, hopelessness… this is where we’re heading. 

What can be done about it? I can envisage a few different scenarios. The first is that an updated version of the Ministry of Works will be recreated. The Government will use that ministry to carry out major infrastructure projects around the country, retraining and employing the unemployed. While it may sound like a great idea on the surface, the proposal is imperfect in a variety of ways.

Existing construction and infrastructure projects already in the pipeline are years away from commencement, and for good reason. Completing consent work, sourcing materials in an unreliable and expensive supply chain, and finding qualified contractors and supervisors are just some of the issues that each major project faces. Even if the Government fast-tracks the bureaucratic process, it can’t wave a magic wand to fix all of the other issues related to construction projects.

By creating a nationalised infrastructure organisation, it will further squeeze a private construction sector already under pressure. It’s also worth noting the businesses already in the sector are complex machines that take years to set up and get running. It would be a Herculean ask to create a nationalised version in a rush. Done badly, a scrambling state-owned player risks inefficiency, budget blow-outs, and shoddy work as a result of poor management and/or fast-tracked incomplete training of new workers. A public-private partnership with existing companies may be another option, but whether our left-leaning Government will find that a palatable choice remains to be seen.

Infrastructure can also only go so far. By retraining vast swathes of your workforce (for example, those in the tourism and hospitality industries) to join the construction industry, you risk major problems when Covid-related infrastructure work is complete and normal private industry demand levels return. There will also be many workers who are ill-suited to construction jobs. What do you do with them?

The major opportunities likely rest around fixing problems we already have. For example, we are hugely dependant on an agriculture sector that has been slow to engage with sustainable technologies. Investing in developing and implementing sustainable farming technologies and practices could be one job creation area the Government investigates. Another it could focus on would be upgrading New Zealand’s existing housing stock to fix problems with cold, damp and leaky buildings.

A seemingly obvious issue that New Zealand has grappled with especially over the last decade is the housing crisis, and some may see Government stimulus spending as an opportunity to build more houses. While increasing the Government’s supply of social housing should be high on the agenda, some of the private housing sector issues may actually resolve somewhat as a result of the crisis. Investors who have owned multiple properties for the purpose of earning revenue from AirBnB are now, frankly, in the shit. They will look to sell or to return to the long term rental market. Speculators now drowning in debt will need to sell. House prices will fall. It’s likely there may be some relief for both first home buyers and renters. If they haven’t lost their jobs and are able to afford to rent or buy, that is.

The Government may also use this crisis as an opportunity to fund the training of professionals it needs more of. Psychologists, addiction counsellors, social workers… there are key shortages in our national workforce, and one option that could be offered to New Zealanders who have lost their jobs is free retraining in an area where a shortage exists, potentially asking graduates to work in state-determined placements for a period after their graduation. It could also partner with iwi to bulk up Māori health and education initiatives.

The glaring elephant in the room, however, is how we pay for all of the bright ideas that will emerge over the coming weeks and months. 

At present, our Government is shelling out billions without blinking an eye. The previous National Government did a similar thing (although at a much smaller level) to keep us afloat during the Global Financial Crisis. Using Keynesian economics, borrowing and spending may be a pathway to getting through this, but who knows how bad this crisis is going to get. If we end up with more than 20 per cent unemployment and a slow, protracted recovery, our welfare bill will balloon and our tax yield will nosedive. There may come a time when we simply can’t afford to throw billions at a problem to kick it down the road. 

One thing that stands out starkly to me is the need for us to consider many different viewpoints as we move forward. The challenges we face are far from business as usual. We need to bring our best thinkers and strategists from a variety of different backgrounds together to offer us guidance. Diversity of thought has never been more important. 

It’s also never been so unpopular. While it can be comforting to come down firmly on one side of an issue and attack anyone who disagrees with you – lockdown is good/lockdown is bad; the Government has done a great job/the Government has done a terrible job; Sweden’s measures are ghastly/Sweden’s measures are awesome – it’s also dangerous. Adopting an immovable point of view means that we’re unlikely to consider new information as it comes to light. We’re unlikely to question the veracity of what we’ve been told. We’re unlikely to analyse suggestions without allowing our biases to interfere. We’re more likely to vilify those who don’t agree with us. 

I’ve seen a staggering rise in tribalism over the last four weeks, and it makes perfect sense. We’re living in scary, bizarre, unprecedented times. I couldn’t sleep properly for the first two weeks of lockdown. I felt like a caged animal when bedtime rolled around, and spent many hours staring up into the blackness, worrying about what would happen next. Families have been separated, people have lost their jobs, and most of us have had far too much time on our hands. It’s understandable that we’d look for something to cling to and hang on for dear life. 

More and more it seems that our “social distancing” is creating an aversion to the middle ground. Not only are we taking care to stay at least two metres away from other human beings when we venture out from our houses, many of us are also implementing “distancing” in our conversations. While tribal migration to polar viewpoints is certainly happening between strangers on social media, I’ve also seen it happen in discussions between friends and family.

I suspect, as the economic carnage becomes apparent in the weeks and months to come, this tribalism will only intensify. With economic hardship will come criticism and fierce debate about what to do to staunch the bleeding. On the flipside, some people will go to great lengths to defend those in power, and will attempt to squash dissent and critique. Neither pole of the argument will be entirely correct, and each will have useful contributions to offer. Whether we can put aside our tribalism for long enough to hear each other out, however, will be the challenge.

In these unprecedented times, however, I believe we need to be open to throwing every idea onto the table. Some will quickly fail, others may be surprisingly interesting. Let’s variously discuss a UBI, a stimulus package for business, changes to the tax system, tax breaks, a new Ministry of Works, public-private partnerships, opening the border with Australia as soon as it’s relatively safe to do so, and a variety of other measures. If we instead act according to ideological purity, we effectively throw most of the possibilities out the window before we’ve had a chance to give them the consideration they deserve.

What this crisis does offer us is an opportunity to think deeply about the kind of future we want to create. Let’s keep an open mind, and work together to create a New Zealand we can all be proud of.

TAGGED IN

  • Lizzie Marvelly Column /
  • COVID-19 /
  • Economics /
  • Unemployment /
  • Lockdown /
  • New Zealand /
  • Politics /
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