Opinion: The economy needs more than just first aid

Despite the first aid administered by the Government’s business payments, the flow-on effects of the Covid-19 pandemic on many businesses in the Otago-Southland area have been dire.

More than a year since the first cases were recorded in New Zealand, now is the time we need some indication from the Government about how it intends to help the country’s economy heal.

While it’s true some businesses and communities have sustained little impact on their livelihood or lifestyle, most have been hit and many have been smacked hard. The financial and social cost in some communities has been devastating.

It’s ironic that we live in a region so remote from the rest of the world that has enabled us to remain largely free of the virus, yet we still experience its financial toll. And it can be frustrating that our region is thrust into Alert Level 2 when there is an outbreak 1400km away in South Auckland.

But we here in Otago-Southland are copers. Businesses and organisations operating in this part of the country have sound management, good risk control and have proven adaptable to the rapidly changing circumstances. One example is the University of Otago’s recent testing, isolation and care of its incoming students, as well as its recent financial results based on prudent management over time.

Unfortunately, prudent management may not be enough to save some businesses that have been most affected by the flow-on effects of Covid-19.

Government payments and other assistance available to affected businesses and employees have been helping. These include the Small Business Cashflow Loan Scheme.

The wage subsidy scheme, which helps businesses pay staff who might otherwise lose their job, and the Flexi-wage scheme which helps with additional pay if businesses hire workers struggling to enter the job market, have also helped businesses meet the ongoing costs of keeping people employed despite business downturn.

These forms of financial first aid go some way to alleviate the costs and hardship inflicted by the lockdowns and business downturn associated with Covid-19. But the measures are tiny in comparison with the scale of the problem that the virus has unleashed in some sectors.

The immense economic consequences of the pandemic are no doubt yet to fully appear. We can infer this from our experience of the 2008 Global Financial Crisis, where the full impacts did not become apparent until up to three years later.

How well we respond not just to the current health crisis but also our economic crisis is critical. We need more than first aid from the Government; we need clear policies and strategies that will promote economic recovery.

Unfortunately, cracks are starting to show in the Government’s handling of its Covid-19 response. Border management, testing, contact tracing, vaccine delivery and general communications are all areas that could be improved.

Yet the Government does not need to have all the answers. The responsibilities and complexities involved in managing the country’s Covid response are many and the Government should use all the resources and expertise available, including the private sector.

Some functions — such as managing contact tracing or operating quarantine facilities in regional areas — could be devolved to businesses or could be operated by businesses jointly with relevant government agencies. These are just some of the many opportunities for business to work with government that would help strengthen our national Covid-19 response and help revive businesses.

There is also a need for greater transparency about the Government’s plans and policies moving forward.

In particular, businesses would like to see and understand the Government’s policies for how New Zealand will regain a strong economy. Its time for the Government to look beyond the first aid kit and let us know what it intends to do to get our economy back to better health.

The Otago Southland Employers’ Association and the BusinessNZ Network are among the growing number of voices advocating for the Government to come clean about its plans for the future management of the pandemic and how it intends to foster economic growth.

We’re also hoping for greater consultation about those plans and policies, including consideration of the economic impact of recent and ongoing lockdowns.

It’s fair to say we’re still waiting for the Government’s response to those requests. In the meantime, I’m tipping my hat to the local businesses who have demonstrated real Southern grit, determination and resilience in the face of adversity.

• Virginia Nicholls is chief executive of the Otago Southland Employers’ Association