The Great Reopening of New Zealand looks like being a subdued affair at best

Public Policy / opinion

David Hargreaves says the poor planning of the Government coupled with a worsening economic scenario doesn't bode well for our moves to reconnect with the world

24th Mar 22, 2:39pm by David Hargreaves

So, are we ready for the post-Covid world?

It doesn’t FEEL like we are does it?

I mean we weren’t ready for the onset of the Covid World, but that’s understandable. In the modern world true global pandemics were just things that existed in the febrile imaginations of paranoid epidemiologists. Until we got the genuine nasty novel virus. We never listen to intelligent folk making gloomy prognostications till it’s too late, do we?

Anyway, little old New Zealand was most definitely not prepared for the unfolding events in 2020. But, heck, we scrambled pretty well. And in doing so we began to reveal what I see as the defining characteristic of this current government.

It is a government that - when it has a blowtorch applied to its collective rear end - can think on its feet extremely well and produce fast, instinctive and effective decisions. But give it plenty of time to ponder a course of action, to implement a plan - and, well, crippling procrastination sets in.

KiwiBuild? Auckland Light Rail? I’ve genuinely been staggered at times by this government’s ability to talk up a policy and then seemingly make little or no physical progress with it. This government has at times almost made inertia into an art form. (Personally, I hope the rail project stays in that category because I think it’s a ridiculous idea, but that’s just an aside.)

In broad summary then; our response to the pandemic was fantastic when the government was simply instinctively dealing with what was in front of it. I think we should justifiably be proud that during potentially the most lethal stages of the pandemic we had low death rates, our healthcare system was not overwhelmed and we were mostly out and about leading near-normal lives. That certainly was not the case in many parts of the world.

Once the ‘instinctive’ phase was over in 2020, however, that’s when the Government’s hyper procrastination showed itself in all its non-glory.

The breathing space New Zealand earned itself through those early actions was squandered. We were too late to order vaccines and that’s had a flow on effect. The detailed planning for ‘beyond Covid’ has not been apparent.

We’ve been drip fed information. And I think a lot of the time that’s simply been down to the fact the Government hasn’t had information to give. It hasn’t settled on a plan.

So, now that we are fumbling and bumbling our way to re-opened borders, we are doing so with a lot of details seemingly still to be arranged.

Here’s two examples:

We had a chance in the two years the borders have been shut to come up with something definitive in terms of a sustainable immigration policy. We haven’t. That’s still a work in progress.

What sort of genuine, coordinated, strategy is there for re-establishment of inbound tourism businesses? Again, we’ve had two years.

It might be argued that you can’t plan for re-opened borders when you don’t know how long the pandemic will last.

Well, not true.

There was always going to be an end point. We just didn’t know when.

But not knowing when doesn’t stop the ability to PLAN for something. Good planning involves creation of several potential plans/scenarios that could be made to fit the particular situation and events as they unfold.

If there’s a plan then it is relatively uncomplicated to simply kick the plan into action once circumstances and said pandemic permit.

There’s nothing wrong and everything right with modelling various scenarios and having plans available for each. A plan is just a plan. It doesn’t commit a government and a country to anything. But it’s there and it's ready should it be seen as THE plan for the moment. So much more sensible than flying by the seat of your pants.

If you wait for the pandemic to say “I’m finished now” before deciding on a course of action, well, then valuable time has been lost.

And we lost valuable time.

Now our great reopening is coinciding with a rapidly darkening global and domestic economic outlook. Have we planned for such a contingency? Well, we know the answer to that really, don’t we?

It's probably fair to say that from an economic perspective the pandemic has confounded expectations. The initial response of central banks and governments was to treat it as a Global Financial Crisis II. A demand shock was visualised. So, money was poured into the system.

I guess people might ultimately say the massive financial stimulus was a mistake. But the trouble is you can't manufacture a counterfactual situation to enable comparison between what happened and what might have been.

We simply can't say what would have happened globally if the massive stimulus had NOT been provided. Maybe there would have been a demand shock as fearful people everywhere collectively went into the foetal position. So maybe stimulus was the correct solution. Trouble is in the short time frame there was no chance of targeting the money to only where it was needed.

Instead, with money everywhere we actually had massive demand, which couldn't be met by supply chains that was struggling with the direct impacts of the pandemic - IE people getting sick and plants having to be closed etc.

So we got inflation. Serious inflation.

Let's be clear, at the start of 2022 the world economy was already in trouble - more trouble than I think is still generally acknowledged - because central banks had waited too long to act. They didn't just wait to see the whites of the eyes of inflation. They wanted to be able to see the blood vessels too.

Then Putin invaded Ukraine. And so now a bad but possibly still (just) manageable situation is looking very open-ended. By open ended I mean things might yet pan out okay...but they might pan out very NOT okay. A king-sized global recession is now eminently possible.

What does all this mean for our Great Reopening? Well, it just shrouds it all in great uncertainty, doesn't it.

If we talk about tourism, theoretically there should be pent up demand for both people to visit New Zealand and for us to clear off for overseas holidays for the first time in two years.

But there's some immediate problems. First, we've got an oil shock. That means expensive fuel. Which means air fares are unlikely to be compellingly cheap for a start.

Then there's other inter-related issues. While a lot of people, certainly within NZ, were able to stash some cash during lockdowns etc, prices of goods and services are now heading skyward and - of course - so are interest rates. What chance the stash of cash is getting quickly eroded now? Or at the very least people are getting worried that it will be?

So, the concern is that spending is going to be constrained, and not just for things like travel. And lest we forget, Covid is not gone. Far from it. Our hospitalisation and death rates are currently the worst they've been by a long way since the start of all this.

What's really happening here is that we are reopening our economy at a time when - far from the global situation being in post-pandemic recovery, it's actually getting worse.

Unfortunately then there's no guarantee that restarted tourism businesses are going to find conditions supportive - and lord knows they could have done with a bit of an economic tailwind, and a hand-up after a lousy two years.

Likewise, elsewhere in the economy the immediate direction looks down not up.

So, while there's a sense of relief and pleasure that things are starting to open up again, this doesn't look like it's going to be easy.

We are going to have to be patient.

This isn't going to be a bounce-back, it looks like being a slow grind. The new 'normal' may take us a while to locate.

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40 Comments

by J.C. | 24th Mar 22, 3:05pm 1648087514

Primary produce exports have been roaring. But look at the yen relative to the Kiwi. Zespri and Fonterra will be taking a hit in that specific mkt. As for Chyna, consumer spending is changing and high-margin yielding products are taking a hit. An ecommerce channel strategy is simply not enough to ensure a profitable business there anymore.

by unaha-closp | 24th Mar 22, 3:43pm 1648089800

In broad summary then; our response to the pandemic was fantastic when the government was simply instinctively dealing with what was in front of it.

I agree how the government acted in the first stanza is seen as fantastically positive by most local NZers.

However shutting the border, blocking overseas NZers from returning and kicking out all tourists (no refunds) is not the best advert for travelers now. Travel to a country that will instinctively harm their interests might not be attractive to some.

by GV 27 | 24th Mar 22, 3:17pm 1648088225

It was a very expensive place to visit before. It's going to get even worse as inflation takes hold and tourist dollars buy fewer NZDs.

by GraemeRansom4234 | 24th Mar 22, 3:51pm 1648090318

Just back from Australia yesterday. Their prices have generally been lower than ours. Was in a very average pub on Tuesday that offered a $25.00 hamburger. Beer was only marginally cheaper than here. We are not on our own.

by GV 27 | 24th Mar 22, 4:06pm 1648091180

That's a big swing if it's representative. The tourist strips in the Gold Coast would have been struggling to charge $20 for a main that the Viaductees want $40 for when I was last there. Are you sure you didn't visit one of those MasterChef pop-up dealies where everyone has short-sleeved business shirts and beards like lumberjacks?

by GraemeRansom4234 | 24th Mar 22, 9:22pm 1648110165

I went to the College Lawn in Prahran, Melbourne.

by GV 27 | 25th Mar 22, 8:06am 1648148786

Looking at those prices, those seem about $ for $ what we pay. But if I lived in Melbourne I'd be pulling down close to another 50% on top of what I earn now. So it becomes a stack more affordable.

I can't remember the last time I ate at a gastro pub. I think a plate of fish and chips with a small side-salad in Kingsland cost me $28 pre-Covid.

by Pa1nter | 24th Mar 22, 10:29pm 1648114199

That's not good news for people who think they can just buy a plane ticket and resolve their issues.

by Officebound | 24th Mar 22, 7:11pm 1648102288

Did they actually kick out tourists, or do you base your whole point on hyperbole?

by AKLCrusader | 25th Mar 22, 9:53am 1648155186

Stats NZ daily arrival and departure data from 16 February 2020 to 12 July showed a Net 247056 people left NZ (arrivals less departures), despite many kiwis running home as the borders slammed shut. Is it any wonder there is a labour shortage, and it raises a question as to how there is a housing shortage, those people must have lived somewhere or were they all in hotels?

It's not hyperbole, the Government shut down the country, told kiwis to get home as the planes wouldn't be flying, shut down the businesses that employed longer term travellers, and refused access to "education based tourism".

They physical act of escorting them to the plane is not so far removed from the act of making it impossible to function as a tourist or visitor, hence his description of kicking out the tourists is remarkably accurate.

by AKLCrusader | 25th Mar 22, 9:54am 1648155262

Here is the summarised version in graphical format

https://www.stats.govt.nz/topics/tourism

by GV 27 | 24th Mar 22, 3:16pm 1648088178

I think we're about to get another reminder of how much domestic tourism is worth. If living costs and inflation take off in NZ, then locals won't holiday. That's fine if the tourists come back in big numbers, but a) do we want that, and b) do the even want to come here? I can't see much structural changes to help us cope with issues like freedom camping or accomodation pressure in the old hotspots, and we're going to have to turn that up to 11 if locals can't afford to holiday locally to help things moving along.

BTW I'm intensely pro-Light Rail and even I can see how far and bloated the proposals have become. The feeling is widespread within the ubranist community who were keen to see it proceed. It's just a mess now. Cancelling it now and trying again for the basic, cheaper street-level option in three years time is the way to go - it would cause disruption but it'd also save you about $20b for hopsitals, schools, hell, even a proper regional light rail network. Other countries can figure this out, why can't we?

by agnostium | 24th Mar 22, 6:11pm 1648098687

Agree on light rail, the project team were trying to solve to many problems in one project. They have also undercooked the disruption impacts of the underground option, digging stations is a huge endeavour (see CRL). If they had looked holistically at the system some of those objectives could have been resolved more effectively and more cheaply by other projects. As further work is done hopefully we will see some of the objectives (e.g. no impact on existing traffic capacity, overemphasis on Kainga Ora land) get pulled back and refocused on the core objectives and benefits. The surface running option will then easily be the preferred option. Personally I think when you give a project to people who are used to building stuff, big stuff, the bigger the build the more attractive it is to them and they subconsciously favour that option.

by JimboJones | 24th Mar 22, 6:32pm 1648099950

I think if they do build the underground LR it will be fantastic and exactly what Auckland needs. But it’s so big and expensive the chances of it being built seem like they are next to zero. Next year it’s highly likely we will have either a National government or a recession to cancel it, and that is just one of the ten or so years it will take to build it.

I think labour really need to find a public transport project in Auckland that even National can support. Or are national still too thick to see that they can’t keep building roads forever in Auckland?

by agnostium | 25th Mar 22, 12:55am 1648122942

The latter. Wouldn't bother me if they did it because they were climate skeptics but they pitch themselves as financially savvy. Their transport policies are just chucking good money after bad.

by GV 27 | 25th Mar 22, 7:08am 1648145319

No, they still think roads and buses are the way forward, but their electorate MPs rally against any semblance of bus priority or parking removal to make bus lanes happen so buses can move around easier. It pisses me off because I trust them to build a cheaper, quicker surface light rail option and actually get it done, but they don't have any interest in doing so. Whereas Labour can't wrestle the project back from the Wellington cardigan wearers and now it costs like 6x more than what they initially proposed TWO branches would cost us.

And you should read the GA discussion around Light Rail. Making it surface in Mangere and tunnelled in the CBD means that it's not going to be a proper metro and not going to give the benefits that should come with the stonking cost of tunnelling everything. The same money could get you a North Shore bridge, a North Shore branch, a NW Line and surface running throughout the CBD just like any other Australasian city - but we're spending it on tunnels and a single line, with no actual rapid transit solution in the NW at all now. It's insane.

The cheaper isthmus light rail was the way to go, start putting it back in on the old frequent routes in central Auckland, gradually grow the network instead of allocating tens of billions towards something that will only lock in the requirement for another $10bn worth of harbour tunnels. That's probably all of our transport spend for the next 50 years sucked up into one route from the Shore to the Airport and not much left over for anyone else in Auckland. It needs to be stopped.

by AKLCrusader | 25th Mar 22, 10:03am 1648155794

Light Rail is an answer for the wrong problem. I'm intensely against it, but then I guess I don't live in Ardern or Woods electorates......

I do however look at the rest of the city as one, and see that the airport link is pointless and undoes a core argumkent for the project.

- Most of the trips to the airport are from South Auckland, not served by this project

- Cities are undergoing pull backs as hybrid working becomes the norm

- Auckland needs a second harbour crossing as both risk reduction and transport improvement

We should be lining to existing transport corridors and pulling those underserved suburbs into that existing rail or bus corridors rather than fashioning an expensive vanity project just because Ardern said they would.

There are plenty of better connected possible projects that won't cost the better part of $30bn plus long term subsidies. Sadly, Labour is still stuck in the 70's and everything for their labour award plans (sorry FPA's) to their immigration policies, to the inflation outcomes being created, reflect them harking back to a "better time"

I live through the Muldoon years, it wasn't a better time! It is feeling like that time again now.

by GV 27 | 25th Mar 22, 10:15am 1648156525

The problem with 'just add more buses' is that you end up with too many of them to handle. The original light rail plan Labour campaigned on did exactly what you suggest - add rapid transit to areas that don't have it, but in a way that doesn't involve cramming more buses into the CBD. And the airport was never the core reason, it's a trip that only single-digit percentages of users would actually do. It was about putting in rapid transit along Dominion Road to Mangere and the North West to serve upzoning and developing areas, and give them a decent connection to the city.

The 'second harbour crossing' really just needs to be a bridge at a fraction of the cost of tunnels. If it can carry Light Rail, then you can increase capacity on the Northern Busway, which was designed to accomodate Light Rail.

All this should cost less than $15bn, but Labour are talking about spending double that to get a single line to the airport. It's insane. It's not the answer, but neither is trying to cram in even more buses or extending a heavy rail network that will require extensive tunneling and is gradient and curve-restricted.

by ModelCitizen | 24th Mar 22, 3:52pm 1648090336

Highlights the importance of the psychological aspect of confidence or “animal spirits” in order to get a rebound from an artificially induced economic slump. When you sell fear continuously since the Auckland lockdown began its eventually going to become self-fulfilling and non-temporary, spilling over into wider attitudes on all matter of things beyond just health. The unintended creation of worrying levels of discontent from those who can see the spin and bluster for what it is another prime example of a flawed approach spilling over beyond their control. Now the economic piper is knocking at the door wanting his penny too.

by Foxglove. | 24th Mar 22, 4:01pm 1648090881

That is I think, the best synopsis I have read to date, in explanation of the path New Zealand has been led down by this government. Impartial and true. Thank you David Hargreaves.

by Gummy Bear Hero | 25th Mar 22, 1:41am 1648125698

... I have it on good authority that the current pandemic of crises's impacting New Zealand : the insane house prices , soaring crime , child poverty , struggling hospitals , crumbling infrastructure , petrol prices , electricity .... you name it , but it's not Jacinda's government's fault ... oh no .... no sirrrreeeee , Jim-Bob !

Its John Key !!!! ... he's to blame ... I know this , because everytime an Ardern minister is interviewed on TV or radio , they invariably blame the previous government , the Nats !

by linklater01 | 25th Mar 22, 11:24am 1648160662

GBH,

Are you serious trying to say-in your own humorous way of course- that child poverty, struggling hospitals, crumbling infrastructure is all down to this government?

You're not as funny as you think you are.

by Gummy Bear Hero | 25th Mar 22, 3:54pm 1648176892

.. many of the " ills " besetting our society have been around for decades ... just getting steadily worse through the inaction of successive governments ... Yet , you never hear Megan Woods , Chris Hipkins , Little Andy , or Poto William's slagging off at Helen Clark ... John " tugger " Key is fair game , but not Ms Clark .... hmmmm. .... curious , that ...

by ngakonui gold | 24th Mar 22, 4:44pm 1648093456

Rugby franchise bosses predicting full houses for games over weekend.

Me i predict they won't be.

by K.W. | 24th Mar 22, 4:47pm 1648093665

I'm not sure how many Australian tourists are going to come to NZ. We still have mask mandates in place everywhere, while they have been living in Australia mask free for months now. Jacinda is making it clear that vaccine mandates and vaccine passports are now up to individual businesses to implement, and is actively encouraging those businesses to keep them. So now it will be pot luck if a tourist is allowed in to a restaurant or bar, depending on the whim of venue owners. Who wants a holiday like that when you can just head to QLD or Bali for some beach fun and no restrictions?

by chebbo | 24th Mar 22, 6:15pm 1648098931

I highly doubt that any hospitality or tourism venues will be requiring vaccine passes for that very reason. In fact, I doubt anywhere will.

The places where you actually do need to be careful - rest homes, hospitals, etc - could (and should) require RAT tests upon entry. They aren't 100% reliable, but they are far more of a safety guarantee than a vaccine pass, which has always just been a way to discriminate against people who won't do as they're told.

by DTRH | 24th Mar 22, 7:20pm 1648102839

Maybe we could get Basil Fawlty to meet them at airport.

by Pa1nter | 24th Mar 22, 10:39pm 1648114778

Probably helps if you look into what's going on elsewhere. Bali still has covid hoops (must be vaccinated, must evidence covid related insurance, must quarantine in specified hotel for a day, must take covid tests etc) , as do many other places. Some are still impossible to travel to.

And there's the rub, international travel is still pretty janky.

Maybe Queensland is super easy but she's pretty underwhelming for someone's first taste of international freedom.

by sit23 | 24th Mar 22, 5:15pm 1648095319

In Queenstown, because of the government's new Kafkaesque immigration rules, minimum wage will be the NZ median wage, $27 apparently. Kitchenhands, hotel cleaners etc. So a combination of more expensive services, and fewer services will be the new Queenstown. Back packers are already being closed for refurbishment as boutique hotels. It will be goodbye to low profit visitors. We now have an even more expensive QT on the cards. I hope to be in on it. Must put a chandelier in my airbnb unit bathroom and jack the price up. We are having a meeting next week of a tourist business I am involved in to put up all our prices. We have been under intense pressure from our operatives to do this for some time. As I have said before, it won't be dull in the near future.

by KH | 24th Mar 22, 5:49pm 1648097368

I can even have sympathy sometimes for the politicians and their intentions.

But they have no hope with the Wellington Civil Service in place. The 'servants' main activity seems to be batting policy consultations and forth across the road to the other ministries. Oh, that and making sure their position is cemented in place.

Look at the Commerce Commission and supermarkets. No real action envisaged, but 'monitoring' set in place. So job security all round for the boys and girls for the next few years.

I think the Civil Service workforce should be halved and the remaining moved out to places like Wanaka, Taupo and Whakatane. We would get an uplift in outputs and performance.

by redcows1 | 24th Mar 22, 8:30pm 1648107022

That's probably my biggest takeaway from this government. I don't feel it's been near as blatant previously. Anything the civil servants don't like has simply been meet with go slow or more obstification than previous government could match.

It must be like herding cats for the ministers.

by Let me be Frank | 24th Mar 22, 6:08pm 1648098514

Excellent piece

by Kiwisaint | 24th Mar 22, 8:05pm 1648105502

Lots of tourists will get a rude awakening with all the Emergency Housing dominating central city hotels & motels in many tourist towns and cities..

by imhenry | 25th Mar 22, 8:03am 1648148596

Japanese Tourist will be to scared to come. because of street crime

by Gummy Bear Hero | 25th Mar 22, 9:21am 1648153276

Avoid Rotorua ... the PM reckons its money well spent , a $ million per day , to put up Kiwis into motels at the taxpayers expense ... ask the regular Rotoruan residents if they agree with her !

by redcows1 | 24th Mar 22, 8:36pm 1648107414

The more I here of the "new normal" the more it sounds like the old normal in drag.

I thought the government would deliver a change with the massive spend up, that at least some of it would go to fixing stuff. Total fail.

But I'm not sure it's right to blame them, most people really don't seem to want change. So when we wake up in a year's time we will be blurry eyed and lost cause there was no plan to deal with the inevitable change. But really it's what we asked for, normal.

by Pa1nter | 24th Mar 22, 10:42pm 1648114968

We had a chance in the two years the borders have been shut to come up with something definitive in terms of a sustainable immigration policy. We haven’t. That’s still a work in progress.

I think the government is aware we'll need sustained immigration from now until probably forever so it's probably more a case of trying to make that palatable to the general populace.

by Squishy | 25th Mar 22, 7:22am 1648146124

I enjoyed the article.

In many ways it's probably unclear to the rest of the world if New Zealand is open for business. We changed our minds so many times with plans, stages and dates. In addition we still have impediments to travel in place (e.g. testing requirements.)

by Wrong John | 25th Mar 22, 3:31pm 1648175519

The kneejerk NZ govt with its kneejerk politics has been both laughable & sad beyond compare at the same time. If they had half a brain between them it would be lonely. A good article though, highlighting the difference in thinking - long-term v short-term - but to be fair, we've had too much short-term leadership for far too long already, before this lot assembled around the beehive. I have a good friend who always votes Labour whom I communicate with regularly & he is filthy on Jacinda & co because he sees them as having no plan, short or long term. And he's right. They don't. Never had have. It's just becoming so obvious today that it's unavoidable. Our current crop of leaders are under-educated (in reality) & over opinionated in every way, backed up with zero experiences in just about everything of real societal building you could name, with no hope of ever getting any better. Ever! The choices, however, are almost as sobering, as we enter a very important moment for this nation & its future. There are just nowhere near enough of us to divide & rule, or segregate, or redress, or call it what you will. At 5 mill, we are the size of an average Chinese city that you've never heard of before, but we desperately need to reset our relational expectations as a nation for the rest of the decade at least (short term) & preferably for the rest of the century as a long term goal. This is a conversation beyond political boundaries & calls for a fair bit of wisdom to have any chance of succeeding. Somehow we need NZ leadership to go beyond the current political borders & boundaries & we desperately need for the real adults in the room to stand tall.

by Alter Ego | 25th Mar 22, 7:24pm 1648189452

When you "Employ" staff with no experience, it is small wonder we get huge problems. (All Politicians etc)..

When they rule the roost, we may end up with egg on our face.

When you try to convert us to a language that only 10% speak, it would be sensible to start with the Language that most people understand.

That way we can educate our people that spending what you ain't got is stupid in the extreme. SO I will keep it simple...like me.

Housing our Homeless is fine for short periods, but we need long term solutions to build for our elderly and unemployed. Not share our Motels and Hotels when the Airline Industry gets back to full capacity.

When trying to mix Tourism with Socialism and Commune-ism it may be even more likely that our friends with money, may part with it elsewhere.

Sharing huge debt, with a plan to root the Tourism Suckers who think that NZ is cheap and a safe Nation, may be mislead yet again, as the crimes and inflating problems arise to prove our Leaders wrong. More crime and shootings this week, than I can ever recall.

We need bums on seats all around New Zealand. Paying for them first at the Middle Classes expense has been a taxing job.

Air New Zealand is an obvious factor.

Plus all of our illustrious Leaders and bleeders who think nothing of spending billions any way they can, over the past few years and way beyond all under standing.

Money is made to go around and around. Printing it, is never easy...I think they called it a crime in the past. But some seem to get away with it...

Banks can charge poor Savers and steal and ship out any cash they can steal a March on. Maybe Orr will up the Ante back on April the 1st.

All Fools Day Daily is getting to be Monotonous. Adrian.......Stop it please. Tax....the sharks....not the small perceentages...ripping ORRf our fair Nation....Workers Unite.......Vote.....Common Sense.....skip to Australia. ....they pay heasps......Not live in em.

Rant over.