Post-Covid wishlist needs to be backed with action and money

Thursday, 13 May 2021

Finance Minister Grant Robertson speaks to media after his pre-Budget speech in Auckland on Monday.

OPINION: You know there’s a problem when even the accounting industry is feeling the effect of our labour and supply constraints.

At a pre-budget speech by Grant Robertson to a business audience in Auckland this week a member of the audience got up to ask if something could be done about the almost-chronic skills shortages now hitting a variety of industries.

“We’re finding accountants are hard to get, data analysts are hard to get, builders and construction people are hard to get, so it’s across the board,” one person in the audience told Robertson.

Some of those hard-to-get workers were at Aotea Square on a damp Wednesday night, where more than 200 migrants turned up for a protest which took on a ferocity and energy that even seemed to surprise the protestors themselves.

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“Some of the politicians are trying to use migrants, to scapegoat them, for the problems that they did not create,' one of the speakers at the protest, Joe Carolan, said.

Veteran union activist Joe Carolan at a migrant rights protest in Aotea Square last week.

“We did not create the housing crisis. Do you know why? Because look up there, and you’ll find who’s building the houses in this country: migrant workers.

“In the liquor stores and the petrol stations where people work at 2 or 3 or 4 at night, where people work at Christmas…they're doing the dirty work, they’re doing the dangerous work, and they’re doing the difficult work…and when we needed help during the pandemic you made us queue for food.”

Everywhere you look the economy is bumping into constraints, whether self-imposed by fiscal responsibility mantras, pay freezes and punitive policies towards migrant workers or externally imposed by supply chain issues, trade wars, or closed borders.

Policies to secure timber supplies by stoking domestic demand through policies like âwood firstâ seem to have stalled.

The global economy was once a bottomless pool of everything we needed. Workers? Import them. Don’t have enough expertise to run a semiconductor factory? Same deal, except just bring in the semiconductor chips. Tourists from one place no longer keen to travel? Run a “clean, green” marketing campaign somewhere else.

We knew constraints were coming when the borders closed. Which is why during lockdown and its immediate aftermath you couldn’t have a Zoom call or an interview with any expert tangentially connected to the economy, politics or business without hearing their musings on what the post-Covid economy might look like.

They seemed to have a similar sense of what this phrase meant: More kindness, few-to-no tourists, re-shoring of key industries, zero-to-no migrants, better education, more productivity, no “export education”, and a lot of construction.

Low migration was signalled as a plank of our post-Covid system, but businesses are hitting up against labour capacity issues.

There would be so much construction we might even need to bring back the Ministry of Works again, mused the once-ascendant Doc and Marty infrastructure duo of Shane Jones and Phil Twyford who were here to take us back to the future.

Somebody would need to build all this housing and infrastructure after all, so why not all the unemployed non-migrant cooks, baristas and flight attendants? Somewhere along the line the idea of giving all of these people a literal shovel took hold and we decided to splurge $3b to fix a $75b infrastructure deficit. Just enough to buy the shovels.

Old industries once written-off as uncool were now back in vogue. The manufacturing industry released a significant piece of work touting all the government investments, policies and incentives which would be needed if we wanted to grow manufacturing here.

Buying off-the-plans is cheaper than it has been in recent years.

Meanwhile, policies to secure timber supplies by stoking domestic demand through policies like ‘wood first’ seem to have stalled, but a new log exporter registration regime people feared would limit log exports roared ahead (if that was its aim, it didn’t work).

On the migration front, starving immigrants had to go to great lengths to secure a single can of beans under lockdown, then had all manner of barriers thrown at them to prevent them retraining or taking up new jobs because they were ruining everybody’s productivity. If we reduced the number of migrants able to work for a living jobs and higher wages would flow to the rest of us, or so we were told. All while house prices and rents shot up faster than when those migrants and foreigners were fully employed.

And as the crisis dragged on our reputation as a country grew. One person I interviewed in the US expressed his appreciation for all the café noise in the background during our interview. It was the first time he’d heard obnoxious laughter and the annoying clanking of coffee cups in months, and he weirdly missed it.

New Zealand had shown the world it was the ultimate insurance policy. A developed country able to lock itself down rapidly and continue on as normal in the event of a global disaster. It was valuable, and companies wanted in.

As Stuff reported in The Monitor large US companies sought NZ out as a potential alternate manufacturing site before suddenly realising our labour and industrial constraints meant it wasn’t such a good idea. At a New Zealand-India Trade function two weeks ago one attendee told me a similar story about Indian companies in the pharmaceutical industry, so the companies were definitely knocking.

The problem, all these international businesspeople told us, were the constraints.

They didn’t really need to tell us because we already knew.

The slow and low level of shovel-ready investment even took credit rating agency S&P a little off-guard after it predicted the Government would come to the infrastructure party where local councils were concerned.

As for new industries like international manufacturing, companies soon reconsidered once they realised how small our labour force was and how the infrastructure here was barely enough to house its existing population.

So, when it comes down to it, just where is the post-Covid economy we were promised? Are we even on the road to it? And are we serious about lifting the constraints on our economy in areas like infrastructure?

We seem to have successfully cut off export education, tourism and immigration, but it is strange that more than year after we shut our borders we haven’t really backed these alternative post-Covid ideas with any sort of investment or urgency.

If we’re serious about wanting to do things differently by building in more manufacturing redundancy, constructing some massive Works Ministry, or training a replacement workforce to the migrant one, then NZ Inc is going to have to spend some money, and the Government are going to have to spend some political capital, backing these post-Covid aspirations.