We are in a situation where we must confront the prospect of a level of change none of us have ever encountered or even imagined in our lifetimes. We need our political leaders to stop sniping and lay out their long term plans, writes Peter Dunne
While every day reveals new uncertainties about the Covid-19 virus and its impact on the world, there is one emerging certainty that will impact universally, no matter how successful individual national efforts to control or eliminate the virus prove to be.
It is now clear that the economic consequences of the pandemic will be worldwide and far more profound than any previous downturn since the Great Depression of the 1930s.
Whether it be in the United States, where around 40 million jobs were shed at the peak of the pandemic – of which it is estimated nearly 17 million will never be restored – or Japan where, according to the Japan Times, economic activity shrank by almost 28 percent in the April to June quarter this year, the picture is the same.
Massive social and economic dislocation is being caused by the pandemic that will not be quickly or easily restored, and existing policy mechanisms are unlikely to prove adequate to the task.
In New Zealand, already around 40 percent of the workforce is currently in jobs subsidised in some way or the other by government assistance packages, a figure likely to increase with the latest $500 million boost to the wage subsidy scheme as a consequence of the community transmission outbreak in Auckland.
By way of contrast, the combined numbers of those who were unemployed or on government relief schemes during the Great Depression peaked at around 30 percent of the workforce in 1933.
The initial response of governments the world over to the current pandemic crisis was similar. Across Europe, the Americas and Asia, governments, through their central banks, deployed a range of personal and business income support measures and credit lines, to ensure businesses were able to operate as usual, until the pandemic was brought under control and normal conditions were restored. New Zealand was no different, and the government was quick to implement similar measures, and has continued to expand them as it has deemed necessary, to protect our economy.
… many of the jobs now being lost around the world will never be replaced.
However, such relief packages are essentially short-term, and we are already seeing questions raised about their long-term viability, as fresh outbreaks of Covid-19 occur. Measures that were implemented to accompany the initial round of lockdowns will become increasingly difficult to sustain as future outbreaks occur.
As the prominent epidemiologist Sir David Skegg observed recently, we need to learn to cope with Covid-19 outbreaks without going into lockdown every time one occurs.
Already there are signs that getting public compliance with the current Level 3 lockdown in Auckland is proving more difficult than the earlier lockdowns.
And, while the government has continued to invest heavily in cushioning the blow on businesses and households, its capacity to continue to do so on an unlimited basis whenever there is an outbreak is becoming more and more limited.
Globally, the focus is shifting to the nature of the international economy in a Covid-19 world. Unemployment and falling economic growth caused by the pandemic are likely to be with us for a considerable period of time ahead as its consequences embed themselves more deeply into our societies. The blunt and emerging international truth is that the emergency measures that governments have introduced so far will not be enough to restore our economies and societies.
For a start, many of the jobs now being lost around the world will never be replaced. The march to automation that has over recent years already seen tens of millions of jobs across the world replaced by machines – for reasons other than Covid-19 – is now accelerating rapidly, driven as much by public health concerns as economic efficiency.
The consequences for those semiskilled or unskilled workers displaced will be massive and will impose huge pressures on governments to address those workers’ new circumstances and to create meaningful, sustainable, replacement employment opportunities for them.
The change in work patterns which is likely to see far more people working from home at different times than ever before, something which has been speculated as more than likely ever since the dawn of the modern technological and communications revolution, will become the new normal, and no longer just a morning coffee discussion topic.
That means many of the downstream industries that support current work patterns will be hit hard – from the inner-city cafes and restaurants used to the morning coffee and lunch trade, to the variety of businesses supporting traditional office and factory structures – furnishing and lighting and air-conditioning, cleaning, and laundry and towel services, for example. Then there will be the impact on public transport services, business travel and accommodation, taxi and delivery services and so on.
Some may say that the discovery of a vaccine will help bring things back towards normal. But while the advent of a vaccine at some as yet unknown future point might offer some relief, the reality is that the economic and social changes unleashed so far are now too profound for anyone to even think we can put everything back together the way it was, and get on with life as though 2020 never happened.
Here is where New Zealand’s rescheduled general election assumes a greater relevance than might otherwise have been the case.
Despite its coy denials, the Government would have been delighted for the original September 19 election to have been a referendum on its handling of the Covid-19 response to date. After all, until last week, there was no community transmission in New Zealand, and internationally we were being lauded as the model response. The Government was cruising to an overwhelming election victory on the back of what the Prime Minister styled the “Covid” election. However, in its inimitable way, Covid-19 has now shattered that dream as well.
The end of the myth that there was no community transmission here, and the mounting questions about the adequacy of testing regimes at the border and for those involved in managed isolation or quarantine – staff as well as detainees – have dented the idea of running the election as an endorsement of the Government’s approach so far.
Despite all the talk, and the calls from the experts, no political party has yet outlined an integrated, comprehensive public health and economic strategy on the way forward.
It will still enjoy considerable residual support for what it has been doing, but as the more critical reaction than previously to the support measures announced in the wake of the Auckland outbreak has shown, people are increasingly turning their attention away from the short-term support measures to the bigger long-term questions of how we prepare for a future where Covid-19 and its aftermath are likely to be far more significant than imagined when our first Covid-19 case was detected at the end of February, or even just a week ago.
It is hardly surprising that the four-week election deferral was not the Government’s preference. However, it became an inevitable and pragmatic response in the circumstances.
While Labour must be still heavily favoured to retain office, the new election date changes the equation somewhat. No longer will the Government will be able to bask in its success on beating Covid-19. Even if the current outbreak is out of the way by mid-October, the election will still take place against the backdrop of Covid-19 not having been eliminated in New Zealand was originally claimed, but potentially still lurking in the community.
Its focus will therefore be less on the glory of past achievements, and more on what needs to happen next, than might otherwise have been the case. And so, it presents an opportunity for every political party to move beyond the short-term politicking now bedevilling the Covid-19 debate in equal measure on all sides into the far more substantive and relevant field of New Zealand’s long-term strategy to cope with Covid-19. Despite all the talk, and the calls from the experts, no political party has yet outlined an integrated, comprehensive public health and economic strategy on the way forward.
Therefore, it is time for Labour and National, as the two parties most likely to be in a position to lead the next government, to stop sniping at each other over petty points and to lay out their comprehensive plans for the future for us all to see.
Resting on the laurels on what has happened over the last few months or focusing solely on various operational shortcomings will no longer be enough. Nor will focusing on competing personalities or leadership styles.
These may have been sufficient points of argument in more normal election campaigns, but the consequences of Covid-19 have moved us all on from that.
We are in a situation where we must confront the prospect of a level of change none of us have ever encountered or even imagined in our lifetimes. Therefore, we have every right to expect our politicians, whether in government or not, to respond with full policy programmes setting out their proposed solutions, which we, as voters, can assess and make a choice about.
Ducking responsibility by claiming either that you are too busy governing to release much new policy, or that you do not have access to the same level of information as the Government to enable you to form detailed policy, are nothing more than abject leadership failures.
Whatever choices we make, or politicians we elect, New Zealand is going to require clear direction and policies in the difficult years ahead. Current circumstances and the October election now present us with a powerful opportunity to determine which of our political parties has the policy mix to guide New Zealand through the difficult times ahead.