Risk NZ will go backwards if it stays in its bubble, business group says

Friday, 3 July 2020

Zoom fatigue is setting in and it’s imperative that New Zealand figures out how to re-join the world, says the Trans Tasman Business Circle.

Sir Peter Gluckman, former Prime Minister Helen Clark and former Air New Zealand chief Rob Fyfe have co-authored a paper saying New Zealand needs to start working out how it can leave its “state of near-total isolation” to avoid the coronavirus pandemic.

“This is not just affecting tourism and export education, but also the many ways in which New Zealand projects and leverages its place in the world,” they said.

Opening the Trans-Tasman bubble looked increasingly distant with community spread in at least one Australian state, the authors said, and a vaccine could be much further away than expected.

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Trans Tasman Business Circle general manager Sharron Lloyd welcomed the discussion paper.

”We absolutely agree that global connectivity is an imperative for New Zealand, and it’s more important now in the current environment.”

The group had worked with the Australia New Zealand Leadership Forum working party investigating how a trans-Tasman bubble would work.

There was no date in sight for opening the borders with Australia, she said.

“There’s been a huge amount of work done on how to open them up safely and not just relying on technology, but working with the ecosystem to the airlines, tourism providers etc. My understanding is there’s been a huge amount done on that, and that both prime ministers need to be in agreement that the timing is right from a health perspective.”

The business community wanted to be connected, and there was work being done on how that could happen if the border did not open.

“Everyone’s in the same boat globally that we can’t travel. The question is in order not to be left behind how do we create that global connectivity – what’s the alternative.”

It was not a matter of waiting until people could move freely.

“Internet and video conferencing is great but it’s limited and people are getting that Zoom fatigue that we’re hearing a lot about - we’re so reliant on global connectivity and an international market that I just think the risks are that we’ll go backwards, that it will be detrimental to our economy if we can’t create global connectivity.”

Businesses needed to replicate face-to-face contact, build relationships, and maintain the flow of goods and services into New Zealand.

“I know things are really patchy at the moment but we are seeing some green shoots of hope and positivity in the business community and I think this report is positive.”

The aviation industry, which was taking a huge hit from the Covid lockdown, welcomed the discussion.

Justin Tighe-Umbers, the chair of the New Zealand Aviation Coalition, said New Zealanders were “understandably cautious”, but it was important to think about what the future might look like if a vaccine for Covid-19 was still years away.

An Air New Zealand spokeswoman said the airline supported the return of safe flying when borders were able to re-open, and would update its international network “if and when possible”.

Asked about the risks to the New Zealand economy of keeping the borders as they were currently, Westpac chief economist Dominick Stephens said the loss of international tourism was the key area.

“For every dollar spent by foreign tourists in New Zealand, New Zealanders only spend about 50 cents overseas,” Stephens said.

“On net we’ll be losing if we have no international tourism industry, but we won’t be losing as much as the worth of the industry.”

Tourism workers would have to be redeployed to other industries, and the next best way to earn foreign exchange and add value around the world would have to be found.

“I don’t know what that would be, but it wouldn't be as lucrative as tourism otherwise we’d be doing it already,” he said.

Not opening up the borders also meant worse job-matching, the meeting between the best employee and employer.

“The longer the borders stay closed, the less able New Zealand firms are to employ a specialist from overseas, or employ the right person from overseas.

“Instead, they’re stuck looking within the New Zealand labour market and they may not find such an ideal person, and that will reduce the efficiency of firms operating in New Zealand.

“On the other side of the coin, New Zealanders will be unable effectively to go overseas and build their skills.”

No business travel meant there was less spread of ideas around the world, which would impede the ability to strike deals, get sales, upskill, or get a great idea from overseas and bring it home.

“If we cut ourselves off, we’re stuck in a smaller pool of ideas and productivity enhancements,” Stephens said.

On the other hand, the ability to operate nearly normally was a really valuable asset to New Zealand.

“So if we opened the border earlier we’d overcome some of the risks … but we would imperil the smooth functioning of a really large chunk of the economy.”