As Auckland business leaders and the city’s economic development agency hold a day-long summit to thrash out a Covid-19 economic recovery plan, Finance Minister Grant Robertson is singing from a different song- book.
He reckons NZ’s economy is doing well and
“ … as we look ahead, there are a number of areas where the government’s support will continue, including investing in our people through policies to close the skills gap, creating jobs, preparing for the future, supporting small businesses and entrepreneurs, and positioning NZ globally to continue to trade with the world”.
While Auckland business leaders are concerned at the fragility of the city’s economy with 150 Auckland businesses a day contacting a Covid-19 support line asking for help, Robertson cites consumer confidence surveys which show consumer confidence remained steady in July after resurgence through May and June.
The Finance Minister, responding in Parliament to a ‘patsy” question from Auckland MP Deborah Russell, referred her to small-business employment and revenue data for June, released by Xero which, he said, showed many Kiwi small businesses are recovering from the impacts of Covid-19.
“The data showed that compared with Australia and the UK, NZ has seen the strongest early rebuilding phase so far, despite having the largest drop in small-business revenue when lockdowns were introduced. June 2020 small-business revenue is on par with revenue in June 2019, recovering from significant drops in May and April. In Australia, revenue remains down 8% on June last year, and in the UK, it’s down 18%t. At the end of June, the NZ small-business sector had 3.6% fewer jobs than pre-crisis levels. This compares to 6.8% fewer jobs in the Australian small-business sector and 8.5% in the UK.
“ While we know that many small businesses are doing it tough right now, this data underscores the benefit of the less restrictive business environment that Kiwi small and medium sized enterprises are now operating in, thanks to the hard work of the team of 5 million”.
Robertson thinks it’s encouraging to see a net 31% of consumers expect to be better off financially this time next year.
And he gives himself a congratulatory pat on the back:
“We can see that our decision to go hard and early in both our health and economic response to Covid-19 has given Kiwi households confidence coming out of the lockdown”.
Almost as an afterthought, he adds:
“ … it’s also clear that with the virus raging overseas and many areas reimposing restrictions, there is less certainty in the consumer environment. That’s why we’re committed to supporting NZ firms and workers to adapt to this one-in-100-year shock, and we have made significant investments to back this up”.
Will it be enough to pull those Auckland businesses through?.
ATEED says 70% of its jobs were being supported in mid-July by wage subsidies. It is predicting 40,000 to 50,000 Aucklanders may lose their jobs in the pandemic recession.
And there isn’t much joy in the latest unemployment statistcs, even though the headline unemployment rate unexpectedly fell to 4%, due to measurement issues as a result of the lockdown. Adjusting for this, unemployment rose to 4.6% in the June quarter.
Robertson of course put a positive spin on the figures. He said the numbers showed the government’s decision to move quickly to put the wage subsidy in place to protect jobs was the right thing to do.
“Our response has protected both lives and livelihoods. The success of the team of five million with our health response, and investments to cushion the blow for businesses and households with policies like the wage subsidy, means that NZ now has economic opportunities other countries do not have.”
ANZ economists, in their commentary on the job statistics, say both the adjusted measure and headline unemployment rate showed a very steady increase over the quarter, reaching 6.2% in the final week of the quarter, “though sampling errors are very wide”.
Under-utilisation increased from 10.4% to 12.0%, with slack emerging in the labour market, “which is only set to increase”. Wage growth was also very modest (up 0.2% q/q), despite the minimum wage rise.
“This picture and the outlook for the labour market to deteriorate significantly from here will be concerning for the Reserve Bank”.
ANZ expects more stimulus next week.
Point of Order thinks Robertson will keep singing from his song-book at least through to the election. Voters will have to decide whether he has got the tune right.