Covid 19 coronavirus: Economist's plea to MPs: 'We need a grown up to tell us how to think about it'

Finance Minister Grant Robertson on the Government's decision to increase minimum wage during coronavirus lockdown.

OPINION:

Even in the first week of lockdown, the pressure is mounting for the Government to quickly articulate how it will extract the economy from stasis.

Economist Shamubeel Eaqub found himself in the middle of a national, live-streamed debate on Wednesday when he briefed MPs on a select committee on Parliament's response to Covid-19.

SIGN UP TO OUR COVID-19 NEWSLETTER.
SIGN IN OR REGISTER, THEN SELECT TOP NEWS STORIES

Usually these types of briefings are held behind closed doors so MPs don't feel afraid to ask silly questions, as they prepare to question a minister or government department chief executive.

With most of New Zealand's white-collar workforce sitting at home, we saw Eaqub warn New Zealand to think of the economy in three stages as a result of the public health response.

Lockdown, purgatory and new normal.

Economist Shamubeel Eaqub said disruption to the economy will not stop at the end of the lockdown. Photo / Nick Reed.

"We are looking at, essentially, a very non-linear, sudden stop in the economy."

If that sounds complicated, it isn't really. Everything is going to more or less stop at once, but the precise way it will affect one business could be dramatically different to the next.

Certain businesses could lie dormant for years with little fuss. Some businesses are closing down already. Some will emerge from the lockdown unscathed.

Some businesses will restart with optimism, only to discover the customers have disappeared.

NeedToKnow3

"The disruption won't end just because the lockdown has ended," Eaqub told the committee, chaired by National leader Simon Bridges.

Eaqub made a number of pleas to MPs, but mainly it was a plea for information.

Firstly this was faster access to high frequency data, such as how many people are asking for the job seeker's allowance.

Mainly, though, tell us how we should plan to get out of the lockdown, Eaqub said afterwards.

TO READ THE HERALD'S FULL CORONAVIRUS COVERAGE CLICK HERE

"Most of the businesses I advise, what they're asking, is, what are the triggers we should be looking for? What are the triggers that are going to end it, or extend it?"

The longer it goes on, the more businesses run out of cash, in their thousands.

"If it's not in four weeks time, then I want to hear from Grant Robertson what are the additional things you're going to do, or not, so that we know."

While workers simply wait for the lockdown to end and hope their job will still be there for them, business owners face decisions about whether to hold or fold, so need the best information available to make sense of the current situation.

"What happens when we go out [of lockdown]? What's the state we go into? Are people going to go back to the CBD? Will they work from home half the time?" Eaqub said.

"We need some sort of help to help them navigate through this period because everyone's operating in a vacuum, and we need a grown-up to tell us how to think about it."

So far, there is little sign of that.

Eaqub spoke to the Herald not only after his hearing, but also after Finance Minister Grant Robertson and Treasury Secretary Dr Caralee McLiesh had faced MPs.

Select committees can be painful things to watch, as ministers often repeat bland statements, slowly, to use up time, rather than risk being embarrassed by their opponents.

Although this week's sessions will be among the most-watched events of their type in our history, old habits die hard for politicians.

When National's Paul Goldsmith asked for Treasury's best guess of how high unemployment would go, Robertson interjected, saying Treasury could not give any pre-Budget forecasts. Robertson said as soon as McLiesh gave any figures, these would become "the truth" and could move markets, so they had to be developed carefully.

It is a reasonable point, but over and over he went, for about three painful minutes.

Eventually, when McLiesh spoke, she first repeated Robertson's point, then said Treasury was considering a range of scenarios, acknowledging the department believed unemployment could rise "well into double digits".

Eaqub, watching an entire select committee for the first time, asked if it was normal for the Treasury to give so little away.

"I didn't get anything from Treasury today. Not to be dismissive, they said they were looking at some stuff."

Robertson did offer a rousing note of optimism at the end of his opening statement.

"These are extraordinarily tough times for the whole country, but for businesses and workers especially. We have to remember, the economy was robust going in. Sound, and full of innovative and successful people. And it still is. And our job is to get people through this so that in the recovery, all of these things continue to prosper for New Zealand."

But as good as that statement sounds, saying that he wants businesses to prosper does not do anything. What businesses need to know very soon is when the lockdown might end and what kind of world its leaders think it will reopen to.

‌

‌

• Covid19.govt.nz: The Government's official Covid-19 advisory website