Employers and Manufacturers Association chief executive Brett O'Riley. New Zealand Herald Photograph File Photograph.
Employers and Manufacturers Association chief executive Brett O'Riley. New Zealand Herald Photograph File Photograph.
Recovery from the Covid-19 crisis requires business and government working together to pivot the economy towards growth opportunities, says Employers and Manufacturers Association chief executive Brett O'Riley.
O'Riley, who has been working with EMA members across industries such as construction, retail and manufacturing, says many businesses are raring to goas soon as they get out of lockdown.
"They can see opportunities to get back into business quickly," he says. "A number of them have existing orders and they're just keen to restart and get going."
On the other hand, there are businesses - typically small hospitality operations - in a situation where they could "barely contemplate getting back to business".
"But I think the prevailing sentiment at the moment is: when can we get into level 3 so we can get back to work in some shape or form?" he says.
O'Riley and the EMA were disappointed by the tight restrictions on retailing that the Government has retained for the level 3 phase.
He is concerned that some small retailers, particularly those that don't sell online, won't survive much longer without the opportunity to trade in some way.
The EMA will continue to lobby the Government for more flexibility around the level 3 phase - particularly if case numbers continue to fall.
But otherwise, thus far, the Government has been responsive and working well with business, he says.
"I think the Government have been listening," says O'Riley. "We've had good dialogue at both ministerial and senior public service level."
Those businesses that could now see a path back to work are already thinking about growth opportunities, he says.
"It looks like we're going to be one of the countries that comes out of the Covid-19 crisis in better shape than some others.
"Just talking to our members in the past few days, there is interest out there in investing in the New Zealand economy.
"We've talked to people in the property game, there's been interest out of Australia. There's some interest in New Zealand property, both commercial and residential."
There will be similar opportunities in other sectors, O'Riley says.
"It's an old cliché, but we produce what the world wants to consume."
The Government fiscal response to support business has been good so far, O'Riley says.
But more will be needed.
"In some ways you might say it's never enough, because of the depth of turmoil and, in some cases, financial ruin for business is so varied."
"We've worked very closely with [Government] at every step of this crisis and we know that there is more financial assistance to come and that is available."
But ultimately the economy will need to attract private investment as well, he says.
The EMA wants the Government to change rules to encourage more foreign direct investment, to ensure that business isn't entirely reliant on state support.
"There is no reason now why we can't look at how we actually encourage private sector investment both from within New Zealand and outside New Zealand," O'Riley says.
That might mean fast-tracking Overseas Investment Office (OIO) approvals and loosening some rules to encourage private sector investment into new projects and expanded production activity.
The NZ Super Fund and other local entities could also play a major role in some of these new projects, he says.
"One of the ideas we've talked about is New Zealand becoming a 24/7 economy," O'Riley says.
"NZ has always had a productivity challenge, so is this an opportunity to actually start operating the economy in a different way?"
There are still industries facing skills shortages, he says.
Construction on the Puhoi to Warkworth motorway, due to open in 2021. New Zealand Herald Photograph by Michael Craig.
"If every major construction project and every manufacturing business could add a shift of workers … that absorbs a huge amount of employment."
That kind of shift might need consent and bylaw changes to enable businesses and projects to operate 24 hours a day with multiple shifts.
The hospitality sector, for example, might not be able to have face-to-face customers, but if the economy was operating on a 24/7 basis, people would be eating more at different times, he says.
"Maybe that sector pivots towards much more of a takeaway home delivery model and the working day and [the hospitality sector] way of operating moves to 24 hours as well."
Another opportunity worth considering was using streamlined Resource Management Act consenting for shovel-ready infrastructure projects.
"Let's fast-track getting them started but let's also fast-track getting them finished," O'Riley says.
"I think we have social licence now to operate economy in a different way.
"All of us want to see as many New Zealanders as possible employed and if we can use this as an opportunity to get some of these projects finished then we all benefit from that"
"Without being too 'Pollyanna-ish', there is a chance here for us to pivot the economy in a different way."
Getting through - EMA's six tips for business
• Prepare a back-to-work health & safety plan for level 3 and level 2.
• Touch base with your suppliers and customers.
• Talk to your shareholders, bank or finance company; they're there to enable you.
• Re-imagine your services to meet the market; take advantage of Government funding to become more digital.
• Reorganise, redeploy and restructure with empathy; use your networks to connect people.
• Keep yourself and your people healthy, mentally and physically; rest when you can.
Government business support (so far):
March 17 • Wage subsidies for up to 12 weeks (estimated cost up to $12 billion) •Business tax changes, including: provisional tax threshold lift; reinstatement of building depreciation and writing off interest on late tax payments (est. $2.1b)
March 24 • Business finance guarantee scheme. Firms (annual revenue $250,000 to $80 million) can apply to their banks for loans up to $500,000 for up to three years, with Govt guaranteeing 80 per cent of the risk. (Up to total of $6.8 billion new lending)
April 15 • Tax loss carry-back scheme (estimated cost $3.1b over the next two years) • Changes to the tax loss continuity rules (est. value to business of $60m per year) • Funding for business consultancy support ($25 billion)
