NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Economy

Covid 19 coronavirus: Sir Bill English warns that if markets shake off Covid-19, the public will respond

Hamish Rutherford
By Hamish Rutherford
Wellington Business Editor·NZ Herald·
10 Apr, 2020 05:00 PM7 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Sir Bill English, pictured during his valedictory speech in 2018, delivered a candid warning in March about the structural changes New Zealand would face from Covid-19. Photo / Mark Mitchell.

Sir Bill English, pictured during his valedictory speech in 2018, delivered a candid warning in March about the structural changes New Zealand would face from Covid-19. Photo / Mark Mitchell.

A briefing by former Prime Minister Sir Bill English gives a remarkably candid warning of the long-term problems New Zealand faces from Covid-19.

Former Prime Minister Sir Bill English appeared to deliver a warning to financial markets: if the stockmarket doesn't fall further the public will realise something is amiss and wealth or capital gains taxes could follow.

In late March, as it was first emerging that Finance Minister Grant Robertson was preparing to offer loans to private enterprise and markets globally were bouncing strongly off multi-year lows, English gave a presentation to Jarden, the wealth management firm where he has been a strategic adviser for around 18 months.

A summary - understood to have been drawn from a 90-minute presentation - was distributed to clients. It has been circulating in political and business circles since.

Advertisement
Advertise with NZME.

The document provides a candid glimpse into English's views on the behaviour of both financial markets and the likely environment within the Beehive as it deals with a public health crisis and prepares for the resulting economic fallout.

NeedToKnow3
NeedToKnow3

English reportedly said the market surge of the time, if correct, suggested the US Federal Reserve could control the turmoil of Covid-19.

"Anyone who believes that is naive," English said. The market was working out that the "out" usually provided by central banks had been extended to a taxpayer "put" - an arrangement to buy an asset for a pre-agreed price - "for now".

But the summary said where markets had repeatedly been bailed out in recent years by politicians or central bankers, this time it was different.

Advertisement
Advertise with NZME.

"This is not about financial markets; it is about the real world. It can't just be talked up. This is going to be a long haul as confidence is rebuilt. Currently all companies, regardless of whether they are financially strong or weak, are hoarding cash."

Even major companies were living in fear, confronted by a major drop in revenue, and were lobbying governments to try to influence decision making.

Discover more

Economy

Liam Dann: Ghost of Muldoon - state support can't mean a return to 1970s

11 Apr 05:00 PM
Business

Depression or inflation? Where will Covid-19 end?

12 Apr 03:07 AM
Companies

Oil and gas firm OMV talks up final oil well off Taranaki

13 Apr 05:00 PM

"If they are feeling that exposed, imagine what small business owners are feeling right now."

New Zealand, a small country at the end of the world, would eventually need to repair its balance sheet and "all forms of taxes will be on the table".

How the burden of the crisis impacted different groups would likely influence the response, but if markets shrugged off the major threat to the wider economy, a public response could be expected.

"If the equity market falls 30 per cent, coughs and then recovers, the Government would likely have no hesitation in pushing through a capital gains tax (CGT).

"An equity market that seems to shrug off such an enormous dislocation would attract broad consensus across the political spectrum that something is amiss, and a CGT is needed.

"We are meant to be a risk-adjusted market economy. If markets go on as normal something isn't right and the 'taxpayer put' is causing bad outcomes."

Advertisement
Advertise with NZME.

Since making his presentation, the NZX-50 and most major global markets have edged higher, despite increasing warnings about the impact of the disruption.

Independent economist Cameron Bagrie said it was likely that as New Zealand moved past the initial impact of Covid-19, all forms of revenue gathering would be on the table in a means to improve the state of the Government's books.

With more bad news likely in the coming months, Bagrie said sharemarkets could head lower. "My personal view is we haven't hit the bottom yet. Risk needs to be repriced. You look at every asset class. Housing, commercial property, equities. They're all hellishly expensive compared to the risk you're taking on board."

English declined to comment.

Jarden chief James Lee said English was just one of a number of experts the firm had been using to improve its thinking on Covid-19. The summary had been sent to clients in a form which was not designed for a wider audience.

A 'structural shift'

As the four-week nationwide lockdown has dragged on, the warnings of how large and lasting the impact of Covid-19 could get have been growing increasingly severe.

English pulled no punches about how much of a change in conditions New Zealand faced.

"New Zealand now has zero net migration, zero tourists, zero foreign students and zero inflow of temporary workers. These flows, which have been drivers of the labour market and the housing market, won't just turn on again," English said.

"Let that sink in. This could be a structural shift. Our economy is not going to fire up again at the flick of a switch."

While there have been few hard indicators of how the economy has been impacted by the pandemic, most economists expect a severe contraction in activity and a sharp rise in unemployment.

Tourism Industry Aotearoa chief executive Chris Roberts warned MPs on Wednesday that 100,000 jobs could be shed from the sector, while the freight industry warned of a growing fear that bills would not be paid.

Infometrics economist Brad Olsen warned the structural changes facing the economy would be huge.

"Some of the ways businesses usually operated, or the conditions we always assumed are going to be there are not going to continue.

"We're not going to have net migration in the same way we previously had. That's been a huge part of the New Zealand story over the past five years."

The search for solutions

English said making decisions in Wellington's "beltway" was difficult at any time, but especially now as the pressure for a quick solution to the problems mounted.

"The feedback loop from the lockdown, job losses and financial and social impacts will be very difficult for many people and it could get really tough for the politicians as people look for fast, effective solutions the Government can't deliver," English reportedly said.

"In six months, people will be wanting to see signs of a recovery in the real economy. People will not care about financial markets – it is the real economy that matters."

With the issue being about "economic survival", the Government may be forced to make decisions that did not necessarily sit naturally with its political beliefs to get the economy going.

English appeared to acknowledge that the scale of the challenge looming now was far worse than the GFC.

There was no precedent for what New Zealand was about to experience, English warned, but he pointed to a period when the deregulation of financial markets led to a period of severe disruption as farmers were put under severe financial strain.

"The closest I can think of, which hasn't really come up much, is the rural restructure over the late 1980s.

"It was an exceptionally painful time for the rural sector as the fabric of its economic underpinning was unwound."

Former United Future leader Peter Dunne, who served as a minister through much of the former National Government's nine years in office, said he was struck by the comparison to the pressures of the 1980s to rural New Zealand.

"That wasn't just a restructure of a sector in a mechanical sense. It was a change of lifestyle, a change of attitude and the whole way in which we did things and the impacts at a personal level were extraordinarily high and probably not properly accounted for."

Dunne said the Government would do well to consider English's comments when considering both the mental health impact of the lockdown, but also the trauma which could be caused by the resulting job and business losses.

Victoria University's Bryce Edwards said the English document was likely to be closely listened to in the business community, but he doubted the Government would struggle to make decisions required to rebuild the economy.

"I view the Government as being very pragmatic, ideologically. English paints them as maybe having to do some pro-business things that won't sit well with a Labour-led Government, but I don't really believe that Grant Robertson will have any issue in bringing in pro-business regulation cutting if that's what's demanded by business."

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

Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Economy

PropertyUpdated

'Special ceiling': sun and moon art adorn new Auckland train station

03 Jul 03:00 AM
Premium
Property

$66m repair bill for Auckland apartments sparks court action

02 Jul 11:28 PM
Premium
Property

Planned for years, 25% owner sells out of Queenstown's Lakeview Taumata

02 Jul 03:00 AM

There’s more to Hawai‘i than beaches and buffets – here’s how to see it differently

sponsored
Advertisement
Advertise with NZME.

Latest from Economy

'Special ceiling': sun and moon art adorn new Auckland train station

'Special ceiling': sun and moon art adorn new Auckland train station

03 Jul 03:00 AM

'Representing the history of this area. This ridgeline was a kauri forest.' - Barry Potter

Premium
$66m repair bill for Auckland apartments sparks court action

$66m repair bill for Auckland apartments sparks court action

02 Jul 11:28 PM
Premium
Planned for years, 25% owner sells out of Queenstown's Lakeview Taumata

Planned for years, 25% owner sells out of Queenstown's Lakeview Taumata

02 Jul 03:00 AM
Premium
Richard Prebble: How Fiji's path to equality could guide NZ reforms

Richard Prebble: How Fiji's path to equality could guide NZ reforms

02 Jul 12:00 AM
From early mornings to easy living
sponsored

From early mornings to easy living

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP