Budget 2020: Business leaders say which way the Government got it right (NZ Herald)

Business leaders have welcomed the cornerstone of the Government’s “once in a generation” Budget – the unprecedented $50 billion Covid-19 Response and Recovery Fund – rating it at 3.75/5 on an effectiveness scale.

The 52 respondents to the Herald’s business leaders post-Budget survey were asked to rate some big spending initiatives – such as the Covid-19 fund, health and education spend-ups, and investments in tourism, environmental and home building programmes on a scale of 1=5 where 1 equalled very poor and 5 equalled very effective.

The $50b fund was set up by Cabinet on April 6 and some $14b of initiatives, including the massive wage subsidy scheme, had already been spent before Finance Minister Grant Robertson unveiled last Thursday’s Budget.

The Budget included a further $16b from the fund to extend the wage subsidy, provide free trades training and boost infrastructure among other initiatives.

A further $20.2 left unallocated drew the ire of the National Opposition, who have called it an election bribe. “My only concern is the $20 billion slush fund,” Simplicity CEO Sam Stubbs said. “Unless this is spent quickly, it should more rightly belong in next year’s Budget and be the subject of better-costed policy announcements going into the election.”

A key part of the Government’s Covid response has been the wage subsidy scheme which provided companies $585.80 weekly for fulltime employees for 12 weeks, and, $350 weekly for part-timers. This was extended in the Budget for a further eight weeks at a cost of $3.2b. But conditions have been tightened so it is only available to businesses who have lost at least 50 per cent of revenue in the month preceding application.

A large fashion retailer boss said the 50 per cent loss threshold is too low, noting: “many businesses will perform better than that, but will still have significantly impaired performance and have to lose staff as a result.”

Spark CEO Jolie Hodson said it was positive to see $1.6 billion earmarked for trades and training and part of this should be directed to digital skills.

“It is important that we are thinking about the future of work in New Zealand and recognizing the need to build the capability of New Zealanders to be able to participate and thrive in an increasingly digital world,” said Hodson. “Covid has highlighted how critical this is, and we already know the productivity benefits it brings.”

Chapman Tripp Nick Wells said all the initiatives were stimulus of one sort or another. “We need to recover in a way that is fit for the future, learning from all of the benefits we have seen from the lockdown such as being more environmentally friendly, increased flexibility and ability to work from home being more digitised and having a much more weightless economy.”

The $400m domestic tourism sector relief package announced in the Budget was panned by many from a sector that directly employs over 229,000 people. Auckland Business Chamber CEO Michael Barnett said tourism was a $40b contributor.

“It deserved more and would have created employment.”

An agriculture boss added, “the investment in tourism needs to be seen for what it is – a start. This is one area where some reimaging would be good for the industry and New Zealand.”

The Government also revealed it would borrow $5b over the next four to five years to build 8000 state and transitional houses in partnership with housing providers. Business leaders scored the initiative 3.4/5.

“As long as (Phil) Twyford stays very far away from the project,” cautioned a wine exporter. A retail chief added: “Unsure on state house builds – there has been no tangible evidence of having good execution with KiwiBuild etc.”

The $1.1b package to create 11,000 jobs in the environment sector – from pest control to wetland restoration – received a score of 3.27/5, with some sceptical of its merits: “It is worthy but unlikely to attract the numbers of unemployed workers to make a difference,” suggested a food producer boss.

The $1b allocated to support education services received a score of 3.83/5 from respondents.

An executive in the transport industry says the package is worthy, but is missing “any mention of digital technology, which seems a missed opportunity following the recent experience of remote learning.”

Perhaps unsurprisingly, the $6.3b investment in health received the highest score from executives of all the Budget areas surveyed with 3.98/5.

“Covid-19 showed that our health system was not up to responding which was one of the reasons for the severe lockdown,” said independent director Cathy Quinn. “The money needs to be spent wisely so that in another pandemic our system is better able to respond.”

“Health needs much more than money, without a complete review and overhaul how much of the $6.3b will be wasted?,” asked a banking boss.

Auckland Volcanoes

While in lockdown for Covid-19, I had the time to finish a project four years in the making – editing/assembling the photos I’d taken over the past four-years of every Auckland volcano, ordered by latitude: from north to south. 

Without viewing at full resolution it is difficult to make out the names of the 53 volcanoes. They are, in order:

  1. Lake Pupuke
  2. Rangitoto
  3. Te Kopua o Matakamokamo, Tank Farm
  4. Onepoto
  5. Takaroro, Mount Cambria
  6. Takarunga, Mount Victoria
  7. Maungauika, North Head
  8. Motukorea, Browns Island
  9. Whakamuhu, Glover Park
  10. Albert Park
  11. Grafton
  12. Pukekawa, Auckland Domain
  13. Taurere, Taylors Hill
  14. Ōrākei Basin
  15. Maungarāhiri, Little Rangitoto
  16. Maungawhau, Mount Eden
  17. Ōhinerau, Mount Hobson
  18. Te Pou Hawaiki
  19. Te Kōpuke, Mount Saint John
  20. Ōwairaka, Mount Albert
  21. Te Tauoma, Purchas Hill
  22. Ōhuiarangi, Pigeon Mountain
  23. Maungarei, Mount Wellington
  24. Maungakiekie, One Tree Hill
  25. Te Tātua a Riukiuta, Three Kings
  26. Te Kopua Kai a Hiku, Panmure Basin
  27. Rarotonga, Mount Smart
  28. Te Apunga o Tainui, McLennan Hills
  29. Te Hopua a Rangi, Gloucester Park
  30. Ōtāhuhu, Mount Richmond
  31. Puketāpapa, Mount Roskill
  32. Styaks Swamp
  33. Matanginui, Green Mount
  34. Pukewairiki
  35. Te Puke ō Tara, Otara Hill
  36. Robertson Hill-Sturges Park
  37. Te Pane o Mataaho, Māngere Mountain
  38. Hampton Park
  39. Boggust Park Crater
  40. Māngere Lagoon
  41. Te Motu a Hiaroa, Puketutu
  42. Waitomokia, Mount Gabriel
  43. Kohuora
  44. Pūkaki Lagoon
  45. Pukeiti
  46. Ōtuataua
  47. Crater Hill
  48. Cemetery Crater
  49. Maungataketake, Ellett’s Mountain
  50. Ash Hill
  51. Matukutūruru, Wiri Mountain
  52. Matukutūreia, McLaughlins Mountain
  53. Puhinui Craters

Auckland’s infrastructure projects must go on: Phil Goff Q&A (NZ INC.)

Phil Goff speaks with Tim McCready about the impact of Covid-19 on Auckland’s infrastructure plans.

In February this year, Auckland Council was focused on the challenges ahead of a city enjoying relentless growth: building transport infrastructure to relieve traffic congestion, coping with the highest ever level of building consents, and dealing with environmental issues including water quality and climate change.

Just two months on, those issues haven’t gone away, but Auckland Council is now facing additional challenges in the wake of Covid-19.

Financially, there will be an unprecedented loss of revenue in the coming financial year of between $250m and $450m. Much of the lost revenue is not through rates, but from the loss of its dividend from Auckland International Airport, reduced fare revenue from Auckland Transport, lower regional fuel tax and less development contributions.

Auckland Mayor Phil Goff says the depression in the 1930s saw the Government pull spending back so much that while it balanced its books, “the cure killed the patient”. He is determined to keep Auckland’s infrastructure projects going as much as possible:

“There will likely be a reduction of infrastructure projects in the coming year, maybe $300m worth, but we will still be spending a whole lot more than we have on average over the last five years on an annual basis,” he says.

“We want to make sure that we’re still creating that infrastructure that the city has been waiting so long for, that it so desperately needs, and which is going to be a core part of actually stimulating the economy, getting jobs going, getting income going and helping to secure recovery.”

Here’s what Goff had to say on a few big issues facing New Zealand’s biggest city:

Work has started back on the City Rail Link now, but we’ve heard that the cost is likely to blow out – do you know what the scale of that will be?

The month-long closure of the CRL is likely to cost probably around, or something in excess of $30m. That’s never welcome, but we had no choice in the matter.

We have a new challenge now – getting some of the specialist staff that we need to do the work internationally, at a time when our borders are closed. I’ll be making submissions to Ministers – obviously we’d need to follow a quarantine process, but we really need that international staff in to not further delay the project.

There is an opportunity here to potentially speed up the CRL project by starting work at multiple sites. We are already doing that to a certain extent now – working on Aotea Centre, working on Karangahape Road, Mt Eden and continuing with the tunnel. If the Government is able to bring some of its capital from its shovel-ready project into CRL, then rather than this being a setback, it could be a chance to advance our programmes.

Auckland Council has submitted 73 priority ‘shovel-ready’ infrastructure projects to the Government’s Infrastructure Industry Reference Group. What do you hope they will achieve for Auckland?

It enables us to create the infrastructure that we desperately need as a city, so that’s something that’s worthwhile in its own right. But we have premised these projects around projects that are ready to go, we’ve consented them, we’ve often done the procurement for them, and we can get them up and going as quickly as possible to create jobs, generate income and help stimulate the recovery that our city and our country desperately needs.

Auckland is uniquely well-placed to assist the recovery of New Zealand in that regard. We’ve been professional in the way that we’ve put the projects up, there are 73 projects, we’ve said 30 are priorities. We know that we can expect a fair share of the money, we are ready to go and we can assist the Government with its recovery objective.

There has been some criticism that the projects put forward haven’t been transformational enough and don’t represent the once-in-a-generation opportunity that this situation has provided. What would you say to that?

We followed the Government criteria – the Government provides the money, they set the criteria. But I reject the criticism anyway – there is a whole lot in our submission which is about mode shift. It’s about bringing forward projects that will assist public transport, that will assist walking and cycling, that will get busways underway. Those are projects that meet our environmental and our transport objectives – reducing traffic congestion, reducing carbon emissions. These are the sort of things that we need to do for the long-term future, as well as needing to deal with the immediate ramifications of Covid-19 and the recession it’s causing.

Will Council be looking at ways to speed up projects – expediting things like resource consent?

There are things we have changed already. For example, noise controls have been lifted – maybe to the detriment of people who live in hearing distance of some of these construction projects, but it means they can work a slightly longer day and a longer working week. We will all have to give up something in order to achieve the wider objective. That is an example of how we have already changed the resource consent requirement to try to facilitate the construction industry getting back on its feet more quickly. The noise might go on a bit longer, but it means the project will be done more quickly, and that disruption will end more quickly, so there is a benefit there as well.

Compulsory water restrictions for Auckland are almost certain with the region’s storage dams dropping below 50 per cent. Around $2.3 billion is due to be spent over two decades on capital works to accommodate Auckland’s growing water consumption – should Council be doing more now to future-proof Auckland’s water supply?

The potential necessity for water restrictions in Auckland is due to the significant lack of rainfall we have experienced since summer. Rainfall levels in January and February have been the lowest on record. Coupled with the very long hot summer and higher demand, the water supply lakes have fallen below 50 per cent full compared with an historical average of around 75 per cent. In addition to this, the long-range weather forecasts do not predict any significant rainfall. Watercare is running a public media campaign to encourage people to reduce usage and are maximising the take from the Waikato River.

In terms of infrastructure, Watercare is continuing to upgrade the Waikato water treatment plant so it can process an additional 25 million litres per day —this work is deemed an essential activity and is due to be complete in around three months. Watercare has also submitted a project through the “shovel-ready” process which proposes the construction of a second water treatment plant and new boost pump station that will increase water treatment capacity by 75 million cubic metres a day and increase pipeline conveyance capacity from 150 to 225 million cubic metres per day.

This project is worth around $300 million to $350 million and will be critical in addressing long-term water resilience in Auckland.

2021 was shaping up to be a banner year for Auckland – with the America’s Cup, Apec, and many other international events. What impact will Covid-19 have on this?

I’m not sure yet what impact this will have on Auckland 2021 – we don’t know yet when our borders will be opened up. We’re hopeful that with the success of New Zealand and Australia, maybe we can open a trans-Tasman border, maybe we can get those tourists back in at least from Australia and maybe the Pacific.

But you take something like the America’s Cup, it’s due to start with the Christmas race in December of this year – will we be ready to have an influx of tourists from around the world? I don’t know the answer to that.

We are keen to see the race and we do want those superyachts here – they bring a lot of money to the country. But we’re also keen to get the economic benefit that covers the cost of the infrastructure that we’ve built to enable to race to take place. We want the tourists to come and enjoy the race and enjoy New Zealand. At the same time, there will still be the benefit that we will be projecting our city and country to the world if the race takes place. That is important as well.

I’m not pushing the Government to do anything that is against health advice. The health and wellbeing of us as New Zealanders comes first. But when we can reopen those borders, having those events in our city, and in New Zealand will give the boost that the tourism and the accommodation sectors need to recover from what has been a bruising period for them.

It feels a little like Apec has been doomed from the start – with the convention centre fire and now Covid-19. What do you think the appetite will be for people to travel – particularly for the Leaders’ Week in November next year? Will we see a mass delegation of world leaders emerge in Auckland?

The leaders won’t want to put themselves at risk. Covid-19 makes no exceptions – we’ve seen prime ministers – Russian and British – come down with the disease. We don’t want people coming to the country to put us at risk if Covid-19 has not been properly dealt with by that time.

Apec in Chile was put off last year, I suspect it’s in real doubt for this year in Malaysia. I think the leaders, if it’s safe to do so – for them and for us – will be ready to come together and have that interaction face-to-face which has been an important aspect of Apec.

Is there anything you’ve seen from the alert level four restrictions that you might like to retain? Personally, I have enjoyed the fact that Cornwall Park has closed its gates to traffic – there has been plenty of space to spread out.

Can we learn things from it? Of course. In every crisis, there is a threat and there’s an opportunity. I think we will see opportunities out of this, things that we can do better.

One of the things we saw was that when you get cars off the road, the air quality is probably the best that Auckland has seen in a generation. And the quietness of the city – we won’t get back to that, but people are saying, gosh, I can hear the birdsong again.

One of the things we can keep is the flexibility around working. If it is possible for people to work effectively from home, why not give them the chance to do that, maybe several days a week? People want to have the social interaction, but they can spend time at home, as well. They can work more flexibly, and that more flexible working I think will be great for things like traffic congestion, efficiency, and people being able to enjoy their working week more.

A bit more amorphous but nonetheless important – He waka eke noa – we are all in this together, and being kind to people, being considerate. We probably haven’t seen this since the war, when people said: “hey, we’re in the same battle together and we are looking after each other.” I hope that we can retain that sort of sentiment going forward.