The BFD | None of Your Business

Chris Penk

First published by The BFD 20th June 2020

The BFD is serialising National MP Chris Penk’s book Flattening the Country by publishing an extract every day.

None of your business

Perhaps the most telling remark on either side of the argument about the lockdown’s length came from Labour’s minister for employment, Willie Jackson. RNZ reported it in this way:

And in response to a question from National’s Finance spokesperson, Paul Goldsmith, Jackson downplayed the impact of the lockdown on small businesses.

“I think this lockdown for four weeks has been brilliant, another week is not going to hurt or destroy anyone, even though you guys are trying to say it’s the end of the world”, Jackson said.

Apart from indicating the breathtaking ignorance and arrogance of Jackson, the significance of this quote is that he’d recently participated in a Cabinet debate and decision about whether to extend the lockdown.

Jackson was able to walk away from a discussion with his fellow ministers with the impression that the lockdown was having no adverse effects on small businesses.

The inescapable conclusion is that none of them realised just how bad the situation was getting out there in the real world.

A relatively junior colleague of Jackson, fellow Labour MP Dr Deborah Russell faced criticism around the same time “after she suggested small businesses hadn’t prepared financial reserves to cope with a setback like COVID-19”, as reported by Newshub.

Unlike Jackson, Dr Russell did at least have the grace to apologise for any offence caused and had made the comments on her own account, unlike Jackson who was reflecting a collective Cabinet view in making his comments.

Labour’s lack of connection to the reality of small business life is perhaps surprising until you realise that its most senior ranks are swelled by career political operatives. Ardern, Robertson and Chris Hipkins all have CVs that begin and end within the Beltway.

It’s little wonder, then, that the cheerleader-in-chief came up with a real clanger of her own:

Where the Government had a role to play, we’ve played it. What I would ask the private sector is to value your workforce in the same way.

Ardern’s implication, that Kiwi employers are tempted not to value their workers in the same way that the government does, is insulting in the extreme.

The small business owners of my electorate invariably pay themselves last. In some pretty dark days for honest and hardworking Kiwis just trying to keep the lights on, countless have been valuing their workforce as though they were family members, retaining staff at all costs.

It is one thing to spend the money of others – as any government does – and entirely another to risk your own life savings and your family home (mortgaged to secure a business loan), as many Kiwis do.

“The Government has spent more than $10 billion subsidising the wages of about 1.6 million New Zealanders during the COVID-19 crisis”, we were told.

But of course that money had come from the pockets of New Zealanders in the first place, which is a basic truth that even left wing politicians (such as Ardern, Robertson and Winston Peters) would do well to remember.

Liam Hehir summed up the situation in a Patreon column this way:

[Y]esterday the prime minister made some comments about what the private sector should be doing that, as they came across in the news report, were insensitive in the extreme [and] not for the first time.

[…] the prime minister – who is generally pretty good on empathy – clearly has a serious blind spot when it comes to those who don’t make a living by state-guaranteed salary.

This recent comment by Ardern was embarrassingly reminiscent of remarks she’d made earlier in her premiership, as Hehir recalled.

“In some senses I am the largest employer in this room”, she’d told a gathering of mere mortals. This had prompted eyes to roll, according to business reporter Hamish Rutherford, who went on to observe astutely that the audience “saw the irony of the comparison”. After all:

Ardern has never had to worry about a tax bill. And even though her ministers give her chances to, she apparently struggles to sack even poorly performing staff.

Ardern also aggravated those hit hard by Level 3’s retail restrictions, when she played the kindness card one too many times.

It’s difficult to argue that she is not a one trick pony when her ultimate alternative to ordering kindness is ordering compassion.

“It’s naïve to say ‘show some compassion’”, said Dallas Pendergrast, owner of Glenfield Mall. As reported by Newshub, she continued in similar vein:

Compassion doesn’t pay our bills. Doesn’t the New Zealand Government realise the landlords’ overheads continue as well? Clearly, they have completely failed to take it into account.

She said it was an “insult” when Prime Minister Jacinda Ardern thanked small businesses during one of her press conferences last week for enduring the lockdown restrictions.

It surely shows how out of touch the Government is with the reality and lack of understanding as to what these people are actually going through,” she said. “They don’t want thank you – they want to get back to work.”

Labour’s lack of understanding about the economic consequences of locking down an economy for a minute longer than necessary will also have another couple of major implications.

One is that this government will fail to grasp what is the single most important thing it can do for Kiwis’ job prospects. Get out of the way.

When it comes to intervening in structurally sound markets, the soundest advice for governments is simply “Don’t”.

The best way to start helping is to stop hindering.

Witness the government’s panicked reaction to our dive into depression that was Budget 2020. The Finance Minister Grant Roberston was spinning about like one foot was nailed to the deck, as the old naval expression has it. Unsure in which direction to throw taxpayer funds, he chose almost all.

A better strategy would have been to think about ways that the government could reduce its role in preventing businesses from thriving.

Just as the best government assistance that could have been provided during the lockdown was to allow safe trading as far as possible – rather than paying subsidies for wages that couldn’t be earned – the post-lockdown strategy should have been to require less, not do more.

Regulations are within the power of the government (not even Parliament) to amend at the stroke of a pen, so that would have been a better place for Robertson et al to have looked first of all.

The other key consequence of Labour’s lack of urgency in allowing the economy to resume was that they created a political rod for their own backs.

Ardern preferred to minimise the plight of businesses relative to the health risks, deriding anyone who expressed concern about both problems. She was kind, after all, and a self-described “perfectionist” to boot.

Arguing that human health and business prospects were relatively unconnected in this way may prove to be a losing long-term strategy. The Prime Minister has wasted an opportunity to blame a bloodied and bruised economy on the coronavirus.

When tens of thousands of Kiwis lose their jobs this year, Ardern and Robertson would like to be able to say that it’s not due to Labour’s incompetent handling of the economy but instead blame covid-19.

In the election campaign, Labour will find that a difficult argument to make given their insistence throughout the lockdown that extending it would not be massively damaging for livelihoods.

Of course, it was always going to be so. Ardern and her team denied and denied, however. Having made their bed, they must now lie in it.

How much longer?

History will record that the government decided that the Level 4 lockdown would endure for five more days than originally planned.

Simon Bridges said he had “very significant” questions about the impact the extension would have on the economy, a valid point for which he was heavily and entirely unfairly criticised.

At the time, Bridges asked the Minister for Small Business, Stuart Nash how many businesses were estimated to go out of business with the additional lockdown length. Nash was unable or unwilling to answer that question, of course. The chattering classes didn’t criticise the hapless minister for his inability to answer the question (again, of course) but instead went for the one asking such uncomfortable questions.

Bridges will be remembered in time for performing his constitutional role with commitment and courage, which is much more than can be said for many of his critics.

Part of the reason that Ardern et al were happy to extend the Level 4 lockdown for another five days than originally planned was that – in their minds at least – it would only be for a further “two business days”.

This was correct as far as it went, given that the additional period included not only a weekend but the Mondayised public holiday for ANZAC Day, which had fallen on a Saturday.

The government was looking at the calendar the wrong way, however, as Heather du Plessis Allan noted eloquently:

I’m so disappointed on behalf of small and medium-sized businesses.

I can’t even begin to think how hard this must be for them – the prospect of trying to last an extra five days. For some, they could barely last four weeks.

Five more days will tip many over. […]

It’s insulting to have the Prime Minister and the Finance Minister say it’s just two more working days. It’s not, it’s five – which business that has been shut for four weeks would not work all five available days to catch up?

She went on to make an educated guess about the reason for the lockdown extension:

I think the key is the Health Ministry. I suspect they haven’t been able to get their acts together this whole time.

I suspect we were put into level four because our health ministry didn’t have the contact tracing capacity to track down contacts of infected people fast enough.

They didn’t have the testing capacity to know where cases were. I suspect we are staying in lockdown because of exactly that same reason.

It was a view shared by others.

“The Prime Minister had no choice but to maintain the lockdown until next Tuesday”, Matthew Hooton opined at the time.

Acknowledging that the initial lockdown had already by that time “imposed enormous social, economic, health and education costs on all New Zealanders, especially Gen-X, Millennials, Gen-Covid and those to be born through this decade”, he pointed out that “it was clear the bureaucracy simply wasn’t ready for a move to level 3 this Wednesday night”.

His unflattering assessment of the Ministry of Health included a reminder that it had been:

responsible for the measles vaccine crisis, seemed unable to competently allocate the $1.9 billion in mental health funding from last year’s budget, and has now been unable to tell a believable story on the availability of PPE to frontline health staff.

Hooton’s view was borne out by the advice of one key expert, as Stuff.co.nz pointed out:

Sir David Skegg, a leading epidemiologist advising MPs on the epidemic response committee on Tuesday, said if the contact tracing system had reached the “gold standard” the country could have left lockdown on Wednesday evening.”

Barry Soper may have put it best, though: “It was a victory for bureaucracy over business.

Sources:

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Chris Penk