Even if New Zealand gets out of the immediate Covid-19 infection better than most other countries, the result is still a wrecked world and a slow recovery.
What we face is something like an Australian firefighter with a hose and a tanker facing an onrushing wall of flame: they successfully dampen down a defined circle a few metres around the truck, but when the dark smoke clears what remains is a lonely circle of green among a vast landscape of charred smoking black.
Even our most reliable trading partners whose populations buy our goods will be very slow to start spending again on any scale as they themselves deal with everyone else’s uncertainty. Confidence requires trust, and that’s gone for a while.
The economic fallout defies calculation. Many countries face a far deeper and more savage economic shock than they have ever previously experienced. In sectors like retail, already under fierce pressure from online competition, the temporary lockdown may prove to be terminal. Many stores will not reopen, their jobs permanently lost – they will be our friends, relatives and neighbours up and down our street. Millions of global workers, small-business owners, and their families are facing catastrophe.
In response we are witnessing the largest combined fiscal effort since World War 2. Our own government has already spent over $10 billion on direct wage subsidies to businesses since it started just a few weeks ago.
What we are now waiting for from government after the announcement on Monday is the near-impossible upon the near-impossible: when we get out of the health disaster, how do we get out of the economic disaster – and retain our social fabric and the governments’ social license to do any more. How much chemotherapy can we take?
What we are now waiting for, then, is quite unreasonable to expect – but we must.
If the response by our businesses and households is risk-aversion and a flight to safety, it will compound the forces of stagnation. It is unlikely that the public sector response to accumulated debt will be austerity.
So Monday’s Prime Ministerial announcement must only allow us a mere moment to appreciate how we avoided the worst of a global fire.
Monday must signal how we will be collectively organized to rebuild our country.
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