The COVID Diaries: New Zealand sustainable finance banker 2

The following interview is with a New Zealand-based banker in sustainable finance. It was conducted on 16 June 2020.

New Zealand is officially the envy of the world, having lifted its social distancing restrictions completely. How have you taken advantage so far, and what are you planning to do that you haven’t been able to for a while?

We bought a campervan just prior to lockdown and had planned a holiday that had to be cancelled. We planned a trip for as soon as we could travel, which was over the long weekend at the start of June – although one of my children wanted to stay home! We went to Wairarapa to visit family and friends. We also visited a spot that would typically be overrun with tourists and we found that it was still busy and a lot of the people there were actually foreign tourists, who must have been caught here during the lockdown.

We have also been getting out to local restaurants and cafés, to support them. My daughter works at the local café and, before the restrictions were completely eased, we said to them that she could use our EV [electric vehicle] to do deliveries for the café at no cost, just to help them get back on their feet.

The change does not feel like a light switch, though. I have still not really been out to shops or been out in town much, nor have I been on a plane. It is not an instant reversion to normal.

Putting aside things relating to international travel and the economic consequences of closed borders, how long do you think it will be before day-to-day life in New Zealand is back to normal, including going back into the office?

Until this week I have been working from home most of the time, although I did go into the office a few times in the last few weeks. It feels like a transition phase, but not a transition to the old normal. I have really enjoyed working from home, but I recognise the need to connect with colleagues and customers face-to-face and to have vibrancy in the city.

Today when I was in the office, I bumped into someone incidentally that I had been meaning to respond to on email, which prompted a conversation then and there that was really productive. This was a great reminder that those coincidental catchups can really make a difference.

It does feel like it takes a bit of effort to get into the office now, but I think that effort needs to be made for at least some of the week. The time it takes for people to get back to a regular schedule of time in the office will be different for everyone. Some are already back consistently, others may take weeks or months.

How worried are you, if at all, of the return of COVID-19?

I am mainly worried for the economy. The focus now is more around how we preserve the status of being free of COVID-19 and how we can leverage it. I think we have done what is needed to keep vulnerable people safe from COVID-19, but I am less confident that we could mop up the economic mess if, as a result of a fresh outbreak, it becomes even worse than what is already locked in.

New Zealanders have sacrificed a lot and this needs to be respected with stringent risk management for those in quarantine. We have had two new cases, from some people that returned from the UK and were allowed out of quarantine on compassionate grounds without testing. This is a completely unacceptable breach – we need to be extremely cautious for the sake of lives and the economy.

When you express concern about the economic impact, a lot of people think you are just worried about dollars and cents. But actually it is also about lives and livelihoods.

“When you express concern about the economic impact, a lot of people think you are just worried about dollars and cents. But actually it is also about lives and livelihoods.”

How confident are you about the scale, pace and direction of economic recovery, and what opportunities do you see in the rebuild?

There is definitely a multitude of opportunities to invest – in infrastructure, decarbonisation and strengthening the health system – but I have concerns about political motivations interfering with optimal outcomes. This does not mean there does not need to be government involvement, but it is as much about ensuring the right policies, settings and regulation as it is about direct investment.

The growth of government also concerns me, as does its ability to ensure investment enhances productivity and positive social and environmental outcomes over the long term, to minimise the burden that future generations will have to bear.

Is the impetus there in the private sector to direct more capital to sustainable outcomes?

I think in New Zealand it was there anyway. The private sector is definitely keen to focus on sustainability and invest towards this, and while COVID-19 has definitely had financial impacts, which are unevenly spread, I think that, broadly speaking, the desire to invest for a better future remains – and has potentially even grown.

Not only does the science support the case for decarbonisation but it has become a societal expectation. The momentum of capital markets is certainly in that direction.

There are some areas with technical challenges though, such as decarbonisation in agriculture, where research and development are needed. New Zealand is well placed, with significant incentives, to do that work, so this is the sort of area where the government could play an important role.

It could also support the private sector in other areas by having the right settings and standards. For example, having emissions standards on vehicles would be good. New Zealand is one of only two countries in the OECD that has no minimum requirements at all, the other being Russia.

In general, I think it would be constructive for the government to look at obvious private sector investment opportunities, such as decarbonisation of transport, understand the hurdles and barriers, and support the private sector to overcome those.

Was elimination the right strategy – and, if so, will you still think so if New Zealand has to keep its borders closed for what could be a matter of a year or more to maintain a COVID-free environment?

New Zealand’s journey through COVID-19 has been relatively quick compared with the rest of the world. If there is a change of strategy, at least now that we are almost COVID-19 free we have the luxury of a bit more time to think and prepare for next steps rather than having to make decisions while people are dying and the hospital system is being stretched beyond capacity.

I think it was the right policy, but it probably could have been done with more nuance. For example, some activity that naturally has a feature of physical distancing, such as roadworks or construction, could have continued. This would bring grey areas but I think that could have been managed.

Perhaps there could also be a regionalised approach, where the level of restrictions was set based on risk in a specific area. Under this, greater levels of activity could have continued and the economic impact would not be as severe.

Perhaps at some point the decision will be made that it is no longer sustainable to keep borders shut, and they will work out a way for more high-value tourists, workers and students to come into New Zealand. Locals will be spending their holidays here instead of offshore but, net-net, the tourism sector will still be affected. Working out a way to open borders safely could help to bridge this gap.

Certainly, once Australia has cases under control it will be good to open the borders to tourists, and I think New Zealand should also work towards opening to its Pacific Island neighbours. This would leak some tourist dollars, but it is good for New Zealand to support its Pacific neighbours as we have many ties to those countries.

Aotearoa New Zealand has gained significant favourable global coverage through the crisis. I think it would be fantastic to find ways to really leverage this position, to support other countries and also to improve our long-term position economically.

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