The COVID Diaries: New Zealand issuer 2

The following interview is with a New Zealand-based debt capital markets issuer. It was conducted on 17 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?

What I am looking forward to is seeing the country a lot more. It is unlikely we are going to be able to undertake international travel for some time, while there is a huge domestic tourism campaign going on at the moment to make up for the lack of international visitors in the past few months and to come. Queenstown is normally packed with international tourists so I might get there at some point.

When it comes to work, everyone is back in the office. We are trying to change the way we do things, including having more flexibility for working at home. Personally, I have found I can get a lot more things done at home without the interruptions of the workplace.

How long do you think it will be before day-to-day life in New Zealand is back to normal? Are people wary of going out into the community again?

I would say we are very close to being back to normal. Apart from international travel, there are no restrictions on our movements. There is no social distancing – not in workplaces or public transport.

We are still being told to wash our hands and cough into our elbows and things like that. We are in this bizarre situation where a few weeks ago we were told we were not allowed to see another soul and now, to me at least, we are back to as close to normal as possible.

Social distancing seems to be less adhered to in Australia and people in Australia, or Sydney at least, appear to be getting tired of the restrictions given the low COVID-19 numbers and apparent suppression of community transmission. It must be much the same in New Zealand.

We had the social distancing measures in place here just a few weeks ago. Restaurants opened up followed a week later by bars. You weren’t allowed to be standing, you had to be seated – and then it kind of slipped to what you were saying, especially around shopping malls. There was no social distancing – it was almost a joke.

Quite quickly after that we were on the path to lifting restrictions. I think there is a massive element of what you say about people getting sick of it.

“I think New Zealanders’ willingness to keep the border closed will last a year, max.”

With two cases being imported into New Zealand yesterday, how scared are you, if at all, of the return of COVID-19?

Not very much at all. Aside from those two, which as you say were imported, I am confident the government will remain on top of it. A return to full lockdown wouldn’t go down well with the public and I think wouldn’t be well adhered to. Some restrictions will be put into place, though, if it were to return.

New Zealand may have to keep its borders closed for what could be a matter of a year or more to maintain a COVID-free environment. Do you think this elimination strategy is the right one?

I am not convinced there will be a vaccine in the next year. If you look at vaccines created for other related diseases, it has taken many years.

On top of this, New Zealand is a small open economy in which 14 per cent relies on tourism. Closed borders will put a big dent in our GDP which may pressure the government to open up the border at some point. Once the damage to the economy gets worse and we see further negative economic numbers flow through, I think there will be a greater public push behind the question of why we are not opening up the borders given the damage done to the economy and the loss of jobs.

There is a lot of talk about having a travel bubble with Australia. Both political parties here are saying we have to be comfortable with Australia’s controls and ability to stamp out COVID-19. What we might see is New Zealand opening up to particular states in Australia in the first instance.

It would be a rather bizarre situation to have some Australians being able to travel to New Zealand before other parts of their own country. New Zealand is also apparently discussing opening up travel bubbles with Pacific island nations.

Our big concern is if Fiji, for example, opens up to everybody, we cannot open up our border with Fiji. In getting New Zealand’s travel bubbles up and running it seems as if other countries will not be able to open up to anyone else – or at least only to countries that don’t have COVID-19, which is just about no-one.

But COVID-19 could potentially be something like the flu where we just have to deal with it on an ongoing basis. You can see the situation of [imported cases] today morphing into something where we have to live with it rather than eliminate it.

I think New Zealanders’ willingness to keep the border closed will last a year, max.

You touched on unemployment and GDP. How confident are you about the scale and pace of economic recovery?

The government has done an excellent job of dealing with the situation. But in some ways this is the easy part of the job, notwithstanding the timing of implementing the measures. We had to lock down, put controls in place and the rest of it.

The harder thing is now there is a lot of choice about what actions to take to revive the economy. I’d probably give the government a 5 or 6 out of 10 in terms of economic recovery efforts and direction. It has piled a lot of money into wage subsidies, business lending and unemployment benefits to get over the initial shock. But we have to think about what is going to happen to the economy over the next 2-3 years now we have all this debt.

The government hasn’t come out with a lot of information about how we are going to restart the economy, aside from some info on fast-tracking infrastructure projects. A few other smaller things were announced in the budget a couple of months back, but I have not seen a lot of information about how these will be implemented. This is what everyone is waiting for and why I am giving government just a pass mark at the moment.

The next month or two is going to be crucial in the messaging for how the government gets the economy back on track. We have the election in September and I expect it to be a tight race as the two parties jostle for who is best to lead the economic recovery.

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