Saturday, June 18, 2022

Point of Order: While some talk of recession, Nash has cheering news (and a $54m trough) for the tourism sector – or for favoured operators, at least

Businesspeople gathered in Christchurch for a national trade show called MEETINGS were treated to a cheering-up speech from Stuart Nash, Minister of Economic and Regional Development and of Tourism.

MEETINGS is described as the only national tradeshow in New Zealand for the business events industry, organised by Business Events Industry Aotearoa (BEIA). Once a year, the conference, meetings and events, exhibition and travel incentive sector come together to discuss new business opportunities across the country.

And – in this case – they heard from Nash about the sums the government is providing to boost the industry. A trough, in other words.

More ominously (if you happen to be bothered about the futures of industries which become subjected to central planning) he enthused about the government’s strategy for the tourist sector and policies which determine what sort of tourists should be encouraged to come here.

It was the same day that StatsNZ added to a stream of disquieting economic news (a 10 per cent rise in food prices, a stock market crash and so on) by reporting New Zealand’s GDP fell 0.2 per cent in the March 2022 quarter, worse than most economists had forecast.

The forecasters who got it wrong include the Reserve Bank, which – in the Monetary Policy Statement last month – forecast 0.7 per cent growth.

This invites a concern that if they misread the pace of economic growth, how can they have made the right call with the official cash rate?

Westpac chief economist Michael Gordon said Covid had continued to disrupt economic activity.

“The December quarter was affected by ongoing Government-imposed restrictions after the Delta outbreak.

“In contrast, the March quarter restrictions were more self-imposed: as Omicron made its way through the country, people stayed away from retail spaces out of caution, and the surge in infections meant that worker absenteeism proved to be a major headache for many businesses.”

The NZ Herald accordingly headlined its report: Omicron Slams economy – GDP falls 0.2 per cent in first quarter.

The Spinoff’s report was headlined Are we headed towards recession? and BNZ head of research Stephen Toplis said New Zealand could fall into a recession at the end of 2022 or early 2023.

The view from the Beehive is different.

Finance Minister Grant Robertson banged out a statement headed Global challenges reflected in March quarter GDP

He said the volatile global situation had been reflected in the GDP figures,

“… although strong annual growth shows New Zealand is still well positioned to deal with the challenging global environment.”

While recognising GDP’s quarterly decline and a 14.3 per cent fall in exports because of negative global economic trends, therefore, he wanted to note that economic activity on an annual basis was 5.1 percent higher than the previous year.

But he also recognised things are grim for many New Zealanders:

“While the domestic economy is resilient and the annual GDP figure is strong, we know many New Zealanders are struggling with higher prices. This is why we have reduced Fuel Excise Duty, Road User Charges and halved public transport fares, as well as introducing a temporary, targeted cost of living payment.

“On April 1, we also increased main benefits, student support, New Zealand Superannuation, Working for Families and lifted the minimum wage. The Winter Energy Payment also kicked in last month.”

On the plus side, unemployment is at a record low, the government is in a strong fiscal position and the easing of border restrictions and opening up to skilled workers and tourists will help business and the economy rebuild.

On another measure – fair to say – economic growth increased in the March quarter:

“Gross National Expenditure was up 2.6 percent during the quarter. This excludes the impact of imports and exports on GDP and is a measure of spending by businesses, households and Government investment.

“These results show why it is really important that we have one of lowest net debt positions in the world, giving us room to support New Zealanders through this global uncertainty.”

The government’s focus remained on controlling spending and targeting support to where it was needed most.

“We are keeping debt in check and making important investments in our future to deliver a high wage, low emissions economy that provides greater security in good times and bad,” Grant Robertson said.

In his speech, Stuart Nash acknowledged the resilience and endurance of the business events sector over the past two years.

“There have been few opportunities to hold large scale face-to-face events, such as this one, which are crucial in fostering strong international connections and trade.

“Business Events play an important role in enriching New Zealand beyond the economy. They deliver broader societal and knowledge benefits. Hosting an international conference is an opportunity to bring the world’s thought leaders to New Zealand while showcasing our expertise on a global stage.

“But I know that planning, bidding for and winning international conferences takes multiple years and the support of many people, from our academics and business bid champions, through to regional partners, venues and operators.”

Nash mentioned Tourism New Zealand’s support for those wanting to bid to host an international conference in New Zealand through its Conference Assistance Programme.

He further said the Prime Minister’s trade missions this year will be a key part of re-igniting our international tourism.

“She has made it a priority to elevate the profile of this country in the minds of potential visitors as part of our reconnecting strategy. Already, the Prime Minister has led successful tourism and trade missions to the United States, Japan and Singapore.”

Tourism New Zealand, too, has been working to reconnect NZ with the world.

Tourism would not return to the way it was, Nash said.

One good reason, perhaps, is that he then spoke of it being rejuvenated under a government master plan which will determine the types of tourists to be encouraged to come here:

“Now is the time to look to the future and understand how the sector can rebuild in line with the Government’s strategy – in a way which is regenerative.

One of my core messages has been the need to transition to a ‘high-value’ tourism sector. Welcoming high-value and high-quality visitors who give back more than they take. We want visitors who are respectful, who are environmentally conscious and who engage with and learn from our local communities and culture.

Business events visitors will have an important part to play in our tourism future.

Oh – and let’s not forget the trough. Nash mentioned the new $54 million Innovation Programme for Tourism Recovery, which (reinforcing the role of central planners) is

“… designed to develop these real and transformational solutions that help to create the regenerative tourism model we are striving for.

“The Programme will support the big initiatives that address the decarbonisation and sustainability of the industry, or initiatives that provide technological solutions to lift productivity and capability.

“Because of this, the Programme is likely to be based on a sustainable co-investment model to allow Government and industry to share the risk associated with these transformational innovations.”

Engagement with stakeholders on the detailed parameters of the Innovation Programme for Tourism Recovery has already begun,

And Nash gave us an idea of how favours are dispensed (to decide which stakeholders will be helped and which will be left out in the cold, we may suppose). He said he met a group of “invited stakeholders” for a first meeting in Wellington last week.

Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton

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