RTF - Will you be a tiger or a tabby in our economic recovery?

Tuesday, February 2, 2021

Following the election, the Road Transport Forum held a free Zoom seminar with economist Cameron Bagrie to discuss where the economy is heading and what to expect as the world continues to deal with the fallout from the Covid-19 pandemic. Cameron is well known as an outspoken economic commentator and has presented at a number of RTF conferences. His seminar was framed around the premise that reality is setting in about the road ahead for New Zealand. Do we want to be a tiger or tabby? Time for some tough decisions. Needless to say, it was a fascinating discussion. I can’t go into all the detail here, but there were some takeaways that I believe will be really useful to road transport companies with an eye on the future. The first is to consider how your organisation is positioned for the near future, because according to Cameron the Covid- 19 recovery will be ‘K-shaped’.

By this he means companies that are innovative and adaptable will, like the upper arm on the K, head back upwards very quickly. However, those that try to keep doing things the way they always have and who refuse to innovate will find themselves, like the K’s lower arm, heading downhill. Cameron’s advice is not to worry too much about the big macro-economic factors at play. As a business owner, those things are largely out of your control. Instead, focus on the small things in your business, take some risks, and think about how the pace of change over the next few years is likely to be exponential rather than linear. There will be opportunities to be had and it will be those businesses that are prepared to take a few risks and can accept the odd mistake that will be in the best position to take advantage of the recovery. Cameron also expressed considerable concern about how monetary policy from the Reserve Bank is dominating the overall state response to the Covid-19 recession. He is particularly concerned that the actions of the bank to drive down interest rates is widening the gap between the ‘haves’ and ‘have-nots’ in our society by making housing affordability worse. He doesn’t think the government is doing enough to offset this. Cameron believes the government should have a much bigger role in the policy mix by spending more of the Crown’s balance sheet on infrastructure.

He’s also very critical of how the government is approaching infrastructure investment generally, with the emphasis seeming to be on making future debt numbers look less bad than developing a medium to longterm infrastructure plan. Such a plan, Cameron argues, would provide the construction and business sectors with 10 to 15 years of certainty, allowing them to invest, upskill and employ people to meet the expected demand. I was really pleased that Cameron identified the dominance that big business has over SMEs when it comes to influencing government. RTF’s members can be sure that we will continue to advocate for the interests of our sector, which is dominated by small and medium businesses, as much as we can. However, we would love to see the government do more to directly tap into the expertise of SMEs as this could give them a far more realistic appreciation of what is really happening at the coalface and to make the right policy decisions going forward. For those who wish to watch the whole seminar, just go to YouTube and search for ‘do you want to be a tiger or a tabby’. It’s an hour well spent.