Effective treatment

That is the title of a paper issued on Thursday by the New Zealand Initiative think-tank (mainly written by their chief economist Eric Crampton).  The subtitle is “Public policy prescription for a pandemic” and they range pretty broadly (although not really on public health itself) in the suggestions they offer and issues they raise.  It is well worth a read for anyone seriously interested in thinking about what policy responses the current situation demands, as well as the sorts of issues that will need to be faced when, some considerable way down the track most likely, we are in a position to think seriously about a recovery.

(By contrast, if it is political spin you want re the eventual recovery, you could try the front page of this morning’s Dominion-Post reporting and channelling comments from the Minister of Finance suggesting some sort of Bill Sutch-like pulling back from the world longer-term, insulationism, and massive public works projects.  The election campaign is clearly getting underway, and the PM and Minister of Finance have claimed to be inspired by Michael Joseph Savage, and whatever good things his government did it led us into the rocks of financial crisis and an insulationism that took decades to undo.)

There is a lot of material in the NZI paper and I don’t want to write a super long post, so what I’m going to do is to take the Executive Summary section by section and offer a few comments on each, and then pick up a few of the interesting or puzzling other ideas that didn’t quite make it up to the front of the document.

Unless effective treatment for the novel coronavirus Covid-19 emerges quickly, the world faces not only misery but economic depression. New Zealand will be immune to neither. The normal economic uncertainties of a downturn will be compounded by the uncertainties of a pandemic.

Perhaps a matter of terminology here –  and I know the first draft of the document was written a while ago – but what we already have is much more than a “downturn”.  More like a “dramatic slump”, partly a result of New Zealand government choices re the virus, but much just unavoidable whatever our government had chosen to do.  The scale of the actual quarterly fall in GDP in the June quarter is likely to be utterly unprecedented –  even if by some miracle the current partial lockdown ends 3.5 weeks from now.

The New Zealand Government’s policy needs to directly boost capabilities in the health sector while providing the kind of appropriate economic support necessary when we’re all taking a lengthy staycation and some industries are put on ice.

Uncertainty about the duration of this crisis makes deciding on the most suitable policy difficult.

Certainly agree about the uncertainty, but in a way the uncertainty is even greater, and much more constraining, for the typical business (and many households).  And that facts does point in some policy directions rather than others, given that the Crown is better placed to bear much of that risk that individual private sector operators (firms or households).

(Incidentally, I’m guessing that the huge number of people losing their jobs altogether each day aren’t thinking of this as a “staycation” but as an utterly disorienting disaster (even if, as for most of us, we know no one with the virus itself yet).

What they say on health itself seems sensible to me

The first priority must be with health.

Increasing the capacity of the health sector to deal with peaks in numbers of Covid cases is important to reduce mortality and morbidity rates. But nobody quite seems to know just where the binding constraints in the health sector are. While credible newspaper articles warn about substantial shortages in equipment and incredible pressure on staff, official statements have been far more sanguine.

If there really will be shortages of critical equipment in four to six weeks, potential suppliers should know that today. Quietly shoulder-tapping likely suppliers may partially solve the problem but won’t provide the necessary scale of response. Suppliers can come from unlikely places. For instance, Italian hospitals are reportedly trialling ventilators reconfigured from scuba diving equipment. Simply announcing a willingness to purchase equipment – and the prices the Government is willing to pay – would allow potential suppliers to identify themselves. Serious companies aren’t likely to re-tool without the certainty of a contract. But they do need to know the demand exists and that they can get essential service status to do the job.

Rapid identification of equipment and skills necessary to boost capability in the medical system, combined with a wide call for assistance, would enable people and businesses to find ways to help. If the health system is not already doing so, it should be offloading less-significant tasks to helpers with limited training, to ease the burden on key medical staff. For instance, thousands of air cabin crew have been trained in first aid and will have plenty of time on their hands. With some rapid training, they may be able to ease some of the burden.

Additionally, the Government has asked retired health workers and health workers furloughed by the current lockdown to assist in Covid-response. It should also consider those foreign-trained medical professionals already in the country who have not yet been able to secure New Zealand medical registration.

To which one could add that a commitment to utter honesty and transparency about what the government does and doesn’t know, has and hasn’t etc would help build stronger confidence.

Part of the cure for a pandemic is a sharp reduction in economic activities in areas not related either to pandemic response or critical areas like food supply. That’s why support for workers and firms is important. But the Government’s chosen wage subsidy scheme is not working well. Even if it can be extended to larger employers, it provides too little support to keep companies from laying off staff en masse.

The Initiative urges the Government to consider a version of Germany’s Short-Time Work support policy. That scheme allows firms to shift workers to a fraction of their normal hours along with an income top-up from the Government. That way, instead of laying off 80% of staff, a company could keep staff on 20% of their normal hours with little reduction in worker earnings.

This kind of scheme is better than either relying on benefits or starting up the sometimes-promoted universal basic income (UBI). A speedy reboot of the economy when this is over matters. That is much harder to do when companies must rebuild hard-earned experience and skills from scratch. The Short-Time Work support policy maintains both workers’ incomes and their links to employers. It targets support to those workers whose hours are cut, rather than spreading support broadly to those far less affected. Simply put, it works better.

I’m increasingly attracted to the Short-Time Work option.  In Germany, for example, in the last recession real GDP fell by more than in New Zealand, and yet the rise in the unemployment rate was much less in Germany than in New Zealand.  Whether or not it makes sense for a country like New Zealand in the longer-term is an open question –  I’m not yet persuaded – but….had it been in place a month ago here it would have looked quite well-suited, albeit perhaps too generous, for the situation we now face.  My unease with as proposed in the NZI paper, and given the time that has already passed, is that if we tried to adopt it as the main initiative now, it might still not do much to keep firms intact –  so severe are the losses of revenue and the extreme uncertainty about whether and when that revenue might again pick- up markedly.   And I entirely agree with the NZI that a UBI is simply not fit for purpose at present –  it does nothing to sustain firms and labour market attachments, and it provides bonus income to the large chunk of the workforce (especially in the public and agricultural sectors) that aren’t likely to be very adversely affected anyway.

Some tax provisions can also be eased. Individuals and firms should be allowed to combine the 2020/21 tax years and temporarily suspend their PAYE collection and Kiwisaver contributions. This would immediately provide more cash in hand everyone. Companies staring down provisional tax assessments based on last year’s earnings could instead defer everything to next year.

This one puzzles me a bit.  It is hard to see that it would do much harm, but it isn’t clear what good it does either.  For those still in a job, they don’t have need of huge amounts of cash right now (what is there to spend it on?). For those out of a job, they aren’t paying PAYE and Kiwisaver anyway. I guess the focus is people on reduced hours, and I don’t have much sense of how large a proportion of the labour force they might be.

Simultaneously, the Government could help reduce business’ fixed costs that otherwise might have compelled them to shut down. It could also cover Council rates bills for firms in financial distress, averting a major hit to the local government purse as well. And access to credit can be improved, especially over the longer term as wage support to employers may need to ease.

I’m a bit puzzled about the rates focus.  I don’t have the figures at my fingertips, but I would assume the business fixed costs that were typically much more substantial were rent, lease costs, and other finance costs (ie interest) –  business interest rates having hardly fallen at all.   There has been some discussion in Australia of the possibility of the government taking over not just wage liabilities but rent.   It is radical, but not out of line with the spirit of my own scheme, guaranteeeing for a year all firms and households 80 per cent of the most recent year’s taxable income.

Finally, a modified version of the New Zealand Student Loan programme should be made available to non-students to help bridge any remaining income gaps. It has the advantage of having already set provisions for income-contingent repayment when the crisis passes.

This is an idea I really quite like.  I asked Eric the other day why they weren’t including here an option to withdraw Kiwisaver funds – again done in Australia –  and he suggested that this borrowing scheme might be preferable, and avoid the risk of encouraging people to cash out of Kiwisaver at the bottom of a share price slump.   Personally, I think people should make their own judgements about that –  US share prices don’t look very low to me – but the secure access to credit (amounts capped at a moderate level) seems quite a good idea.

But financial support is not the only way the Government can and should help.

Regulations that were no real barrier to getting things done in normal times can be insurmountable in a pandemic. For example, some airline pilots require time in simulators to maintain certification, but the necessary simulators are in Australia. In normal times, this just doesn’t much matter – pilots can roster onto an Australia route when and as necessary. This doesn’t work now. But the Government can’t be expected to identify every barrier proactively. It needs to rely on business to highlight the obstacles as they come up using lines of rapid communication with regulators who can suspend or modify them during this crisis.

Sounds sensible to me.

And this is no time for policy or regulatory changes which are not related to the pandemic. The Reserve Bank and Commerce Commission have already postponed theirs. But Parliament’s Select Committees are still asking for submissions on non-urgent legislation. Doesn’t the Health Select Committee have better things to do than consider the regulatory framework for vaping? Some legislation may be urgent enough to require submissions during the Level 4 alert, but everything else should be quarantined.

Totally agree (and I could not quite believe on Thursday when someone asked me for some input on an aspect of a submission on a not-very-important-at-all bill that had submissions closing that afternoon).

Obviously, the Government should borrow the funds it needs to do all this. But this will require maintaining a disciplined approach to any spending lines unrelated to the pandemic. Entrenching new ongoing commitments would complicate a return to prudent debt levels after the crisis and make it harder to borrow the funds necessary for responding to the pandemic.

Hopefully the four weeks of Level 4 lockdown gives the Government enough time both to knock back the pandemic and adjust policy to help us through the coming economic turmoil. We need to adopt more effective treatment.

It is likely to be easy enough to borrow whatever it takes through the crisis.  Not only is the balance sheet strong, but we have a central bank, able to effectively lend into a shock that is, for the time being, powerfully deflationary.  Whatever monetary policy can do, directly or indirectly, the better.

What else struck me in the rest of the document.  Simply in the order the paper comes:

If a treatment does not emerge quickly, economic turmoil could easily last well over a year and the 2008 recession could look mild by comparison.

At this point, this is rivalling the Prime Minister for understatement. For New Zealand, what we see now is already far worse than the 2008/09 recession.

Firms that were viable during normal times and would be viable again after the crisis may nevertheless have substantial difficulty in securing credit to see them through.

The government’s small and medium business loan guarantee scheme –  details yet unknown – may well tackle this particular issue. But it is unlikely to be the main issue.  A far bigger issue is that many firms’ owners will not be willing to borrow, faced with the huge revenue loss and huge uncertainty.  If time could simply be stopped as at the end of February and resumed again 12-18 months hence, it might be one thing.  But there are real and often big costs for many firms, even if the government were to cover many of the wage costs –  and recall that at present even the government wage subsidy is only on offer for a few months, and there is no possibility of many of the adversely affected industries coming back strongly in that time.  We know that.  More importantly, owners in those sectors either know it already or will be realising it very fast.  My one year income guarantee is aimed to buy time before firms simply decide to exit.  But more will simply be exiting with each week that passes, without government action.

(Incidentally, I was a bit surprised not to see any caution in the NZI paper on one rule for the big and well-connected firms and another for the mass of companies.  Sadly, that is the way the government seems to be talking at present, and Air New Zealand already sets something of a precedent.   Quite possibly, policy will not be generous enough anyway, but it would hardly command ongoing public support if just the big-end of town is able to collect from the government.)

A post-crisis recovery period might include longer school and university hours to allow students to catch up on missed work and the temporary extension of working hours for the employed.

Quite what is going to happen, especially around school, if the situation drags on for long is hard to tell.  The current on-line model might work fine for well-motivated senior students, but I’m sceptical it can work for long.  I was a bit more troubled by the final better of the sentence: people may well want to work longer hours, and should be free to do so, but there is a tone to that sentence that almost suggests the state might direct longer hours.  And I’d be distinctly uneasy about anything of the sort.   In thinking about coming through the other side of this, it is wise to keep the overall economic losses in context.  Suppose GDP fell by 50 per cent for a year: that total loss is equivalent to 1 per cent of the total income the country and its people will generate in the next fifty years.  Even if we end this with government debt at 70 or 80 per cent of GDP – which need not happen with sensible balanced, but generous policies, in a growing economy with a balanced budget debt ratios drop away steadily without undue longer-term dislocation (as a historical reminder, the highest level of government debt on record in New Zealand was about 230 per cent of GDP).

Reckless trading provisions of the Companies Act makes directors liable for taking on more credit while insolvent. Policy may require making credit available to companies made insolvent by the crisis.
Banks may be unable to lend as needed during the current crisis if hampered by responsible lending criteria requiring assessment of future income. Relaxing these criteria will help.
Record-keeping and witnessing requirements of AML/CFT regulations currently require face-to-face processes; this may be impossible during lockdowns. Alternative compliance arrangements must be implemented.

I wasn’t quite sure of how much there was to the second point –  although would welcome any comments to elaborate-  but generally the issues raised seem sensible.

Encouraging more people to work from home may require helping individuals and firms with any unexpected costs. The Government’s decision to allow full depreciation of minor business investment will help. It may wish to go further in supporting firms providing employees with the necessary equipment if people are working from home over longer periods. Office-based workers, in the short term, can make do with a laptop but may eventually require monitors, printers and other similar equipment at home. Small condition-free grants to small business calculated by employee headcount

This one seemed like a level of specific support too far, and again would be better dealt with through my overarching income guarantee approach, which enables firms and individuals to make their own choices.

As I say, there is a lot in the paper worth thinking about and debating.  From my perspective it is mostly rather micro-focused, but in that sense much of what is good about the paper meshes quite nicely with my programme for macroeconomic stabilisation, which might usefully be read together with the NZI piece.   The proposed one-year income guarantee –  ACC for the national income, the payout of an (implicit) national pandemic insurance policy –  is at the centrepiece of that, but so too is further really major cuts in retail interest rates.  It is truly remarkable that the government can shred civil liberties, scrap Parliament in the midst of a grave crisis, close down much of the economy and almost all of society, ban funerals and so on….and yet the government, while essentially unfettered power at present, for good and ill, will do nothing to insist on such a basic aspect of responding to any large scale economic slump: much lower interest rates, and servicing costs, in a period when time simply justifies no return.

More on that issue on Monday.

 

27 thoughts on “Effective treatment

  1. The plums (farming) will still be there, those (including management at RNZ, TVNZ and NZ On Air) who encouraged an extra million people to migrate should be held to account?

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    • Yes 1 million did leave NZ for greener pastures. The 650,000 in Australia currently finding out about their 3rd class work permits issued under a Special Category Visa.

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      • More tripe from GGS

        The “Special Category visa” (subclass 444 restriction) only applies to NZ passport holders who arrived after 2001. A large proportion of the 650,000 arrived before 2001 are entitled to benefits. Those arriving after 2001 have to apply for permanent residency in order to obtain benefits

        The 2016 Australian Census recorded 518,466 NZ-born people in Australia, an increase of 7.3 per cent from the 2011 Census. Compared to 61.8 per cent of the total overseas-born population, 64.3 per cent of the NZ-born people in Australia arrived in Australia prior to 2007. Among the total NZ-born in Australia at the 2016 Census, 17.4 per cent arrived between 2007 and 2011 and 14.4 per cent arrived between 2012 and 2016

        The balance of 130,000 of your 650,000 are non-nz-born NZ passport holders

        NZ citizens do not need to apply for a visa before coming to Australia. If eligible, you will be granted a “Special Category visa” (subclass 444) when you arrive. The Special Category Visa (SCV) is not a permanent visa. You need to apply for permanent residency. Permanent residency means you can then apply for unemployment or sickness benefits — you can’t receive these benefits until 2 years after being made a permanent resident in Australia

        November 2017
        https://croakingcassandra.com/2017/11/10/some-labour-market-statistics-that-really-should-be-looked-into/#comment-20160
        May 2017
        https://croakingcassandra.com/2017/05/05/backdoor-entry-to-australia/#comment-14518

        to quote someone else
        “John Howard had Helen Clark on the mat and told her that if any NZ government ever pulled a stunt like that again (granting about 9000 criminal overstayers passports, half of whom bolted straight to OZ), all deals regarding NZ’ers special rights to live and work there would be stopped”

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      • @ Iconoclast.
        I posted a piece on The Politicisation of Immigration (by Richard Bedford) on Kiwiblog. Its said
        “Notwithstanding this ambivalence, there seems to be clear recognition and acceptance that New Zealand society is going to become more diverse in terms of ethnic and cultural groups over the next 20 years. Immigration will play a major part in this diversification of communities, especially immigration from countries in Asia. Fortunately, there seems to be a broad consensus among the main political parties as well as many of the minor ones that this is not something to be feared or resisted at all costs. In this regard, there appears to be some consensus of party view (excluding the position adopted by New Zealand First) that continued immigration at or above present levels will produce positive outcomes for the country’s economy and society.
        To which someone replied “why shouldn’t the public choose who they want to come here?”. That for me was like the apple falling from the tree.

        Thinking about the PM’s UN speech she quotes primatologist and neuroendocrinologist Robert Sapolsky who “reminds us that humans organise into us and them” but also points out how quickly who us is can change. Ardern posits that “us” “can and should” be based on a “common humanity”. My thoughts on that are that 1. people assess for themselves who is us and who is them and acceptable conditions as to how they earn that right, whereas today elites are using all the power of the state and it’s institutions (in spades); they would call it a human right. 2.There is the matter of our territory and what price. I’m fairly sure a territorial exchange (eg residency in Shangrila) would cure objection to immigration of people not like us.
        3. I think the “culture wars” are about liberal high culture embracing anti-racism to the point that there is no boundary between us/them/ours, therefore we have upper white/lower white as it also denotes status (Stats Chat called consideration of which ethnic group was buying lots of houses in Auckland “distasteful”). A nation is an imagined community of people with common bonds. It doesn’t need to be closed off completely but the integrity of the nation needs to be maintained (current policy is the exact opposite). People want to lie in their tents at night knowing that their family and kinsmen lie around them extend all the way to the border.

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      • Iconoclast. Spoke to my neighbour about her son who left for Australia in 1998 who is now jobless in Australia but was refused any benefits and is now about to lose his Australian home because he came back to NZ for 2 years after 2004/2005 and then returned to Australia. He is now considered outside of that privileged 2001 cutoff. He is also now worried he would be sent to Manus Island if he catches the Covid19 as Australian Hospitals will not allow him treatment or even if he has mild symtoms he would be quarantined on Manus Island. He is very worried about his 3rd class workers Visa. Nothing Special about the Special Category Visa.

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      • Special Category Visa’s are only available to New Zealanders, citizen or not. By your definition all other nationalities must be 4th class. Your next door neighbours son returned to Australia knowing what the rules were yet has remained there for 12 years without bothering to obtain permanent residency

        NZ unfettered rights to enjoy the freedoms of Australia were destroyed by Terrence Clark and Helen Clark. Blame them

        A Special Category Visa (SCV) is an Australian visa category (subclass 444) granted to most New Zealand citizens on arrival in Australia, enabling them to visit, study, stay and work in Australia indefinitely under the Trans-Tasman Travel Arrangement. There are two categories of SCVs: protected SCV and as non-protected SCV. New Zealanders who had entered Australia before 26 February 2001 are classified as protected SCV holders, and after that date as non-protected SCV holders. The rights of the two categories are somewhat different.

        Most New Zealanders are eligible for a SCV, except:
        those with significant health problems
        those with significant criminal records ie. being sentenced to more than 12 months imprisonment combined in total
        those who hold temporary or permanent Australian visas
        those who arrive in Australia using another passport (e.g. if holding dual nationality). In this case an SCV can be obtained at a Department of Immigration office in Australia upon production of a valid New Zealand passport

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      • Currently there are 100,000 tourists and backpackers stuck in NZ. They can’t get home. They may be here for quite a while. Will NZ govt provide them with unemployment welfare. What class will they be assigned?

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      • Twoguys, other Nationalities would have applied for Australian residency and taken up their Aussie citizenship. New Zealanders on SCV after 2001 have no path to residency while they reside in Australia. My brother was in NZ, applied and left for Australia properly on a residency visa. He rang me yesterday to tell me that he will not need to pay rent on his business premises for the next 3 months and Australia is still only on level 2 lockdown. He is still on full pay but expect some form of assistance from the government to help with his home mortgage payments when and if he loses his job.

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    • A cautionary tale about travelling without New Zealand permanent residency

      It cuts both ways apparently

      Johnstone was looking forward to her big overseas trip, but unfortunately her holiday hit a massive hurdle. After spending a week catching up with a friend on the Gold Coast, Johnstone was about to board her plane back to New Zealand, when she was stopped at check-in and told there was an issue with her travel conditions. Johnstone, 37, was born in the United Kingdom but emigrated to New Zealand with her parents when she was seven. For the past 30 years she has lived, studied and worked in New Zealand and believed herself to be a permanent resident. Unbeknownst to her, that wasn’t quite the case. Although Johnstone was granted a residence permit when she first moved to New Zealand as a child, that permit expired when she visited Australia.

      https://www.stuff.co.nz/travel/travel-troubles/119043125/a-cautionary-tale-about-travelling-without-new-zealand-permanent-residency

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  2. Great work on TV last night Michael, and always thanks for your thought provoking comments.

    Just a couple of points about the NZI report, the example about flight simulators seems an odd one to reference (something in the health sector might be more appropriate?)

    Air NZ has simulators available for all their aircraft types in Auckland. Although I appreciate air freight providers use different aircraft types (B767 and B737) that Air NZ don’t have, but these aircraft are still flying trans Tasman so wouldn’t present an issue. Some helicopter types and smaller regional aircraft may need to go further afield for simulator time but I would suggest it’s not a widespread/systemic issue. I appreciate that I am nit-picking, it just seemed a curious example to use.

    However I do totally agree with the NZI that this is the sort of thing that should be able find a sensible work around. Related to that it will be interesting to see how much ‘business’ travel (both public and private sector) is justifiable post this current crisis and what administratively burdensome processes (AML etc.) can be digitised.

    It would be interesting to understand what decisions firms are actually making in this environment. I would suggest that the government hasn’t fully appreciated what was already a weak level of business investment (per some of your historic posts) in what was a relatively buoyant macro environment. So surely all else being equal through this current crisis this will be absolutely abysmal for a long, long time? This doesn’t seem to be acknowledged or appreciated by anyone in a senior position (at least publicly).

    Appreciating that now is not necessarily the time to be thinking about this but what long term policy prescriptions could be implemented that will accelerate New Zealand’s growth and productivity post crisis?

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    • Thanks re the TV.

      I’m hesitant about saying much about the long term at present. There are too many people trying, consciously or not, to use this crisis to push unrelated policy barrows. I’m trying to discipline myself to focus on what the crisis and emergence from it require and imply (altho I’m sure I’ll have slip ups there too).

      But I guess my bottom line views on nz policy and productivity aren’t materially altered by this crisis, so the policy imperatives are likely to be what they always were, but just against a much tougher backdrop.

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  3. When you say “US share prices don’t look very low to me,” I would ask compared to where? Compared to the EU/Japan, sure. But why did NZ share prices increase nearly 5 fold in the past 10 years? I’m at a loss as to what fundamentals support even their current value. Shouldn’t we expect a much bigger drop still?

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    • It was a passing ref to a chart of the S&P I tweeted yesterday: at that stage the index was at about end 2018 levels, in face of the biggest economic dislocation in many decades.

      But yes, the points you make are entirely fair too.

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      • “the index was at about end 2018 levels, in face of the biggest economic dislocation in many decades.”

        You’re right, that’s absolutely astonishing when you think about it.

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      • I think a big reason for the US being in a better sharemarket position is that a lot of their tax cuts were spent on share buybacks which pushed up the stock prices.

        Liked by 1 person

      • NEW Zealand – NZX50 Index
        March 2007 value was 4088
        1 year later
        March 2008 value was 3547
        12 years later in 2020
        February High value 12073
        March 2020 Low was 8500 fall 30%

        Australia – ASX200 Index
        March 2007 value was 5876
        1 year later
        March 2008 value was 5300
        years later in 2020
        February High Value 7139
        March 2020 value was 4667 fall 35%

        New York – DJIA Dow Jones Index
        March 2007 the value was 12300
        1 year later
        March 2008 the value was 10900
        12 years later in 2020
        Feb 2020 High Value was 29500
        March 2020 the low was 18600 fall 37%

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  4. Hi Michael
    Enjoy your blog but don’t understand your comment regarding deferral of provisional tax (or combining the 2019-20 and 2020 years). Maybe its different if you aren’t in business but I think to many it could be a final straw.

    Being self employed I have the schedule for next years p tax already and will have to find a big pile of wedge in a couple of months. I have no idea whether I will have any work before then. I havent applied for a handout because it goes against the grain and who knows, some jobs may still go ahead.

    I can survive a few weeks no probs but a combo of little/no work and big p tax bill will be killer by mid year. Especially when last years income will likely be multiples of this year.

    I guess one option could be to start a new company and try trading through that so I can avoid provisional until 2021 (although you get double slammed then)….at least it might keep things on life support for another 12 months when things hopefully start to pick up.

    I suspect I’m not the only one who would say amendments to tax may be the thing that keeps the business going over the next while

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    • Oh sorry if somehow I wasn’t clear. I fully support people being able to revise down their provisional tax and income estimates/obligations for 20/21. I was only intending to be sceptical/puzzled about the suggestion that employees’ Paye and KiwiSaver obligations might be deferred/waived.

      On the urgency of something being done for the business sector, I totally agree.

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  5. Very interested in the ACC model concept. This pays 80% previous 4 weeks average, capped at $2,015 per week. Payday filing required within 48 hours of payrun means IRD already will have the information for each individual, so the data is available. The certainty now of this level of support would give our company confidence that we can then cover our fixed costs for the indeterminate duration of the lockdown. This confidence would give staff the ability to continue paying rent and mortgage commitments. The wage subsidy simply does not cut it for typical skilled staff, and was designed for a typical 30% deduction of activity scenario. While the statement delivered by Grant Robertson on Friday implies that in the case of no revenue coming in, it is sufficient for firms to `at least pass on the wage subsidy’. The expectation of employees is that they will get something close to their normal pay, and that their leave entitlements remain intact. If we can get as close to that position as possible, there should not be the need to cover home mortgage failures. In our case, we would expect that many of our staff have high leave entitlements, and they may choose to top up the extra 20%.

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    • Grant Robertson is the dumbest Finance Minister we have ever had. With no income, the wage subsidy is already spent as soon as it is received by the business. For most skilled staff that subsidy is only a small percentage of even 80% of my pay package.

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  6. On the IRD… during the financial crisis the IRD went hard at anyone owing them money and bankrupted loads of people… for no economic return… I guess the point about the IRD is no so much the money, but the relief from that stress during these times…

    Make no mistake if you owe the IRD and you can’t pay they will gut you like a fish to get their money…

    To them this is just another day in the office…

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  7. I am puzzled by your antipathy towards Select Committee work continuing, particularly since you object so violently to Parliament being suspended. As you well know Select Committees are Parliament too, just not the House, so their continuation means Parliament’s activities are continuing. My only objection to their continuation is they’ll receive even less media attention than in normal times, but many stakeholders (and the bulk of submitters) will be aware that Bills relating to their industry/sector are due for submissions anyway. Select Committees have the ability to meet via video link, and to stream SC proceedings live. People will still have opportunities to submit via written submissions, and the video link option allows for oral submissions also. Having submitted in person to a Select Committee twice I appreciate the ability to eyeball the Committee, but while it’s a second best option, video link does allow this to some extent.

    Also, with officials keeping their jobs, at least they’ll be able to continue to advise committees and not just sit around getting paid. Ditto for those back bench MPs who are still paid, and doubtless have even less to do than usual.

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    • Spoke to a National MP yesterday on the phone and i was concerned that they have bought into the Jacinda Ardern narrative that supermarkets are price gouging. Coming from National who are supposed to be pro business we just lost a Opposition National party.

      Even John Key has gone rogue making public statements supporting Jacinda. Looks like he has given up on National party and is now chasing the many bribes that the Jacinda Ardern government dishes out to experts to say yes.

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  8. Two different issues here. Select Committes taking submissions on bills means people need to have time/energy/focus to think about and write submissions. I sure many people at present have time and focus only for Covid. For bills where submissions closed a month ago, i have no particular problem with the ctte deliberations continuing.

    As for the House itself, it is the heart of democracy. The special select ctte can do some useful things, incl summoning officials, but there are plenty of things it can’t do, and govt is (necessarily) going to be continuing to introduce highly contentious policies thru this period, many of which should be scrutinised, challenged, and approved by Parliament (under urgency) not simply by ministerial decree, The symbolism of abandoning Parliament at the first opportunity is shocking – as if just a frippery, a nice to have, all while the cigarette company (as an example) is an “essential”.

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    • I totally agree with your 2nd paragraph. As for the first, I think it’s important people have other things to focus on besides the pandemic. Instead of checking the news 5 times a day for coronavirus news they can have something productive to think about. For many people work continues albeit in a different location, for those unemployed they have the time to submit. Business owners who may want to submit but are overwhelmed by COVID-19 matters, sure, they’ll find it harder, which is an argument for extending submissions time frames, not putting everything on hold.

      I suppose officials twiddling their thumbs after their Bills got paused could always write 3 RIAs for their Bills/regulations covering best case, medium case and worst case post-COVID-19, but that would be a waste of time. ^^

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      • Down to a 4 day week and therefore 80% wage. Still expected to be online and clicking the keyboard to demonstrate at work to be paid. It is depressing this working from home. Not sure how anyone believes it is more productive. It is difficult to tell when a day starts, when it finishes, and what needs to be accomplished for the day.

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  9. Foreign buyers have been slapped with tougher rules to prevent acquisition of Australian companies during the coronavirus crisis amid plunging share prices and fears of predatory takeovers. Federal Treasurer Frydenberg moved on Sunday night to slash a key takeover threshold from $1.2 billion to zero in order to ensure any overseas bid could be blocked. The new rules apply to all overseas buyers, Will NZ follow suit?

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