Laurence Kubiak was the speaker at the Club’s last dinner meeting. Laurence is Chief Executive of the NZ Institute of Economic Research and he presented his view on the economy as the country approaches a post Covid era. He was able draw on the Institutes Quarterly Survey of Business Opinion that was “hot off the press” as it had just been completed for the first quarter of 2021.
Whilst broad opinion was that the economy would be improving particularly as the vaccination programme gets underway sectors that had really felt the effects of lockdowns were retail, tourism, hospitality and education. In the latter case he estimated it would take 10 years for the number of foreign students attending secondary and tertiary education institutes to recover to pre- covid levels. He also shared his concern for some of the “head winds” that will impact how quickly the economy recovers with supply chain problems, cost escalation and a shortage of skilled workers causing significant problems for business’s.
The government’s response of helping businesses through the crisis with wage subsidies and other schemes helped minimize the damage to economy but the resulting increase in government debt from the pre-covid 20% of GDP to 72% in 2025 meant that the problem is being transferred to future generations. This unfortunately would necessitate an increase in taxes at some point. Improvements in productivity would help pay off the debt however NZ’s record is not good in this area as we tended to use labour rather than investment/capital to increase output. This was a trend that he hoped would change post covid.
All in all, an informative, enlightening and somewhat surprisingly, given the subject, entertaining presentation from a Mellon’s Bay local. And it was also a delight to meet Jennifer, Laurie’s wife who attended the dinner meeting with him.