Bottomless money pit is a thing of the past
Leading economist Cameron Bagrie addresses Transporting New Zealand’s Road Ahead Conference.
IA ARA AOTEAROA TRANSPORTING NEW Zealand members will by now be familiar with Cameron Bagrie’s style of economic analysis. Bagrie is a trusted voice amongst the endless noise of economic and political commentators, which is why over a number of years we have trusted him to provide sound advice to our industry.
At the recent Road Ahead Conference in Invercargill Bagrie provided some typically hard-headed analysis of the state of the economy, where it is heading and the type of environment our businesses will be operating in.
After a long period of market resilience, the old laws of economics are back in play, he told the Conference. If you print a whole lot of money, the Government spends a lot of money and you get a supply shock you unleash the thief that is inflation.
Most of our workforce has yet to see the destructive impact of inflation because they are all under 50 and it is going to be tough for some. The good news is that this means business is fun again. Not everyone will make money. Businesses will have to be good to succeed in a tough market and it will be all about market share – “who can rip the throat out of the competition,” as Bagrie put it.
The advice for businesses is to learn again to take risk. Doing things the same old way they always have been done, will not guarantee success, and will actually expose a business to having disruption inflicted upon them by competitors or a changing market. The weak will get eliminated.
As a country we can no longer rely on ever-increasing property prices. What only a year or two ago were low-risk investments are now high-risk. “So perhaps New Zealanders need to invest in real productive assets and banks need to change their culture and invest into the real productive part of New Zealand,” he suggests.
Bagrie was also extremely critical of the current generation of global political leaders and their response to the changing global economy.
The recent budget package released by Liz Truss’ Conservative Government in the UK came in for a particularly unfavourable review, and when you look at what has happened to the pound since, it’s hard to argue with that. Divisive tax cuts that primarily benefit the wealthiest individuals (some of which have since been backed away from) along with massive spending to help offset the rise in energy prices is incredibly irresponsible at a time where hard-headed economic orthodoxy is the order of the day.
“The days of the bottomless pit in terms of money is over,” Bagrie said. “Now, economic reality is starting to sink in. Now, we need substance to decision-making, not politicians spraying money or tax cuts around like confetti…the old laws of economics are back.”
Looking at the significant issues for New Zealand, Bagrie emphasised the weakness of many of our economic and
The British Pound took a hammering on the back of what most observers concluded was an irresponsible budget package by the new Conservative leadership. structural fundamentals, including our current account deficit of $28 billion, or 7.7 percent of GDP in the red. He pointed to the huge drop-off in school attendance and educational attainment levels as things that will have a big impact in the future.
The fragmentation of our society is also a big problem according to Bagrie. This is something I’d say many of us have become aware of over the last couple of years, and as Bagrie points out, we are all having these conversations in our own homes or with our friends about how it just doesn’t feel right.
All these issues are being borne out in our migration figures. It seems as though more people who leave New Zealand are not coming back…what we are seeing at the moment is the population below the age of 65 actually shrinking!
“Migration is symptomatic of the broader economic story; we get the economic story right and people are going to stay,” Bagrie advised.
The challenges ahead for transporters, business leaders and politicians are significant and it is invaluable to have someone like Cameron Bagrie to lay those out for us. However, it is not all doom and gloom, because we know the path ahead. It will just take hard work, innovation and the motivation to take some risks – in this way, good businesses will still succeed.
Address your wellness in challenging times
A couple of months ago I focused my column in NZ Truck & Driver on the stress the industry has been under through the pandemic and its aftermath. Rising costs, ongoing inflation, decreasing margins and an ultra-tight labour market are having a big effect on transport businesses and this is impacting on the wellness of our people.
A survey Transporting New Zealand conducted has provided further evidence that mental wellbeing is a growing issue in the industry, with 60 percent of trucking company owners and drivers experiencing detrimental impacts on their mental health over the course of the pandemic.
While the survey also found that trucking companies did a good job in providing support to their staff, we must continue to make sure that we keep confronting these issues and use our shared experiences to be more open and assist each other.
As a membership organisation, Transporting New Zealand is here to assist you. Firstly, do not hesitate to make contact with one of our capable regional advisors and have a confidential chat about the challenges you and your business are facing. They will help you access the support you need. Secondly, visit the new health and wellbeing section of our website where we have a range of resources and tools to help support health and wellbeing in your business. This available to all members at https://www. transporting.nz/healthandwellbeing.
If you or any of your work colleagues are dealing with anxiety then please, go talk to someone and access help. It may be an old saying, but it still rings true – a problem shared, is a problem halved.
T&D