Cameron Bagrie
Economist, Bagrie Economics
Economist Cameron Bagrie says New Zealand needs some brave and bold leaders. “One of the biggest problems we have across the country at the moment is that New Zealand is very fragmented. We are a very divided society. In fact, I’ve never seen New Zealand like this before,” he says.
“We have those conversations in our own houses or with our close friends about how this just doesn’t feel right, and I don’t see any political parties standing up with the recipe of how we’re going to mend it.
“A populous leader is just a leader that stands up and says, ‘I’m gonna put money in your pocket – whether that be spending or via tax cuts.’ We don’t need that sort of leadership. We want real leadership, and I’m not seeing too many step up.”
Bagrie says now is the time for businesses to start thinking about market share. “It’s not fun making money when everybody’s making money. I don’t like that environment when the market’s going up; everybody looks like a rockstar. I like a tough market because a tough market sorts out who’s any good at anything,” he says.
“And what you need to be thinking about over the next two to three years is this thing not called the market, but market share, which is a fancy way of saying, ‘ripping the throat out of the competition’.
“If you do well and your competitor does not, when you go home on a Friday night and you crack open that bottle of beer or that bottle of wine – that’s gonna taste extra sweet because your endeavours are going to reflect your work, not the market covering your backside.”
While the New Zealand economy is looking good, Bagrie says there are some cracks.
“We have low unemployment, bank non-performing loans are low, strong corporate balance sheets, and low levels of government debt. But then there are the other things we are noticing, like inflation.
“Inflation is just a corrosive lack of leadership,” he says.
Bagrie says there has been a lot of damage done to businesses’ money lines over the past 12 months. “The money line, or supply line, is the truck and the staff member. If your truck’s not working for a day because you don’t have demand to use that truck, you can wear that. If your truck isn’t working for a week because your staff has taken an extra week of sick leave or you can’t get a part to fix your truck, that’s damage to your capability. That is the line that hurts. And what I think happened across New Zealand in the past 12 months is that we’ve done a lot more damage to our capability – or the money line – and we need to be focusing on reconnecting that line.
“Going back to have a look at what we saw in the 1970s and 1980s, this is how it works,” Bagrie says. “Inflation moves up and your staff member says they need to be compensated for inflation. So, you force up wages, and that adds on to costs, this adds costs onto inflation, and the mouse on the exercise wheel is going round and round. That is the playbook, or the merry-go-round, that we need to break.”
Bagrie says to stop inflation from getting passed onto the end consumer, there needs to be a variable that stops it in the middle, and unfortunatey, it will be business margins that will start to suffer.
“So, if you are a business owner at the moment, your margins are your numberone issue to be focusing on because that goes right to the bottom line,” he says.
“This is about having strategies to pass on price increases; anything you can do to give yourself a little bit of wriggle room within that margin or give yourself a little bit of control.”