Driving into the future with the handbrake on
A meeting of minds this week will ponder our way forward in the post-Covid world, but we might be hindered by 1980s thinking. Dileepa Fonseka reports.
As the exchange of passive-aggressive notes between Finance Minister Grant Robertson and Reserve Bank Governor Adrian Orr seems to be reaching its end, some attention is finally turning to the bigger question of ‘what next?’
Economists and policy wonks will attend a conference at the University of Waikato on Wednesday and Thursday to chart a course at the 2021 NZ Economics Forum themed Economics for Tumultuous Times – Finding the right policy mix in the post-Covid world.
Some will no doubt be nursing their wounds over overly-pessimistic predictions, which thankfully turned out to be wrong, but there’ll also be a dash of hope.
Continue on this track and our country might escape the worst of Covid-19 and emerge in a good position relative to others.
There might even be opportunities to ‘‘build back better’’.
So will we leverage our brand of excellent Covid-management to reel in new higher-value businesses and tourists?
Or, will the country lapse back into its old practices of luring foreigners in with the prospect of residency then changing its mind once they’ve spent a decade or so settling in?
Strategy and risk consultant Raf Manji suggests one opportunity might lie in flipping those global supply-chain disruptions on their head and selling them as a strength.
Why not market the country to the world as the ultimate backup for your supply chain? Similar to financial trading-houses which used to have alternate dealing rooms waiting in the wings as a backup if the main one went down.
‘‘Can we use this opportunity to say, ‘look, we reacted well to this, we could shut down our borders’.
‘‘The UK is also an island, but they couldn’t. There’s too many entry points, it’s too difficult to do. Whereas we’ve got basically two to three entry points.’’
‘‘We should be doing that with India. India’s producing a big percentage of the world’s serums. We should be saying, why don’t you manufacture here? We’ll provide facilities and you start to build redundancy. So you see New Zealand as a sort of redundancy outpost for when the s... hits the fan.’’
Great idea, but what about the infrastructure to support all these factories, and the new people we’ll need to bring in?
In short, won’t we need all the things we’re already struggling to provide now?
‘‘I mean, you’re right, so it kind of sounds like a great pitch, and then it’s like ‘oh, you don’t have the people, your housing costs are too high’ and all that kind of stuff,’’ Manji replies.
‘‘So, we’re kind of stuck . . . our policy settings have kind of stuffed us.’’
Which is why our country is like a used car driving around with the handbrake on.
NZ Initiative chief economist Eric Crampton (who will be on a panel at the forum) sees one of those policy settings which has ‘‘stuffed’’ the country as a stubborn unwillingness of central government to incentivise councils to provide infrastructure.
Crampton spent part of last year attending town hall meetings in Khandallah, Wellington, where residents had all sorts of horrified reactions to their council’s upzoning and intensification plans for increasing housing supply.
‘‘There are infrastructure upgrades that need to happen to facilitate it and council doesn’t get any money to be able to do that.
‘‘They’ll get a small increase in ratings base. So they have a capacity to apportion a budget over a slightly larger number of households, but the upfront cost is really big for councils.’’
So, why not simply never re-open the border? Pull up the drawbridge, train our own and live with low debt and the infrastructure we have?
Crampton sees a danger that this is exactly what could happen. The pandemic has changed our attitudes towards foreigners with even returning New Zealanders being perceived as a bit of a danger.
We might not be as open to welcoming everybody in as we were in the past, and this attitude isn’t likely to bring us any closer to solving our infrastructure problems either.
Even if we embrace a population policy which assumes no migration, the random fluctuations of citizens and permanent residents who move in and out of the country could end up causing the same issues.
And if the housing issues don’t go away, there’s the problem of interest rates.
Low interest rates were supposed to bump up house prices, inflation, and encourage people to spend.
However, with housing supply so constrained and interest rates so low, money flooded into property investments, but didn’t necessarily trickle down and stimulate spending in what economist Shamubeel Eaqub calls the ‘‘real economy’’.
‘‘I think there is a big question of what next for monetary policy because I think inflation-targeting is a tool that’s done its dash.
‘‘And if not, then what?’’
He argues interest rates have become a good tool for discouraging spending, but not so great for encouraging it.
Part of it is because fewer people own houses – meaning a boost to homeowner wealth isn’t pumping up the economy and spending the way it used to.
‘‘I think it’s the distinction between the real economy and asset markets.
‘‘For the last 10 years they’ve been trying and failing to generate inflation in the consumer market, but we’ve had no problem generating inflation when it comes to the asset market.’’
Eaqub believes we will eventually have to discuss measures to force capital to go to the places we want it to go.
Manji says the problem is decision-makers are still stuck reading their textbooks from the 1980s and hung up on the theory low interest rates automatically lead to more bank lending for business investment, which in turn supports employment.
‘‘That’s the last place anybody’s going to put any money because of the risk.’’
Low interest rates should lead to more spending and higher inflation, but right now consumer inflation is more affected by supply chain issues than it is by interest rates, he says.
And lower interest rates are simply encouraging people with idle cash to purchase assets like shares and property.
Alternatively, people are just using those low rates to leverage existing assets and invest even more in the property market.
‘‘Those people are not rushing down to the supermarket [to spend],’’ Manji says.
‘‘I mean they might come down to Moore Wilson’s and buy an extra tub of Duck Island, but they’re not going down to Pak’nSave and pushing up the price of rice.’’
‘‘We’re kind of stuck . . . our policy settings have kind of stuffed us.’’ Raf Manji Strategy and risk consultant
She who is by Susanna Elliffe was highly commended in the Sunday Star-Times short story competition’s under 25 category. Author and judge Amy McDaid described it as ‘‘a love story with a sting, examining idealisation, control, and misogyny’’.
‘‘It’s about the painful growth from naivety to knowledge, the importance of self-definition, and the beauty of imperfection – of the half-formed. This story gripped me with its stunning use of imagery and metaphor. I paused over certain lines, did a little inhale, and was compelled to re-read.
‘‘The protagonist was perfectly captured. I could see her. I have been her. I think most, if not all women, can relate: to the initial dreaminess, the attraction, only to have this broken by devastating snatches of the character that lies underneath.’’
any girl I’ve ever met, he says, softly.
She takes that home with both her hands, places it gently across her chest, and sews it right above her heart. Wears it as a brooch, bright and sparkling.
When they go out for dinner the next night, she lets him drape rich clothing over her quilt. He buys her jewels so that she sounds, when she walks, like a windchime. They eat from platters, grapes and cheeses and sliced meats – her, delicately, so as not to tear any words he has given her. Him, a wild thing, bacchanalian.
She is telling him about her day when he reaches forward to wipe a tomato seed from the side of her mouth. A blush of red circles her neck, and she lets her words fall to her plate. He does not cup them, does not hold them back up to her, what were you saying? Just sits back and smiles at her, as though she is, once more, without flaw.
This is the first night she notices a piece of him crumble, the tip of his nose cracking, the dust falling like dry clay to the floor.
(He said he was old-fashioned, said she was unique, and these were words she trusted. Words he had hardened beneath the sun to form the shell of him. Words he had given her to make a coat of a thousand colours and patterns, a coat that no other woman would have. But she sees them walk down the street with gaps the size of fists, gaps that stretch, light shining through them like cellophane. She wonders, is it them that are other or her?)
‘‘I’m so glad you can appreciate art,’’ he says one evening, as they walk home from seeing Shakespeare’s The Winter’s Tale. ‘‘Most women these days are more interested in Instagram.’’
Her hesitant laugh gets caught in her throat. She feels it, like chalk, the tips of his fingers eroding away in hers, leaving behind marks, dark as charcoal in snow.
They go to the beach for their anniversary, where the waves beat a discordant rhythm. There are other women on the sand, she sees them all, bikini-clad figures, their see-through patches gleaming in the sun. To her, they are works of art, like those busts so many moments ago in the gallery, essences of something more.
To him, they are unseemly. ‘‘It’s basically underwear, right? What happened to a bit of modesty.’’
When he says this, his cheek starts melting in the heat. She watches it drip, like molten glass, until there’s a hole she can see right through revealing the wire of his jaw.
‘‘This is why I love you, you know, you’d never be caught dead looking like that.’’
She looks away and stuffs the swimsuit she bought – one chosen with such care – to the bottom of her bag, as far down as it can go.
They traverse the rocky coast around the cliffs instead. He talks of coming here as a child, but his words are chased away by the waves, sea spray licking at their heels. The straps of her sandals rub against her toes as they stumble along, let’s turn back, always a moment too far from her tongue. They reach a curve in the cliff edge where a sea cave looms, and he laughs, triumphantly.
‘‘I thought it was around here somewhere. Come on, I’ll show you.’’
‘‘I don’t want to,’’ she says, and something peels from her, coming loose in the wind (the cave is a gaping mouth, open wide). ‘‘You go. I’ll wait.’’
‘‘Don’t be silly,’’ he says. And she hears it in surround sound, a command, other girls are silly, not you. You are fearless. She feels a chisel at her, beneath her sternum, carving chips of bone to make her what he wills. But she does not move. She hesitates on the rock, where the water feels more of an ally than stone.
He takes her wrist and pulls hard, as though she will not bruise like other girls, too. The fabric bunches. ‘‘Come on, it’ll be fun.’’
It is damp, in the throat of the cave, dim and sentient. She feels the breath of the place, hears it gasp. It is a great, howling cathedral, and she is bare, unworthy. In the dark she is shadow. She is a silhouette, stripped.
Then the light on her phone casts a city of shadows against the rock wall, a strange metropolis. And when a surge sinks the city, her lungs twist tight, like a towel wrung in rage, all drops of air squeezed from her. He is whooping into the dark, entertained by his own echo. The light casts through honey-comb holes in him.
She closes her eyes, makes promises she will never keep and prays in the dark to a goddess she doesn’t believe in. To let her live. To let her see light again –
But it is him who finds her, eyes closed. Him who grabs her hand and pulls her from that crumbling shrine. When they meet light, he is laughing. His left hand has become as jagged as the rock behind him, his torso like teeth. She can see the sun through a widening hole in his chest.
‘‘You’re shaking. What’s wrong? Come on, what happened to my adventurous girl?’’
She does not speak for loss of air. The bottom of her dress hangs wet, and ragged. She takes her sandals off her feet and lets the barnacles cut her, to feel that she is flesh, and blood, stung by saline.
On the way to the motel, someone hits a seagull with their car.
She sees it as they drive by, one wing stuck to the tarmac, the other flapping in the wind like a half-ripped tissue. A woman runs across the road, holding her hands out to the oncoming traffic, all hot and hallowed. She scoops the broken bird in her arms and runs back to the footpath, cradling it gently. Ever so gently, as she might a child of her own.
‘‘Stupid woman. It’s just a bird, it’ll die anyway,’’ he presses the car horn and the image is gone. That small moment of divinity morphed by his hands. They drive away and she thinks of that woman. She who is other. She who is shimmering.
When they get back, she feels something has slipped between them, like a broken bone healed out of line. But he kisses her cheek with dusty lips and pulls canvas out from behind his back. Says, ‘I have something for you.’
The paper is alive with her. She is tall and bold, all lines, no angles. Her hair golden in the sun and she is light-filled and smiling. She is a sacred breath. She is unattainable. She is whole and unfamiliar.
‘‘It’s you,’’ he says, but it is not.
‘‘I love it,’’ she whispers, a lie.
He drinks too much that night, and falls on his back, mouth open wide, like his cave. His snores are howls but far less holy. The fabric of his shirt falls into the dips of him like ravines and there is sauce in one, a blooming, sanctimonious heart. When she reaches to stroke his hair, it comes away in her hand, straw-like.
Outside, the wind is throwing its weight with fury, and the ocean spills stars onto the shore. She cannot sleep. Sits cross-legged on the bed. Breaks into a bar of chocolate. Makes sure to lick it off her fingers, one, two, three. She holds the painting. Stains it with her fingers. Looks at him. Looks away.
Gets up. Pulls the swimsuit from the dark. Down at the beach, the moon and ocean are in a violent embrace. She slips off her dress – beneath it, that matching sky-blue set – and feels the wind try to shape her. But the water is warm, and it carries her. She sees it before she feels it. Patches floating beside her, peeling from her skin like scales. Some are stuck on hard and don’t budge, but she digs her fingers in hard to tear the one from her chest. It comes away with a gasp, taking skin with it. Clay clouds around her like dust. She who is searching. She who is weightless. She who is outlined, beneath a half-formed moon.
She thought she knew who she was, you see, thought herself ready, but pieces were taken away bit by bit until she stood, uneven, on the edge of a cliff with crumbling feet to balance on and half a ribcage –