Jacinda Ardern announced her COVID-19 budget last week - interesting snippets for Australian observers

Originally posted on LinkedIn.

The New Zealand Prime Minister is certainly popular in Australia, and a great ambassador internationally for my home country. I travel between Wellington and Australia regularly for work and the enthusiasm for NZ has been wonderful. Jacinda Ardern visited Melbourne in July 2019 and was one of the hottest tickets in town. Both NZ and Australia have done extremely well responding to COVID-19. The NZ budget announced last week has some nuggets of interest as an example of what governments are doing to respond. I’m writing to pluck a few highlights from the budget rather than repeat the news.

$20bn budget spend ‘still to be allocated’

Probably the biggest surprise is that the Minister of Finance doesn’t know what they will spend all the money on this year. This may be obvious, but it isn’t often that the government writes the amount on a cheque and leaves the ‘pay who’ field empty. So this defines a provision for the government to continue to announce new spend in fighting COVID or stimulating the economic recovery. Decisions will be hotly contested amongst 3 parties, Labour, NZ First, Green who manage the severe crisis with the temptation of an election later this year.

Major health spend

New Zealand’s health sector is structured differently to Australia’s and the poor capability and long-term lack of investment gets a multi-billion dollar shot in the arm. In technology, the state of national health data has been shown to be extremely poor, being fragmented, poor quality and not helped by extremely expensive IT projects that are prone to failure. For example, the flu vaccine supply ran short and the vaccines register was unable to rebalance stock levels to deliver to vulnerable citizens or even provide a sense of available inventory.

Green Shoots – classic Keynesian style stimulus, applied to our natural environment.

The Prime Minister emphasised that her budget would be about jobs and preserving employment throughout New Zealand. If the global financial crisis sank the credibility of Milton Friedman and traditional austerity policy, this crisis restores Keynes to power. New Zealand is spending big to create jobs working on environmental priorities. Having had low unemployment NZ has struggled to source workers and many industries have been reliant on migrant workers for the long term.

The government projects 11,000 jobs for environmental projects – conservation initiatives, pest eradication (animal and flora), and natural tourism promotion. Given the impact of the disastrous Australian forest fires, this may well be policy that Australia replicates. It’s notable that this spend is in relatively uncontroversial initiatives, not focusing on issues such as agricultural runoff into waterways etc.

Other jobs-stimulus spending areas include the trades, residential housing schemes, rail and ferry infrastructure.

Lack of transformational vision for now

Keep an eye on the election as to the new balance of power and whether big moves are possible. Where the budget does not signal big moves are the potential reengineering of society to take advantage of the COVID-19 shock. This may be the last chance to significantly reengineer our economy to respond to climate change and reorient around clean jobs. New Zealand’s economic strategy is still to fall back on our historical economic strength in primary industry – dairy, meat, horticulture and similar goods. Given a severe drought there is some irony in this.

Labour share power with the NZ First party who have a different set of priorities. There’s no way to tell what types of ideas fell flat at Cabinet or if there are some bold economic moves still being worked on. It will be interesting to see what concepts are put on the table this year and what ideology guides it. The Prime Minister repeatedly referenced Michael Savage (who led NZ out of the depression) as a guiding model. Rod Drury, founder of Xero put an interesting op-ed up around developing NZ exporting of hydro-electric expertise (see: https://www.newsroom.co.nz/covid-19/2020/04/13/1125849/what-we-do-now-will-shape-new-zealands-future). His other idea, inviting billionaires to set up residence in New Zealand fell flat rather sharply.

Technology industry groups have been quick to direct the government to ‘digital shovels’ (e.g. NZRise.org.nz) however there has not been much announced in policy around spend on technology projects.

So in summary, we see climate change largely sidelined, and fairly minor changes in potential areas such as technology firms, procurement policy or public private partnership. There is vague loosening around R&D rules but nothing of interest to us as a software firm for example.

Quantitative Easing, negative interest rates being readied

I still remember working in HSBC London when Lehman Brothers went bust. It felt surreal to see a barrage of media cameras outside their Canary Wharf building next to where I was working and living. New Zealand has to date avoided QE but this is clearly anticipated to be necessary.

NZ government quick to support jobs and business – banks slow to deliver for SMEs

The NZ Jobseeker equivalent differs from Australia in that it is a ‘No-questions-asked’ lump sum payment. Firms who applied generally received their money within 48 hours (in full). New Zealand took a ‘trust first’ hand out, disciplined by publishing the recipients and having a public dialogue about investigations of misbehaviour. This has been a really exceptional example of brave policy and swift execution.

By contrast, the Govt guaranteed business loans scheme failed almost entirely, the (Australian-owned) banks did little immediately to support business financing and the tax authority acted swiftly in response, writing loans directly to business. It will be interesting to see how banks support the economy going forward from the crisis.

Profiling projects – Warmer Homes Scheme and local government administration

One of the best things about working at Ackama and Squareweave is seeing the impact of projects that we release.
It has been great seeing work become relevant in the context of COVID-19 response.

One highlight of the budget was the Warmer Homes Scheme, providing a 90% subsidy for low-income households to access heating and insulation. Ackama partnered with Marlborough District Council to assist them in the administration of this scheme. Many councils locally offer `voluntary targeted rates` – essentially another long term payment plan to permit a home improvement project to be paid off alongside your rates bill at affordable interest rates. Ackama has also identified the general need for local councils to innovate in raising finance for local initiatives. There is potential for ratepayers to ‘crowdfund’ infrastructure improvements in their own communities using this mechanism.

We have discovered through our work that one of the barriers and pain points for Councils adopting these schemes is the cost and time of the administration of the VTR’s. The app we have developed helps solve a lot of processing headaches and costs for MDC and we are looking to adapt it for other interested Councils.

We are convening a NZ community meeting of ratings teams across NZ councils to promote innovation within ratings teams, and the new government policy only underlines the value of collaborating across government. Get in touch with matt.gallen@ackama.com if you’re interested.

We specialise in tailoring digital services to permit more efficient service delivery, so get in touch if you’d like to explore improving your service.

Other clients working in the COVID-19 response

NZSL Share (nzslshare.nz) – a new initiative led by the deaf community to collaborate around the creation of new language. Offering a digital forum for deaf speakers to participate in new signs and sharing ideas

Data Ventures and Statistics NZ (https://dataventures.nz) – Data Ventures now runs their own development team but worked with Ackama to rapidly stand up a development team and provide their initial releases. The value of providing data insights was proven in providing visualisations of New Zealanders travel patterns and demonstrate our success in lockdown conditions, while preserving private information.

Ackama has provided support to a local contact tracing app spearheaded by another independent agency, PaperKite with strong privacy design. (see: https://www.paperkite.co.nz/rippl/ )

We have been working closely with our customers operating the Business Support Pacific programme adapting Pacific business support services to the COVID challenges (https://businesslinkpacific.com/)

A government website launching soon around a pest eradication project that is part of the green jobs spend.