Long after Jacinda Ardern and her on-again, off-again lockdowns are consigned to the dustbin of electoral history, New Zealanders will be paying off the debt of her policies.
But, that is, as we say in Australia, on the never-never. Which means that something has been bought on credit, with little-to-no upfront cost…but a long tail of debt that has to be paid off, eventually.
Which is sadly typical socialist thinking. Venezuelans voted for Chavismo in droves, intoxicated by the promise of wealth-for-all. They are now paying the debt in the worst possible way.
New Zealanders might think that they weathered (the first) lockdown with little cost – but those economic chickens will fly home, sooner or later. The first are already taking wing.
Steelmaker BlueScope has posted a massive plunge in full-year earnings including a $197 million writedown of its New Zealand and Pacific Islands business, which is set to shed jobs under a proposed restructure.
The company’s reported net profit for 2019-20 totalled $96.5 million, down from $1.015 billion last financial year.
That’s a 90% fall. If such a drop played out across the economy, the results would be diabolical. Of course, some sectors of the New Zealand economy will weather the COVID shutdowns better than others – farming, perhaps – but others, like tourism, will necessarily fare perhaps even worse. Economists are, in fact, projecting a 10% economy-wide fall.
The Wuhan pandemic – or, more correctly, the Ardern government’s response to the pandemic – is an economic sledgehammer that follows another Ardern policy flight of fancy: shutting off the country’s oil and gas industry. The Tiwai Point aluminium smelter is also closing down, largely thanks to government policies on energy.
New Zealand’s heavy industry appears frankly doomed.
Meanwhile, despite falling steel prices, BlueScope’s Australian arm reported higher sales and stronger demand, as residential construction remains solid. The US arm is also expanding its operation.
BlueScope’s North Star mill in the US operated at 90 per cent capacity despite two-month automaker shutdowns.
Chief executive Mark Vassella said the planned expansion of the mill was advancing, albeit at a slower pace to preserve cashflow during the pandemic, with commissioning slated for the second half of 2021-22.
But New Zealand is another story.
The company last month flagged it was reviewing its New Zealand and Pacific Islands business and now says a planned reconfiguration costing up to $50 million could result in substantial redundancies.
“While we are confident we can deliver on this plan, in the event that the improvements are not achieved, the business may shift to external supply of products, and primary steelmaking operations at Glenbrook may cease,” Mr Vassella said.
Who will Jacinda Ardern blame, as more and more Kiwi jobs vanish in a puff of economic reality? Ardern can splutter all she likes that she’s “angry if I’m speaking frankly” when companies just can’t keep paying their employees, but this is the reality of shutting down an entire economy for months at a time.
“There’s nothing there,” as one Warehouse employee bleakly states. “Everyone else is losing their jobs. It’s going to be really hard.”
But, hey, at least Ardern eliminated the Wuhan virus…for a short couple of months, anyway.
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