The Economy and Change - why we need to think differently
15 June 2020
How will COVID-19 effect the NZ economy, what will the impact of this be regionally, and why should the physical activity sector care are just a few of the questions Brad Olsen, Senior Economist at Infometrics, discussed in Sport Wellington's latest webinar - The Economy and Change: Why we need to think differently.
“People often say, look don’t waste the opportunity of a crisis which is a little bit hard to digest,” Brad said. “The way I read that is we have to make adjustments to fit the new normal, therefore let’s not just make the barebones adjustments. Let’s make sure that we are as well positioned for the future and that does bring some big opportunities, huge challenges but still quite a lot of opportunities for NZ.”
Check out the following highlight from Brad Olsen on how the sector should look to maximise the NZ Government budget money following COVID-19:
You can watch the full recording below or read the summary notes to find out more.
Brad is a Senior Economist at Infometrics and a leading economic commentator across New Zealand who focuses on getting useful information to businesses, decision makers, and the public. At present, he is focused on the economic effects of COVID-19 and the reimagination of the New Zealand economy, as jobs are lost, business practices change, and a “new” normal emerges.
In 2019, Brad co-authored the Regional Wellbeing: A broader view of community outcomes around New Zealand Infometrics report, and designed the Regional Wellbeing Framework, allowing local leaders and their communities to better understand how their area functions and design innovative actions to improve the wellbeing of the wider community.
This webinar is designed for leaders across the whole sector including:
- Sport (Boards, CE & GM)
- Other Providers
1. How will COVID 19 affect the NZ economy?
- Watch at 4:17
- This is huge.
- Global financial crisis was a decade ago: NZ was at 6.7% unemployment until December last year when we moved down to 4%. It took a decade for 2.7% change.
- We often look to what has previously happened (GFC and Great Depression) – but these examples have all been prompted by economic changes
- COVID-19 is a health issue first and foremost – requires some very different thinking
- A pandemic is different. 1918 Spanish flu was the last big one. Question you have to ask - do you have a smashed economy or a smashed economy and a lot of body bags?
- Need to keep in mind that there are some big structural changes coming through this.
- Unemployment could peak at around 10% (saw this in the late 90s)
- Tourism, main driver of economic activity is gone
- Loss of migration flows that we usually have. Key driver of spending.
- This crisis is different. Still to see it fully play out.
- 40,000 job losses in first month of lockdown - this is just the initial reaction. The govt. is still pouring money into support.
- The economy is starting to look better. We’re in level 1 but at the same time we’ve got 60% of workforce that are government supported by wage subsidy. Lull before the storm.
- It will take a long time to go through.
- The economy is ‘soft’ or in decline for next year or so. It’ll take 3 ½ years to get back to pre-COVID levels.
- Don't waste the opportunity of a crisis
- Make adjustments for the new normal. Brings challenges but huge opportunities.
2. What will be the effect on the Wellington region (including the Wairarapa)?
- watch at 10:38
- Wellington as a region won’t be as hard hit as some other areas (which have a big concentration of tourism activities). But we won’t avoid being impacted.
- Predicted - 9% decline in employment and 8% GDP (Wellington will be slightly less 8% and 7%)
- Wairarapa horticulture and dairy, they’ll perform slightly better than other sectors
- Wellington – international education was a big earner
- Working from home will impact on Wellington city. Where people are located and are spending will change.
- Organisations that provide services to other businesses, e.g. accountancy firm, will be affected
- This is real people, not just numbers we're talking about. Expect social changes
- People out of work, people from low skilled through to high skilled jobs
- Disposable income down, people taking pay cuts, still have to pay power, rent, food etc.
- Households will be looking for a ‘good bang for their buck’.
3. Why is it important that any sector, especially sport and recreation and those working with youth, align themselves to the Living Standards framework?
- watch at 15:31
- Financial benefit - it currently pays to align. Plus wider spin offs – incentive to align with it.
- There is a real benefit to making sure the right support and initiatives come into play to support people moving forward
- Financial capital – you can give them money and that keeps their financial situation going but that’s a simplistic view.
- Need to think about all four capitals.
- Need to find unique ways to reposition people.
- If people are out of work for over a year they’ll lose ‘work-ready’ skills - including motivation. This is devastating from a personal point of view, but also a society/community point of view.
- Sport and rec sector has an opportunity:
- People will have more spare time. Enjoy and be around, be a part of.
- Human Capital element, keeping active, fit, engaged, social, connected, sense of purpose. Take their mind of doom and gloom.
- Opportunity to give people a purpose. Self-empower, take action.
- People flock towards known things
- Sport has a huge part to play in recovery. The importance of being sociable and activity was seen and felt during lockdown.
4. How best and important is it to respond to marginalised and vulnerable communities during these times?
- Watch at 19:53
- Important to respond them
- Being open to new and radical ideas.
- Needs must
- We're going to have to re-imagine how the economy is going to work - we haven’t had this huge amount of people out of work/fundamental change to structure of economy before
- The way we have to redeploy and rethink is huge.
- Challenge is trying to understand how to meet that need
- Opportunity is giving space for these new ideas to come through
- Young people (under 30s) are feeling the brunt of unemployment
- 50% increase in jobs lost
- Need to think - what do we actually need to do here?
- Not a new problem.
- Going into the grass roots and getting communities operating is important
- Value in having both structure and not a lot of structure to motivate people
- How do we redevelop/reimagine the deliver/structures that sports/recreation is delivered under?
- Structural change – do you have to think about the timing/days of training and competition, or where people have to go to do it?
- We can’t just go back to what we were doing.
- How do we keep things similar but adapt them for the new environment?
5. What impact can we expect to see from the government budget, specifically with the investment into the area of sport?
- Watch at 24:59
- A lot of money going round is both a good and a bad thing.
- A lot of competition to secure the funding.
- Challenge is going to be realising this is not an ongoing pool of money.
- Do enough with it to set up for the future.
- Investing and redeveloping ideas.
- Govt wants activity to get back to normal but also solve issues that were in the ‘too hard basket’ or had been on the backburner. Now is the time to make these changes.
- Redeveloping the blueprint for the house – build it new to fix/adjust
- Focus on how do we redevelop and make sure we’re bringing everyone on this journey – young people, maori, women
- Big need to focus on the progression pathways for people who are engaged in the sector.
- Continuum -there's no one size fits all answer.
6. How might the economic downturn effect the service sector?
- Watch at 28:35
- A year to 18 months for recovery.
- Starting point was a v shaped recession. Moving towards a U shape - low point that will stick around for a while.
- Expect this low point to hit in 6-8 months
- Big drops do allow big rises
- It's not going to be the same - we don't just bounce back - bounce forward.
- We’re still at the beginning of this. Points towards a slow return to normal but normal won’t be the same.
- Structural changes. Tourism etc. Focus of people moving out of urban centres and working more rurally.
7. What learnings we take from the great depression and the economic downturn of 2008? Can we apply those new learnings to what's happening now?
- watch at 31:07
- 1918 Spanish Flu – the first wave was actually pretty small, it was the 2nd
- We are likely to have more cases, how well will we cope/trace?
- Our connections with the wider world are likely to be curtailed for a while.
- The numbers globally are still rising. There is still a lot to play out.
- Need to keep an eye on the wider picture
- Great Depression and GFC – government took the approach of baton down the hatches and cut spending. The war got the economy out of the Great Depression.
- How do we keep operations/business going, while also investing in the future and also making sure business is viable?
- How can we keep businesses stable for as long as possible?
- Continue to invest in our people
- This is going to be tough but we will get through it.
8. What should we do with the money the Government has given to the sport and rec sector?
- Watch at 34:37
- Look at what works at the moment.
- What wasn’t working but always part of the model
- How do we change away from the models that we thought was important but might not fit?
- One shot with this money, figure out what will works
- Make some fundamental changes. Be ruthless. Everything is uncomfortable, now is the time to take risks as things are already bad so what have you got to lose.
9. What role do women play in the recovery of the economy - especially in the physical activity sector?
- Watch at 37:16
- Where can we change the model and why have we had issues. What is the pathway to continue if you’re not professional?
- New options, delivery, times, competition
- Try things out, give it a go and if it doesn’t work, try something else without fear of failure.
- Give women the licence to make changes. Get as many people involved as quickly as possible.
10. What are the priority areas for the sector to focus on in case we move up/down levels?
- Watch at 39:25
- Events and community culture. People are looking for things to do.
- Sense of purpose to be fulfilled
11. How can we collaborate for social and mental wellbeing? Within our sector and with other sectors?
- Watch at 40:55
- Leave pride and position at the door. Everyone is hurting in different ways.
- Orgs looking for quick wins, might not be the case. We have to find a different way.
- We're going to have to make some tough decisions
- Everything is uncomfortable, everything is painful looking to smash through
- Now more than ever is the time to take risks
- Going bad has already happened
- Critical to get good information to decision makers - big and small.
This was the first in a three-part webinar series. The next part will focus on introducing ideas associated to adapting current systems to the new world we're living in.
Upcoming webinars that are open for registration, as well as a content archive of relevant webinars hosted by other organisations are listed on our Online Support - Webinars hub.