COMMENT We need a proper Covid inquiry

• Published date: 10 April 2024
• Author: Steven Joyce is a former National Party minister of finance and ,inister of transport. He is director at Joyce Advisory, and the author of the recently published book on his time in office, On the Record. Steven Joyce
• Publication title: Northern Advocate, The (Whangarei, New Zealand)

It started pleasantly enough but the tone went downhill rapidly when Reidy tried to get Orr to reflect on the cause of our current economic malaise, rather than have a more generalised discussion about what causes inflation

Orr bristled when forced to focus on the bank’s role in dramatically expanding the money supply during the pandemic which, coupled with gargantuan fiscal stimulus, let the inflationary dogs off their leash.

The Governor wearily trotted out his now familiar talking points. We were the same as everyone else, we started tightening earlier than anyone else, we did a review of our own work and we were largely tickety-boo, we could have started tightening monetary policy two quarters earlier if we’d had amazing foresight but it wouldn’t have made much difference, and we are the only bank that’s done a review, so that makes us pretty exemplary. And could we all now move along, please.

Left unchallenged and unanswered was whether the sheer size of the initial monetary stimulus was too big (almost certainly), whether given that size it was incumbent on the bank to respond more quickly when it was clear we were in a supply shock or a series of supply shocks rather than a demand shock. Other overlooked points included whether people not in the bank had shown the “amazing foresight” he claimed was absent, whether the stimulus itself caused an asset price bubble which left some people high and dry, and whether the structure of the stimulus was too inflexible and too inclined to encourage banks to lend money to people who could ill-afford that borrowing.

The interview got me reflecting again about just how many of our current problems are caused by our response to the pandemic, and how much we need a proper inquiry into the actions of decision-makers during that time.

Every day there are signs of the post-pandemic economic grind. Our collective and substantial loss of purchasing power. The numbers of businesses, charities and sports teams quietly going broke because their balance sheets were so weakened through the pandemic that they can’t cope with the current recession. The large number of house-for-sale signs and the very few sold stickers as house owners struggle to come to terms with the shrinking value of their biggest asset. It’s a long tail of bent and broken dreams.

And it’s not just the economy. Many of our current societal ills are either directly caused or exacerbated by pandemic-era decisions. Take the health sector, where the length of...