each week material asks New Zealand business and community leaders what they think the economy is doing, and what they consider to be the biggest challenges.
Alex Fala is a Kiwi Samoan and former Rhodes scholar who lives in Auckland, and has previously worked for Wend, Trade Me, Les Mills, Orion Health and management consultancy McKinsey. He became chief executive at Christchurch-based tech company Syft Technologies in March.
Fala said New Zealand’s economy looks like it is doing well, but there are major issues beneath the surface.
A small isolated country cannot rely on domestic consumption or commodity production for growth, he said, and driving a more sustainable economy requires policies that provide opportunities for all.
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How do you think New Zealand’s economy is currently on track?
Overall, New Zealand’s economy is doing well. But when we scratch beneath the surface there are bigger problems.
Lower interest rates have led to a steep rise in house prices (and other assets) thereby boosting domestic consumption. I don’t think it is sustainable overall and even more worrying, it has created a huge rift in our society.
What are you most worried about right now?
I worry that we are not living up to our Kiwi egalitarian values. We hold firmly to the idea that we are down to earth and with everyone. But we are now a country where your postcode determines your access to health care and education, and the best estimate of a child’s income is their parent’s income.
To afford the average rent in Auckland or Wellington you need to make a six digit salary – which is out of reach for our nurses, teachers and police officers. And we have the most expensive housing in the developed world.
All New Zealanders should pay attention to these issues. We will get the society we choose, and it will determine whether we retain and attract the talent we need for a prosperous economy. We need urgent changes in our communities and our policy settings to reverse these worrying trends.
What has the past year taught us about New Zealand’s economy?
Overall, our economy has proven to be quite resilient. We have also been reminded of the value of many things that we often take for granted. In a crisis, we have seen the importance of our stable political system, and the confidence in our democratic institutions and leaders.
When the streets of our city were quiet, we saw the simple joy of bird songs and the clean atmosphere. And we learned a new phrase that I hope we all remember: ‘essential workers’.
Are you optimistic or pessimistic about the economy this year? Why?
I am always optimistic! There is no place in the world where I want to be, I am surrounded by amazing talent every day at work, and I see more and more companies emerge with the potential to win on the global stage.
However, this year the government and the Reserve Bank have a difficult task which is taking our economy to a more sustainable place (in economic, social and environmental terms) while avoiding a crash in the near future. Successive governments have been biased towards short-term results.
This government has started taking some controversial decisions in the interest of long term future. I hope this continues.
What is the biggest challenge facing New Zealand?
We need to transform our economy from a ‘tackling residential market’ to a high value export based one. We are a small isolated country so cannot rely on domestic consumption or commodity production for development.
The good news is that technology trends are on our side, but we need to back it up with policy.
For example, if we are committed to this type of economy, we will prioritize the leaders of export businesses on a COVID-19 vaccine so that they can travel to offshore markets. We will make immigration concessions for technology businesses to recruit senior executives and engineering talent.
These are simple changes that will support the development of a more sustainable economy with opportunity for all. However, in these competitive environment, we need every edge we can get.
Monitor Stuff has a unique set of insights that help the business community better understand the economic landscape and maximize their success. It is an economic index showing the pace of growth in different parts of the economy along with quarterly snapshots.