The SME Stream

With the word ‘crisis’ now comes talk about working from home.

As oil prices rise and the cost of petrol surges towards $4 a litre, it’s been flagged as a potential voluntary measure in contingency plans.

There’s been no direct government endorsement or mandate for working from home, but it’s been recognised as a possible fuel-saving step if the crisis worsens, alongside prioritising essential sectors.

Today on The Front Page, University of Otago business school associate professor Paula O’Kane is with us to take us through different ways of working, and what businesses could do to help out their employees.

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You can read more about this and other stories in the New Zealand Herald, online at nzherald.co.nz, or tune in to news bulletins across the NZME network.

Host: Chelsea Daniels
Editor/Producer: Richard Martin
Producer: Jane Yee

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Independent economist and the chair of Transport NZ. What are we seeing across livestock transport? Plus, we look at the exchange and interest rates, inflation and the NZX50 down 7% in March. And what are the best and worst-case scenarios?

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Finance Minister Nicola Willis joins Herald NOW to discuss the latest fuel supply data.

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The Middle East conflict continues on for another week, and it's led to economic forecasters revising their predictions for recovery.

Significant cuts to growth, higher inflation, lower investment, household consumption, and higher unemployment appear to be on the cards, according to new reports. 

HSBC chief economist Paul Bloxham says it's unclear how the central banks on both sides of the Tasman will proceed. 

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General Manager KiwiSaver and Investment Funds Murray Harris discusses Kiwisaver contributions.

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"It's the economy, stupid," is a catchphrase that means the primary concern of American voters is the state of the American economy and how that economy affects their personal finances. It was a phrase coined by a strategist in Bill Clinton's successful presidential campaign, and it's pretty much what Christopher Luxon campaigned on in 2023.  

The Labour Government were, and I paraphrase, incompetent economic vandals who had done incalculable damage to the New Zealand economy and only by electing a National Party into government could New Zealand's fortunes be restored. That was pretty much the narrative going into ‘23. Add to that a little bit of light law and order and education and you had the election campaign. Three years on we're heading into another election, and the economic headlines are grim. Example: ASB economists have joined Westpac in forecasting that the economy will contract in the second quarter of the year. Households are only just starting to feel some relief according to ASB's chief economist Nick Tuffley. Higher fuel prices are now squeezing budgets again. That pressure will be felt right across the economy.  

Here's another headline: Finance Minister Nicola Willis has revealed inflation is set to go much higher this year and sit outside the Reserve Bank's target band of 1 to 3%. Here's another: Prospects for a recovery in the labour market this year appear to have dimmed with any decline in the unemployment rate looking more like a story for next year. Infometrics said any signs the economy was starting to recover would most likely be put on hold. Here's another: Wattie's factory closures, boss blames soaring manufacturing costs. Contrast that with Christopher Luxon back in 2023 and his bullish promises that help was on the way, first when he was speaking to me in July. 

“It's going to be a big turnaround job because I think actually we've got a great country but a lot of it is going to be pretty decayed by the time we get there in terms of health, education, housing, the economy, law and order. But that's why I've got my team working on that right now because when we get there, we're not forming steering review, you know we had what was it, 230 working groups to do reviews of stuff. We're going to be ready to go on day one and we're going to have to move at 100ks an hour.  

“So we will have to be really, really clear about the things that we need to transform and actually step up and change a lot and it is going to be education, it is going to be healthcare, it is going to have to be the economy, making sure we're making every dollar count and get a payback for it.” 

And this was Christopher Luxon in November: 

“I don't want people to give up hope. You know, we can actually get to a better and a different place from where we sit today, but we do have to go to work now and we have to go sort out the challenges and we have to realise the opportunities we've got in front of us, and we have to be straight up about it and get it done and get the country turned around.” 

Hmm. Have they? No. They won't be able to campaign on that. Is some of it due to external forces like the fuel crisis? Absolutely. But there were no caveats in the promise that things would turn around and things would get better. Could Labour have done any better? Hell no. I mean they'd already shown they can't cope in a crisis other than throwing money around and locking people up. They simply have no answers. Thank God they're not the government right now otherwise we'd all be working from home and homeschooling the kids because of the fuel crisis or strong winds. But when you look at the polls and you wonder to yourself how on earth could anyone possibly see Labour, the Greens, and Te Pāti Māori as a viable government, what you're seeing are voters who were promised much and have yet to see the delivery. 

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Garth Bray joins Ryan for the latest business update thanks to Forsyth Barr

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Banks' forecasts of an economic contraction in the second quarter are probably right, independent economist Cameron Bagrie says. 

ASB’s revised outlook shows the bank expects annual GDP growth of 1.3% this year, down from its previous forecast of 2.9%, thanks to higher fuel prices hitting consumer spending. 

It expects the economy to contract by 0.3% in the second quarter and expand by 0.3% in the third, with New Zealand’s economic recovery now “unlikely” before 2027. 

Bagrie told Ryan Bridge those forecasts were a “central scenario” but there was a lot of variance, as nobody had a firm idea of how long the war would last. 

The economy would likely move backwards in the next quarter, and GDP per capita was still down 3.4% from its peak three years ago. 

While that didn’t technically qualify as a recession —which requires going backwards for two quarters in a row— “it’s still going to feel like it’s pretty tough out there”. 

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All signs are pointing towards inflation going up - as the Middle East conflict causes business confidence to plummet. 

ANZ's latest Business Outlook survey shows most firms expect costs to increase as economic insecurity sets in. 

Most anticipate they'll raise prices in the next three months.

Retail and construction had the sharpest slides in confidence. 

Auckland Business Chamber Chief Executive Simon Bridges told Ryan Bridge after the tariffs last year, this feels like a sense of deja vu.

He says this survey was from early days of the war - so things will likely get worse.

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New Zealand’s fuel suppliers will be “substantially punished” legally and financially if they don’t live up to their word in supplying fuel, Associate Energy Minister Shane Jones says. 

Those international companies had asked for the current just-in-time supply model, and “rightly or wrongly I took them at their word”, Jones told Mike Hosking. 

“I said, okay, you guys know how to keep New Zealand afloat, but the political downside is that the national security question always remains with the Government, not just the commercial companies.” 

There was no suggestion of any problem with supply, he said. But the issue was even if the Government were to underwrite additional fuel imports —as Australia plans to do— there was not currently space to store added fuel volumes. 

“We could have a ship bobbing off the coast of Marsden Point for a while, then someone's got to pay for that ship to sit there and do nothing while we draw down.” 

He repeatedly blamed the closure of the Marsden Point oil refinery for leaving New Zealand with inadequate storage. 

Jones said he had been warned that refineries in Singapore, Malaysia and Korea were set up specifically to deal with oil from the Middle East. While they would be seeking oil from other regions, they would need work before they could process that oil. 

He also revealed more details about the unsolicited proposals the Government is receiving to increase New Zealand's offshore fuel supplies. 

Jones says both the Government and MBIE officials have received approaches from either New Zealanders, people already known to them, or people who have lived in New Zealand. 

But Jones he told Hosking the offers they're making don't last long, with ships usually being snapped up within 72 hours. 

He says many Kiwis don't appreciate how serious the situation is in Asia. 

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