Although New Zealand has now created a travel bubble with Australia, he believes a full reopening is still some way off.
“The question for New Zealand is how fast can you vaccinate? And when can you open the borders?”
“I think the government won’t open the borders for full travel without MIQ (managed isolation) facilities until everyone has been offered the chance for the vaccine.”
He doesn’t think that is likely before November or December.
Sir John cautioned that there are risks to New Zealand’s economic recovery.
The first is that a variant of Covid-19 emerges that is not covered by existing vaccines.
The second risk is that inflation rises faster than expected, leading to an increase in interest rates.
“Very small changes will make very significant differences to people’s household incomes.”
He explained that interest rates are like petrol prices. If they rise, people cut their spending in other areas.
Sir John said it’s why when people ask to borrow money the bank asks whether they could afford the repayments if interest rates were to rise.
This is particularly important in New Zealand because most customers fix their home mortgage for one or two years.
Sir John told the audience that more investment in infrastructure is vital to improving productivity and growing the economy; especially to keep up in a world in which technology is quickly changing.
“To do that you have got to do the sort of things we were doing in government. When I rolled out ultra-fast broadband people were screaming that it was a waste of money. Well, if we hadn’t had that with Covid-19 it would have been a very different world.”
He said that with a growing population investment in infrastructure is vital.
“The truth is we are living in a more complicated world and people need to be upskilled dramatically.”
He said investing in infrastructure is an example of good debt, rather than bad debt. Bad debt adds to the money you owe, good debt adds to the assets you own.
“That’s the issue for New Zealand. Can it spend that money on good infrastructure, at a higher rate? Because if you take something like the Auckland harbour alternate crossing, let’s say a tunnel, it’ll take ten years to do it, let alone when you start.”
“So really, you have got to be ahead of the curve. It takes a while to get things done.”
Migration is one of the drivers of population growth, and Sir John concluded by saying said he remains committed to encouraging people to move to New Zealand.
“We have been a magnet for migrant talent. I’ve been an advocate for it.”
“They’re good people who work really hard. They’re bright and they are dedicated. Anyone who has to drag themselves from some other part of the world, to make a life, is almost sacrificing sometimes their own life for their kids.”
That is why he believes improved infrastructure is so important to New Zealand.
“What people don’t like about migration is not people who look different from them or sound different. Innately what they worry about is “I won’t be able to get into my local doctor, my kid won’t be able to get into the local school, there‘ll be even bigger traffic jams’.”
“So what you have got to do is you have got to build out the infrastructure so they don’t feel like that.”
He concluded by saying if we are ambitious and if people believe they can transform their lives through hard work then we can grow an “amazing country”.