Q&A: Optimism about year ahead

The biggest challenge facing New Zealand is righting the economy, says entrepreneur and business owner Tony Falkenstein.

Each week Stuff asks New Zealand’s business and community leaders how they think the economy is going, and what they believe are the biggest challenges. Entrepreneur Tony Falkenstein is founder and chief executive of NZX-listed Just Life Group. He says the biggest challenge facing New Zealand is righting the economy, with the Government having to pay down debt but also avoid causing serious harm to the country in the process.

Various experts seem to know what is going to happen but in reality nobody knows, he says.

How do you feel the economy is tracking currently?

The $50 billion pumped into the economy by the Reserve Bank has been great for employers and employees – it has allowed business to carry on successfully with virtually no unemployment. Although the Reserve Bank has stopped quantitative easing of money supply, the buoyancy created by this $50b bonus will continue for at least another year.

Inflation is upon us, meaning interest rates will go up but the increases will not be significant.

However, there needs to be a careful balance by the Reserve Bank and Government to ensure no loss of confidence, resulting in a recession.

The big bugbear is the ‘‘unexpected’’ and it would be foolish to think Covid-19 can be kept away from our shores.

In terms of Just Life Group, we operate in two key market segments – ‘‘Healthy Living’’ and ‘‘Healthy Homes’’. ‘‘Health’’ is on people’s minds and is a growth area, so from a selfish point of view, I think that even if we go into another lockdown, we have sufficient strategic business units to survive through it.

However, for other businesses, such as tourism, hospitality and retail, these are challenged sectors and with the current border restrictions, they continue to face an uphill battle.

Personally, I feel the lower socio-economic groups bear an disproportionate portion of the financial impacts of the current situation, and increasing interest costs and inflation will hurt them.

What are you most concerned about right now?

In terms of Just Life Group, it is all about getting team members at every level. The media is focused on the hospitality and farming sectors but really all businesses are finding it difficult to attract staff with the current border restrictions in place.

There is a trend towards a more centralised economy and I am concerned about whether we have the intellect to address the issues at a central level.

I am concerned about the lack of speed of the vaccination programme, as we will be very lucky if there is not a Covid-19 outbreak before we have 50 per cent of the population vaccinated.

Mental health is affecting all of our society but especially young people, with the challenges of schooling and social media. I am concerned with social and racial equality.

Also, our food and beverage intake – we are world leaders in obesity, leading to type-2 diabetes and heart problems. The list could go on …

What has the past year taught us about the economy?

New Zealand business owners adapted to the changes extremely well and worked their way through the challenges.

The ones to suffer were the smaller businesses and it was sad to see many of them close down or shed team members.

At Just Life, the level 4 lockdown gave our senior management team time to rethink the business and this was massive in making ourselves more efficient. Our revenue went down but our profits went up as a result.

Are you optimistic or pessimistic about the economy this year? Why?

I am an eternal optimist and although the money supply will reduce and the economy will tighten, New Zealanders who spent their holidays outside the country will continue to spend domestically. I believe the buoyant economy will continue over the next 12 months.

From Just Life’s point of view, we are optimistic about the year ahead – we operate within a range of business segments, of which most are experiencing increased demand at the moment but we are conscious that the economy is operating with increased government funding at the moment and the lack of workforce labour will cause constraints going forward and drive up costs such as housing which will affect the ability of the younger generation to meet their aspirations of homeownership.

What is the biggest challenge facing New Zealand?

The biggest challenge is righting the economy. The Government is going to have to hold the purse strings tightly as it repays debt but not too tight to cripple the economy. However, the unknown is the ‘‘unexpected’’ – various experts seem to know what is going to happen but in reality nobody knows. Living in this environment, and making sure our 150 staff are safe, is going to be Just Life Group’s biggest challenge.

■ The Monitor is Stuff’s unique set of insights to help the business community better understand the economic landscape and maximise their success. Alongside the quarterly snapshot is an economic index showing the speed of growth across different parts of the economy.