By Hugo Clapshaw

The New Zealand government’s response to Covid-19 has widely been praised, both internationally and domestically. The way the crisis has been handled by the government and how their response to the pandemic has been perceived by the New Zealand public, has arguably been one of the key reasons Prime Minister Jacinda Ardern and her government’s overall popularity soared, resulting in her Labour Party achieving an unprecedented outright parliamentary majority in the recent 2020 New Zealand election. However, this government’s response has come with huge economic and social costs for the nation, many of these will become more apparent in the long term.

What did the New Zealand government do?

The government were extremely quick in implementing border closures with countries deemed high risk from a very early stage in the pandemic. After February 2^nd, New Zealand began banning entry to any foreigner coming from or via China and New Zealanders returning from China had to isolate for 14 days. From March 16^th, everybody (including New Zealanders) had to go into self-isolation upon arrival in New Zealand (except from a few largely unaffected Pacific island nations. Several days later, PM Ardern took the step of shutting New Zealand’s borders entirely to almost all non-citizens or non-residents. These were and still are among the strictest border regulations in the world, for which PM Ardern said she would ‘make no apologies.’ In late March the government introduced a four-tier alert system, showing the current risk and necessary social distancing measures. By placing the country on Tier 4 on the 25^th March, a national lockdown was triggered. During this period of March, the country had recorded no deaths and only 102 cases of coronavirus. Many scientific experts concluded this meant that community transmission never really got a chance to occur and the rate of infection failed to spiral out of control, as in other countries such as the UK. This effective communication and rapid response from the government has helped to ensure New Zealand’s current Covid-19 death rate is extremely low at only 25 people.

Government response critiques

However, it has not all been praise for the government’s handling of the pandemic, in fact PM Ardern has faced criticism for overextending the country wide lockdown and not prioritising or giving enough consideration to the national economy. Former leader of the opposition Simon Bridges contended that the negative impacts of lockdown, would be greater than without having one, fitting into the bigger argument that the cure used (lockdown) is worse than the disease itself. The data does suggest that the tough stance taken by the NZ government has helped contribute to the national economy taking a big hit. New Zealand is now facing the worst recession the country has seen since. The country’s GDP shrank by 12.2% between April and June 2020. The opposition have therefore accused the government of a ‘lack of pragmatism’ that made the economic impact worse than it needed to be. This may have some credence as New Zealand has experienced a steeper drop in GDP compared to Australia, where the lockdown was less severe.

Additionally, a small group of New Zealand academics, called Plan B, has argued that lockdowns are unnecessary and will harm employment and social cohesion. They believe that the government’s current strategy is unsustainable, arguing that their policy of keeping New Zealand’s border shut until the situation improves internationally is wishful thinking. Even if a vaccine is shortly developed, New Zealand’s borders under current policy would still have to remain shut for an extended amount of time until a large enough proportion of the world’s population has been vaccinated. Based on this, New Zealand’s treasury is forecasting that the nation’s international borders will not reopen until January 2022. If this is the case, the nation faces an extremely uncertain economic future, in particularly due to the country’s reliance on international tourism. Figures from early 2020 have shown that tourism accounted for 5.8% of New Zealand’s GDP, while industries supporting tourism accounted for an additional 4%. Tourism also made up a greater share of New Zealand’s exports, accounting for 20.4%, making it the largest export industry in 2019, with 8.4% of the country being employed by tourism.This implies that if existing government policy of absolute border closures is maintained, a significant sector of the economy faces continual decline, potentially costing thousands of jobs and investment in the different regions of New Zealand.

Arguably, the government’s low threshold number lockdown policy within New Zealand is having significant implications on domestic tourism too. The second lockdown emplaced on Auckland (the country’s largest city), in August, was in response to only four new cases from community transmission.The lockdown of Auckland’s 1.5 million people, out of a total national population of 5 million, put huge pressure on tourism operators who were already floundering due to zero international tourism. This tough approach taken by Jacinda’s government demonstrates that going forward it is highly likely there will be mini lockdowns in the future within the regions of New Zealand, and this will continue happening for the foreseeable future, having huge economic implications.

However, despite the negative economic impacts partially caused by the government’s tough Covid-19 stance, more than 80% of the New Zealand public backed the government’s actions. The numbers show New Zealanders faith in their government’s ability to combat Covid-19 far outstrips the response of populations in any of the G7 nations – 88% trust the government to make the right decisions on Covid-19, whereas the average for G7 countries surveyed by Colmar Brunton is 59%. Additionally, in the recent New Zealand 2020 general election, which many viewed, as a referendum on the government’s Covid-19 performance – Jacinda’s Labour party won 49% of the vote and 64 out of 120 parliamentary seats. This all appears to legitimise the narrative that Jacinda Ardern and her government have public support for the way they have handled the pandemic.

The New Zealand government’s coronavirus response has definitely had some noteworthy successes; the quick closure of borders has so far ensured that widespread community transmission has been avoided, the death rate is very low, and hospitals have never been in danger of going over capacity. On an international scale, particularly in relation to the performance of several European countries and the United States, New Zealand’s pandemic response can be regarded as effective. However, New Zealand does hold a distinct geographical advantage in contrast to these countries, its geographic isolation and low population density certainly helped reduce community transmission, a luxury- other countries such as the UK do not have. The present and future decline of New Zealand’s economy has and will face take place due to the government’s tough approach on international arrivals and domestic lockdowns. Thus, New Zealand’s coronavirus response can be regarded as unsustainable and has not been as successful as widely critically acclaimed – both internationally and domestically.

The views expressed in this article are the author’s own and may not reflect the opinions of The St Andrews Economist.