COUNTING THE COST
As The Year of Covid-19 series continues, Hannah Martin, Brittney Deguara and Felippe Rodrigues explore the human toll and the economic impact the pandemic has had on New Zealand and the world.
In its year sweeping the planet, Covid-19 took many lives, livelihoods and security. Some businesses which shuttered during lockdown never reopened, leaving empty storefronts lining once-busy streets.
For two dozen families the cost was much greater – they were left mourning the 25 New Zealanders who succumbed to Covid-19.
The death toll would have been much higher if New Zealand had not opted for early and significant action.
The country was ‘‘literally a week away from not being able to contain’’ coronavirus when the decision was made to plunge into a nationwide lockdown, Royal NZ College of General Practitioners’ medical director Dr Bryan Betty said in June.
Facing the kind of outbreak seen in parts of Europe and Asia, the healthcare system braced for the worst.
In February, before a case had been confirmed, hospitals across the country were readying for the arrival of the virus.
The country’s pandemic plan was put in place. Stocktakes of isolation rooms, masks and other PPE, including aprons, gloves and eye protection were undertaken, and authorities reassured the public they were ready.
Just days before level 4 lockdown, doctors delivered a petition warning the Government had a small window of time to prevent New Zealand facing a similar fate to Italy.
Meanwhile, district health boards began postponing elective surgery procedures. Visitation was greatly restricted, and expectant mums were allowed only one support person.
New Zealand avoided the worst-case scenario, but not without repercussions.
Cancer diagnoses took a hit and waiting lists grew, leaving people languishing in pain or waiting to hear their fates. Screening programmes paused, leading to a reduction in the number of cancers diagnosed, but treatment – including surgery and radiation – continued as usual for almost all patients.
During level 4, the Cancer Society warned overseas data showed a three-month delay to cancer diagnoses could potentially lead to the deaths of 400 New Zealanders.
But as New Zealand closed in on eliminating the virus, the health system resumed full activity.
By September, the number of people diagnosed with cancer mirrored that of last year, indicating the backlog had been worked through, Te Aho o Te Kahu (the Cancer Control Agency) said.
It is in stark contrast to the UK, where the impact on cancer screening, diagnosis, treatment and care has been devastating.
An article published in The Lancet in October said an estimated 3million people in the UK missed cancer screenings between April and August, and suspected cancer referrals were down 350,000 compared to the same period in 2019.
The same article highlighted New Zealand’s continuation of cancer care during lockdown as evidence that such a task was ‘‘not an impossible ask’’.
It has not all been smooth sailing: the nurses’ union has criticised PPE issues at the border, stating staff have not had consistent access to N95 masks or fit-tests.
PPE issues were also at the centre of an investigation into how seven nurses at Auckland’s Waitakere Hospital contracted Covid-19, including one who ended up in the High Dependency Unit.
It is almost universally accepted that New Zealand’s strong health response spared the country a worse fate, saving numerous lives in the process. But this also came at an economic cost.
Few countries locked down as hard as New Zealand – restrictions were matched only by Israel and India, according to the Oxford Stringency Index – meaning economic activity took a very sharp nose-dive.
The first lockdown was ‘‘brutal’’, said economist Shamubeel Eaqub.
Nobody knew what they were doing, how to operate businesses in those circumstances, or how long it would last.
The ‘‘deep contraction’’ of the economy in April and May saw the number of New Zealanders on the unemployment benefit increase by about 60,000, Eaqub said.
The country’s tourism and hospitality sectors were hit hard, with popular tourist destinations such as Queenstown and the West Coast acutely feeling the pinch.
Locking out deep-pocketed foreign visitors left a void in the market, even as Kiwis flocked to explore our own backyard.
Tourism spending in the year to July 31 declined everywhere bar the Wairarapa, when split into regional tourism operator regions. Fiordland, the West Coast, Queenstown and Dunedin were hardest hit, with spending down by between 17 and 22 per cent.
Regional tourism operators drastically changed offerings and pricing to entice local customers. Campervan hire was slashed to $29 a day, and Milford Sound scenic flights and stays at the Grand Chateau Tongariro were available at a fraction of the usual cost.
Kaikoura Kayaks was one such business: 95 per cent reliant on international tourism.
Owner Matt Foy said they were initially concerned about how they would make it through. They ‘‘had to think like Kiwis’’, discounting their product and changing up their family offerings.
While their change of plans ‘‘definitely helped’’, and the school holidays saw Kiwis travel in droves, it’s still ‘‘very tough out there’’, he said.
‘‘No one is anywhere near the level they were.’’
Business was down about 75 per cent in November compared with the same time last year, but Foy was looking forward to being ‘‘slammed’’ over the 4-8 weeks of the summer holiday period.
Foy worried the summer spike would be short-lived. The beacon of promise still lay in the
Few countries locked down as hard as New Zealand – restrictions were matched only by Israel and India, according to the Oxford Stringency Index – meaning economic activity took a very sharp nose-dive.
longed-for Trans-Tasman bubble, which would make a ‘‘ten-fold’’ difference. ‘‘It really will lift the whole tourism game here, and lift everyone’s spirits [in the sector].’’
While we made sourdough and baked banana bread during lockdown, cafes, bars and restaurants suffered.
The sector saw the writing on the wall early on, warning that potentially thousands of jobs would be lost. The hurt continued when Auckland went back into lockdown.
Big names in hospitality relied heavily on the wage subsidy.
McDonald’s received more than $6.9 million for 1185 employees.
But while the economic pain has been very real for some, it’s barely touched others.
Job losses peaked about August, and have been coming down ‘‘very gently’’ since.
Eaqub said the country was in for a ‘‘bizarre recession’’. marked by ‘‘unevenness’’. It will be ‘‘very different to what we’ve experienced’’ in prior downturns, he said.
In a normal recession, you would expect most of the economy to go up and down together. Instead, it is fragmented: the impacts differ by location, sector and occupation.
While job losses have been significant, other measures such as hours worked, retail spending, and job ads show things have largely recovered to pre-Covid-19 levels, Eaqub said.
Although locking down as hard we did was ‘‘deeply painful’’, New Zealand rebounded much quicker because we were able to suppress the virus, he said.
‘‘We were expecting the worst. But New Zealand has gone through this entire thing much better than other countries have, and better than others expected us to.’’
Part of our success in that regard was due to the wage subsidy, he said.
In order for our health response towork, people needed to stay home. The Government’s wage subsidy scheme enabled that, supporting very high rates of lockdown compliance.
On March 25, just hours before the country went into lockdown, Parliament passed a law allowing the Government to increase the amount of money it spent by $52 billion – on top of $12.1b it had already committed to the Economic Response Package, including the first block ofwhat would become the wage subsidy.
‘‘The scale of the spending is the price that we have to pay,’’ Finance Minister Grant Robertson said during a reading of the bill.
The result was a $50b Covid Response and Recovery Fund (CRRF), to address the immediate response to the pandemic and the economic damage left in its wake.
As of September, when the scheme came to an end, more than $13.9b had been paid out. The majority of New Zealand jobs – 62 per cent – were supported by the subsidy at some point.
Some who took the wage subsidy survived the fallout, but others failed.
A Stuff investigation in June found at least 73 businesses – who received almost $8m in wage subsidy payments across the board – had gone into receivership or liquidation.
It was unprecedented spending – at no time in recent history has so much public money been made available for spending in such a short period.
It was also not without controversy. The ‘high-trust’ scheme was criticised for being too broad in its scope and easily abused by businesses who did not need a handout.
Some big businesses raised eyebrows by taking the millions in the wage subsidy and then posting an increase in profits.
Harvey Norman received $17.7m in the wage subsidy, and reported a year-on-year increase in profits of almost 20 per cent and a lift in New Zealand sales of more than 28 per cent.
Briscoe Group reported a barely-dented $27.9m profit this year and paid out a 9-cent per share dividend to shareholders, up from last year, but also took $11m in the wage subsidy across its businesses, sparking calls for them to pay the money back or face a ‘‘Covid-19 wind fall tax’’.
Covid-19 exacerbated wellentrenched issues in New Zealand.
The housingmarket, for one, boomed despite predictions of economic turmoil.
In March, before the lockdown, the Reserve Bank lowered the benchmark interest rate to a record-low 0.25 per cent for at least 12 months. That emboldened home buyers across the country.
House prices were already outpacing earnings before the pandemic hit and a worried Reserve Bank temporarily removed the loan-to-value ratio (LVR) restrictions in May, scrapping the need for people to stump up a 20 per cent deposit.
In August, the day Auckland re-entered alert level 3, the bank also expanded its cap on quantitative easing to $100b from $60b – adding fuel to the fire.
The number of residential properties sold in September jumped by 37.1 per cent from a year earlier to 8377, the most sold in New Zealand for over three years.
By year’s end, although a public health crisis remained just a border mistake away, a burgeoning wealth inequality crisis was looming larger in the national consciousness.