Matthew Hooton: Ardern’s big challenge
Ardern’s challenge is to work out how to avoid a coronavirus recession
The Prime Minister faces an immediate but probably insoluble dilemma involving New Zealand’s relationship with its most important strategic and economic partners, the urgent need to avoid an unnecessary domestic recession and the maintenance of public health.
As the political class entertains itself with the latest instalments of the Jami-Lee Ross and NZ First Foundation affairs, the tourism, education and merchandise trade sectors have been quietly grinding to a halt.
Jacinda Ardern’s decision on February 2 to close the border with China — “temporarily” we were told — has devastated the tourism industry, put the financial viability of universities and other education providers at risk, prevented retailers from obtaining new stock and made it difficult for exporters to ship meat, seafood and wood products.
Like the border closure itself, the effects will not be temporary. The Shanghai family forced to cancel their long-awaited holiday to the Bay of Islands won’t be rebooking any time soon. The Shenzhen student supposed to start his health sciences degree at Auckland University of Technology on Monday will instead choose Canada for the whole three years. Perhaps worse, New Zealand has made a permanent enemy of the Beijing BCom/ LLB student unable to return to the University of Auckland for the fifth year of her course — and her potentially influential family.
In none of these hypothetical cases could the Chinese citizen have plausibly represented a health risk to New Zealand. It would be like the Chinese authorities banning visitors from New Zealand because of a health issue in Melbourne.
Moreover, the Chinese authorities have ways of making sure the effects on even merchandise trade will endure. Major importers and ports have close links with and take guidance from the state, party and army. When Beijing is grumpy with us, it is not unknown for mysterious border processing problems to emerge with milk powder, meat and logs.
Not unreasonably, the Chinese ambassador to New Zealand, Wu Xi, went public this week to point out that New Zealand and China’s foreign policies are based on the multilateral rules-based system, noting that closing the border was against World Health Organisation (WHO) advice.
More menacingly, she quoted the proverb “in prosperity, friends know us; in adversity, we know our friends”.
The Wellington bureaucracy’s initial response to the coronavirus outbreak was typically chaotic and incompetent. Different agencies provided different advice to exporters, importers, tourism operators, schools, universities and immigration consultants. It was only later that Ardern stamped her authority on the situation by putting the Department of Prime Minister and Cabinet in charge — but by that time the border closure had already been announced, seemingly without any consideration of either WHO advice or the economic and diplomatic consequences.
In retrospect, it seems far too comprehensive.
But Ardern had no real choice. The one international relationship more important to New Zealand than that with China is that with Australia, our only military ally and most extensive economic partner. Perhaps still stung by his incompetently slow response to the bushfire crisis, Australian Prime Minister Scott Morrison was quick to play the conservative tough guy on coronavirus, closing the border on February 1 and setting up a quarantine centre on Christmas Island in the Indian Ocean.
Probably New Zealand’s most important international agreement is the mostly unwritten Trans-Tasman Travel Arrangement (TTTA). It is the TTTA that keeps New Zealand wages commensurate with those in Australia and stops us drifting off from the developed world to take over from Fiji as just the biggest collection of South Pacific islands.
Protecting the TTTA means New Zealand must ensure alignment with Australia’s immigration policies, however unreasonable we may perceive them, making Ardern absolutely right to fall into line with Morrison’s tough position the very next day.
Nevertheless, the Prime Minister now needs to find a diplomatic way to avoid an increasingly certain but entirely unnecessary coronavirus recession, with the job losses and fiscal implications that will come with it. This must be done in conjunction with Morrison, despite the poor personal relationship between the transtasman prime ministers.
The politics are difficult, in two conflicting ways.
First, the actual public health risks of coronavirus are getting larger, not smaller. When they relax the travel ban, Morrison and Ardern will not be able to say this is because the risk has passed, but because the true risk was never great enough to justify closing the border in the first place. The initial decision-making will look like an over-reaction at best or racist panic at worst. Morrison especially risks a huge loss of face.
Second, relaxing the ban will in fact lead to more Australians and New Zealanders getting infected with coronavirus and a small number dying, probably frail elderly people, or those with heart or respiratory problems or diabetes. Coronavirus is no ebola or even measles or influenza, but it does kill a small minority of those who get it.
When Morrison and Ardern re-open the border they will know there will be someone somewhere in each of their countries who will die as a result. But life and death are the consequences of the full range of prime ministerial decisions, whether it is sending troops abroad or into disaster zones, setting the Pharmac or police budgets, raising or lowering prison sentences, approving new Oranga Tamariki policies, or deciding whether or not to upgrade roads. All these life-anddeath decisions involve weighing up other factors.
None of this is easy but no one forced Morrison or Ardern to take their jobs. Being Prime Minister isn’t just about visiting primary schools or running cute Topham Guerin ads. They need to hurry up or else tens of thousands of their citizens are about to lose their jobs. And a week-long Ardern charm offensive in China over the next few months wouldn’t go amiss either.
When Morrison and Ardern re-open the border they will know there will be someone somewhere in each of their countries who will die as a result