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[Analytics] What next for New Zealand in its post-Covid-19 era?

New Zealand Prime Minister Jacinda Ardern has spoken out against US President Donald Trump telling elected congresswomen to go back where they came from. Photo / Marty Melville. Sketched by the Pan Pacific Agency.

Having successfully eliminated COVID-19, New Zealand now faces the option of sitting tight or exploring various ways of loosening its stringent border controls. All these options involve complex health and economic trade-offs. Nick Wilson, Michael Baker specially for the East Asia Forum.

New Zealand has succeeded in eliminating the COVID-19 pandemic within its borders — there has been no evidence of community transmission since late April 2020. While COVID-19 infections continue to be identified in some returning citizens, these cases are all managed in designated isolation facilities and these individuals are only released into the community when they become non-infectious.

The public mood in New Zealand seems very positive about the country’s elimination success. New Zealand Prime Minister Jacinda Ardern has high approval ratings as a result. Indeed, the country has the lowest death rate from COVID-19 in the OECD (with only 22 deaths) and total weekly deaths declined during the lockdown.

On the economic side, the government instituted a major spending program to support businesses, supplement the incomes of employees and create new jobs. The economy appears to have largely bounced back to near normal after the lockdown period. On the downside, unemployment has increased with a rise in ‘jobseeker support benefits’ and business confidence and the New Zealand trade weighted index are slightly down.

On the upside, official data show that monthly earnings are up, the New Zealand stock exchange is up and the value of key exports such as dairy, meat and fruit have increased relative to previous time periods. New Zealand features on all international travel ‘green lists’ that allow its business travellers to visit nearly every other country without quarantine requirements.

When thinking about the longer term, New Zealand appears to have three broad options in terms of how it engages with the outside world.

The first option is to sit tight and maintain very stringent border controls. This seems the most likely approach the government will take over the coming months, with only New Zealanders and a few essential workers being let into the country. Those who do enter the country undergo 14 days of quarantine at the border. Under this regime there is only a very small risk of outbreaks that can be controlled using established measures such as contact tracing and mass masking at the regional or national level.

The ‘sit tight’ option means putting more economic stress on the education sector that is currently missing international students and on a tourism sector used to benefitting from international visitors. But this is somewhat cushioned by domestic tourism, making up 60 per cent of the tourism market. And international tourism is largely suspended for all countries, regardless of New Zealand’s border restrictions.

The second option is to carefully open up to more travellers and migrants from other nations. This option could see a return of international students, albeit with 14 days of quarantine or some variant of this involving testing and mask use in the first weeks after their arrival. COVID-19 free jurisdictions in the Pacific Islands and most Australian states and territories could join New Zealand and become part of a quarantine-free travel zone to grow more sustainable regional tourism. But careful risk management would be needed at every step of this process — any failures resulting in outbreaks might trigger strong public and political demands to revert to tighter border controls.

The third option is to fully open borders if the cost-benefit calculation changes. This option seems remote at present because an effective vaccine against COVID-19 appears relatively distant. It remains unknown whether or not there will be an adequate uptake of such a vaccine among the population, although vaccination could be made a requirement for those travelling to New Zealand.

The prospect of developing a treatment that substantially reduces the severity and death rate of COVID-19 also seems unlikely in the near future. But if this development did occur — and the benefits of participating in any major reactivation of international tourism were considered large enough — then New Zealand might pivot away from its current elimination strategy.

It could shift to a ‘suppression strategy’ where a low circulation of the virus is tolerated. But suppression can still come with large economic downsides in that consumer confidence drops markedly when the virus is known to be circulating. For example, the downturn in the Swedish economy (with no lockdown) has been similar to that of Denmark, a country that imposed a lockdown and had a much lower death rate.

These three options need to be carefully assessed by policy-makers considering the implications for health and wellbeing, socioeconomic inequalities and the overall economy. During COVID-19, countries should be encouraged to learn best practice policies from each other — especially now that New Zealand finds itself in the same COVID-19 free position as Pacific Island states such as Samoa, Asia Pacific nations like Taiwan and some Australian states and territories.

Nick Wilson and Michael Baker are both professors in the Department of Public Health at the University of Otago.

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