Auckland will move to alert level 2 at midnight, despite a third new community case of Covid-19 being announced today.
The rest of the country will move to alert level 1 but face masks will be mandatory on public transport until further notice. The alert levels will be reviewed again on Monday.
The Prime Minister made the announcement at a press conference this afternoon - alongside director general of health Dr Ashley Bloomfield - after Cabinet met to review the settings.
Another family member of the two Papatoetoe High School pupils who tested positive today has also been confirmed as a case, Bloomfield said.
They are currently all isolating at home.
There are five people in the household.
Bloomfield said it was "reassuring" all the new cases were linked and were identified through contact tracing.
They have been in isolation since Monday.
Two other new community cases were announced earlier today.
Bloomfield said "we should be encouraged" that all cases have clear epidemiological links.
The new cases are being interviewed at home in "strict isolation" and the Health Ministry will release more locations of interest this afternoon.
Worked at McDonald's
One of today's cases was a McDonald's worker, Bloomfield confirmed.
Contact tracers are still establishing when they were at work. The person has not had any symptoms, said Bloomfield.
Ardern said Cabinet knew where the person worked and factored it into their decision.
In a statement, McDonald's revealed the case worked at their Cavendish Drive restaurant.
"We received notification from the Auckland District Health Board Wednesday afternoon of a McDonald's staff member who has tested positive for Covid-19," McDonald's said.
"The DHB notified us that this person had worked a shift on Saturday afternoon, prior to the change to alert level 3.
"We have responded immediately and followed DHB and Ministry of Health instructions.
"Staff are being provided detailed information and support. Any staff who worked at the same time have been advised to isolate and get tested. We have also closed the Cavendish Drive restaurant for an immediate deep clean.
"Our restaurants had been operating at our level 1 protocols, and the restaurant has been regularly cleaned since Saturday. Since the move to alert level 3 on Sunday evening that restaurant has operated for Drive-Thru and delivery only, and at heightened levels of hygiene and distancing. This includes the use of masks, protective screens and contactless service."
Papatoetoe High School
Bloomfield said the two new cases at Papatoetoe High School were not at school when they were infectious but it will remain closed until Monday.
All students and staff will need a negative test result before returning to school.
Testing will remain open at the school so everyone can be tested.
Nearly 80 per cent of students at the school have tested negative, but there are still 363 tests outstanding.
Bloomfield reminded Aucklanders that health services were still open.
Next alert level review on Monday
Ardern said the latest restrictions will be reviewed on Monday.
Her expectation was if the country is in a similar position on Monday, it was likely there'll be another drop in alert levels.
Ardern said the evidence suggested there wasn't a widespread outbreak but a small chain of transmission.
There will still be some restrictions for people connected to Papatoetoe High School but there will not be a public health order mandating the school community must isolate because they had been so co-operative, said Bloomfield.
She reminded Aucklanders that gatherings were limited to 100 people, masks must be worn on public transport, hospitality venues could reopen with the restrictions and weekend sports could happen with the public health measures in place.
"If you are sick, please stay home - this continues to be one of our most important messages."
"There is every chance we will find further cases."
Ardern said perfection when dealing with a virus is "very, very difficult" and they tried to put as many filters in place to prevent leakages.
She said if Aucklanders followed the rules at the weekend Cabinet would be in a better position to make their decision on Monday.
All Auckland businesses who've experienced a 30 per cent drop in revenue will be eligible for the Covid Support Scheme.
Ardern said the level 3 lockdown had been necessary because it was "much, much better" to be cautious than try to stamp out a widespread outbreak.
The Government is looking at extending the testing order to include more people connected to the border.
Ardern said no one should fear they'd have any other repercussions - other than gratitude - if they went to get a test if they didn't have a visa and were here illegally.
Ardern said there was a "daily grind" with dealing with a pandemic.
"I will never be comfortable with Covid-19. There is an indescribable anxiety which comes with the daily grind of managing a pandemic and I think we all feel it. But you do learn things - you undoubtedly learn things.
"We make the best decisions we can with the information we've got and with the best advice that I can imagine happen. So the decision we've made today still has a level of caution in it and that gives me a level of comfort."
Not fully out of the woods, says Goff
Auckland Mayor Phil Goff welcomed the move to alert level 2 for Auckland but urged people to continue following precautions.
"I want to thank Aucklanders for their efforts over the last few days. I know it has not been easy.
"However, today's cases show us a short sharp lockdown was necessary to hit this outbreak on the head. We are not fully out of the woods yet, so we need to be cautious.
"The vital thing now is for people to continue scanning their QR codes and get tested if they are feeling unwell."
Aucklanders should "take their alert level with them" if they leave the city, Ardern said.
Bloomfield said they were "quite comfortable" with the levels of negative tests at the high school and if anyone connected to that wanted another test they were able to do so.
Mask use on public transport across New Zealand will be required "for now". Cabinet had not yet decided whether to mandate it indefinitely, said Ardern.
The decision on mandating mask use for all of New Zealand will likely happen at the same time they decide whether to mandate Covid Tracer scanning.
Level 2 rules
• People can still go to work.
• Schools and daycares remain open.
• Gatherings restricted to 100 people
• Public and hospitality venues can open, and sports are allowed, subject to limits on gathering numbers and other provisions.
• Social distancing in public with strangers required.
Level 1 rules
• The disease is contained in NZ and there are no restrictions on movements and gatherings.
• Border entry measures - including managed isolation and quarantine - are in place to minimise the risk of importing Covid-19 cases.
• People should stay home if they feel sick and get a Covid-19 test.
• Face coverings legally must be worn on all public transport across New Zealand.
• QR codes issued by the Government legally must be displayed in workplaces and on public transport to enable use of the NZ Covid Tracer app for contact tracing, which people are encouraged to use.
Hipkins: Still some risks to be managed
Covid-19 response minister Chris Hipkins spoke to Newstalk ZB this afternoon.
He said the key thing is evidence of any community transmission.
"We haven't detected that, we've done a good wave of testing," he said.
"We're obviously still working on the source infection," he said
He said there was comfort to see there was no undetected community transmission out there.
He said there was work to do around the testing at the high school and workplaces and there were still some risks to be managed.
"We'll be back at level 1 as soon as we can be," he said.
He said today's new cases were "flow on" cases and a result of the earlier cases.
He said it remains a puzzle about whether the student or mother was infected first.
"We haven't got a conclusive answer there."
He said it depended on the circumstances of each case as to whether alert levels are escalated in future situations.
"The thing that made this case a puzzle is we don't have a good lead on the source."
He said the chances of the virus circulating in the community were very low.
He said the Government's response was short and sharp.
Schools welcome decision
Auckland schools are welcoming the decision to reopen schools from tomorrow despite three new Covid cases in the Papatoetoe High School community.
Auckland Secondary School Principals' Association president Steve Hargreaves said he expects a mixed response from parents.
"The vast majority will be pleased and will rush back, and there will be a section of our community that will be a bit more hesitant for these two days [Thursday and Friday]," he said.
"That's understandable, and we will make work available for those students to do at home."
Hargreaves said the level 2 rules meant that schools could operate normally as long as they are careful about hygiene.
"We'll have a few restrictions around sharing of food. We have facilities for students to make lunches. They will close. We'll close the water fountains."
Schools are exempted from the broader level 2 limit of 100 people in social gatherings, but Hargreaves said his school, Macleans College, would not hold assemblies this week to be safe.
Hospitality in Auckland would face challenges under alert level 2 but operators would welcome news of the Covid resurgence subsidy payment, North Shore bar and restaurant operator Kevin Schwass said.
"Level 2's a bit weird because a lot of people don't want to come out because of the restrictions," said Schwass, owner of Florrie McGreal's Irish Pub in Takapuna.
Customers under Level 2 must be seated, practice physical distancing, and only have one server per table.
Dance floors are off-limits and patrons cannot stand around tables.
He said for gastropubs, the bar business was as important as the food business, so these restrictions would impact revenue.
"I guess the pleasing thing is that there will be a wage subsidy. Most hospitality businesses would qualify for that easily."
The supplementary payment applied to companies which could demonstrate a 30 per cent revenue drop over a seven-day period.
A rush to bars and restaurants was unlikely, as earlier lockdowns suggested consumer behaviour lagged behind alert level reductions, Spirits New Zealand chief executive Robert Brewer said.
He said today's news was positive but experience showed consumers would take time to navigate the new restrictions in Auckland.
"People are reticent about coming back. And when they do, their behaviour's different."
"And that will have an impact on businesses and more directly on the sale of spirits," he added.
He said the spirits industry's thoughts went out to hardworking restaurant and bar owners and staff.
"They will continue to be doing it hard."
Otago University infectious diseases expert Professor David Murdoch said the decision showed officials felt the extent of the potential spread had been contained.
"[It shows] there is confidence that all of the close contacts are either being tested or contained at the moment."
But there was still some concern and uncertainty, he said, given there were still test results to come in, and the source of the scare remained unknown.
"I think it will be a cautious and probably nervous time over the next few days as we see the rest of the results - and hopefully we don't have any more cases."
Covid-19 modeller Professor Michael Plank, of Canterbury University and Te Punaha Matatini, said it was reassuring that test results had virtually all come back negative.
"So overall, it's looking pretty good."
But, despite clear assumptions that today's new cases were likely secondary infections from the initial ones, Plank was still concerned at the lingering possibility that transmission could have instead come from them.
"It's not completely clear to me, from the information that we have at the moment, that we can say definitively either way," he said.
"But I would add that Dr Bloomfield said that cases D and E were asymptomatic - and that's good news.
"Because if they're asymptomatic, it means they're less likely to have been the source of transmission for the cases A, B, and C."
Plank said the latest wastewater sampling results, showing no signs of widespread community transmission, offered a little more reassurance, he added that we still hadn't seen wastewater test results from Papatoetoe High School.
Horticulture industry responds
Horticulture New Zealand chief executive Mike Chapman said fruit and vegetable growers should now be able to sell more produce.
"Going to level 2 not only reduces the cost and the burden of growers ... it also means you've got more outlets you can supply."
Only 10 to 15 per cent of locally-produced vegetables were exported, so growers relied on local buyers, and Auckland's restaurants were a significant market.
Level 3 made doing business more difficult, he said.
Restrictions on travel across regional boundaries during lockdowns had sometimes been problematic for growers and drivers, Chapman added.
But he said the Government had listened to some industry concerns, such as requests to let independent produce retailers open at level 3.
"From March last year, there were some lessons, and they've been learnt."
The announcement came after two new Covid-19 cases were found in the community and announced earlier today.
One of the two cases confirmed earlier this afternoon was a close contact of case A – the daughter who was confirmed Covid-19 positive with her father and mother on Sunday. They went to Papatoetoe High School together. The second new confirmed case is a sibling of the first.
The source of the family's infection is still a mystery.
Health officials have been racing to trace the contacts of the two students. Interviews were continuing with the latest infected pupils, the Ministry said in its Covid update at 1pm.
ESR testing of wastewater has so far found "no evidence of any community cases of Covid-19", the Ministry of Health said.
Case investigation and contact tracing for the latest cases were under way.
As at 11.30am, 31 close contacts and 1523 casual plus contacts had been identified at Papatoetoe High School.
Contact tracing had identified 128 close contacts associated with the original family at the centre of the Covid outbreak. Of these, one had tested positive (one of today's new cases), 76 had tested negative, and 49 results were still being analysed.
National leader Judith Collins said that whether or not the alert level settings are extended is a "call for the Government".
"We're all very disappointed to hear that there are ... more community cases."
She pointed out that there is still a lot more testing to come back but National was going to "wait and see what the Government comes up with".