Queues of people wait to drive through a Covid-19 testing centre set up in the Waikato township of Matamata yesterday. Photo / Alan Gibson
Queues of people wait to drive through a Covid-19 testing centre set up in the Waikato township of Matamata yesterday. Photo / Alan Gibson
KEY POINTS: • PM says some border controls will need to be in place until a vaccine is ready • That could be 12 to 18 months away, experts estimate • No overseas arrivals will devastate international tourist and international student numbers - which are worth $23b a year • If lockdown works, some border measures could be eased with countries that have contained Covid-19 • NZ communities will still have to be ready to return to lockdown if a new outbreak arose • Govt plans a massive public works programme to put jobless into jobs post-lockdown
A post-lockdown New Zealand may have to grapple with strict border controls for another year or more, while local communities will have to be prepared to retreat to their households if new cases of Covid-19 arose.
And while some international markets could reopen with countries that have contained the deadly virus, Tourism Industry Aotearoa is looking at a timeline of up to five years before the $18b-a-year international tourism industry will get back on its feet.
Education institutes face a similar predicament due to the dearth of international students, who normally contribute $4.94 billion to New Zealand's economy and support 45,000 jobs.
"There's no doubt that when we come out of the lockdown, there's going to be much more of a domestic or local regional economy as opposed to a fully international one," Business NZ chief executive Kirk Hope told the Herald.
If the lockdown is successful, Covid-19 will be essentially eradicated from New Zealand communities, meaning the alert system level can be eased. Local and even national arts, sports and community events could come alive again.
If not, the lockdown will likely be extended and the Government might consider other ways to limit the spread of Covid-19.
Either way, the borders are likely to remain closed to non-New Zealanders for the foreseeable future because any overseas arrival could trigger a new outbreak.
The Brave New Economy will have to make do with no international arrivals for the foreseeable future due to the risk of importing a Covid-19 outbreak. Photo / Jason Oxenham
Prime Minister Jacinda Ardern said yesterday that strict border measures would likely be in place until a vaccine was available - which has been estimated to be 12 to 18 months away.
"We have to continue to try and protect ourselves until there is a vaccine," she said at her post-Cabinet press conference.
A vaccine was one way to ensure collective global immunity, she said.
The other way was "herd immunity", where 95 per cent of people were infected, but that strategy could see millions of deaths worldwide and tens of thousands of deaths in New Zealand.
Ardern said "herd immunity" was never considered as a strategy in New Zealand because the price was "too high".
And while the world waits for a vaccine, the alert level could change in different regions, meaning whole communities would have to go back into lockdown if new cases of community transmission arose.
International tourism in 'hibernation' for the foreseeable future
The Government is currently grappling with how to kick-start the country's economy - including the tourism sector - once the lockdown is no longer needed.
More than half a million jobs have been salvaged so far through the Government's wage subsidy scheme, including tens of thousands of tourism jobs.
But Tourism Industry Aotearoa (TIA) chief executive Chris Roberts said the lights have already gone out on international tourism.
"It's effectively gone for the remainder of 2020 - potentially longer," he told the Herald.
"It could be potentially up to five years before we can rebuild international tourism."
The sector was expected to be worth $18b this year, or roughly 6 per cent of GDP, and it supports hundreds of thousands of jobs (there are about 400,000 workers in tourism, including domestic tourism).
The domestic tourism market is worth $6b a year more than the international market, and Roberts said that would be the focus in a post-lockdown New Zealand.
"It's clear that's where we can get some activity underway, and get some money through the tills of those tourism businesses from local Kiwis."
Tourism Industry Aotearoa chief executive Chris Roberts says it may take up to five years before the international tourism sector fully recovers. Photo / Jason Oxenham
He said more international visitors came from Australia than any other country, so a relaxation of trans-Tasman border controls would be a huge boost to the tourism sector.
But that was unlikely, according to Otago University epidemiologist Professor Michael Baker, because Covid-19 seemed to be gripping Australia in a similar, devastating way as it had hit the USA and European countries.
More than 4000 people have been infected in Australia, while 17 people have died.
"The problem is that this pandemic is likely to rage around the globe for one to two years," Baker told the Herald.
"If New Zealand can eliminate it from the local population, then overseas travellers become the only source of infection. That has to be carefully managed."
Otago University epidemiologist Professor Michael Baker. Photo / Supplied
Airlines and border agencies already had to manage a range of risks, including biosecurity and terrorism threats, he said.
"The risk of importing people who are infected with this virus is just another risk we will have to manage.
"There will be a whole lot of new methods to help that, such as antibody tests to check immunity. Almost certainly there will be a time for freer movement of people, with precautions."
He said countries that had seemed to contain the virus included China, Taiwan, Singapore, South Korea and Singapore.
That could be good news for the international tourism and education sectors; China is behind only Australia in terms of visitor numbers and spend in New Zealand, while Chinese foreign students make up about half of all foreign students at New Zealand universities.
"This is all very speculative," Baker added.
The economy as an oven rather than a light switch - Finance Minister
Regardless of when the borders will open, the Government wants the domestic economy to be ready when the lockdown is over.
More than a fifth of the workforce - 579,369 full-time, part-time and self-employed workers - has so far managed to keep their jobs through the Government's wage subsidy scheme.
About $3.7b has already been paid out in less than two weeks, an astounding figure given that the $3b Provincial Growth Fund is over a three-year period.
Finance Minister Grant Robertson says a major public works programme will help the jobless into jobs after the lockdown is lifted. Photo / Mark Mitchell
Last week Parliament passed a $53 billion imprest supply bill to enable the Government to spend that amount during the crisis - $40b in operational funding, and $13b in capital spending.
Finance Minister Grant Robertson has compared the economy to an oven that needs to be kept warm rather than a light switch that can instantly be turned on and off.
A main aim of the wage subsidy scheme is to keep workers in jobs, even when business activity has dried up, so they are ready to hit the ground running when normal activity resumes.
When that will be, however, is an open question. The scheme is in place for 12 weeks, though it can be extended.
Robertson is considering a universal basic income to keep people's livelihoods afloat after the scheme expires.
He is also looking at a major public works and infrastructure programme to get the jobless into jobs, and has asked Economic Development Minister Phil Twyford and Regional Economic Development Minister Shane Jones to put that together.
The Government has also loaned $900m to Air NZ to ensure the national carrier stays viable.
TIA boss Chris Roberts said the airline is vital to the tourism sector, as half the world's airlines are expected to go under by the time a vaccine for Covid-19 is available.
"There just won't be the planes in the air to move visitors around the globe, so it's critically important for Air NZ to be protected to provide those connections to the world."
The Brave New Economy
Roberts said it may not feel like it, but New Zealand was relatively well positioned because the Government had moved early to try and stamp out Covid-19.
"Our colleagues in the northern hemisphere are heading into peak summer season. The devastation there is incredible.
"We are looking at a winter hibernation for the entire industry, and then hopefully getting some spring shoots emerging from that hibernation.
"There are positive and passionate people working in tourism in New Zealand, and we are looking to be ready to be there when tourism is ready to come back again."
If the lockdown worked, for example, he said cruise ships could look at operating again around the country, and in other countries that have contained the virus.
Former Prime Minister Sir Bill English, in a presentation to investment group Jarden that has been summarised on Kiwiblog, said the Covid-19 crisis will change the economy permanently and it wouldn't return to "normal" in a few months or even years.
The Government will need to rebuild business confidence which may mean having to do things that don't sit well with its core beliefs, English reportedly said, such as scrapping regulations to help ensure economic survival.
Business NZ boss Kirk Hope said primary industries were in a good position to push premium products - including food technology, as well as the likes of apples and kiwifruit - into global markets.
But the New Zealand economy that emerged from the other side of the lockdown would be very different, given the hefty role that has been played by millions of overseas visitors.
"Essentially that industry and the value it provides will be hard to replace. There's no doubt about that.
"It will be challenging as the world gets back into figuring out if it wants to travel, and how to do that safely."
In the meantime, New Zealanders will be hoping that the lockdown breaks the chain of community transmission.
There are currently 589 confirmed and probable cases in New Zealand, but only about 10 of those are considered cases of community transmission, Director General of Health Ashley Bloomfield said yesterday.
He implored people to continue to follow the lockdown rules, including staying at home unless they were exercising, buying food or going to the hospital or pharmacy.
