National Leader Simon Bridges says the Government's decision to extend the level 4 lockdown shows it hasn't done the groundwork required to make sure the country is ready for the next step.
He said the decision will "no doubt see a rise in mental health problems and stress-related illnesses".
His comments came just moments after Prime Minister Jacinda Ardern announced the Government was extending the lockdown until next week.
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She told media this afternoon that New Zealand will move out of alert level 4 at 11:59 April 27 – next Monday.
The country will stay at level 3 for two more weeks, Ardern said.
After that, New Zealand will move to level 2 "if it is safe to do so", Ardern said.
"We have done what very few countries have been able to do – we have stopped a wave of devastation," she said.
Bridges said the Government's decision means one of the strictest lockdowns in the world has been extended. It was still more restrictive than what what was happening in Australia, which is in level 3.
"The medicine is worse than the cure.
"It's a lockdown, or close to it, in any other words."
Australia has "every bit as good" health outcomes as New Zealand, despite its more relaxed lockdown.
He was critical of the Government's level of preparedness.
"Unfortunately the Government hasn't done enough and isn't ready by its own standards and rhetoric."
He said the public has done a great job of self-isolating and social distancing.
"The entire country has made huge sacrifices to ensure the four week lockdown was effective," he said.
But he said New Zealand has been held back because the Government has not used the lockdown period to ensure best practice of testing and tracing.
And there are a number of issues with contact tracing.
He said what New Zealand is looking at is a level 3.9 - not a level 3.
"The rate of testing for the first half of lockdown was low, work has only just begun on surveillance testing to confirm whether community transmission is occurring.
"Tracing is the biggest challenge and experts have identified major shortcomings in the methods being used by the Government."
He also said the availability of PPE hasn't been at the standard it should have been.
"I urge the Government to move as fast as possible," he said when it comes to issues around PPE.
He said the decision to extend the lockdown will hurt many businesses across the country. Tens of thousands of workers will be out of work because of this decision.
"I now worry that the harm of staying in lockdown will be greater than if we were to come out. We will no doubt see a rise in mental health problems and stress related illnesses."
The decision to extend the lockdown over the weekend is bad news for businesses, who would have done a lot of trading over the weekend.
"Every day counts for small businesses."
A number of experts have been saying for weeks the Government needed to do a better job on things like community surveillance.
Going forward, there are some "very serious" questions for New Zealand's economic Ministers to answer about how this lockdown extension will impact the economy.
"We will be asking the effect of another week of lockdown," he said, when asked what his Epidemic Committee's focus will be this week.
Meanwhile, Act Party leader David Seymour said The Government has made the right decision.
But the Government's focus must now be on support for the narrowing range of sectors which remain severely restricted at alert level 3.
"Sectors such as tourism, hospitality, some retail, and event centres will now bear the brunt of the cost for a wider public benefit," he said in a statement.
"In these circumstances there is a stronger case for targeted support for those sectors which cannot operate even at alert level 3."