Malls, cafes and restaurants re-open from Thursday and schools resume next Monday but bars must wait 10 days as the country moves to alert level 2 in 48 hours.

On Thursday, retail stores, malls, cafes, restaurants, cinema and other public spaces can reopen. All require physical distancing. Health services will also restart.

The deadline was 11.59pm on Wednesday, meaning effectively alert level 2 started on Thursday, Prime Minister Jacinda Ardern said.

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She did not think level 2 would "necessarily" be in place for longer than level 3 was, but it depended on factors such as the number of new Covid-19 cases.

Border restrictions would remain for a long time, as would the expectation of the public oberving hand hygiene practices.

"If we slacken up, we might move in the wrong direction," Ardern said.

Friends and family can also be reunited from different regions from Thursday. Sports teams can play but the social gathering afterwards should have no more than 10 people.

"This is a transition out of our bubbles," Ardern said.

From Monday May 18 all schools and ECE centres will open.

Asked about schools, Ardern said parents should feel assured that they will be in safe environments.

However bars will have to wait 10 days - until Thursday May 21 - before being able to open.

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Restaurants will be able to serve alcohol, she said.

Bars and restaurants will be closed if they broke the rules, Ardern said.

Ministry of Health officials had recommended keeping bars closed for two weeks but Cabinet settled on 10 days.

Closing bars for longer was rejected was a "balanced" decision, Ardern said, given the safeguards including that everyone had to be seated, tables separated and a single server per table.

The "safe and normal" level 2 will be reviewed in two weeks and if progress was being made, the group size will be allowed to widen.

Bars posed the most risk and Ardern noted that South Korea had opened bars but then closed them again after there was a fresh outbreak.

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She said these few extra days allowed the country to lock in the gains that had been made so far.

'Breaking out of our bubbles'

Director general of health Dr Ashley Bloomfield said Australia had gone from 10 to 20 to 50 to 100 people for gathering restrictions, and New Zealand's next limit would depend on what happens in coming weeks.

Bloomfield said people over 70 or with compromised health conditions should be encouraged to go out and do things safely, and it was up them and to all of us to keep them safe.

But there is an upper limit of 100 at level 2.

The policy around rest homes and hospital visits was being updated, he said, noting they are high risk environments and any visits will have strict safety rules.

Masks were not recommended, but people were able to wear them if they wanted to use them.

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"It's not a supply issue. It's a evidence issue and the evidence is in the balance," Bloomfield said.

There was a feeling that loads of people were not complying with alert level rules, but his sense was that the majority of people were complying.

Bloomfield said that a trigger back to level 3 might be about the number of cases and where they were happening, and the ability to control outbreaks "very quickly".

He said regional measures might be put in place to ring-fence an outbreak, and those measures might be more restrictive than the rest of the country.

Bloomfield said there were no cases of Covid-19 inside prisons.

One confirmed case is someone who worked in Corrections but didn't have contact with prisoners, and transmission was within the family.

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He said visits for prisoners had to be done safely.

Ardern clarified that the 10-person limit was consistent. "If you are socialising with a group of your friends, you have to keep it to 10."

In 10 days, most businesses would be reopened, much sooner than most other countries around the world.

"There does have to be a new normal," she said.

"We will be breaking out of our bubbles. We will be around more people."

Ardern said she didn't have plans to resume travelling around the country immediately, and she would act in the same way she had encouraged New Zealanders to act.

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But she was looking forward to hugging her sister: "That will be nice."

Social gatherings should be kept small for now, she said.

She noted that clusters had sprung from social gatherings, including at bars, and reducing socialising was the best way to reduce risk for the time being.

"Parties, big social events, anything designed to be for mixing or mingling won't be allowed for crowds bigger than 10."

Bars won't be able to take group bookings for groups larger than 10.

Prime Minister Jacinda Ardern is revealing Cabinet's decision about moving to alert level 2 at 4pm today. Photo / Pool
Prime Minister Jacinda Ardern is revealing Cabinet's decision about moving to alert level 2 at 4pm today. Photo / Pool

Ardern said that size of a group meant contact tracing would be much easier.

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Larger gatherings of people will be at the movies, but will be spaced out. Sport crowds can be spaced out as well.

Those businesses will have to operate differently for the "next wee while".

Ardern added that a family larger than 10 didn't mean throwing someone out of the house.

Moving around the country isn't so much of an issue, so "go and see your mum" and maybe visit a local tourism business.

The alert level will be reviewed in two weeks, and if the numbers are still looking good, gatherings of larger sizes will be permitted.

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Ardern said level 4 and level 3 had broken the chain of transmission, but level 2 meant people were out and about again. "Just about all parts of the economy" will be open again, so she asked New Zealanders to be "incredibly careful" in the "new safer normal".

Keep your distance, stay home if sick - "there should be a really low bar" - and wash your hands were the key alert level 2 messages, as was keeping track of where you've been and who you've seen.

"We are looking to provide more support for the businesses most affected," she said, and the Budget on Thursday will be called "rebuilding together".

Addressing inequality and run-down infrastructure, as well as environmental challenges, would be in the Budget.

"Keep it small, keep your distance, and be kind," Ardern said to all New Zealanders once alert level 2 begins.

"Please be vigilant at level 2."

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Breaking the rules will take New Zealand backwards, the Prime Minister said.

Asked about policing level 2, especially for large gatherings, she said police can enforce the rules on a large group of partiers, but she said it also relied on New Zealanders and "personal responsibility".

She said restaurants could cater for more than 10 people, but there should only be 10 people in one group.

"Hold off," she said when asked about people's wedding plans.

That 10-person limit will be reviewed in two weeks. She said a 10-person limit was given "hard consideration" in light of the difficulties people have had with funerals and tangi, but it was a balanced decision taking safety into account.

Ardern said an embarrassing email from her office on Friday telling ministers not comment on lockdown documents being released was not a "gagging order". But she noted feedback and would try to give notice about the release and release such documents in the morning in future.

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She said the language in the email was not language she would use.

Director General of Health Ashley Bloomfield has given Cabinet the latest public health advice on the potential to move to alert level 2. Photo / Pool
Director General of Health Ashley Bloomfield has given Cabinet the latest public health advice on the potential to move to alert level 2. Photo / Pool

Ardern said the Government was still working on a way to ease commercial rents and rejected the suggestion that NZ First was blocking progress.

All issues were being worked through on a consensus basis, she said, when asked about whether NZ First was blocking opening up access to welfare benefits for migrant workers.

Sacrifices of last six and a half weeks

Ardern acknowledged the sacrifices of the last six and a half weeks, such as people who had lost loved ones who couldn't have the chance to grieve properly, or people who had lost their jobs.

She said New Zealanders were determined to win the "war" against Covid-19 by forming a wall of protection.

Ardern shared a letter from a mother whose son had a compromised health system, who told her that every person who stayed home had done it for her boy.

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The wall meant that the virus couldn't reach those who it would easily take, Ardern said.

Covid-19 cases remain low, she said, and the R value remained low at level 3.

There are only 90 active cases, and only two in hospital. "None of that has been through luck, rather through hard work."

Ardern said up to 12,000 tests a day can be conducted, and 3.5 per cent of the population has now been tested.

Contact tracing has also been improved to tracing 185 cases a day, including making 10,000 phone calls a day.

Ardern said testing and rapid contact tracing, if efficient, could be 90 per cent as effective as a vaccine.

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But speed was of the essence, and Ardern said every person with a sniffle or a sore throat needed to be tested: "Please don't be a stoic Kiwi."

"We all know there is more to do. We may have won a few battles, but we have not won the war. We are still recording cases most days."

"I think the focus now turns to saving jobs and getting people back to work," said National Party leader Simon Bridges.

Alert level 3 for past 14 days

New Zealand has been in alert level 3 for 14 days, following 33 days in alert level 4, and many businesses will be eager to hear which ones can open, and what any restrictions might be.

Ardern has already laid out the rules for alert level 2, but it was possible that some aspects may be phased in over a longer period.

Three new cases today

The number of Covid-19 cases has been zero or near zero for nine days, and in single digits for over three weeks.

Today there were three new cases of Covid-19 - including one imported case in quarantine near the airport, and two nurses at Waitakere Hospital linked to the St Margaret's Hospital & Rest Home in Auckland.

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Both of the nurses had been asymptomatic throughout a stand-down period which they spent in precautionary self-isolation at home.

They were tested as part of routine requirements for their safe return to work and the results came back positive. They remain in isolation awaiting further testing.

The total of confirmed and probable cases in New Zealand is now 1497, and with most people having recovered, there are now only 90 active cases in New Zealand.

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Ardern has previously said that some of the riskier aspects of level 2 might be phased in, depending on the latest public health advice.

She has not articulated what aspects those might be, but indoor and outdoor gatherings up to 100 people, hospitality businesses and domestic travel are all considered to be higher risk.

That is because so many of the country's cases have stemmed from social gatherings, such as a wedding or a stag party.

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Being in close contact with strangers also poses greater contact-tracing challenges, while allowing inter-regional travel opens up a possibility of location-to-location transmission.

Ardern has been in contact with her Australian counterpart Scott Morrison - they both shut their respective borders to non-citizens at the same time - and Morrison has opted to ease restrictions in Australia in stages.