Officials massively underestimated the cost and demand of the country's Covid-19 managed isolation border facilities, and the initial $198 million provided quickly ran out.

It has also been revealed the Government is working to a "best-case scenario" of the population being vaccinated against Covid-19 by the end of 2021.

For the first time the Government has released how much it costs taxpayers to put up one person in managed isolation - an estimated $5700 for 14 days in an Auckland facility.

Advice on the border facilities was included in today's document release and shows how officials struggled to predict demand on the service.


In a Cabinet paper from April 9, just before managed isolation became mandatory for all returnees, officials believed they would need to put up 190 people a day - a total of 13,600 - costing a maximum $195 million for six months.

At the time there were 12 hotels available and 1400 campervans set aside for managed isolation and this was thought to be sufficient.

"Once the hump of repatriation flights are complete world-wide, international passengers numbers are likely to remain low for some months as countries, like New Zealand, will continue to keep in place restrictions to manage the virus," advice said.

"This should start to release pressure on provision of accommodating or quarantining New Zealanders coming home."

How much it costs to put someone through managed isolation.
How much it costs to put someone through managed isolation.

And in May, officials believed a scenario that 10 per cent of the estimated 800,000 New Zealanders living abroad was unlikely.

"This would be a substantial increase above rates to date. Under our model, the costs would be around $325 million. We have considered this to be a risk rather than a scenario for the purpose of establishing the quantum of the contingency."

But six weeks later the border operation had already blown through $48.2 million - about a quarter of the initial $195 million budget.

A further $54.7 million was put towards the border operation.


This again quickly ran out.

Advice from June 9 titled "A Sustainable Quarantine and Managed Isolation System" said the estimate of 13,600 New Zealanders returning by October would be "well exceeded" given 10,700 had already come back by the end of May.

How estimated returnees compared to the actual demand.
How estimated returnees compared to the actual demand.

In the paper, Housing Minister Megan Woods and then Health Minister David Clark sought an additional $298 million to allow contracts to be negotiated with hotels until the end of the year.

That would lock in the capacity required for an average of 288 arrivals per day.

There was also the threat of losing staff from public agencies who had been redeployed to the operation, the advice said.

"If decisions are not made very soon on what resource is needed over the next few
months, we will lose the ability to utilise this staffing resource and institutional
knowledge to run the facilities."


But after the country moved to alert level 2 there was a steady increase in daily international passenger arrivals.

"Under current border restrictions, it is anticipated that the numbers of New Zealanders returning home will continue to increase and more essential worker entry exemptions will be granted to foreign nationals in order to support our economic recovery."

Officials also couldn't say how long the border facilities would be in operation but a "best case scenario" was for population immunity to the deadly virus by the end of next year.

"It is possible the global pandemic may subside as it runs its course, but this situation may take several years to resolve.

"A treatment or vaccine may be developed and widespread immunity achieved, but this is not certain. A best case scenario is for an immunisation programme to begin early-mid 2021 with population immunity achieved late-2021."

And with more exemptions likely for international students, businesses and other "high value" visitors, demand on facilities would only increase further.


"We will not be able to meet more than a fraction of the potential demand under the current arrangements, so new models will need to be developed if border restrictions are to be eased."

The spend has now ballooned to almost $500 million until the end of the year and there are now 32 hotels in operation.

Air Commodore Darryn Digby Webb recently said this was likely close to the maximum number of suitable hotels which could be used for border facilities.

This week the Government announced a $3100 managed isolation charge for New Zealanders who leave the country after the end of next week then return, or people returning to New Zealand for a trip shorter than 90 days.

There will be exemptions for financial hardship and on compassionate grounds.

But the scheme is only set to recoup about $10 million by the end of the year - just 2 per cent of the total cost of the operation.