Prime Minister Jacinda Ardern revealed on Monday Cabinet's decision to keep Auckland in alert level 2.5 and the rest of the country at level 2.
Ardern said her decision was based Ministry of Health modelling suggesting there would be around a 25 percent chance of cases moving out of the Auckland region.
"So while the cases are currently contained in Auckland, with inter-regional travel open, there does remain a risk of spreading the virus to the rest of the country."
Her decision was backed by public health expert Dr Amanda Kvalsvig in a Science Media Centre release.
"It's good to see the Prime Minister reinforcing the need for caution while there is still community transmission," she said.
"There are at least two very good reasons to step down alert levels slowly. The first is that a low number of daily cases is not as reassuring as it might be. COVID-19 is extremely infectious, and a small number of cases can quickly escalate to a major outbreak.
"The second reason for caution is the time-lapse effect of new cases: a new case today indicates transmission that was happening up to two weeks ago, not transmission today. Likewise, it'll be a couple of weeks before we can assess transmission happening right now."
University of Canterbury's Professor C. Michael Hall from the department of management, marketing and entrepreneurship, described it as a "continuing cautious balancing act between opening the economy up further and reducing infection risk".
"These measures will be especially welcomed by the tourism and hospitality industry, as well as other sectors, with the school holiday period coming up, and should provide a substantial boost to many businesses and holiday destinations."
However Dr Paula O'Kane, human resource management senior lecturer at the University of Otago, said this decision is a worry for businesses.
"Staying in the status quo for another week or so is disappointing for New Zealand business, particularly in the South Island, where many were anticipating a move to level 1," she said.
"This lengthened time at level 2 adds extra stress to both business and employees.
"Businesses continue to see reduced turnover associated with restrictions on numbers, particularly in hospitality. For employees, this adds to the worry about job security, and the ability for organisations to stay afloat, which can contribute to reduced wellbeing."
And registered clinical psychologist Jacqui Maguire warned the announcement may cause business owners and tourism operators "upset and confusion".
"Level 2.5 / level 2 has significant impact on New Zealand's economy and businesses bottom lines. This sense of unfairness and injustice may cause the individuals impacted distress," she said.
Judith Collins said the Government's decision around the alert level restrictions is "starting to look very political".
The leader of the National Party responded to the alert level announcement on Monday, calling for Ardern to "front up" about her decisions around COVID-19.
"The alert level moves are starting to look very political," Collins said while on a campaign trail in Christchurch.
"I'd like the Prime Minister to front up and tell us exactly how those decisions are made and if they differ or not with the advice they are getting.
"Why is the South Island still at level 2 when there hasn't been a case recorded there since the end of May?" Collins asked.
"South Islanders have put up with the inconvenience of restricted gatherings, cancelled sports fixtures and half-empty businesses.
"They've had enough."
Deputy Prime Minister Winston Peters said Cabinet's decision to maintain alert level 2 settings outside of Auckland is something he "agrees to disagree" with.
"The Director-General of Health has stated the COVID-19 outbreak in Auckland is contained. Additionally, he believes there is a low risk of transmission outside of Auckland," he said.
"Travelling around the South Island has reinforced that people are not observing social distancing in the absence of any registered or real threat of COVID-19 exposure since late April. Not because they are against the Government's COVID-19 response, but because they have applied their own 'common sense' test to their risk of exposure to the virus.
"While New Zealand First supports the continuation of alert level 2 in Auckland it cannot support a continuation of alert level 2 outside of Auckland."
And ACT leader David Seymour described Cabinet's decision to keep New Zealand at alert level 2 a "slap in the face" to New Zealanders and restrictions on the South Island as "particularly harsh".
"Six months into this epidemic, the only tool the Government has is lockdowns. This approach is not sustainable. New Zealanders are understandably becoming increasingly frustrated at the rules and restrictions they're facing because the Government didn't go hard or early enough," he said.
