COVID-19 document dump reveals $450 million cost of staying at alert level 2 a week longer

Staying at COVID-19 alert level 2 an extra week would have cost the economy $450 million in lost output - a figure almost equal to the Government's budget for managed isolation facilities until the end of this year. 

A dumping of documents on Friday related to the Government's COVID-19 response has revealed that Treasury estimated an extra week at alert level 2 would have set New Zealand back almost half-a-billion-dollars. 

"A rough estimate from the Treasury is that an extra week at alert level 2 compared with alert level 1 amounts to around $450m in lost output," a paper by the Department of the Prime Minister and Cabinet says. 

That figure is almost equal to the Government's $479 million budget set aside until the end of 2020 to pay for its state-funded managed isolation and quarantine facilities at the border for returnees. 

The alert level 1 framework came into force on June 9 meaning New Zealanders no longer had to work from home, schools could operate normally again, and crowd sizes no longer had limits - but the border remained closed to non-returning Kiwis and residents. 

Director-General of Health Ashley Bloomfield wanted to keep New Zealand at level 2 longer over fear of COVID-19 spreading again - but the documents reveal he changed his mind after considering the social and economic impacts. 

"I previously recommended that a move to level 1 should not happen until at least 28 days after fully implementing level 2," Dr Bloomfield said in a Ministry of Health review of factors for moving to level 1. 

"However, given the time with zero new cases, and the fact that there is only one active case remaining, it is prudent to revisit that recommendation. Level 2 controls incur significant social and economic costs and we should therefore move as soon as it is safe to do so."

Director-General of Health Ashley Bloomfield was cautious about moving New Zealand to alert level 1 too soon.
Director-General of Health Ashley Bloomfield was cautious about moving New Zealand to alert level 1 too soon. Photo credit: Getty

A document from the Department of the Prime Minister and Cabinet acknowledged Dr Bloomfield's advice to stay at level 2 longer but said new data had shown the risk of community transmission was low. 

"The Director-General's previous advice was that a move to level 1 should not be considered until at least Friday June 26, 28 days after fully implementing level 2 controls. However, the data now available shows that our situation is more positive than previously thought."

The economic impact of the coronavirus lockdown and alert levels has weighed heavy on New Zealanders, with around 200,000 now on unemployment benefits. 

Around 18,600 people were receiving the Government's COVID-19 Income Relief Payment (CIRP) as of July 17. The total number of people receiving income support - either CIRP or jobseeker - was 211,000, up 2300 on the week prior.

But New Zealand, compared to allies such as the US, UK and Australia, is enjoying much more economic freedom because it's been 90 days since the last case of COVID-19 was acquired locally from an unknown source.

The US currently has more than 2.2 million active cases of the virus, followed by Brazil with more than 600,000 and India with more than 500,000. The Australian state of Victoria is in lockdown and recorded more than 700 cases on Thursday. 

Treasury says spending has held up "better than expected" in New Zealand thanks to support measures including the wage subsidy scheme, the small business cash flow scheme, and mortgage repayment holidays

Prime Minister Jacinda Ardern confirmed the wage subsidy scheme will end in September, but Finance Minister Grant Robertson says he would bring it back if absolutely necessary

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