Lockdowns costing $240m a week, ASB estimates

Monday, 1 March 2021

Motorists travelling north to Auckland faced lengthy delays to reach the Covid-19 checkpoint on the Waikato Expressway after the city was placed into level 3 restrictions.

The Alert Level 3 lockdown in Auckland and the level 2 alert in the rest of the country will cost the country about $240 million a week, according to a “back of the envelope” calculation by ASB.

The bank’s chief economist Nick Tuffley admitted its estimate could be “well off the mark” but said it highlighted the value in spending money “to ensure that the right people isolate appropriately and they are supported while they make a sacrifice for the wider community”.

The calculation did not account for any “catch-up activity after lockdown conditions get loosened”, he said.

ASB said the lockdown was likely to have a proportionately larger impact than the one in mid-February, as it already includes parts of two weekends.

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“It is the services sector – particularly hospitality and events – that bears the brunt of the impact, even if contactless sales do enable some venues to open during people’s leisure time,” the bank said.

Shops were closed and few people were out and about in Papatoetoe town centre after Auckland went back into Covid level 3 lockdown.

BNZ said it was “a waste of time” trying to put numbers on the economic impact of the current restrictions because the range of scenarios was so wide.

“But we can say with some certainty that the impact is negative. In particular, for some businesses this might be the straw that breaks the camel’s back,” it said.

The bank said “a realistic best-case scenario” was that Auckland would move down to level 2 next weekend and the remainder of the country into level 1.

“A worst-case scenario doesn’t bear pondering,” the bank said.

Westpac said the higher alert levels would impact many businesses, but forecast they “wouldn’t have much impact on the overall economic outlook”.

“Many individual businesses will find this tough, but the big lesson from the economic data last year was that levels 3 and 2 had only a small impact on overall economic activity,” it said.

“The reason is that a good portion of the economic activity ‘lost’ during a lockdown gets made up for soon afterward.”

Westpac said the alerts were unlikely to change its economic forecasts “unless the alert level is raised further or it extends for much longer”.

Business NZ and the Council of Trade Unions (CTU) issued a rare joint statement on Monday calling on “workplaces” to step up in their response to the outbreak.

BusinessNZ chief executive Kirk Hope said it was essential anyone who had been identified as a Covid contact stayed away from work and isolated.

CTU president Richard Wagstaff said there should be no disadvantage or penalty of any kind for shielding others from Covid-19.

“We need to work together so that isolation is not only the right thing to do, but also the easy thing to do,” he said.

The Government currently pays a $350 Covid-19 Short-Term Absence Payment to businesses to help them pay any staff member who cannot work from home while they wait for a Covid-19 test result.

Employers can claim $1176.60 for each worker who is required to self-isolate, to help pay their wages during two weeks of isolation.