Grant Robertson confident 'very long extended lockdown' won't be needed

Friday, 20 August 2021

There’s plenty of evidence of the damaging psychological effects of long periods of lcokdown, writes Janet Wilson.

Finance Minister Grant Robertson says the Government is optimistic that the Delta lockdown will not last as long as the lockdown that the country experienced when Covid first hit last year.

“We're very confident and optimistic we can get ourselves through this period we're in now without the need to be in a very long extended lockdown like we had the first time around.

“We are better at this. The level 4 approach should be able to contain it,” he said.

Robertson made the upbeat comments during a webinar organised by business groups including BusinessNZ and Business Central, after he was asked about the prospects of resurrecting further business support schemes, such as the Business Finance Guarantee Scheme.

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In the “unlikely event that it did go on a lot further then of course we would come back to some of the earlier programmes that we had in place to support businesses”, he said.

For now, the Government is relying on the wage subsidy scheme to provide much of the heavy lifting supporting businesses.

Robertson said 47,341 applications for wage subsidies had been received from businesses to date with about 28,000 of them approved so far.

He also had words of reassurance for firms rattled by the spread of Delta to the capital.

Finance Minister Grant Robertson says the Government is confident and optimistic this lockdown won’t be as long as New Zealand’s first.

The Ministry of Health confirmed on Friday that three cases had been diagnosed in Wellington, that are believed to have resulted from people attending a church service in Auckland on Sunday that a carrier had attended.

“We're optimistic that they only had a very brief time in the community before we went into lockdown but obviously we now need to be careful about that,” Robertson said.

“It is regrettable for all us that we are in level 4. No-one wants to be here, but as we've seen the evolution of the Delta variant around the world, I'm sure it's not a massive surprise to people.”

Some Wellington businesses were bracing for a lockdown lasting weeks in the wake of the spread of the Delta variant to the capital, Wellington Chamber of Commerce chief executive Simon Arcus said.

“There is a ‘where there is smoke, there is fire’ feeling among businesses.”

But others were not yet in that head-space and were more optimistic, he said.

Arcus made those comments before the Government announced a short extension to the level 4 lockdown until Tuesday at midnight.

But he said afterwards that they still stood.

“There is still a ‘wait and see’ feel about the announcement next week.”

Ahead of the announcement, “rumours had been starting to spiral” of the lockdown immediately being carried forward to early September, he said.

“People are pleased that it is being ‘staged’,” he said.

Prior to the word of Wellington cases, businesses had been expecting they could get through a three or five-day lockdown with relative ease, Arcus said.

But now the mood was one of “heightened anxiety”.

“The other thing that is coming through a bit is a strong desire for clarity from the Government over what the plan looks like for essential services, essential food delivery and the wage subsidy.

“We have definitely got a sense with the Wellington cases that it has ‘come home’,” he said.

People wanting a Covid-19 test at Christchurch's Pages Rd site face a wait of up to five hours.

Arcus believed it was possible that if an extended lockdown developed, the Government might choose to operate at different alert levels in different parts of the country.

“You just don’t know.”

Infometrics economist Brad Olsen said the spread of the Delta outbreak to Wellington was not a game changer in itself from an economic perspective.

The virus’ spread and the corresponding risk of longer lockdowns was probably not unexpected, he said.

“As we were at alert level 4 for 4½ weeks with ‘Alpha’, we were going to be incredibly lucky to have been at alert level 4 for just three days once we had a possible Delta outbreak.”

The Wellington regional economy accounts for about 14 per cent of the country’s gross domestic product, while the Auckland regional economy accounts for about 38 per cent.

Both regions now appear to face the possibility of a significant period in level 4, which the Treasury estimates reduces economic activity by between 25 and 30 per cent nationally.

But a relatively high proportion of Wellington workers are employed in the public service, the information technology industry, and other services sectors that are better suited to working from home.

Infometrics estimates that about 56 per cent of Wellington workers are able to work during level 4, either from home or because they are employed in “essential services”.

That compares to the national average of 53 per cent, and 51 per cent of workers in Auckland.

Wellington Chamber of Commerce chief executive Simon Arcus says the mood is one of heightened anxiety.

But Olsen noted there were large sectors within the big urban economies, such as hospitality and construction where that was not possible.

“Outside of lockdown we have seen some of the strongest economic activity in the provincial economy, with urban centres generally lagging behind.

“We'd expect that trend to continue during alert level 4,” he said.

There was some surprise overseas that New Zealand had gone for a hard lockdown in response to what was then just one case, he said.

“But we know, time and time again, that the best economic response and the best health response is to ‘go hard, go early’ and that remains the case,” he said.

The Delta outbreak had made people think again about “where we go to next”, he said.

New Zealand was on a strong upward economic path and at present Infometrics saw this outbreak as a “set back”, but with an expectation the economy would bounce back on the other side, Olsen said.

“We are also seeing and hearing to a degree that businesses across New Zealand have got better at operating at higher alert-level restrictions.

“At level 4 there is no wriggle room at all. At level 3 there is a hope businesses are better equipped with contactless delivery options and similar.”

The Wellington Business Chamber had advocated earlier in the year for initiatives such as the trans-Tasman travel bubble.

Arcus did not believe the calls business groups made for a wider opening of the border were a mistake in retrospect.

There were “broader issues” such as the speed of the vaccination programme – “our relative performance compared to the rest of the world”, he said.

“Secondly, the border programme was always about opening and closing as risks presented themselves,” he said.

“I think we have done an extraordinary job keeping Delta out. The question is ‘can we forever’?”