Longer lockdowns, $30b wage subsidy, and food rationing in Covid worst-case scenario
4 March, 2021
Longer lockdowns, a $30 billion six-month wage subsidy, rationing food, closing supermarkets and pharmacies, and forcing companies to stop exporting goods overseas were all considered as part of the Government’s “worst-case scenario” Covid response, released to Stuff under the Official Information Act and revealed here for the first time.
On April 7, 2020, New Zealand reached a milestone. With 54 new cases and 65 recoveries, the number of recovered cases exceeded the number of new cases for the first time since lockdown began
Prime Minister Jacinda Ardern said the result suggested the lockdown was working. We now know she was right.
But behind the scenes, the Government was laying out the groundwork for a strategy that would kick into action if Ardern was wrong and Covid was of control.
That paper landed on ministers’ (virtual) desks on the same day, April 7.
Called the “All-of-Government paper on Managed Economy”, it laid out what it called the “worst-case scenario”.
It foresaw lockdowns of various rigour and length (a separate paper considered six months of level 4 restrictions and another six at level 3), and had the Government picking up a greater and greater share of the economy as the private sector slowly atrophied.
The worst-case scenario
This worst-case scenario envisaged disruption to supply chains, meaning essential businesses wouldn’t have enough goods to sell.
“New Zealand’s inclusion in international shipping routes may be reduced if our imports of non-essential goods are limited and our exports are significantly reduced,” the paper warned.
Despite the climbing unemployment rate then envisaged, the Government also foresaw workforce shortages for essential businesses, in some cases because of “people refusing to work due to concerns about health risks”.
Worse still, the Government feared “level 4 proving insufficient”, and that this could require the use of “a more extreme form of lockdown, for example a narrower definition of ‘essential’, stronger restrictions on movement, and deliveries only permitted for essential supplies”.
And what to do about it
With international trade routes deteriorating, the Government was worried that New Zealand would be “unlikely to be able to source the normal range of food, beverage and other products, and temporary shortages will become more likely”.
The Government looked at rationing the amount of essential goods New Zealanders could access, and blocking the export of some essential products.
“In some critical areas, New Zealand may want or need to (rapidly) become more self-sufficient, to the extent practicable,” the paper said.
The Government proposed underwriting manufacturers as they sought to repurpose factories to make things such as PPE, and expediting the consents of new plants that would manufacture things onshore.
Rationing could be brought in to ensure that the limited resources left in the country were doled out fairly, although people would still have to pay for goods.
“A worst-case scenario might require the Government to consider some combination of rationing and price control to ensure as much as possible that everyone in New Zealand has access to sufficient essential goods and services,” the paper said, although it said the probability of rationing was “low”.
Another reason for rationing could be because a more extreme form of lockdown shut supermarkets, forcing some sort of delivery system to be set up. To prevent price gouging, these deliveries would be made at prices dictated by the Government.
“Formal food rationing could be considered in the future because of sustained shortage of staples or because of a more extreme form of lockdown, most likely at a sub-regional level.
“This could be based on a rapid scaling-up of existing arrangements, for example online ordering, physical delivery and administered prices.
“Alternative arrangements would have to be found for those not online. Consumers would pay for their rations, with existing income support mechanisms helping those otherwise unable to meet the cost,” the paper said.
Getting people to work
Officials were also concerned that there might not be enough people to staff the public health response. Some staff would be sick, while others would have to take time off for their families.
But the Government was also concerned that fears around the pandemic would be so great that some people would refuse to go to work. At the time, its modelling feared tens of thousands of New Zealanders would die from causes related to Covid-19.
The Government came up with a few ideas to ensure the health response was staffed. One was targeted “incentives” to work in critical roles, probably involving increased pay.
Officials considered “targeted additional incentives to work in critical public sector roles, if necessary and feasible (which would depend on prospects for eliciting increased supply rather than driving up cost)”.
Another option was “relaxing occupational regulation to enable less qualified people to perform essential tasks (and accepting the associated risks)”.
This could mean people without appropriate registration performing essential tasks.
Officials also considered banning the export of some essentials and redirecting them to New Zealanders.
“There is potential for conflict between business interest and the public good if, for example, a New Zealand-based business decides to export medical products or primary produce that also are in demand locally,” the paper said.
There were concerns that this would risk retaliation from other countries, so it was decided against.
“Selectively banning export of ‘essentials’ would be difficult to do and would risk retaliatory action by trading partners,” officials said.