Lives and livelihoods

The cost of the pandemic

In its year sweeping the planet, Covid-19 took many lives, livelihoods and security. Some businesses which shuttered during lockdown never reopened, leaving empty storefronts lining once busy streets.

For two dozen families, the cost was much greater – left mourning the deaths of the 25 New Zealanders who have succumbed to Covid-19 to date.

On March 29, three days after the country went into level 4 lockdown, Anne Guenole died at Grey Base Hospital in Greymouth - the first person in New Zealand to die of the virus.

The 74-year-old had initially been diagnosed with influenza that was complicated by an underlying health condition, but eventually tested positive for Covid-19.

Twenty-one others died of Covid-19 in the initial outbreak.

The identities of those who died of Covid-19 were not all made public, but among them were Chrisanthos (Christo) Tzanoudakis, 87, who died after attending his son Manoli’s wedding in Bluff, which was at the centre of one of the country’s largest clusters.

In April, 62-year-old Jocelyn Finlayson from Invercargill died of coronavirus complications.

On May 2, George Hollings, a “real Kiwi bloke” in his 80s died of Covid-19, and on May 28, 96-year-old Eileen Margaret Hunter, a resident at CHT St Margaret’s Rest Home – at the centre of another cluster – also died of the virus.

On September 4, three months after the last reported death, Alan Te Hiko died in Middlemore Hospital’s intensive care unit, when his life support was turned off.

Almost two weeks later, on September 15, his younger brother Nigel Te Hiko died in similar circumstances – both victims of the virus.

The one thing we know about the 25 New Zealanders killed by Covid-19 is that they are overwhelmingly older – consistent with the risk groups identified by the World Health Organisation (WHO).

In New Zealand, young adults have been more likely to be infected, but it was people aged over 60 who died as a result of the virus.

All who died were over 50 and 23 of the 25 were aged over 60, even though this age group amounted to less than a third of all infections.

The death toll would have been much higher if the early and significant action New Zealand opted for had not been taken.

New Zealand was "literally a week away from not being able to contain" coronavirus when the decision was made to plunge into a nationwide lockdown, Royal NZ College of General Practitioners' medical director Dr Bryan Betty said in June.

At the time, Betty said New Zealand was staring down the barrel of a "potential health system meltdown" similar to those seen in Italy, Spain, the UK and the US.

With the spectre seen in parts of Europe and Asia looming large, the healthcare system braced for the worst.

In February, before a case had been confirmed, hospitals across the country were readying for the arrival of the virus.

The country’s pandemic plan was put in place. Stocktakes of isolation rooms, masks and other PPE, including aprons, gloves and eye protection were undertaken, and authorities reassured the public they were ready.

Just days before level 4 lockdown, doctors delivered a petition warning the Government had a small window of time to prevent New Zealand facing a similar fate.

"It's not hyperbolic to say we have only hours to prevent the inevitable horrors we see in countries that waited too long,” Dr Kelvin Ward, an urgent care physician who handed the first lot of signatures to the Director General of Health Dr Ashley Bloomfield, said at the time.

"At the rate we are going, we will look like Italy and the US - running out of medical supplies, turning patients away, Kiwis dying needlessly, because we are over capacity," Ward said.

Meanwhile, District Health Boards began postponing elective surgery procedures. Visitation was greatly restricted, and expectant mums were allowed only one support person.

In April, Auckland’s North Shore Hospital set aside an entire building for coronavirus patients – temporarily closing its Elective Surgery Centre to establish a 51-bed ward and second ICU if the crisis worsened.

"We must prepare for all potential possibilities. We hope that those preparations will not need to be fully activated, however, we are prepared," Waitematā DHB chief executive Dr Dale Bramley said at the time.

New Zealand avoided the worst case scenario, but not without repercussions.

Cancer diagnoses took a hit and waiting lists grew, leaving people languishing in pain or waiting to hear their fates. Screening programmes paused, leading to a reduction in the number of cancers diagnosed, but treatment - including surgery and radiation - continued as usual for almost all patients.

During level 4, the Cancer Society warned overseas data showed a three-month delay to cancer diagnoses could potentially lead to the deaths of 400 New Zealanders.

But as New Zealand closed in on eliminating the virus, the health system resumed full activity.

By September, the number of people diagnosed with cancer mirrored that of last year, indicating the backlog had been worked through, Te Aho o Te Kahu (the Cancer Control Agency) says.

It is in stark contrast to the UK, where Government “incompetence” has had a “devastating” impact on cancer screening, diagnosis, treatment and care.

An article published in The Lancet in October stated an estimated three million people in the UK missed cancer screenings between April and August, and suspected cancer referrals were down 350,000 compared with the same period in 2019.

The same article highlighted New Zealand’s continuation of cancer care during lockdown as an example that such a task was “not an impossible ask”.

It has not all been smooth sailing: the nurses’ union has criticised PPE issues at the border, stating staff have not had consistent access to N95 masks or fit-tests.

PPE issues were also at the centre of an investigation into how seven nurses at Auckland’s Waitākere Hospital contracted Covid-19, including one who ended up in the High Dependency Unit.

It is almost universally accepted that New Zealand’s strong health response spared the country a worse fate, saving countless lives in the process. But this also came at an economic cost.

Few countries locked down as hard as New Zealand – restrictions were matched only by Israel and India, according to the Oxford Stringency Index – meaning economic activity took a very sharp nose-dive.

The first lockdown was “brutal”, economist Shamubeel Eaqub says.

Nobody knew what they were doing, how to operate businesses in those circumstances, or how long it would last.

The “deep contraction” of the economy in April and May saw the number of New Zealanders on the unemployment benefit increase by about 60,000, Eaqub says.

The country’s tourism and hospitality sectors were hit hard, with popular tourist destinations such as Queenstown and the West Coast acutely feeling the pinch.

Locking out deep-pocketed foreign visitors left a void in the market, even as Kiwis flocked to explore our own backyard.

Tourism spending in the year to July 31 declined everywhere bar the Wairarapa, when split into regional tourism operator regions. Fiordland, the West Coast, Queenstown and Dunedin were hardest hit, with spending down by between 17 and 22 per cent.

Card spending on travel agency and tour arrangement services fell 97 per cent ($144 million) in August 2020, when Auckland went back into lockdown, compared with August 2019.

Regional tourism operators drastically changed offerings and pricing to entice local customers and keep business booming: Campervan hire was slashed to $29 a day, and Milford Sound scenic flights and stays at the Grand Chateau Tongariro were available at a fraction of the usual cost.

Kaikōura Kayaks was one such business: 95 per cent reliant on international tourism.

Owner Matt Foy says they were initially really concerned about how they would make it through. They “had to think like Kiwis”, discounting their product and changing up their family offerings.

Foy says while their change of plans “definitely helped”, and the school holidays saw Kiwis travel in large numbers, it’s still “very tough out there”.

“No one is anywhere near the level they were,” he says.

Business was down about 75 per cent in November compared with the same time last year, but Foy is looking forward to being “slammed” over the 4-8 weeks of the summer holiday period.

Foy worries the summer spike will be short-lived.

The beacon of promise still lies in the longed-for Trans-Tasman bubble, which would make a “ten-fold” difference.

“It really will lift the whole tourism game here, and lift everyone’s spirits [in the sector].”

Foy says the pandemic also allowed for reflection, and highlighted how important tourism is to New Zealand - something he believes will look a bit different when this is all over.

While we made sourdough and baked banana bread during lockdown, cafes, bars and restaurants suffered.

The sector saw the writing on the wall early on, warning potentially thousands of jobs would be lost. The hurt continued when Auckland went back into lockdown.

Big names in hospitality relied heavily on the wage subsidy, such as Auckland’s Hipgroup (owner of the Amano, The Store and Ortolana restaurants), which received $1.3m for 206 employees in the first tranche, and a further $741,000 during the extension; and the Good Group (White + Wongs, Botswana Butchery, Harbourside), which received more than half a million dollars during the initial wage subsidy.

Not even McDonald’s was spared the pain, receiving more than $6.9 million for 1185 employees.

But while the economic pain has been very real for some, it’s barely touched others.

Job losses peaked about August, and have been coming down “very gently” since, says Eaqub.

The country is in for a “bizarre recession,” he says, marked by “unevenness”. It will be “very different to what we’ve experienced” in prior downturns.

In a normal recession, you would expect most of the economy to go up and down together. Instead, it is fragmented: the impacts differ by location, sector and occupation.

While job losses have been significant, other measures such as hours worked, retail spending, and job ads show things have largely recovered to pre-Covid-19 levels, Eaqub says.

While locking down as hard we did was “deeply painful”, New Zealand rebounded much quicker because we were able to suppress the virus, he says.

“We were expecting the worst. But New Zealand has gone through this entire thing much better than other countries have, and better than others expected us to.”

Part of our success in that regard was due to the wage subsidy, he says.

In order for our health response to work, people needed to stay home. The Government’s wage subsidy scheme enabled that, supporting very high rates of lockdown compliance.

On March 25, just hours before the country went into lockdown, Parliament passed a law allowing the Government to increase the amount of money it spent by $52 billion - on top of $12.1b it had already committed to the Economic Response Package, including the first block of what would become the wage subsidy.

“[T]he scale of the spending is the price that we have to pay,” Finance Minister Grant Robertson said during a reading of the bill.

“It is the price of making sure our public health system can operate and support New Zealanders. It is the price of people keeping their jobs and keeping their homes. It is the price of cushioning the blow to businesses and of keeping them afloat, and it is the price of making sure that the core of an economy exists that we can build on to recover in the way that New Zealanders want us to do.”

As of September, when the wage subsidy scheme came to an end, more than $13.9 billionhad been paid out to businesses since mid-March, in response to 756,649 applications. The majority of New Zealand jobs - 62 per cent - were supported by the subsidy at some point.

It provided $585 per week for full-time workers of businesses that initially had suffered a revenue drop of 30 per cent due to Covid-19, but later was restricted to those who had lost 40 per cent in revenue.

Some of those who took the wage subsidy survived the fallout, while others failed.

A Stuff investigation in June found at least 73 businesses - who received almost $8m in wage subsidy payments across the board - had gone into receivership or liquidation.

It was unprecedented spending – at no time in recent history has so much public money been made available for spending in such a short period.

It was also not without controversy. The ‘high-trust’ scheme was criticised for being too broad in its scope and easily abused by businesses who did not need a handout.

Some big businesses raised eyebrows by taking the millions in the wage subsidy and then posting an increase in profits.

Harvey Norman received $17.7m in the wage subsidy, and reported a year-on-year increase in profits of almost 20 per cent and a lift in New Zealand sales of more than 28 per cent.

Briscoe Group reported a barely-dented $27.9m profit this year and paid out a 9-cent per share dividend to shareholders, up from last year, having taken $11m in the wage subsidy across its businesses. In October, it repaid the subsidy, following calls for it to face a “Covid-19 windfall tax”.

Approaches to stimulus differed widely across the world.

In April, the US Government began sending one-off Covid-19 stimulus cheques in the mail of up to $1200 for an individual and $2400 per married couple, as well as $500 for children under 17.

Approximately 159 million payments were made by the IRS, a move praised by Eaqub.

The UK’s ‘Eat Out to Help Out’ scheme saw diners offered a 50 per cent subsidy as an incentive to support stricken local restaurants and pubs post-lockdown. However, the half-a-billion-pound scheme may have also fuelled a spike in case numbers.

Covid-19 exacerbated well-entrenched issues in New Zealand – particularly for our poorer communities.

Capital markets all around the world - most notably in New Zealand, the housing market - boomed.

In March, before the lockdown, the Reserve Bank lowered the official cash rate (OCR) to a record-low 0.25 per cent for at least 12 months. Banks could offer historically low interest rates on mortgages, emboldening home buyers across the country.