Economic Recovery

NZ Inc should prepare for a long lockdown

Tourism and education businesses hoping for the borders to reopen to visitors, students and guest workers within months should challenge their assumptions, warns Bernard Hickey

There were just six minutes of sunshine in Wellington in all of last week, and it certainly felt that way for New Zealand Inc.

A long winter is coming for those parts of the economy that depend on tourists, international students and a plentiful supply of cheap guest workers. The events of recent days both here and overseas have effectively dashed any vague hopes or pleadings about a return to some sort of normality any time this year.

International educators, the tourism sector and the Opposition had been seriously talking in recent weeks about both a trans-Tasman travel bubble and mass quarantining of international students within months. It was an understandable act of desperation from a set of managers and owners who cannot afford their businesses to be idle until the next academic year or summer. 

But their dreams are now dashed and they, along with voters, policymakers and bankers, should revisit their assumptions and start assuming and planning for a re-opening only once large swathes of the world are vaccinated. That could be years, rather than months. 

Our politicians and media have also understandably focused on the breaches at the border. They have only served to reinforce just how hard it is to open back up again safely when a pandemic is raging beyond our borders and the science of this virus does not respect the way our globalised society, politics and businesses operate. The Government has scrambled to shore up the arrangements for quarantining arrivals, which shows how hard it is to humanely and safely isolate people in buildings designed for leisure and making social connections -- not the other way around.  

But the real action is overseas and none of those things are within the Government's or New Zealand Inc's control.

Second waves are now crashing through America and the pandemic is catching fire in India. Australia's internal borders are locked down and Victoria has reversed some of its opening up. The Australian government is now talking about 2021 for re-opening its borders. China is desperately trying to contain second waves bouncing back in from Europe and elsewhere. Europe and Britain have barely begun to reopen their economies. Even Germany, which appeared to have crushed its outbreak, is now seeing rising infection rates and is considering halting or reversing its opening up.

Essentially, only very limited numbers of tourists, students and guest workers will be allowed in until there is either some foolproof and very fast test available at international airports before someone gets on a plane, or everyone is vaccinated. 

The Government acknowledged this week it's trying to build extra quarantine capacity at a rate of 4 percent per fortnight, but is being overwhelmed and surprised by the number of New Zealand residents wanting to come home, who are at the front of the queue ahead of visitors, students and guest workers. It is also understandable that New Zealanders in Australia, Britain, India, Europe, China and America are desperate to return to a Covid-free country that has at least some chance of social and economic stability amid the waves of the infection crashing around the global economy.

Anyone trying to calculate how many New Zealanders could be at the front of that queue and how much space might be available for the 'rest' should know there's around one million people living overseas, including at least half a million in Australia, who have the right to simply turn up and expect re-entry. 

The new 'fix-it' Minister Megan Woods told me this week less than 5 percent of the places will be available for non-residents. That means fewer than a couple of dozen people a day. That is a far cry from the 250,000 students and guest workers arriving each year pre-Covid-19, and the five million visitors a year forecast within a couple of years. 

Any business model depending on those numbers is dead until either a very fast and very reliable test is available, or the parts of the world that provide the bulk of our tourists and students and guest workers are vaccinated. That means China, India and the Philippines, which have a combined population of almost three billion.

Demands from universities, the Opposition leader, the Deputy Prime Minister and the tourism industry to quickly reopen our borders are simply unrealistic, unless New Zealand takes a collective decision to sacrifice its nanas for the sake of rescuing a less-than-10 percent chunk of the economy. 

It's not about politics or economics. It's simple biology.

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