Political Distraction

If the Covid-19 pandemic had happened in a non-election year, would this or any Government’s response have been different?
At the best of times, election campaigning can be a distraction for politicians. But supposing the Government’s first decision early this year after it learned of the approaching pandemic was to postpone the election by perhaps six months, might leadership decisions have been more focused?
After all, it is hard to see how a fragmented parliament spending precious energy on politics as Kiwis struggle to recover from a major crisis is the best situation for New Zealand.
Without an election in the back of their minds, Ministers would be solely focused on protecting the country from Covid-19. A postponed election may even encourage – and make it possible for – members of the Opposition parties to pitch in and help with the recovery effort without anyone concerned about others making political gains during that time.
Such a process has existed before. For example, prior to the Second World War, the United Kingdom maintained an all-party coalition War Cabinet under Sir Winston Churchill. The Brits knew normal politicking was a distraction that only drew precious mental energy away from the greater national effort.
So, assuming that political distraction is partly to blame for some recent scandals and mishandling of border quarantine, had New Zealand adopted a similar War Cabinet model it could have avoided much of the political drama. Then again, other scandals might have replaced these stories. In other words, it is hard to tell if the election distraction is part of the problem or not.
Yet a mechanism to set up a War Cabinet in times of national crisis is worth considering for the future. Such a mechanism must include all MPs with the best and most relevant leadership experience across parliament and clearly outline a sunset clause when the election process can be resumed.
After all, an effective government must be able to deal with emergency circumstances with as few distractions as possible. In Select Committees, parties already cooperate on a broad consensus basis when debating new legislation. Temporarily connecting them as a solid front during a crisis would not be too much of a precedent. 
The last few months have proven that a distracted Government, like a tired driver, makes mistakes which can put the country at greater risk. Should Kiwis expect that elections are to be delayed by default in times of natural disasters? Perhaps.  

Research Note: Lessons from Abroad: East Asia’s Covid-19 Containment Model

Leonard Hong with assistance from Joel Hernandez

Since the first cases of the Covid-19 virus emerged in the Chinese province of Wuhan, several East Asian countries including Singapore, South Korea and Taiwan have successfully ‘flattened the curve’ of infection rates. The three countries used common public policies in the first 50 days since each registered their 100th case.

This report summaries how the three countries prepared for a pandemic to create the best possible position for dealing with Covid-19. It offers lessons for New Zealand’s efforts to set up efficient epidemiological controls and tracking efforts to help fight any future pandemic.

Research Note: Lessons from Abroad: Taiwan’s Covid-19 Containment Model

Leonard Hong with assistance from Joel Hernandez

Alongside South Korea, Taiwan is one of the few countries to “flatten the curve” of Covid-19 without a national lockdown due to its prior experience with the SARS epidemic of 2003. New Zealand’s pathway is similar to Taiwan’s and there are lessons to be learned as New Zealand moves into Alert Level 2. Last week, Deputy Prime Minister Winston Peters suggested creating “international bubbles” for countries with Covid-19 success to introduce new trade connections and travel links. His reasoning is that direct inbound travel to New Zealand from Taiwan cannot be riskier than travel within New Zealand at this point.

As of May 11, Taiwan is 53 days into its Covid-19 response compared to New Zealand’s 49 days (measured by the date of the first 100 cases). Judging by cumulative cases per capita (see figures 1 and 2), New Zealand has 24.8 cases per 100,000 while Taiwan only has 1.9 cases per 100,000. 

In early January, when the first outbreak began in Wuhan, Taiwanese Professor Dr Jason Wang from Stanford University predicted Taiwan would have the highest number of cases outside mainland China.1 As of May 10, Taiwan only has 73 active cases and 366 recoveries from a total of 438 confirmed cases.2 It also has a low case fatality rate (CFR) of 1.3% or 1.36% deaths. Italy, Spain, the US and New Zealand have CFRs of 13.9%, 10.1%, 5.9% and 1.4%, respectively.

The Taiwanese Government dealt with the initial rise in cases while maintaining an open economy by using optimal border controls, strict quarantine requirements, targeted testing measures, an advanced national healthcare system, effective contact tracing system, maskwearing public policy, tight enforcement of new Covid-19 rules and general government competence.

This report outlines eleven key examples of Taiwan’s pandemic approach.

Why Taiwan is winning against Covid-19

Taiwan is one of the few countries to “flatten the curve” while maintaining an open domestic economy. Earlier this week, Taiwan only had 104 active cases of Covid-19. Even more impressive, given its geographic position, is the state only had 27 new cases on March 20.

The key to its success was early action, far earlier than many other countries including New Zealand. While most only reacted to Covid-19 after the first confirmed case (between January and February), Taiwan started its epidemic response on the last day of 2019.

Before the first confirmed case outside China was reported, Taiwan’s Centre for Disease Control immediately set up border restrictions for arrivals from the province of Wuhan. This was followed by a suite of further restrictions on both incoming and outgoing travel and strict mandatory quarantine.

Taiwan’s response was not only quick, it was highly efficient and effective. It had prepared exceptional epidemiological and health infrastructure as a key lesson from the 2003 SARS epidemic. Screening tools such as temperature monitoring, track and trace technology and protective equipment was already in place for the next pandemic.

Moreover, to ensure its healthcare system did not collapse, Taiwan mobilised greater hospital ICU capacity with 20,000 isolation rooms combined with 14,000 ventilators. With Taiwan’s population of 23.8 million, this would be the equivalent in New Zealand of 3400 isolation rooms and 2400 ventilators. Presently, New Zealand only has 520 ventilators.

It is no surprise then that Bloomberg’s 2018 Healthcare Efficiency Index, ranked Taiwan’s healthcare system in the top 10. New Zealand is just behind at 15.

In contrast to South Korea, Taiwan did not implement high-volume testing. Instead it concentrated on efficient track and tracing that utilised a nationally integrated database between the Immigration Agency and the National Health Insurance Administration in combination with GPS tracking on smartphones. Taiwan’s CDC has tracked 2761 close contacts related to Covid-19.

As a result of Taiwan’s response to Covid-19 the IMF estimates its economy will contract by 4.0% over 2020. This compares with contractions of 5.9% for the US, 7.2% for New Zealand and 7.0% for Germany.

While New Zealand appears to have Covid-19 under control, Taiwan provides lessons on what to do to prepare for the next pandemic. Taiwan was able to avoid lockdown and maintain an open domestic economy because it acted quickly and effectively because it learned from previous crises.

New Zealand must do the same to ensure the next pandemic does not catch the system off guard again.

Lessons from South Korea: Looking 40 days into the future

South Korea has quickly become a model country for effectively containing Covid-19 without needing a national lockdown.

Given that the liberal democracy of South Korea is 40 days ahead of New Zealand on the epidemiological curve, it offers important lessons on how to balance an increase of economic activity with continued efforts towards virus elimination as New Zealand leaves Alert Level 4.

Despite the initial outbreak of the Shincheonji cluster in Daegu, South Korea has successfully ‘flattened the curve’ in its second phase.

Its robust ‘all-of-government’ attitude and deep coordination between the private and public sectors was boosted significantly by its experience with the MERS epidemic. That virus in 2015 taught the South Korean government it needed better medical infrastructure to deal with future pandemics.

This time around, South Korea implemented early and effective contact tracing made possible by its advanced digital infrastructure. Taking only 10 minutes per person to complete the test, South Korea’s contact tracing is now among the fastest in the world.

And it has conducted a lot of tests. With a combination of various drive-through and walk-through testing clinics, managed by its centralised public health care system, the East Asian nation has the capacity to do 20,000 tests each day, and has already conducted about 580,000.

Yet it still managed to facilitate a relatively open economy. It did this by sending teams to fumigate and disinfect public spaces while the government encouraged the use of face masks. Both measures have been widely lauded as key in preventing rampant community transmission.

The Korean governments early response to the outbreak, made possible by its own diligent lessons from previous pandemics, meant the country largely avoided a public health and an economic catastrophe.

President Moon Jae-in’s administration proved to be transparent with excellent and open communication to citizens which helped solidify great public cooperation and compliance to get the job done.

As New Zealand opens its economy a bit more next week, possibly down to Alert Level 3, it can learn from South Korea’s success. The Government must ensure it has rapid contract tracing and continue with high-volume testing while Kiwis continue to carefully comply with lockdown rules.

If South Korea is a model for what New Zealand can expect 40 days from now, then the Government should pay attention to avoid exacerbating the public health and economic catastrophe.

Research Note: Lessons from Abroad: South Korea’s Covid-19 Containment Model

Leonard Hong with assistance from Joel Hernandez

As the world struggles to contain Covid-19, many countries are at different stages of containment and mitigation since registering their first 100 cases. Some, like South Korea, are more than a month further ahead compared with New Zealand and could offer a good example of what might be expected as New Zealand transitions out of Alert Level 4 lockdown.

As of April 20, South Korea is 91 days into its Covid-19 response compared to New Zealand’s 52 days. New Zealand appears to be on the same trajectory as South Korea measured by total cumulative cases and cumulative cases per capita. New Zealand has 29 cases per 100,000 people while South Korea has 20 cases per 100,000, showing that both are flattening their epidemiological curves. 

Early in the pandemic, Covid-19 cases in South Korea sharply increased, peaking at 909 new cases after 41 days. But as of April 20, South Korea only has 2385 active cases and 8042 recoveries from a total of 10,674 confirmed cases. It also has a low case fatality rate (CFR) of 0.2% or 236 deaths. Italy, Spain, the US, and New Zealand have CFRs of 13.2%, 10.3%, 5.3% and 0.8%, respectively. 

Although the South Korean government failed to stop the initial transmission of the virus from overseas, it speedily dealt with the first Shincheonji’s clusters in Daegu while maintaining an open economy, effective border controls, high-level diagnostic testing, strict enforcement of Covid-19 rules, efficient contact tracing and government transparency. It even avoided a national lockdown by giving local governments the authority to shut only parts of their districts.

The effectiveness of these policies was boosted by public solidarity, civil compliance, the prominent use of face masks and the widely understood lessons of previous virus outbreaks.

This report outlines seven key examples of South Korea’s pandemic approach and shares the lessons for New Zealand.

Research Note: Lessons from Abroad: Singapore’s Covid-19 Containment Model

Leonard Hong

Singapore has set a high standard for dealing with Covid-19 and despite its decision to enter a lockdown this week, New Zealand can learn a lot from the country, according to a new report Lessons from abroad: Singapore’s Covid-19 containment model from the New Zealand Initiative.

Although Singapore has enacted a “circuit breaker” lockdown to defend against some new sources of coronavirus, it could make this choice due to its earlier efforts to identify, control and contain the pandemic threatening its territory.

New Zealand Initiative research assistant Leonard Hong said since Singapore reached its 100th confirmed Covid-19 case in March, it now has a similar number of cases per capita to New Zealand.

Neither country is yet through the worst of the pandemic, but speedy government action helps explain both countries’ relatively low case rate.

“Singapore’s main point of difference was its early and aggressive border security measures. Its first line of defence restricted travel from countries profoundly affected by the coronavirus, such as China, despite the World Health Organisation not recommending travel restrictions at the time.”

“It has also implemented one of the world’s most restrictive quarantine measures, including digital surveillance tracking systems to monitor those possibly infected with the virus,” Hong said.

While many countries encourage citizens to self-isolate to slow the spread of the virus, they find it tough to enforce those commands, particularly when the rules have not yet become laws.

However, Singapore authorities have already issued hefty fines for some individuals not complying with quarantine rules, and even repealed the work permits and visas of others.

“The Singapore government has taken a ‘no-nonsense’ approach when enforcing its rules by using excellent technological surveillance and harsh penalties,” Hong said.

He added that Singapore is rigorously conducting and boosting its testing regime to be one of the highest per capita rates in the world, although its rate is still slightly below New Zealand’s.

The city-state’s tight border and screening protocols also give the government greater visibility into which people encounter possible Covid-19 cases. It has created 20 dedicated Contract Tracing teams, under the jurisdiction of the police, to locate and monitor at risk individuals.

The teams are using a new, publicly available mobile software app to help warn citizens when they might be in proximity to infected people. The free source code for the app will be opened up for other countries to adopt.

“New Zealand’s government decided to enact a lockdown 26 days after its first case on February 28. By comparison, Singapore took 75 days since its first case on January 23 to enact its ‘circuit breaker’ phase showing that some of its earlier measures for containment were effective,” Hong said.

“Singapore’s early containment policies were a model for the world that the right policy decisions could make significant differences to the problems of Covid-19. New Zealand should keep an eye on what it does next.”

Research Note: Effective Treatment: Public Policy subscription for a pandemic

Dr. Eric Crampton with assistance from Leonard Hong

Unless effective treatment for the novel coronavirus Covid-19 emerges quickly, the world faces not only misery but economic depression. New Zealand will be immune to neither. The normal economic uncertainties of a downturn will be compounded by the uncertainties of a pandemic.

The New Zealand Government’s policy needs to directly boost capabilities in the health sector while providing the kind of appropriate economic support necessary when we’re all taking a lengthy staycation and some industries are put on ice.

Uncertainty about the duration of this crisis makes deciding on the most suitable policy difficult.

So, a combination of policies is warranted. Our latest report, Effective Treatment, explains our approach.

The first priority must be with health.

Increasing the capacity of the health sector to deal with peaks in numbers of Covid cases is important to reduce mortality and morbidity rates. But nobody quite seems to know just where the binding constraints in the health sector are. While credible newspaper articles warn about substantial shortages in equipment and incredible pressure on staff, official statements have been far more sanguine.

If there really will be shortages of critical equipment in four to six weeks, potential suppliers should know that today. Quietly shoulder-tapping likely suppliers may partially solve the problem but won’t provide the necessary scale of response. Suppliers can come from unlikely places. For instance, Italian hospitals are reportedly trialling ventilators reconfigured from scuba diving equipment. Simply announcing a willingness to purchase equipment – and the prices the Government is willing to pay – would allow potential suppliers to identify themselves. Serious companies aren’t likely to re-tool without the certainty of a contract. But they do need to know the demand exists and that they can get essential service status to do the job.

Rapid identification of equipment and skills necessary to boost capability in the medical system, combined with a wide call for assistance, would enable people and businesses to find ways to help. If the health system is not already doing so, it should be offloading less-significant tasks to helpers with limited training, to ease the burden on key medical staff. For instance, thousands of air cabin crew have been trained in first aid and will have plenty of time on their hands. With some rapid training, they may be able to ease some of the burden.

Additionally, the Government has asked retired health workers and health workers furloughed by the current lockdown to assist in Covid-response. It should also consider those foreign-trained medical professionals already in the country who have not yet been able to secure New Zealand medical registration.

Part of the cure for a pandemic is a sharp reduction in economic activities in areas not related either to pandemic response or critical areas like food supply. That’s why support for workers and firms is important. But the Government’s chosen wage subsidy scheme is not working well. Even if it can be extended to larger employers, it provides too little support to keep companies from laying off staff en masse.

The Initiative urges the Government to consider a version of Germany’s Short-Time Work support policy. That scheme allows firms to shift workers to a fraction of their normal hours along with an income top-up from the Government. That way, instead of laying off 80% of staff, a company could keep staff on 20% of their normal hours with little reduction in worker earnings.

This kind of scheme is better than either relying on benefits or starting up the sometimes-promoted universal basic income (UBI). A speedy reboot of the economy when this is over matters. That is much harder to do when companies must rebuild hard-earned experience and skills from scratch. The Short-Time Work support policy maintains both workers’ incomes and their links to employers. It targets support to those workers whose hours are cut, rather than spreading support broadly to those far less affected. Simply put, it works better.

Some tax provisions can also be eased. Individuals and firms should be allowed to combine the 2020/21 tax years and temporarily suspend their PAYE collection and Kiwisaver contributions. This would immediately provide more cash in hand everyone. Companies staring down provisional tax assessments based on last year’s earnings could instead defer everything to next year.

Simultaneously, the Government could help reduce business’ fixed costs that otherwise might have compelled them to shut down. It could also cover Council rates bills for firms in financial distress, averting a major hit to the local government purse as well. And access to credit can be improved, especially over the longer term as wage support to employers may need to ease.

Finally, a modified version of the New Zealand Student Loan programme should be made available to non-students to help bridge any remaining income gaps. It has the advantage of having already set provisions for income-contingent repayment when the crisis passes.

But financial support is not the only way the Government can and should help.

Regulations that were no real barrier to getting things done in normal times can be insurmountable in a pandemic. For example, some airline pilots require time in simulators to maintain certification, but the necessary simulators are in Australia. In normal times, this just doesn’t much matter – pilots can roster onto an Australia route when and as necessary. This doesn’t work now. But the Government can’t be expected to identify every barrier proactively. It needs to rely on business to highlight the obstacles as they come up using lines of rapid communication with regulators who can suspend or modify them during this crisis.

And this is no time for policy or regulatory changes which are not related to the pandemic. The Reserve Bank and Commerce Commission have already postponed theirs. But Parliament’s Select Committees are still asking for submissions on non-urgent legislation. Doesn’t the Health Select Committee have better things to do than consider the regulatory framework for vaping? Some legislation may be urgent enough to require submissions during the Level 4 alert, but everything else should be quarantined.

Obviously, the Government should borrow the funds it needs to do all this. But this will require maintaining a disciplined approach to any spending lines unrelated to the pandemic. Entrenching new ongoing commitments would complicate a return to prudent debt levels after the crisis and make it harder to borrow the funds necessary for responding to the pandemic.

Hopefully the four weeks of Level 4 lockdown gives the Government enough time both to knock back the pandemic and adjust policy to help us through the coming economic turmoil. We need to adopt more effective treatment.

Singapore’s Successful containment of Covid-19

Plenty of first-world countries have been hit with Coronavirus cases and failed to stamp it out effectively. However, Singapore has once again shined as an example of clever public policy.

As of March 17, Singapore has a very low total number of cases with (243) because its government took what World Health Organisation Director-General Tedros Adhanom described as an “all-of-government approach.”

How did it achieve this?

In the initial phase, Singapore focused mainly on border controls to prevent the virus entering. The city-state was one of the first to impose travel restrictions with China, then Iran, South Korea, Italy and now France, Germany and Spain as those places became infected.

It also imposed a mandatory 14-day ‘Stay-Home Notice’ and self-isolation for its citizens, permanent residents and long-term pass holders arriving from countries affected by the pathogen.

In the second phase, it prioritised hard containment by creating strict measures for tracing the virus’ spread, isolating individuals and treating the ill to keeping deaths low as possible. Its vigilant digital ‘Contract Tracing’ system also helped to locate the infected and map out the virus as it spread.

Singapore operates a centralised, top-down government system which makes it easy to compel people. In fact, the Home Affairs Minister deported three Chinese nationals – who were also permanent residents – for not following quarantine protocols and lying to officials.

Third, Singapore pursued economic stimulus packages to support the economy. In February, Deputy Prime Minister Heng Swee Keat announced an $S6.4 billion government programme, of which $S5.6b will assist businesses and consumers, while $S4b is tagged to support businesses with their wage costs.

Singapore achieved all this without enacting a lockdown and remains open to the world.

New Zealand has many similarities to the city-state. Both countries rely on free trade, boast similar population sizes and are advanced market economies. However, while New Zealand’s more liberal approach makes it harder to exert central control, there is plenty to learn from Singapore’s containment policies.

Today, Finance Minister Grant Robertson announced a $12.1b stimulus package to support New Zealanders and businesses. It follows Singapore’s example by including $5.1b in wage subsidies for affected businesses in all sectors and regions.

But there is more to do. Singapore and other South East Asian countries may provide inspiration for us.