Research Note: Safe Arrivals

Dr. Eric Crampton and Leonard Hong

Up to a million Kiwis live overseas with a right to return to New Zealand. While the country is now effectively free of Covid-19, with cases only in the country’s quarantine facilities, the pandemic rages abroad and is unlikely to abate anytime soon. Even if a vaccine is developed this year, scaling up its production will take time. In the meantime, the Government must scale up its own capabilities and capacity within its managed isolation and quarantine facilities.

This report provides a pathway toward safer scaling-up of border capabilities. It begins from the principle that safe entry should be allowed, and that risky entry must be made safe.

Beginning from that principle, the report argues that the New Zealand border should be reopened to travellers arriving from places that are similarly free of Covid-19. Islands in the Realm of New Zealand depend on travel to and from New Zealand and are currently Covid-free. Taiwan has no community transmission and has pandemic control systems at least as strong as New Zealand’s. Maintaining border restrictions against travel to and from safe places imposes substantial harm. Continued closed borders to the Pacific Islands imposes an onerous humanitarian burden along with economic calamity.

Like kayakers in stormy seas rafting up together for safety, New Zealand should ‘raft up’ with other Covid-free places.

Entry from other locations must be made safe. And while closing borders entirely can feel like the right response when other parts of the world are in dire straits, it is impossible. Too many Kiwis live abroad and may wish to return. The managed isolation and quarantine system must be able to scale up to accommodate those people along with potential non-citizen visitors from similar locations.

This report argues that the Government should shift its approach. Rather than considering charging some arriving Kiwis for their stays in managed isolation, it should instead directly subsidise the stays of returning Kiwis whose stays the Government would wish to support with a voucher system.

Under the proposed voucher system, those wishing to come to New Zealand – citizens or not – would be required to present before boarding proof of a booking in one of the approved managed isolation facilities. Eligible returning Kiwis could apply their vouchers toward the full or partial cost of their stay in managed isolation. Vouchers could be set at a level consistent with the cost of a stay at a basic facility. Other returnees would need to bear the full cost of their stay. Facilities would be free to set their own room fees, but the Government would charge each facility for the full cost of police, military and other staff involved with managing isolation.

The Government would continue to oversee safety in managed isolation and private accommodation facilities would continue to provide the rooms. But this shift would make it far easier for returning Kiwis, and others, to manage their own arrivals while freeing the Government of the burden of scrambling to place arriving visitors into scarce spaces in managed isolation. It would also encourage other facilities to shift into providing managed isolation services (under Government oversight and supervision).

The present system is strained. It struggles to accommodate need, but must scale up substantially if Kiwis abroad choose to exercise their right to return home. Allocating scarce positions in managed isolation by Ministerial discretion forces Ministers into impossible positions in deciding whose need is greatest.

Being able to scale up safely is critically important. The entire country made incredibly costly efforts to make New Zealand effectively Covid-free. Some Kiwis continue to bear those costs through family separation, unemployment or failing businesses. And for a long time yet, the country will be paying off the new government debt accrued to help the economy survive lockdown.

Improving border protocols to allow for safe entry at scale would not only help those worst affected by the collective elimination efforts, it would open up opportunities that simply were not available in the pre-pandemic world. Rather than trying to estimate the extent of New Zealand’s likely economic losses, the country could be looking at stronger economic opportunities.

The New Zealand Government should:

  • Set a principle to allow safe entry into New Zealand;
  • Recognise that entry from safe places by people who have not recently been to risky places is safe. Re-open the border to entry from Taiwan and the Covid-free Pacific Islands and assess whether individual Australian states could be considered safe;
  • Support the Pacific Island neighbours in ensuring safe external borders;
  • Continue to assess the adequacy of safety protocols on flights to risky places and at airports handling passengers from risky places;
  • Allow greater scaling-up of managed isolation by:
    o Allowing those arriving to take up a greater portion of the cost: full user-pays for non-citizens and a voucher-based co-payment scheme for returning residents and citizens;
    o Certifying facilities as authorised providers of managed isolation or quarantine services;
    o Charging isolation facilities for the isolation management services provided by the government;
    o Allowing facilities to provide their own management services if they are able to credibly demonstrate capability of doing so safely, but only under strict supervision and process auditing;
    o Requiring all arrivals book their own accommodation in authorised isolation facilities and provide proof of booking before boarding flights to New Zealand;
    o Training potential isolation management staff;
    o Charging isolation facilities for the isolation services provided by the government on a full cost-recovery basis;
  • Layering additional safety protocols for non-citizens arriving from risky places to further reduce risk as numbers increase, such as post-isolation testing and daily health check-ins;
  • Consult with New Zealand’s epidemiologist community over the medium term as both testing and app-based technologies develop to assess whether alternative sets of restrictions could reduce risk at lower cost for travellers from less risky but not risk-free places.

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.

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.