Coronavirus: Shutdown is all about trying to kill Covid-19

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Prime Minister Jacinda Ardern announces that the country will enter effective lockdown on Thursday.

Now it’s up to all of us do our part: Stay at home, associate only with our family, flatmates, those we live with. Keep our distance from others and, put simply, don’t take the mick. The more we suck it up and do self-isolation and social distancing properly, the faster life can get back to some form of normal.

Provided people self-isolate properly, It’ll take about 12 days from the beginning of the lockdown period for the virus to reach peak infection numbers. It should then hopefully fall away.

This announcement will mean that many – probably even the majority – of New Zealanders will not be able to work. To make sure that everyone gets an income, the Government has tossed away the cap on its wage subsidy entirely: All affected firms, charities, NGO’s and self-employed people will be able to get over $500 per employee per week.

The Government is set to announce a three-way deal between it, the Reserve Bank and the banks on business loans and residential mortgages in the next couple of days. The shape of that is not yet known but it could be a mortgage holiday, or a repayment holiday etc. Basically, the Reserve Bank has the banks’ backs – and in return they will have ours. Much has been learned since the global financial crisis.

Doctors and epidemiological experts I’ve spoken to all think that the shutdown is the right decision. Business is in favour of it, the National Opposition is in favour of it. For such an extreme measure that was literally not even imaginable when we all sat down for dinner on Christmas Day, it has remarkable support.

The public policy challenge posed by coronavirus has always been how to ease the strain on the hospital system as much as possible, so that people can get hospital treatment as they get sick, rather than the health system being inundated with cases that it cannot keep on top of.

The system will now be given a fighting chance.

Schools and child care centres will be shut by Wednesday. Rents will be frozen. There will be no public gatherings, no discretionary air travel, no getting closer to a stranger – or even a friend – than at least 2 metres.

As my colleague Henry Cooke has written, this will be the biggest peacetime intervention the Government has ever made in the economy. Parliament is effectively being shut down indefinitely.

Simon Bridges supports going to level 4.
KEVIN STENT/STUFFSimon Bridges supports going to level 4.

The Government is now expecting to spend $9.3 billion to pay for all of this, but let’s be honest: That figure is a back-of-the-envelope calculation. The Government will borrow heavily to finance this bridging loan to employers and workers with the hope that New Zealand will come out the other end able to keep going with work having mostly nipped the virus in bud. Better to spend $10 billion or $20 billion dealing with the crisis – and then recovering – as quickly as possible, than spending years coping with high unemployment and whole swathes of the country in bankruptcy.

For the next four weeks at least the Government wants people to be able to feed themselves, stay at home and not worry about how they are going to make payroll, or pay the mortgage. The level of income support will be a step down for down, but it is designed to be temporary and keep the wolf from the door, nothing else.

Even one week ago this action would have been absurd, that was after self-isolation was announced, but before the border was shut.

Businesses will go to the wall, jobs will be lost.

The prime minister was right when she said that it is time for each of us to step up to do our bit, and take our responsibilities seriously: It is in times such as these that each of us finds out if we are truly our brothers’ keeper.

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