The BFD | How Bad Can It Possibly Be?

Chris Penk

First published by The BFD 18th June 2020

The BFD is serialising National MP Chris Penk’s book Flattening the Country by publishing an extract every day.

How bad can it possibly be?

Having indulged in that favourite New Zealand pastime of measuring ourselves against other countries, it’s worth making another comparison, namely time.

The clever title of an item circulated by ANZ Research gave an immediate clue to its key points: “Behind the ‘08 ball”.

Issued on 1 May 2020 (a mayday call, therefore?), it publicised the results of an ANZ NZ Roy Morgan survey. Reader, these were not good. Consumer confidence had fallen 21 points in April to 84.8, around the low-point of 2008 when the Global Financial Crisis hit.

Meanwhile, the net proportion of households thinking that it was a good time to buy a major household item had plummeted 67 points to a net negative number of 51%. That comprised 18% thinking it was a good time and, on the other side of the ledger, a massive 69% thinking it was a bad time.

You don’t need to be much of a soothsayer to see and tell that these numbers do not augur well for any kind of retail rebound in the near future.

Thanks to the interconnectedness of consumer confidence and the job market, it’s a sadly straightforward matter to predict similarly tough times ahead for Kiwis wanting work.

So far, so bleak from consumers of goods and services. But what about the businesses themselves?

Newshub reported the frightening findings of a survey by the Auckland Business Chamber in April 2020: “The economic impact of COVID-19 is starting to rear its head with about one-third of New Zealand businesses saying they don’t expect to survive the crisis.”

This lack of confidence will surely translate into tough times in the job market. And, as noted in the New Zealand Herald in late April 2020, it has proven difficult to know exactly how bad things are already: “Right now, one of the biggest gaps we have is real-time information on unemployment”.

That article went on to note that an additional 30,000 people applied for the main unemployment benefit in the first four weeks of the lockdown.

Simon Bridges rightly described the number of Kiwis forced to the dole queue as “devastating”, at a rate of a thousand a day.

“These aren’t just statistics”, he noted, as “every one of those numbers represents a family that will be under enormous stress to pay the bills and put food on the table”.

And the most frightening bit? “That’s all while the Government is paying 1.6 million New Zealanders the wage subsidy.”

Little wonder that Bridges then called for some relief for devastated businesses, starting with moving out of lockdown there and then. It would be a move “to open up the economy” and letting people get back to work that would make the most difference.

And of course it wasn’t only the straitjacket of Level 3 restrictions that had businesses so tightly wound up. It was the blindfold that really caused fear: “Tourism, hospitality and retail have been shut down for six weeks. It’s unfathomable that they won’t have any certainty about when they can open for another week”.

Whether or not the political prognosticators were ready to admit it, Bridges was to be proven right again.

Some readers will by now be objecting strenuously that in making my case I’ve almost exclusively quoted sources from my side of the political aisle. The Wall Street Journal, the NZCPR, a bank and the then-Leader of the National Party together make a full line in Vast Right-Wing Conspiracy Bingo.

Unfortunately, the numbers are all too real as social agencies on the front line are just as aware (and probably more so):

After four weeks in lockdown, food banks around the country say there has been a dramatic rise in the number of people needing help to put food on the table.

The number of food grants made by the Ministry of Social Development has also skyrocketed under alert level 4 – hitting close to 70,000 in just a week.

Auckland City Missioner Chris Farrelly said the eight days before Christmas are usually the busiest of the year.

But over the lockdown period, he said the mission has been handing out about 1200 food parcels – double the usual demand. […]

And some of those people needing help have never been to a food bank before, Farrelly said. […]

Further south, Murray Edridge from the Wellington City Mission said they’ve seen a 400 percent increase in the need for food parcels.

The only saving grace is that, as the RNZ item noted, these figures included some people who’d been unable to get to a supermarket due to lockdown logistics, rather than more general need.

Still, however, there is clearly deep deprivation already and it’s hard to imagine that things won’t get worse before they get better. Winter is coming.

Health vs Health

One of the most bizarre aspects of the government’s decision making during the lockdown was its single-minded determination to act against COVID-19 even in ways that would clearly cause significant health harm elsewhere.

Wellington epidemiologist and infectious diseases doctor Ayesha Verrall described the dilemma in this way:

How am I meant to look after my patients who have got HIV who can’t speak English, on the telephone? It’s really hard … I put people in isolation all the time, and I know that there’s a massive difference in how that impacts wealthy people with good social support versus people with precarious or no employment.

I think about how important it is for my patients to stay in their jobs, for their connection to the community and for their good health and financial situation. Their health and the economy is tied up so tightly.

This item in Stuff was also highly instructive given Verrall’s observations about the desirability of a lockdown in the first place. She is “not a fan”, according to the article, although “it was the right decision under the circumstances”. We’ll look at those circumstances in more detail later.

Tellingly, Verrall stated that she would have preferred that we’d had an ability instead to manage outbreaks with testing, case isolation and rapid contact tracing.

So, it’s clear from the testimony of the likes of Dr Verrall that significantly adverse non-coronavirus health effects are to be expected from the lockdown. But is it possible to measure them?

An excellent guest post on Kiwiblog by Barry Brill mused that, “[o]n a net basis, eradication will cost the lives of many New Zealanders”.

The basis of his assessment was a variety of statistical analyses that he cited:

When economies contract, life expectancy declines, due to, among other things, a rise in poverty, violent crime and suicide.

During the global financial crisis of 2007– 09, the suicide rate in the United States increased by 4.8% according to the Center for Disease Control and in Europe by 6.5% according to the World Health Organisation.

Philip Thomas, professor of risk management at Bristol University, has calculated that if the UK’s GDP falls by more than 6.4% per person as a result of the lockdown, more years of life will be lost than saved, using [the Imperial College] estimates.

The trade-off between health and health can also be considered in another way, in a world of infinite possibilities for spending but finite resources:

When a choice must be made between spending marginal dollars on either (say) a life-saving traffic barrier or an additional Pharmac medicine, that decision-making process must be both objective and consistent. Similar choices arise in allocating limited healthcare funding as between physical health and mental health.

Meanwhile, former New Zealander of the Year, Sir Ray Avery, is on record stating that it will be impossible to remove the threat of COVID-19 completely.

“Based on the Government’s intervention strategies and New Zealand’s known COVID-19 case related mortality rates”, says this decorated pharmaceutical scientist, “this virus will have caused more economic damage, loss of livelihoods, increased suicides, disruption to our education system, inhuman treatment of our elderly and irreversible social changes than actual deaths to date “associated” with the virus.”

So have we been conned? That was the question, ultimately rhetorical, of Dr Don Brash in an opinion highlighting, among other things, the spurious distinction being made by the highest levels of government:

On 23 March, the Prime Minister announced that two days later the country was moving into an Alert Level 4 lockdown for four weeks. […] Yes, there would [be] an economic cost it was acknowledged, but faced with a choice between saving lives and worrying about dollars, the Prime Minister was clear that she placed a higher value on lives saved than on dollars. […]

If she imagines for a single moment that locking the economy down tightly has no effect on lives lost she is even less well informed than I had imagined. […]

Professor John Gibson, one of New Zealand’s leading academic economists, has drawn attention to the fact that life expectancy is to some extent a function of real GDP per capita. He has noted in a recent paper that “if real per capita GDP in New Zealand falls by 10% due to the lockdown and other effects associated with Covid-19, life expectancy would be predicted to fall by 1.4 years”.

Given the stresses and strains of locked down life for many, it was sadly predictable that we would soon see reports of increased family violence. It’s hardly secret, although it is shameful, that as a society we have a bad enough problem with violence in the home already.

In other words, it was depressingly obvious that headlines such as “Revealed: Spike in family violence under level 4 lockdown” would begin to appear within days of such severe social constraints being imposed.

Were such considerations taken into account? You would hope so. Sanctimonious responses to suggestions that the lockdown be lifted as soon as possible suggested otherwise, however.

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