Why We Can’t Keep Going Into Lockdown

This was going to be a boring little article about the government’s new rules about provisional tax penalties. I was going to recommend you read it after 11.00 tonight, particularly if you are having trouble sleeping. But I am going to have to leave that for another day (bet you can’t wait) because I am just so bloody angry right now. We are facing the likely prospect of another lockdown, and it just isn’t right.

When Jacinda announced the lockdown in March, she said that, if we do this once and get it right, we will do less damage to the economy in the long run. I agreed with that. It made sense. But it only made sense if we got it right the first time. One lockdown. That’s it.

So, when she announced a Level 3 lockdown for Auckland and Level 2 for the rest of the country on Tuesday night, she tried the same line again, claiming it will be ‘best for the economy’ if we do this again. But she is wrong. John Key was right; the economy is just ‘not her thing’. She has no idea.

Many businesses in New Zealand, other than tourist outlets and ice-cream manufacturers, struggle in the summer months. This is when people are on holiday and business is generally low. It’s okay. Those businesses know it is going to happen, and they make provision for it. But this year was different. Having survived January, we went into Level 4 lockdown in late March. It is hard to survive when three of the first five months of the year produce little or no income, but thanks to wage subsidies and rent holidays from generous landlords, survive they did. Once we were at Level 2 and then Level 1, many businesses saw a big upturn in revenue, which compensated in part for the dry months earlier in the year.

But the problem was, we all thought it was over. We had done it. We could now go back to living life (mostly) to the full.

We were warned to expect more cases, but we expected them to be managed differently. We expected the testing and contact tracing systems to work, that those with the virus would be quarantined and the rest of the country would continue life as before.

We never expected the country to be back at Level 2 and Auckland to be at Level 3 in August over a mere 4 cases.

This is the slap in the face that the economy really doesn’t need; Auckland in particular.

The problem is the uncertainty. Business hates uncertainty. Markets hate uncertainly. Today it feels as if we are caught in a witches’ curse; that we will be going in and out of lockdown for the next hundred years.

Imagine if you are an Auckland hairdresser. You had low revenue in January, and went into lockdown in March, until mid-May. All those people with cancelled appointments represent revenue you will never get back; clients will come for one haircut, having missed the last two months’ appointments. But you made it through the worst, and have most of your clientele back again. Still, your income for the year is down by about 20% on the previous year. Now you are back in lockdown. You have to start cancelling appointments again, and you have no idea how long this will go on for. This means your total income for the year is going to be down by… who knows. 25%? 30%? This time, there are no more wage subsidies and no rent holidays. Are you going to survive? Good question.

The second tranche of wage subsidies is still available. Many businesses that didn’t apply for it before will do so now. That is more taxpayers’ money that we don’t have, being spent. But it is all about survival now.

What if you build houses? In March, you may have had 5 houses on the go, all at various stages, and because the owners have signed contracts, lockdown simply means the completion dates will be delayed. Okay, so no big deal, you might say. But builders lost 2 months of revenue too. In the 12 month period, they only managed to work 10 months, so another likely drop of about 20% in revenue. But how many people who have been contemplating building a house will now decide not to go ahead. There’s that uncertainty again. Will I have a job after a second lockdown? Will we be able to afford the mortgage? Will we go into lockdown again? Uncertainty is a nasty, insidious thing. After two months of lockdown, uncertainty is the worst thing for the economy that could possibly happen.

Groundhog Day. Oh God. Today there are long queues at supermarkets, with people standing 2 metres apart. Everyone is buying toilet paper. You promised yourself you wouldn’t; you still have toilet paper left over from panic buying in March. But what if it sells out? What if you can’t get any? So you buy it. You know you shouldn’t, you promised yourself you wouldn’t, but it is human nature. We all do it. It all feels familiar, like a pair of old slippers. But it isn’t normal and it shouldn’t feel like it… what do they call it? Stockholm syndrome?

How many events will have to be cancelled between Wednesday and Friday? I know someone who was travelling to Auckland from Wellington for a concert this Friday. Flights, accommodation and concert tickets all paid for. What happens now? What about sports events? Conferences? Weddings? Will sponsors now close the door on these events because of the uncertainty? Will we go back to empty stadiums with cardboard cutouts? All because of 4 new cases?

We were going to exploit our COVID-free status by bringing in cricketers, other sportspeople, games, events… that all just went out of the window. No one believes this will be over in 3 days. We are being softened up. It just isn’t possible.

Those who said the government had no Plan B were right. There is no Plan B. There was never even a Plan A when it came to dealing with more cases. It is just more of the same. Wash your hands, be kind and lock yourself down. That’s it. That is all there is.

I was talking to a client yesterday who said that things had just about got back to normal for him, 3 months after lockdown. How is he going to fare now? There are others like that too: they had no income for 2 months and then reduced income for the next 3. That is almost half of the year, and now they are right back into it.

Other countries have locked down more than once, but for most of them, their first lockdown was nowhere near as comprehensive as ours. Australia never went beyond our Level 3, and the UK tried the herd immunity route before backtracking rapidly when the prime minister caught the virus. But nobody has locked down for 2 months and still failed. It proves our approach was the wrong one all along. We were never going to eliminate the virus.

Now we are back to square one, with community cases, and the economy in tatters. We almost did it. We almost eradicated the virus and recovered the economy. We were almost there. Except, we didn’t. And the economy is not going to survive another onslaught like the last one. We are in big trouble. More debt, more quantitative easing… this is our economic plan now, with trillions of debt and no end in sight.

And all of this for just 4 cases. It won’t be just 4 cases though, will it?

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