Eric Crampton: Where do we go from here?

The government this week extended the COVID-19 (coronavirus) travel ban barring foreign nationals from arriving in New Zealand from mainland China and suggesting self-quarantine for Kiwis returning.

The continued ban feels like the right decision for a highly contagious disease with mortality rates that appear to be around twenty times higher than the seasonal flu. But feels are a poor basis for policy.

The disease has some very worrying features.



Oral swab testing can miss cases detected by a blood test. And while the virus can be detected in most people within three to seven days, it takes up to 24 days for others. Quarantine for those who have been in contact with anyone who has been infected will be long.

Where about 5% of similar patients in Singapore wind up in intensive care, Wellington’s 29 ICU beds are start looking just a bit inadequate. The health system will very likely quickly be overwhelmed if there is any serious outbreak.

So, preventing an outbreak seems important, if it is possible.

As more cases emerge internationally, any travel-ban strategy would have to expand rapidly but would become far less effective. And, as NZIER pointed out this week, delaying COVID-19’s arrival to coincide with the local flu season could make things worse rather than better.

We need to be thinking beyond the ban.

The government is contemplating support for exporters. But that seems only the start of the problem. How many businesses depend on timely deliveries of critical parts, tools and materials from China? Inventories will be running low and China’s shutdown will not end soon. Will everyone get a bailout?

There may be a case for compensating workers and firms affected by quarantine requirements for workers who have been exposed. Not providing that compensation makes it far too tempting for firms to tell workers to come into the office regardless of quarantine requirements, as a SkyCity manager reportedly did with an employee under quarantine after returning from Wuhan.

Singapore compensates firms for quarantined workers while applying sharp penalties to firms and workers who break quarantine. It is managing to keep something of a handle on its outbreak. The government should be considering that kind of model.

Businesses should be preparing to deal with short-notice work-from-home arrangements in addition to supply chain disruption.

The travel ban has bought us a bit of time, nothing more. Use it wisely.

Dr Eric Crampton is Chief Economist at the New Zealand Initiative HERE.