New Zealand’s Coronavirus Response Isn’t as Great as It Seems
New Zealand prime minister Jacinda Ardern has been praised around the world for her response to coronavirus. But while Ardern's response has been much more coherent and competent than, say, Donald Trump's, its economic protections for the country's workers are nowhere near enough.
As is often the case with crises, the coronavirus pandemic has been a boon for New Zealand’s political leadership. Jacinda Ardern’s decisive and effective health response to the virus has garnered both New Zealand and herself adoring headlines around the world, particularly in countries starving for basic governmental competence. New Zealand’s exceptional handling of the crisis is something Kiwis should be rightly proud of, as should the prime minister, who may well have secured herself another three years in power because of it.
But it’s been less good for those already on the margins, for whom weeks of lockdown has meant even greater levels of economic uncertainty and deprivation. Tens of thousands have applied for the unemployment benefit at a rate of around a thousand a day, food demand at city missions quickly shot up by magnitudes of hundreds of percent — many of them people who had never needed help before — and unemployment is expected to hit double figures.
Some of this will be solved by moving from Level 4 to 3 of lockdown. (Moving from Level 4 to Level 3 means restrictions have been relaxed, including letting families reunite, and reopening some schools and businesses.) But the fact is that New Zealand’s economic response to the crisis has fallen far short of the gold standard set by its health response. And with a global depression looming — and the ever-present threat of another lockdown should the virus come back — this bodes ill for the future.
The government’s economic response wasn’t nothing. Among other things, it put together a more than $10 billion wage subsidy scheme to prevent mass layoffs by businesses, created a leave scheme to allow essential workers to keep getting paid if they need to self-isolate, doubled the winter energy payment, increased core welfare payments by $25 a week, and relaxed the welfare work requirements that have bedeviled New Zealand’s working poor for years. The crisis has even expedited the process of housing our homeless people, with the government putting nearly 1,000 people into motels and recently pledging an extra $100 million to the effort.
Given all this — and given the inundation of news about the US government’s woeful and shambolic response to the pandemic — it’s easy for Kiwis to come away with the same widely held perception many of us hold about our country in better times: that its economic policies have been exceptionally generous and progressive. But perception isn’t reality.
With few requirements on the wage subsidy scheme, some of our largest firms with ample reserves to ride out the lockdown have taken advantage, pocketing government money while firing workers and cutting their wages. Particularly egregious has been Fletcher Building, which took at least $66 million from Kiwi taxpayers while forcing its workers to give up as much as 70 percent of their pay. (Don’t worry, though, because the company’s already well-compensated executives are hurting, too: outrage forced them to double their own planned pay cuts to a whopping 30 percent.)
Similar reports of workers being sacked, forced to accept pay cuts, or pressured into using sick or annual leave to survive abound. There has been widespread fraud and abuse of the scheme by businesses, with eight hundred complaints lodged in a mere nine days, with confusion and delays around the scheme pushing Kiwis into precarity. The government will claw some of this money back, but that will mean little for the people who have had to cover rent and feed themselves and their families with reduced or no pay.
All of this has helped push an army of workers into the arms of Work and Income, with thousands quickly forced to initially pack its waiting rooms, then sit for hours on the phone to get the help they’re entitled to. But even when they break through and get a lifeline from the government, many are for the first time finding out what New Zealand’s permanent underclass has known for a long time: that even with the extra $100 a month, the dole is barely enough to cover the sky-high rents in our biggest cities.
The issue of rent, in fact, has highlighted the regressive nature of the government’s response. While it sensibly arranged a six-month mortgage holiday for homeowners and investors, and froze rent increases and most evictions for renters, those renters have still been forced to keep subsidizing their landlords with rent payments, even though two-thirds lost at least a third of their incomes under lockdown. When questioned about the unfairness of this, Finance Minister Grant Robertson urged landlords to voluntarily give “security and assurance to your tenants.” Unfortunately, the vast majority of landlords haven’t listened, and there are now calls for a national rent strike. Trickle-down economics doesn’t work in real estate either, it turns out.
Then there are the groups who have simply fallen through the sizeable holes in the government’s patchwork response. Even as justified outrage has greeted the plight of New Zealanders in Australia, Ardern has abandoned our own country’s hundreds of thousands of migrant workers, with employer links and our own restrictions on welfare for migrants trapping them in impossible situations.
Many of those migrants are students, another group that found itself financially destitute under lockdown, struggling to pay for rent, bills, and food. After pleas for help, the government responded not with temporary cash payments, but by allowing students to sink themselves further into debt, lifting the borrowing cap for course-related costs from $1,000 to $2,000. Sole parents, who are more likely to live in poverty, have likewise complained about being forgotten.
How has this compared to other countries? Next to dysfunctional, right-wing-governed countries like Australia or the United States, New Zealand’s response looks pretty good.
But compare New Zealand to Canada, a country we’d likely prefer to identify with. Though far from flawless, Canada paired its wage subsidy scheme with a $2,000-a-month emergency unemployment benefit for four months for every worker who lost all of their income thanks to the pandemic, a benefit that applies even to the self-employed and those who didn’t work enough hours to qualify for regular employment insurance. As students cried out for help, the Trudeau government announced an aid package that included payments of $1,250 a month to tertiary students and graduates who were citizens or permanent residents.
Meanwhile, though Kiwis may take some solace in their situation when looking at the death and chaos unfolding in the United States, consider just some of the demands that have been made by leading politicians in that country, which we think of as far to the right of our own: universal cash payments for up to a year after the end of the crisis, a moratorium on utility shutoffs, and the suspension of all debt collection and credit payments, including credit cards. The archaic nature of US government services has meant weeks of delays before Americans put out of work by the pandemic could get their hands on their expanded unemployment insurance, but at least they’ll be getting an extra US$600 a week until August — a sum that rivals how much jobless Kiwis can currently expect for an entire month.
Even Joe Biden — who sits on the conservative end of a Democratic Party more conservative than most of New Zealand’s political spectrum — has called for measures that go further than our government’s response. At various times, Biden has called for direct cash payments to families, freezing and forgiving rent payments, a moratorium on utility shutoffs, and forgiving at least $10,000 of student debt, a proposal that has been considered a laughable half-measure by American progressives, but has no comparable equivalent in New Zealand politics at the moment. That Joe Biden of all people has a more progressive vision than a New Zealand Labour-led government should prompt some serious soul-searching by our country’s liberals.
The worry is that even as the government has pumped more than $30 billion into financial markets, an inordinate number of New Zealanders now have less money to spend, and a bigger share of the meager income they do have has to be directed toward paying off debts, including any credit card and landlord debts they may have run up under lockdown. This is not only immoral, but as some economists have warned, could be economically disastrous, as less and less money goes toward buying the goods and services that drive the actual economy, and more and more goes into the world of finance.
Unfortunately, the Ardern government doesn’t look like it’s changing course, with the prime minister warning the next budget will “continue the government’s careful and balanced approach to running the books.” With the loudest criticisms of the government focused on tired beneficiary-bashing or science-denying demands to end lockdown, there’s little incentive for them to do otherwise. Yet the soaring demand for food banks alone is a testament to the pain being felt by Kiwis all over the country. The prime minister should listen to her own mantra: “Be kind.”