New Zealand’s Response to Covid-19 Showed What Governments Can Do
One of the most remarkable and under-reported aspects of New Zealand’s response to Covid-19 is how the government eliminated homelessness during the lockdown period. Rough sleepers were offered places in motels, supported with mental health and other wrap-around services, and guaranteed access to food and welfare support. In a matter of days, New Zealand ‘solved’ homelessness for a period of time and protected some of its most vulnerable from a rampaging virus. The total cost of this outrageous policy success? $22 million dollars.
Of course, motel rooms are not a long-term solution to chronic homelessness, and the price tag for addressing the various causes of homelessness is undoubtedly much higher. But it’s still noteworthy that the cost of eradicating national homelessness for over a month was less than the price of former Prime Minister John Key’s mansion in leafy Parnell. The truth is that the state has always had the capacity to emphatically address homelessness and even eradicate it altogether. $22 million is a tiny fraction of the government’s budget. Homelessness is a solvable public policy issue, and the government did solve it — temporarily at least — in 2020. The real question is why it took a global pandemic to force the issue.
One answer is that politics in New Zealand and around the world is constrained by the self-preservation instinct of politicians to never rock the boat. Another way of thinking about this is the Overton Window: the range of policies acceptable to the mainstream public at any given time. The Overton Window helps explain why current PM Jacinda Ardern takes such limp public positions when asked about house prices. She will lament the rise and rise of the housing market and categorically rule out any changes in the same breath. Labour’s calculation is that while people love to moan about house prices, a policy that would actually stop prices from rising would be too politically unpopular to implement, even if it’s demonstrably the right thing to do. C’est la vie.
However, things changed when the pandemic struck. Threatening both a health and economic crisis, Covid-19 splintered the Overton Window as states around the world took decisive action to stave off the pandemic. This includes policies that were totally unthinkable in a pre-Covid world: imagine explaining to your 2019 self that the government would go as far as to confine every citizen in the country to their homes for a month. While the pandemic presented an extreme threat, governments showed an ability to coordinate some serious policy responses at a pace only previously seen in wartime. In doing so, the most successful countries like New Zealand modelled what states are actually capable of doing when sufficiently energised.
The best example of this is the $50 billion dollar Covid-19 Response and Recovery Fund that the New Zealand government unveiled in this year’s Budget. Vast sums of money were ploughed into wage subsidies and shovel-ready infrastructure projects, all aimed at solidifying New Zealand’s economy and stopping unemployment from skyrocketing. This was an unprecedented and bold policy package, and it largely succeeded in propping the economy up through a ruinous year. However, there are trade-offs. New Zealand’s debt will balloon over the next few years with new government borrowing in order to finance the response to Covid-19. As Finance Minister Grant Robertson put it, “there were no costless decisions in this situation.”
But Covid-19 is far from the only public policy challenge where there are no easy solutions. For instance, 235,000 children live under the poverty line in New Zealand. While lifting those children and their families out of poverty might cost a lot of money, the truth is that choosing not to address child poverty imposes its own set of costs in the long term (whether in terms of lost economic productivity, crime, or to the health system). This is hardly a left-or-right wing idea, either: it is the foundation of National’s social investment approach, as well as the issue that Jacinda Ardern claims as her own. Despite this bipartisan appeal, successive National and Labour governments have failed to roll out any substantive policies to address child poverty. The results are unsurprising.
There are no costless decisions, as Robertson might say.
New Zealand’s globally-lauded response to Covid-19 was a healthy reminder of the political environment that decides what challenges the government should address, and the scale with which it acts. Few would deny that Covid-19 was an extraordinary challenge and that the government was justified in taking the extreme measures that it did. But climate change will in all likelihood prove an even greater risk to the country, with longer-term impacts on our economy and environment. There is little appetite on either side of the House to address that issue with the importance it deserves, despite broad public support for climate action and a powerful economic case for early mitigation and adaption.
While we lead the developed world in responding to the pandemic, we undeniably lag behind on other issues. Whether in terms of homelessness, child poverty or climate change, we underperform relative to GDP and are failing to meet our own commitments to do better. The world is taking note, with New Zealand cut from an international climate leaders’ conference over concerns about our country’s inaction on reducing emissions. It’s a strange and jarring contrast to the decisive, substantive action the government took in response to the pandemic. Our representatives have taken a view of the Overton Window in New Zealand that is hard to understand. Somehow, borrowing tens of billions of dollars to address Covid-19 is proportionate, but all we can manage for climate change is $140m to replace some coal boilers?
The point here is not that the government should borrow endless amounts of money to throw at all of the country’s issues, nor that greater state involvement is always a good thing. Instead, I make the simple observation that politicians make up their own rules about when the state should take decisive action. If it wanted to, the government could apply the same thinking to child poverty or climate change that it did to Covid-19: early intervention and spending to avoid future catastrophe. The pandemic may be a once-in-a-lifetime aberration, but strategic policymaking doesn’t have to be.