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21 March 2020 00:36

The panic I've been feeling in this pandemic is for the economy - New Zealand's and the world's.

jacinda ardern

Don't panic, says the Prime Minister - and I'm glad to hear it. I haven't felt the slightest panic over the coronavirus and I've been feeling guilty about that. It's like not helping the war effort. But I can't help it, I keep thinking of Tom Hanks. When Hanks and his wife caught the virus and were taken into hospital in Australia, the actor posted, "We felt a bit tired, like we had colds, and some body aches.

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Rita had some chills that came and went. Slight fevers too." That sounds no worse than the heavy cold I get most winters. I don't normally take those symptoms to a doctor but, if it happens this winter I will, for the war effort. Actually I'll call in sooner than that for a flu jab, which I do every year. As the injection goes in, the nurse dutifully explains that it covers all the bugs known to be going around that season but that there's no guarantee they know of them all. It's still worthwhile, I don't expect perfection from medical science. When I get the shot this time I might also be given a test for coronavirus, being in a "vulnerable" age group, but I hope not. Those tests cannot be cheap for the public purse, a culture has to be grown from each swab over 24 hours. They should continue to give priority to the frail elderly and those in close contact with them. This is, "not a time for panic, it's a time for preparation," the PM said, meaning preparation for working from home, isolating ourselves and avoiding non-essential travel. Those are all too easy in the age of the internet. We're probably more isolated these days than is healthy. The panic I've been feeling in this pandemic is for the economy - New Zealand's and the world's. It was Friday of last week, March 13, a "black Friday", when Donald Trump suddenly closed the United States to flights from Europe. My heart went through the floor, my world stopped, my head said, "Surely now, somebody will step in." Europe was sleeping when he made the announcement. Surely when its leaders awoke to the news, they would urgently get together, make contact with better minds in Washington and ensure transatlantic travel, the main axis of the international economy, was maintained. The World Health Organisation had declared the coronavirus to be a pandemic and evidently that warranted this. The next day, last Saturday, Ardern announced New Zealand's quarantine period would now apply to all travellers, not just those from the four countries with the largest outbreaks. In Wellington, Grant Robertson was working up the promised package of job subsidies and business relief, now for a certain recession. Ardern said the package would be the "most significant I will announce while I am Prime Minister". She will be right. If she lasts six years or nine, she will spend that time under pressure to recover a balanced budget. Advertisement In fact, the package was not as large or loose as I'd feared. The cost, $12.1b, is only a fraction higher than the splurge on infrastructure announced in December. The $5.1b age subsidy scheme for Covid-19 is very well targeted. The wage subsidy is available only to employers who can show they are suffering a 30 per cent drop in revenue on the same month last year. That should not be hard for hotels, restaurants, bars, taxis, tour operators and all the industries the Government has effectively shut down. To get the subsidy they must undertake to retain the staff on at least 80 per cent of their income, the equivalent of four days of a five-day week. The scheme will be open for only 12 weeks, ending in June. Beyond that, doesn't bear thinking about really. Along with benefit increases and some business tax relief, the package equates to 4 per cent of GDP, which may be, as the Government claims, comparatively larger than those offered by Australia, Britain or the US. But it should be compared to the cost of the Christchurch earthquake that put the 2011 budget into a deficit that amounted to 6.4 per cent of GDP. It took National three years to get back to a surplus. If there is a silver lining to this cloud, it is a timely reminder of why a surplus matters. It is entirely thanks to the budgets of Ruth Richardson, Bill Birch, Michael Cullen, Bill English and Grant Robertson that we can absorb another economic shock without putting the country's solvency in peril. Now we should hear no more about National's "10 years of neglect" and the golden opportunity to fatten up public services by borrowing on low interest rates. Long after this pandemic has passed we'll be paying its price.

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