New columnist Kate MacNamara
Up in the air: Kiwi firms hoping for border rethink
Grant Straker reckons he took 70 flights last year, most of them international. In the last five months the Auckland-based chief executive hasn’t been further afield than the Southern Alps.
Straker Translations, the ASXtraded global translation services company he co-founded, shelved its acquisition plans in response to the outbreak of Covid-19. But growth can’t remain suspended indefinitely.
Straker says he’ll know with more certainty in about a month, but a dealrelated trip to the US around late September or October, “is still very much a possibility”.
Straker is just one of an uncounted number of New Zealand firms assessing the new difficulties of international travel and weighing them carefully against business imperatives.
Among them there is a quiet but building sense that the current border plan needs serious revision.
Many, like Straker, hasten to add that they’re grateful for the normalcy of everyday life that has resumed in New Zealand because of the so-far successful elimination of the virus beyond isolation facilities.
But Zoom cannot always replace face-to-face meetings: sealing major partnerships and acquisitions; bringing in new customers or investors; and, creating cohesive corporate aims across far-flung global operations are all on a long list of situations best tackled in person.
The longer those meetings are suspended, the greater the pressure for their resumption, particularly if competitors are able to get back to it first.
New Zealand’s current border settings allow only citizens and permanent residents into the country, with very limited exceptions.
Despite these restrictions, demand has threatened to overwhelm the Government’s capacity to accept arrivals, at least under the current policy settings. New Zealand requires all arrivals to spend at least 14 days in managed isolation, at which point most leave following a negative test for the virus.
Capacity for such approved facilities is roughly 6000 per fortnight. Recently, those facilities came so close to brimming over that the Government, through airlines, suspended new international bookings for arrival into the country for most of July.
The log jam has many implications. It curtailed the ability of New Zealanders abroad to return home (there is an estimated one million, though there is no way currently to estimate demand for return). It has also pushed farther toward the horizon the prospect of New Zealand accepting a wider range of arrivals, foreign students, work visa holders and tourists among them.
All have large implications for the economy; foreign students brought in some $5 billion annually before Covid-19. International tourism was more valuable still.
Quarantine problems have also added a layer of difficulty for businesses that need foreign travel. “The New Zealand Government is having trouble with [capacity] to meet demand. I wouldn’t want to add to that burden,” said Charles Finny, partner with government relations and lobbying consultancy Saunders Unsworth, who several months ago anticipated a work trip to the United States in New Zealand’s spring. That trip is now on hold. His other main consideration is “the Covid situation in other places, [which] is not good.”
It’s difficult to identify the cost of very tight border settings to global New Zealand-based companies. Eric Crampton, chief economist at The New Zealand Initiative, said it would rise in an “S” curve: “the costs of delaying travel would start rising and rising at an increasing rate, before the curve back and plateau.”
He isn’t aware of any attempts to estimate it, though he said it would be possible, and pointed out that New Zealand business people’s ability to travel would need to be compared to competitors elsewhere in the world.
Although world circumstances vary enormously, New Zealand’s disadvantage would likely be two-fold. Competitors in larger domestic markets have less need for international travel. And international travel rules are more relaxed elsewhere, most notably in Europe.
The difficulties in changing the border settings
New Zealand’s elimination of the virus is a great benefit that, over time, creates an intractable problem.
Both the public and the current Government appear to have a very low appetite for any policy changes that would risk reintroduction of the virus in the community.
A “travel bubble” with Australia has been sidelined because of a new outbreak in Victoria. And there is no timeline for travel reopening to the realm countries, although the Prime Minister’s office says officials have been asked to work on one.
The upcoming September election has also undoubtedly made politicians particularly cautious about any changes at the border. An Ipsos poll released this month found that 80 per cent of New Zealanders are in favour of keeping the country’s border closed until the virus is proven to be contained elsewhere. The public, it seems, has little appetite for error.
So what’s Plan B?
Despite that, some discussion of alternatives is under way. Early this month a conversation paper written by former Prime Minister Helen Clark, former chief science adviser to the prime minister, Sir Peter Gluckman, and Rob Fyfe, former CEO of Air New Zealand, broached the subject. A vaccine or effective treatment could be years away.
Under such circumstances, the trio pointed out, the cost of “almost total physical isolation” from the world would be greater than tourism and export education. It would also be counted in damage to “the many ways in which New Zealand projects and leverages its place in the world”.
The paper suggested that a longterm border plan is likely to require the pragmatic revision of New Zealand’s collective notion of virus elimination, to case-transmission at a very low level rather than zero cases. It is a conception of elimination already held by many epidemiologists.
Beyond that the paper raises questions. Could a regime of testing before a traveller’s departure, and upon arrival in New Zealand, reduce quarantine times for those arriving from low-risk countries? Should we treat managed isolation differently for low-risk entrants? Does selfisolation make sense for some travellers?
A research note published by think tank The New Zealand Initiative last week offers a more precise prescription for greater opening. It recommends New Zealand adopt the principle that it will open its borders to travellers from countries where the virus is under control, currently Taiwan and the Covid-free Pacific Islands.
It also called for a more marketbased system for the provision of mandatory isolation. Spaces are currently allocated and paid for by the Government (with a handful of userpay exceptions).
Co-author Eric Crampton said a voucher system should be introduced to cover all or some of the basic cost of isolation (eligibility for a voucher would be up to the Government). Travellers would be able to shop for facilities that appealed to them and providers would have flexibility in pricing, encouraging more to modify their premises to accommodate isolation, thereby adding capacity to the system.
Finny said he would like to see a bipartisan effort established to consider border settings, and particularly to address the predicament of business people. “We need to think about things like a kind of Apec travel card [issued by Immigration New Zealand before the pandemic allowing for streamlined entry into the country] to allow holders to be treated in particular ways at the border. People who are cleared could isolate under more flexible conditions . . . at home.”
Behind the scenes
There has been some recent improvement to border settings, albeit modest. Kirk Hope, chief executive of BusinessNZ, pointed to the exemption system for allowing into New Zealand people deemed essential to business, officially described as “other critical worker”.
Such exemptions were originally made at the discretion of Economic Development Minister Phil Twyford, but decision-making has moved to senior officials at Immigration New Zealand. It’s a better process, Hope said, though he reckons the number of people admitted under the altered system could be fewer than 100.
There is also some suggestion that bureaucrats are working on a range of border policy alternatives. “That work is taking place within the Allof-Government group,” said Hope.
“And I think there’s very much a sense that there’ll be a time and a place for bringing in changes.” At the beginning of July a Covid-19 All-ofGovernment Response Group was established as a business unit of the Department of the Prime Minister and Cabinet.
The border isn’t a subject the group has much to say about. “There’s always work going on across government on future policy settings, including at the border. Any announcements on new policy will be announced at the appropriate time,” a spokesperson said.
But there are plenty in New Zealand’s business ranks who’re quietly hoping that time is soon. Last month, one New Zealand-based executive made a difficult journey to the US. His company is deemed an essential service in both countries, and indeed in many others. He declined to speak to the Herald, noting the extreme public mood. But he’ll need to continue to move back and forth across the Pacific; if it gets too hard the loss is likely to be New Zealand’s.