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Insights 32: 3 September 2021
Newsroom: Eric Crampton on why the ban on rapid antigen Covid tests must end
Podcast: Sir Bill English on the Individualised Funding model for disability support
NZ Herald: The Government can't drive Covid strategy by looking backwards says Roger Partridge

There are no answers, only trade-offs
Dr Eric Crampton | Chief Economist |
Politics is hard when every available option is terrible. Get ready for a year of awful choices.

If borders remain closed after the vaccination rollout, split families will face insurmountable costs. Many skilled migrants stuck on temporary visas in immigration queues, including some 3000 doctors and nurses, will leave. Business connections will atrophy. Trading nations cannot isolate themselves from the world forever.

If borders ease, Covid outbreaks become inevitable unless vaccination is close to universal, according to work in The Lancet modelling effects of ten daily Covid-positive arrivals. MIQ has sometimes reported ten daily cases.

If 90% of us, and almost everyone in high-risk groups, were vaccinated, peak daily hospital admissions might be held to only 36. But more than 10% of the population is younger than 12.

Thirty-six daily hospitalisations might mean about five new ICU cases per day. ICU beds are scarce – New Zealand has far less ICU capacity than other OECD countries. Covid patients spend a long time in ICU. Inevitably, non-Covid patients would be unable to access critical treatment. Auckland’s outbreak is already sending non-Covid ICU patients elsewhere while Auckland seeks ICU staff from other regions.

More vigorous measures could encourage or compel vaccination so the vaccine-averse take up fewer ICU spaces in any outbreak. Absent those measures, is it worse to deny treatment to accident victims and heart attack patients when ICU is full, or simply to close hospital doors to the wilfully-unvaccinated needing Covid treatment? Vaccination mandates are bad. Realistic alternatives seem worse.

The government can take steps, now, to make each option less bad.

Effective therapeutics are being ordered, used, and stockpiled overseas. Ordering them now would avoid our being at the back of yet another queue and help keep people out of ICU.

The Government could end the blanket ban on point-of-care antigen tests, enabling appropriate use at essential workplaces.

Public health orders could ensure vaccination of workers in health, schools, and early childhood education who deal with vulnerable and unvaccinated people.

And the Government could decide to treat migrants less horribly, so we might attract ICU staff rather than driving skilled medical professionals away.

On Tuesday, Waikato University’s Professor of Laws Alexander Gillespie started the conversation by noting some of these terrible trade-offs in the Stuff newspapers. Every option is bad, and every one of them will only get worse if the government delays weighing them.

Yes, there is intergenerational inequality on housing
Leonard Hong | Research Assistant |
House prices have risen to all-time highs. According to the Real Estate Institute of New Zealand, prices have risen by 30.6 percent in the last year. We’ve seen record high housing prices for fourteen months in a row.

A housing crisis? It’s more accurate to call this as a “housing catastrophe.” For many young people, attaining the Kiwi Dream is now close to impossible.

Anecdotally, there have been many reports of growing intergenerational inequality between the young and the older generation because of continued price inflation. Is this however supported by empirical evidence?

According to Statistics NZ, the average annual income of today’s Generation Z is $45,188. In 1998, the average annual income for Generation X was $22,256. In nominal terms, incomes have merely doubled.

Conversely, national median house prices have risen from $164,167 to $826,000 over the same time period. Prices have soared by fivefold. Prices in Auckland and Wellington are approaching $1 million.

In 1998, house prices were about 7 times the gross income for Gen X, today for Gen Z, it is 18 times. Buying a home today is significantly more difficult for Gen Z than it was for Gen X in 1998.

According to Demographia International, from the late 1950s to the early 1990s, the median property price was only two to three times the average annual household income. This figure is now 8.6.

As far as housing is concerned, the data shows that our parents and grandparents had it far easier than Generation Z today.

Back then, it was possible to buy a home with just a single source of income. Today’s couples and spouses must both work to cover their housing cost, whether that is rent or a mortgage.

It may be true that the older generation had higher mortgage rates due to higher interest rates during the 1980s. But mortgage rates have little bearing on the affordability of a home. Even though new buyers today may face trouble with higher interest rates later.

House prices at all-time highs are detrimental to our economic prosperity. A more affordable housing market with lower rent prices is associated with greater social mobility. So far, this tradition has dwindled.

For a variety of reasons, housing affordability has deteriorated. Restrictive planning laws, poor incentives for local councils, local obstructions to urban development, and the Reserve Bank’s monetary responses to Covid-19 fuelled the fire. However, the main reason for this is a lack of housing supply.

House prices have skyrocketed, preventing young people from realising the Kiwi Dream. It’s time we change that.

I went to the vaccination centre, and all I got was a jab and a paper card
Dr Oliver Hartwich | Executive Director |
My European friends and family have all had Covid shots over the past few months.

They proudly showed me their fancy vaccination certificates (with QR codes) over Zoom as if to rub it in. These codes store their vaccination data, date of birth, and a digital signature – all the important stuff.

I was super-excited last Friday to finally catch up and get a shot, too.

I booked my jab in no time. I only had to refresh the page a few times to get through. It was nothing like booking an MIQ slot.

My vaccination was seamless and efficient, too. It took less than half an hour from entering the vaccination centre to leaving with a slightly sore upper arm.

But there was also disappointment. There was no fancy QR code. Not even an unfancy one.

I got a piece of paper the size of a credit card. My name and the date are handwritten on it. However, there isn’t a batch number. No location. No stamp. And no personal information.

I guess I shouldn’t be too surprised since they didn’t even ask for my ID, either.

Now I have ‘proof’ of my first vaccination, but it looks about as official as a fairground token.

Before my vaccination, I did not even know it existed, but now I have QR code envy. 

Actually, I have QR code angst. Airlines around the world require vaccination certificates to fly. I’m afraid airlines from more developed countries would laugh at me if I tried to board with that dodgy-looking paper slip.

Maybe I’m being critical. Since we are unlikely to fly internationally for many years, perhaps we don’t need anything fancy? And it is perfectly suitable for domestic use.

In our two-degrees team of five million, you’ll almost always find someone who knows someone who knows you’re vaccinated. What’s the point of recording it?

That’s similar to the story of the New Zealand driving instructor who told his elderly student that she had forgotten to indicate before turning. “But it’s okay. Everybody knows I live here,” she said.

The lack of proper vaccination documents isn’t a flaw in our system. It is a loveable feature of our close-knit society.

QR code certificates are for big, anonymous countries. Kiwis just know each other. We don’t know how lucky we are.

On The Record
Initiative Activities:
All Things Considered
  • Graphs of the week: How much will vaccine inequality cost?
  • Almost 3000 doctors and nurses waiting to apply for skilled migrant residence
  • Carbon dividends: A win-win for people and for the climate
  • Thinking of breaking your bubble for a tryst? Calculate your covid risk!
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