6.1 Economic and social impacts and responses Ngā pānga me ngā urupare ōhanga me te pāpori
Introduction | Kupu whakataki
The strict public health measures introduced in March 2020, especially the border closure and national lockdowns, were essential to protect the economy and society from the immediate and devastating effects of the pandemic if the virus had been allowed to spread unchecked. However, they placed significant pressure on the economic and social fabric of Aotearoa New Zealand. Over the next two years and beyond, this pressure affected the incomes of many households and businesses, housing, employment, the supply chains New Zealanders relied on for essential goods and services, and nearly every other area of the economy. The pandemic also highlighted or exacerbated many existing social challenges – including unaffordable housing, high rates of mental ill health, long-standing inequities for Māori and other groups, and the persistent disadvantage experienced by a significant proportion of the population. Even people who were doing well before the pandemic found themselves struggling; financially, emotionally and socially. Some were more susceptible to loneliness and isolation; others suddenly had to get by with less income, while for some, their previously manageable living arrangements became unsafe. The Government’s response sought to mitigate many of these factors, although in some cases it may have made them worse (demonstrated by house price increases, for example).
The wide-ranging social and economic effects of the pandemic, and of the Government’s response to it, are the subject of this chapter.
What’s in this chapter
- The first part of this chapter focuses on how the economy was affected by COVID-19 over time, and the economic and fiscal policies (and other measures) Government introduced in response. After a period of initial uncertainty, the Government’s economic response came in three successive waves which are described in section 6.2.1.2. In section 6.2.1.3, we turn our attention to the monetary policy response led by the Reserve Bank of New Zealand, to ensure that financial markets at large, and the banking system specifically, continued to operate efficiently and safely. Our description of the economic response ends with an overview of the steps the Government took to protect international and domestic supply chains (section 6.2.1.4).
- In section 6.3, we move from description to evaluation. We start by assessing the outcomes of the Government’s economic response, both positive and negative, and how they affected households, businesses, the workforce and supply chains. We also considered the longer-term legacy of both the pandemic and the response – which, the evidence shows, had a sustained economic tail of higher inflation and living costs that is likely to involve a protracted period of lower productivity, lower economic growth, and widening inequalities in wealth. As we make clear throughout the chapter, these outcomes can only partly be attributed to the pandemic and the nature and timing of Aotearoa New Zealand’s domestic policy responses. We provide frequent international comparisons to help clarify the broader global picture.
- In the second part of the chapter, we examine the social aspects of the COVID-19 response. Section 6.4 describes the measures the Government put in place to ensure people had sufficient social support to weather the pandemic’s impacts, and to comply with public health measures. Some government agencies made significant changes to their usual operating models, partnering with community groups, and adopting innovative and flexible ways of working. Communities, iwi and Māori, volunteers and other groups also stepped up and often took the lead on the ground, ensuring their people had the support and services they needed. These local responses are described in section 6.4.1.2.
- Having described the social sector landscape, section 6.5 presents our assessment of the pandemic’s many social impacts – including on vulnerable groups – and the extent to which the response was effective in addressing or mitigating them.
- Finally, section 6.6 offers some reflections on the long tail of social and economic after-effects which were created or exposed by the pandemic. As of late 2024, many continue to reverberate; others are only just emerging. More are likely to reveal themselves in the years to come, emphasising that – even while we turn our minds to the challenge of preparing better for the next pandemic – the impact of the COVID-19 pandemic is still far from over.