10 - Economic and Social impacts and responses Ngā pānga me ngā urupare ōhanga me te pāpori

The Inquiry assessed the wide-ranging social and economic effects of the pandemic, and of the Government’s response to it. We considered how the economy was affected by COVID-19 over time, and the economic and fiscal policies (and other measures) Government introduced in response. We considered the monetary policy response led by the Reserve Bank of New Zealand (the country's central bank) and the steps the Government took to protect international and domestic supply chains.

We assessed 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. These outcomes can only partly be attributed to the pandemic and the nature and timing of Aotearoa New Zealand’s domestic policy responses. We provid international comparisons to help clarify the broader global picture.

We assessed the social aspects of the COVID-19 response. We describe 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. We describe a range of these local responses.

As well as describing the social sector landscape, we also assessed the pandemic’s many social impacts – including on vulnerable groups – and the extent to which the response was effective in addressing or mitigating them.

Note: detailed information about these topics and what occurred during Aotearoa New Zealand’s response to COVID-19, along with our complete assessment, can be found in the corresponding Looking Back chapter in our main report.

Finally, we offer 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 COVID-19 pandemic is still far from over.

In the main report, the Chapter contains case studies (spotlights) on: the COVID-19 Wage Subsidy Scheme; food security during the pandemic; prison life in the pandemic; and what happened to family violence and sexual violence.

Economic impacts and responses

Through the Inquiry’s public submissions process, we heard a range of experiences and perspectives on aspects of the economic impacts of the pandemic and the Government’s response. Many commented that the financial support provided during the pandemic kept businesses going and gave workers financial security. In particular, the Wage Subsidy Scheme reduced financial stress, protected job stability, and supported people to stay connected with work. People told us that these factors, along with being able to use sick leave for COVID-19, helped reduce the spread of the virus.

The ability to continue working during the pandemic was often raised by submitters. Some people who could work from home told us that it worked well and offered a better work-life balance. Essential workers shared how being able to continue working gave them a greater day-to-day structure than others and that the COVID-19 protections helped to keep them safe.

Some submitters felt the economic and health concerns were well-balanced in the Government’s response and explained, for example, how being able to shop online made the experience easier. The steps taken to limit the spread of COVID-19 in supermarkets were also appreciated, along with the options for contactless shopping and deliveries.

On the other hand, people also considered that the benefits of the Government’s response were not worth the economic costs. High debt, the rise in the cost of living, and the serious impact on the small business and tourism sectors were noted as major consequences of the response. People often raised the negative impacts of small businesses being closed throughout the pandemic, often in relation to limited options for purchasing food in their local community. We also heard that vulnerable people did not always receive prioritised food delivery support from supermarkets during lockdowns.

We heard many personal accounts of significant financial hardship and stress caused by the pandemic. People sold assets and spent their savings to make ends meet. Accessing financial support could be stressful and tiring, and some told us that eligibility criteria were too strict to enable everybody who needed assistance to get it. People also told us they felt those in low socio-economic positions should have been given support ahead of people in better financial positions, and that social inequities weren’t addressed.

“And not only lives were saved. The Government did everything they could do help people survive financially. All those folk (including opposition MPs) who wanted to open back up for business seemed to forget that dead people can’t participate in the economy.”

“The money spent on the COVID-19 campaign will cripple New Zealand for generations.”

“I lost my job as the company I was working for dropped down to skeletal staff. Financially things were very tight and still are as we try to catch up.”

“I own a small business […] The response from the government and the reassurance that they were doing the best for all of us helped. Once I understood what help the government were providing for people like myself, I felt that there were at least some options. Because the wage subsidy was so easy to apply for and came through so quickly, I was able to make sure that my family and employees would be okay.”

Social impacts and responses

In terms of social impacts, people shared views that New Zealanders came together and supported one another through the pandemic. People appreciated that community groups mobilised to provide support at a grassroots level, including social and mental health services to those who needed them.

We heard how hard the pandemic was on people’s mental health and wellbeing, especially during lockdowns. People noted that certain rules could have been more flexible to help make sure individuals got the support they needed. Being unable to see sick or dying loved ones, or attend funerals or tangi, was highly disruptive to the grieving process and very painful for those affected.

People shared how the complex rules and restrictions made it hard for them to access important social/community groups and activities. People also expressed concerns about Aotearoa New Zealand becoming more divided during the pandemic. Some felt that aspects of the Government’s response to COVID-19, such as vaccine and mask mandates, were to blame, while others cited misinformation and disinformation.

“It was the first and only time in my life that I felt like I lived in a genuine, caring community. I felt safe.”

“Some amazing things happened on marae. I am very aware of the services that, in the area where I live, provided creative and comprehensive health and social services.”

“I am very grateful that my mum and babies group, SPACE, continued online. I would have been so lost without that support network.”

“My mental health through these times was not great. My passion and dedication for schoolwork and study went down dramatically and my grades declined.”

“I was treated like a leper. I was alienated by friends. I lost my job, I wasn’t allowed to have my hair done. I couldn’t eat inside a restaurant. I lost out on visiting my family.”

“I no longer trust the Government, or the Police, or any other institutions now, including the medical profession.”

Note: this material is taken from the Inquiry’s Experiences Report, which is a summary of the public feedback submitted to Phase One of the Inquiry during early 2024.

1. The COVID-19 pandemic disrupted all aspects of our lives, and exposed emerging weaknesses and vulnerabilities that had been forming in our social and economic fabric for decades.

• We acknowledge that it was beyond the scope of a pandemic response to address all long-standing issues.
  
  
• While some Government mitigations provided effective protection for many, including for particular sectors and population groups, others missed out or carried a heavier burden.
  
  

2. The initial package of economic measures the Government provided was comprehensive and generous.

We acknowledge that it was beyond the scope of a pandemic response to address all long-standing issues.

• The economic response met its immediate aims: to support the public health response to the pandemic by maintaining economic activity, sustaining business confidence, protecting employment, protecting incomes, sustaining financial stability, and ensuring that all essential services were accessible.
  
  
• Initially at least, the package of social and economic policies – together with the health response – achieved better social and economic outcomes than most other comparable countries.
  
  
• At the time, the generous economic response seemed appropriate and was widely supported. But because of the amount of Government spending it required over an extended period, the economic response left a long shadow on the economy: the level of government debt increased, and a period of elevated interest rates was required to constrain inflation. The cost-of-living pressures since 2021, the surge in house prices from 2020 to 2021, and higher mortgage interest rates, are in part attributable to the economic response to the pandemic, although international forces have also had a significant effect.
  
  
• We also share some concerns that were raised by others about the duration for which the Government and the Reserve Bank of New Zealand provided substantial economic support in the response. This has led to a range of economic pressures that are taking time to resolve.
  
  

3. When decisions were made about allocating government expenditure during the response, the approach to robustness, transparency and accountability was inconsistent.

• While we recognise that decisions about economic support measures had to be made rapidly in the early pandemic period, the consideration given to effectiveness and value for money was inconsistent. Given the significant amount of tax-payer dollars being spent, wherever possible sufficient opportunities should have been given to more rigorously scrutinising and assessing these measures, and periodically reviewing and adjusting them. This would have ensured the decision-making process was transparent and accountable.
  
  

4. The pandemic’s economic impacts put households and businesses under great pressure, especially during lockdowns.

• Government introduced mitigating measures, including the Wage Subsidy Scheme, that supported well over a million workers and their employers. The scheme was necessarily developed very quickly and had some flaws, but it was fit for purpose and an essential support measure.
  
  
• Businesses experienced the pandemic differently according to their sector, size and location. They had different abilities to absorb the shock of the pandemic.
  
  
• While key goods (including food) remained generally available, supply chains were disrupted by international and domestic developments. It was essentially down to good luck that supply disruptions were not more severe. Aotearoa New Zealand needs to be more actively aware of the risks that can threaten supply chains.
  
  

5. The social sector – including government agencies and non-governmental and community organisations – did a remarkable job of ensuring people had their needs met during the pandemic.

• Many positive changes were made in how systems operated, contracts were commissioned, and relationships were built. These new approaches often delivered good outcomes. This capacity, or the ability to rapidly stand it up again, should be maintained to help the sector be better prepared in a future crisis.
  
  
• The respective roles of some social sector agencies and groups remain unclear. Resolving these roles and responsibilities, and strengthening regional coordination models, will facilitate the rapid implementation of local supports, especially during a crisis.
  
  

6. A network of non-governmental organisations, iwi and Māori groups, and community organisations provided many of the frontline services and support that kept families safe and well during the pandemic.

• This network’s important role needs to be recognised, valued, cultivated and strengthened so that it can continue to deliver in future crises. It is these organisations that give Government a greatly enhanced ability to reach families and communities.
  
  
• Locally-led responses were invaluable in addressing the social impacts of the pandemic, as they are based on local knowledge, strengths and trust. Their value was particularly apparent in Māori communities. Local responses will be critical in any future pandemic and central government needs to actively build and maintain relationships and trust with communities now to enable a more effective response later.

7. The economic and social response to COVID-19 helped prevent deaths and protected many people. But the pandemic’s economic, social and wellbeing impacts on individuals and families were unevenly distributed.

• Some groups came through the pandemic better than expected due to targeted mitigations. But some groups (such as Pacific peoples, women and disabled people) experienced more negative impacts, especially those who were most disadvantaged before the pandemic.
  
  
• In a future pandemic, it is essential that Government gives consideration to mitigating harms, including the unintended consequences of response measures. Attention should be given to the cumulative impacts on socially, economically or health-disadvantaged groups.
  
  

8. For many individuals and families, COVID-19 is not over, showing that wide-ranging pandemic support measures are needed even after the immediate crisis has passed.

Attention should be given to the cumulative impacts on socially, economically or health-disadvantaged groups.

• Many New Zealanders continue to struggle with mental health issues, long COVID, loss of learning, relationship breakdowns, health problems due to delayed diagnosis or treatment, bankruptcy or loss of savings and employment. The mental health, educational and social impacts on young people are particularly concerning.
  
  
• Other impacts could yet emerge and may well be long-term and intergenerational. The consequences for Aotearoa New Zealand, and for future human capability more generally, are likely to be considerable.