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Coronavirus: Hard New Zealand lockdown ‘costing $8m per year of life saved’

NZ’s hard lockdown is thought to have prevented the deaths of 1000 people at a cost of $7.8m for each year of life saved.

New Zealand Prime Minister Jacinda Ardern in Whakatane on Wednesday. Picture: Getty Images
New Zealand Prime Minister Jacinda Ardern in Whakatane on Wednesday. Picture: Getty Images

New Zealand’s hard lockdown policy is thought to have prevented the deaths of 1000 people at a cost of $NZ8.5m ($7.8m) for each year of life saved, according to a new analysis casting doubt on the effectiveness of Victoria’s extended shutdown.

The $NZ8.5m figure is 190 times greater than a $NZ45,000 value public health experts had ascribed to a year of life before the COVID-19 pandemic, according to the analysis.

Martin Lally, an economist who advises Australian and New Zealand government price regulators, said Victoria’s tough lockdown, like New Zealand’s, would save lives only at an “extraordinary” cost that fell disproportionately on private businesses and the unemployed.

“Victoria illustrates one of the many problems with lockdowns; you do it, incur huge costs in the form of GDP losses and then discover you have wasted your time,” he said, referring to the reinstatement of lockdown in Auckland in August after a spike in coronavirus cases.

Dr Lally’s analysis put the cost of the coronavirus pandemic to New Zealand in terms of GDP at $NZ87bn, to which the decision to have a hard lockdown contributed $NZ22bn. “Some of these GDP losses would have arisen without government-imposed restrictions because some people would have reduced their interactions with others anyway,” he said.

Dr Lally estimated about 1,000 New Zealanders would have died from or with COVID-19 rather than the 24 that have perished in the pandemic so far if the New Zealand government had followed a Swedish-style lighter touch response.

He assumed they had an average of five years of life remaining: “Consistency would require spending $NZ22bn to extend the lives of 1000 people suffering from heart disease, cancer or diabetes, which is more than the entire annual spending on healthcare in New Zealand.”

By adopting an eradication policy rather than mitigation policy “in order to moderately extend the lives of 1000 largely old and sick people”, the unemployed and businesses had suffered significant losses, he said.

Neither the New Zealand nor Victorian governments have released a cost-benefit analysis of their lockdowns, which critics say cause social, mental and economic costs that need to be weighed against any lives saved.

Read related topics:Coronavirus

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Original URL: https://www.theaustralian.com.au/business/economics/coronavirus-hard-new-zealand-lockdown-costing-8m-per-year-of-life-saved/news-story/c00d3e2f9c8b25e402956e7b103706ed