Hipkins on lockdown analysis: We don't put price on lives

Health Minister Chris Hipkins says a more relaxed response to Covid-19 would have cost potentially tens of thousands of Kiwi lives. Photo / Mark Mitchell

The Government does not put a dollar value on people's lives, Health Minister Chris Hipkins said yesterday when asked about a new report analysing the cost and benefits of New Zealand's hard lockdown response to Covid-19.

Martin Lally, an economist who advises Australian and New Zealand government price regulators, has estimated the Government's lockdown policy would have prevented 1000 deaths at a cost of $8.5m for each year of life saved.

He outlines his analysis in a paper that considers the merits of the lockdown approach compared to a milder mitigation policy like Sweden.

Lally's analysis puts the cost of the pandemic to New Zealand in terms of GDP at $87 billion, with the decision to have a hard lockdown contributing $22b.

"Some of these GDP losses would have arisen without government-imposed restrictions because some people would have reduced their interactions with others anyway," he told the Australian newspaper.

"Consistency would require spending $22b 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."

When asked about the report yesterday, Hipkins said he would need to look into the basis of Lally's findings.

"Generally it's not something we would do. We don't put a dollar value on people's lives," Hipkins said.

"You look at what's happening in other countries around the world and look at the thousands ... if not tens of thousands of deaths that New Zealand would experience if we took a different approach, that's not a price that I am willing to pay. And that's not a monetary price, that's a price in terms of human lives.

"And I think that what we are doing is the right thing."

Lally said he had sent his paper to Government advisers and the director general of health, Dr Ashley Bloomfield, but had no response.

Asked about Hipkins' remarks, Lally questioned why the Government did not appear to be interested in cost-benefit analysis of policy making.

"If saving lives is all that important at apparently any cost, why aren't we prepared to put median divider strips along every motorway in New Zealand? Why were there waiting lists for people in hospitals before Covid? And why does Pharmac have such a tiny budget for buying drugs?

"If saving a few lives is so important that we are prepared to tank the whole economy why aren't we doing the same in all these other areas?"

The Productivity Commission has produced one piece of cost-benefit analysis, using only information available at the time of decision-making.

That was done after Cabinet had decided to add five additional days to the first hard lockdown, over the Anzac Day weekend, before moving to the looser rules of level 3.

The work concluded that the five extra days at alert level 4 came at a net cost of $741 million for a gain of about $8m.