How much will New Zealand invest in preventing the community transmission of Covid-19 – is any dollar value too high? Jonathan Milne investigates the price of life.
Andrew Graham was 18 years old. In his first year out of school, he had a good job at Kuripuni Motors, a steady girlfriend, and he was saving money to head to university. “Life was going pretty good.”
Coming home from work, about 6.15pm on a Wednesday, he turned south onto state highway 2 out of Masterton, heading towards the family farm on Norfolk Rd. He remembers passing Solway Park Motor Lodge, and crossing the bridge over the Waingawa River.
Then he remembers waking up five days later in Wellington Hospital. Witnesses pieced the rest together for police. He had been waiting to turn right into Norfolk Rd; traffic was busy. A drink driver coming the other way at 140kmh overtook four cars that had slowed for the intersection – and wiped him out.
Graham sustained two small scratches from flying glass, bruises from his seatbelt, and a completely stoved-in skull. The brain damage he suffered affects him still, at 47 years old. He’s classified as an epileptic, he has to take medication every day so he can work and drive, he has suffered from depression.
The cause of the crash was a drunk, dangerous driver, no two ways about it. But there was a contributing factor: an intersection that couldn’t sustain ever-increasing volumes of traffic.
Records maintained by the Wairarapa Times-Age reveal there have been 46 accidents at the Norfolk Rd intersection since 2000. There have been five serious injuries in that time, and three people have died. (Police note that the most recent death, a 66-year-old man injured in a crash in 2018, was actually found to be caused by a coincidental and spontaneous aneurysm rupture, two days later in hospital).
“It took me 20 years to get my degree. I was told by my neurosurgeon, ‘do not expect to pass a single paper’. I did seven papers in my first year; I passed four or five of them. The surgeon was quite pleased about that!”
– Andrew Graham
“I sometimes wonder why it’s taken so long to fix the road,” Graham muses. “The people making the decision do not have a personal interest in it. If one of the politicians knew someone who got hurt there, you know what? It would get done tomorrow.
“They can put all the economic values on it that they want, but this has been going on long enough now. It needs to be done.”
How officials value human life
To be fair, it’s not as simple as Graham paints it. Not quite. The Ministry of Transport and Waka Kotahi NZ Transport Agency have a formula that they have honed over many years, for allocating scarce funds to roading infrastructure that is slowing traffic, choking economic growth, and endangering lives.
As part of that formula, the agency has a dollar value it places on what is delicately described as avoiding a statistical fatality. It is called VOSL, the Value of Statistical Life. It is, in short, the price of life.
In line with the latest cost of living increase, the Ministry of Transport updated that dollar figure in August. It is now $4.53 million.
Add in other costs like emergency services and the vain work of hospital A&E specialists, and the “average social cost per fatality” is $4,562,000. For someone who suffers a serious injury, it is $477,600. A minor injury is valued at $25,500.
But these figures must also be weighed up against the social and environmental benefits of, say, reducing congestion on a busy commuter route.
Those are the numbers NZ Transport Agency feeds into its computers, to help calculate whether it builds Transmission Gully, or a tunnel under Waitematā Harbour, or a roundabout on the corner of Norfolk Rd.
And more, these Ministry of Transport values placed on human lives are used by other agencies like councils, health and workplace safety, in deciding how to prioritise their spending.
Now, these formulae have new significance. It is the economic value that we place on a human life that is the unspoken calculation behind the biggest political question of this year and this election campaign. How much will New Zealand invest in preventing the community transmission of Covid-19?
Is any price too high to save us from coronavirus fatalities?
Counting the deaths
Norfolk Rd farmers Neil Wadham and Mark Graham (Andrew’s father) have spent the past 15 years battling for improvements to the dangerous intersection. In that time, they have seen a new industrial estate built; traffic has increased dramatically.
Mark Graham speaks plainly: “It’s a shit of an intersection. It just about made an old man of me overnight.”
Wadham, who’s been on the AA local council and met with NZ Transport Agency, says the intersection is no longer fit for purpose, with 22,000 vehicles up and down that stretch of highway every day, and big trucks turning across the traffic.
So why is it taking so long? Have they been waiting for more people to die? “Well, bluntly, yes.”
Of course, Graham and Wadham did not know about the Ministry of Transport’s VOSL figure – not many people do. For obvious reasons, government ministers and their officials don’t like to talk about such a seemingly callous calculation.
But in July this year, Waka Kotahi NZ Transport Agency announced it was designing a roundabout for the Norfolk Road intersection, and safety barriers and a speed limit review along that high-risk section of state highway 2.
The intersection was finally deemed to be sufficiently congested, sufficiently dangerous to life and limb, to justify the spending.
“The New Zealand strategy cannot be that we stay locked up until everybody else gets to zero or we have a vaccine. This country would be on its knees if that was the case.”
– Todd Muller, June 2020
At the same time, New Zealand was out of Covid-19 lockdown, patting itself on the back for 100 days without community transmission, and merrily debating whether to open the borders to Cook Islands so Kiwis could take a tropical holiday.
Todd Muller, who was then the National Party leader, called for New Zealand to open up. “The New Zealand strategy cannot be that we stay locked up until everybody else gets to zero or we have a vaccine. This country would be on its knees if that was the case.”
Businesses wanted to be allowed to resume trading, locally and internationally. Their critics accused them of placing money before the lives of vulnerable people.
Somewhere in the middle has to be the answer: that always, we set priorities for scarce funds; that always, there is a sane and sensible balance to be struck between risk to human life and harm to the economy.
Why Covid-19 is more fearsome than a death on the road
In 1991 government researchers completed a survey of 700 New Zealanders to find out what value they placed on safety.
They wanted to measure the amount society would pay for the avoidance of one premature statistical death – and they did it by asking individuals the amount they would pay for safety improvements. They came up with a Value of Statistical Life of $2 million. A new survey in 1998 doubled the figure to $4 million – but the government of the day refused to adopt it, seemingly dismayed at the cost implications for road, rail and aviation infrastructure.
So it is that the flawed 1991 survey result has been updated in line with inflation, every subsequent year. Extraordinarily, that outdated and discredited survey is still used to decide whether or not to build transport and other infrastructure
Almost since the beginning, there have been voices questioning whether VOSL provides a good measure of how much the community should pay to minimise the risk of death and injury. One such voice is Dr John Wren, who was principal research adviser at ACC.
Wren lives in a cottage near Carterton Rugby Club, just five kilometres down the state highway 2 from the Norfolk Rd intersection. It was he who suggested that particular accident blackspot as an example of the difficulty applying the VOSL calculations in real life. “How many deaths and serious injuries before NZ Transport Agency will do something?” he asks.
Covid-19 exposes the limitations of this economic model and indeed, the Ministry of Transport now says it intends to replace the 1991 methodology.
One question is whether New Zealanders would like government and other big organisations to pay more to protect them from certain types of death that they especially fear. This is known as the “dread” factor.
In the UK for instance, health authorities will pay twice as much to minimise the risk of death from cancer. And the Government will pay 10 times more for safety measures around nuclear power plants, because surveys show residents dread death in a nuclear accident 10 times more than they fear death on the road.
“I do think there has been an element of a ‘dread’ factor with Covid-19. The dread was looking at Italy and saying let’s learn and if we don’t act now there is no reason to say it won’t happen here.”
– Dr John Wren
So is there a similar dread factor around Covid? There’s not yet been any research, but anecdotally, it seems the public and politicians express a greater aversion to the risk of death from the coronavirus.
“Governments have basically been schizophrenic,” argues Dr Paul Frijters, a visiting professor at the London School of Economics. “To prevent a death marked as due to corona they have been willing to spend well over £1m per year saved. To prevent a death not marked as due to corona, they have basically not been willing to spend much at all.
“To save a person from corona, the New Zealand government has been prepared to damage its own economy such that many more over time will die, and the quality of life for the whole population will diminish much more than if they’d simply ridden out the virus.”
Let’s be clear, Frijter’s view is not mainstream. New Zealand economists told Newsroom that they agreed Covid-19 was treated disproportionately – but that’s not necessarily a bad thing. This is a disproportionate disease; it breaks many of the old models.
“I do think there has been an element of a ‘dread’ factor with Covid-19,” John Wren says. “The dread was looking at Italy and saying let’s learn and if we don’t act now there is no reason to say it won’t happen here.”
This is slightly different from the traditional dread model; which found people were especially repulsed by dying in manners that were perceived to be more unpleasant. What Wren describes here is a more systemic dread that goes beyond individual fears; that rightly recognises the potential of this killer virus to spread in a way that a dangerous road intersection cannot.
Wren asks: “What is the price New Zealand Inc is prepared to pay for the elimination strategy? What are the socio-economic trade-offs; are we happy with the choices made?
“The answer so far seems to me to be yes, the country is – I guess we will find out by how much on Saturday night.”
Saving lives at any cost
When the Government wrote out a $52 billion so-called “blank cheque” to keep the country running through the lockdowns, Finance Minister Grant Robertson said it was the price of saving lives and saving the economy.
Even that is not enough to prevent a precipitous fall in New Zealand’s GDP. Comparing the Treasury’s forecast growth track in its December Half-Year Economic and Fiscal Update, with its revised figures ahead of the election, shows it anticipates a $74.4 billion reduction through to the end of 2023.
Not all of that is caused by the government-imposed border closure and lockdowns; many people would have reduced their interactions with others regardless; exports would have been hit by our trading partners’ reduced spending.
“Lockdowns just have one consequence that you must never, ever belittle, and that is making poor people an awful lot poorer … It seems that we may well have a doubling of world poverty by next year. We may well have at least a doubling of child malnutrition.”
– Dr David Nabarro
The question is, given the Government has taken out $50 billion in loans to combat Covid; given the projected $74 billion loss to the economy, have we been consumed by politicians’ rhetorical need to beat Covid at all costs?
For, after Todd Muller’s initial dabbling with opening borders, National’s new leader Judith Collins is now battling Labour’s Jacinda Ardern on who would go hardest, who would close the borders tightest, who would put the most soldiers on guard at the borders and in managed isolation facilities. It’s become an election year arms race.
Amid the heat of the election campaign came this week’s unexpected position statement from the World Health Organization. “We in the World Health Organization do not advocate lockdowns as the primary means of control of this virus,” said Covid-19 special envoy Dr David Nabarro, cautiously.
“Lockdowns just have one consequence that you must never, ever belittle, and that is making poor people an awful lot poorer,” he added. “Look what’s happened to smallholder farmers all over the world. Look what’s happening to poverty levels. It seems that we may well have a doubling of world poverty by next year. We may well have at least a doubling of child malnutrition.”
The WHO position was far more nuanced than Donald Trump and many other critics of lockdown acknowledged; nonetheless, it did open up a smart discussion about the wider human and economic impact of a “go hard, go fast” lockdown strategy.
In the New Zealand context, it is right to ask the question of whether the country’s economic sacrifice is proportionate to the risk to human life. Have we imposed a greater Value Of Statistical Life when that life is threatened by the coronavirus, than when it is threatened by a dangerous highway intersection, or cancer, or the ravages of poverty?
Because a $74 billion hit to the economy doesn’t just mean rich business leaders trading in their Maseratis; it means families going hungry and struggling to put a roof over their heads. It means less tax revenue, and potentially, less to spend on schools and hospitals.
Of course, fighting Covid is not about saving a single life here or there. When community transmission takes hold, it could claim hundreds or even thousands of lives.
Martin Lally, an economist who advises Australian and New Zealand government price regulators, has calculated that New Zealand’s lockdowns save 1000 lives. If that is so, our economy is paying $74 million for every life saved – far, far more than the $4.6 million we are willing to pay to save our friends and neighbours from car crashes or a long painful death from cancer.
However, a team led by Auckland University professor Shaun Hendy (who has been advising the Government on its Covid response) previously calculated up to 80,000 Kiwis could die from coronavirus without strict measures such as the country-wide lockdown.
By that count, the $74 billion it’s costing the economy to save 80,000 lives is very little; less than $1m for every fatality averted.
That scenario works on the assumption that nothing is done to combat the virus – an abdication of community responsibility that nobody would seriously contemplate.
So the truth is probably somewhere in-between those two numbers, 1000 and 80,000.
And that brings us back to the simple truth that we cannot know for certain whether we have got our priorities right; this is not a controlled laboratory experiment, this is real people dying in real New Zealand communities.
As we cast our votes, we must simply fall back on our own intuition to judge whether the Covid response has been proportionate – and the extent to which we trust the judgment of our leaders.
A debt for the next generation
In Masterton, Andrew Graham is out working on a farm today, fencing the paddocks. He did get to university in the end, and did a Bachelor in Applied Science, majoring in agriculture.
“It took me 20 years to get my degree,” he says. “I was told by my neurosurgeon, ‘do not expect to pass a single paper’. I did seven papers in my first year; I passed four or five of them. The surgeon was quite pleased about that!”
Despite his brain injury and the ongoing epilepsy and other health problems, he has built a career and, with his wife of 22 years, has three children who will soon be heading off to university. One wants to be a civil engineer; he’s already done a research project on that dangerous Norfolk Rd intersection that nearly killed his dad.
“I don’t know how you quantify the amount of money that has been spent on Covid, when you compare it to the amount of money that’s been spend on fixing blackspots, getting the money into Pharmac to fund the right drugs, but no, I don’t think they’ve got it right at all.”
– Andrew Graham
Andrew Graham believes the sacrifice to eliminate Covid is disproportionate. We could have shut down the borders sooner, he argues; instead we are borrowing money to patch up the damaged economy. That is a $50 billion debt that will be left to his children, and their children, to pay back.
“Yes, they have saved this country a lot of heartache, but at what cost? I won’t see it paid off in my lifetime.”
So, it’s a matter of personal judgment, but is New Zealand taking a consistent approach to combating Covid, compared to other risks to social wellbeing – including the very real risks of poverty described by the WHO’s Dr Nabarro?
“Hell no,” says Graham. “That’s a definite no. I don’t know how you quantify the amount of money that has been spent on Covid, when you compare it to the amount of money that’s been spend on fixing blackspots, getting the money into Pharmac to fund the right drugs, but no, I don’t think they’ve got it right at all. I think they’ve put immensely more into Covid.”