There is light at the end of the tunnel for a trans-Tasman bubble, but it is a long tunnel.

Last week New Zealand reached a fantastic milestone in the fight against the virus; zero new cases, zero cases in hospital and zero active cases. These are the zeroes you want to see when it comes to Covid-19.

New Zealand is the only OECD country in the world with that set of zeroes. Fittingly, that day last week coincided with the move to level one and the removal of all restrictions except border controls. It is a return to normal for the vast majority of New Zealanders which is a great state of affairs.

And most important of all, because of the continuing border restrictions, New Zealanders can return to normal confident that they are not about to unwittingly become part of a chain of infection that places the vulnerable in our society at risk.

Hence it should be no surprise to hear from the Government that they will have an extremely measured approach to any significant relaxing of the border restrictions. As we are all now well aware, the Covid-19 virus thrives in societies that are behaving in a normal way, the way New Zealand will now be operating. Even if you have the very best contact tracing available, the threat of an uncontrollable outbreak is all too real.

Imagine an asymptomatic but virus-carrying visitor arrives in the country, is allowed straight through the border, and then proceeds to attend Super Rugby and netball games before attending a large wedding. By the time that person realises they may have the virus, the web of contacts has become too wide to realistically contain. This understandably seems to be the type of scenario that is concerning the Government.

So, it is a mix of good news and bad news for the trans-Tasman bubble. Yes, it appears that both the New Zealand and Australian governments are keen to see such a bubble formed, but not until Australia has also managed to card some of the magic zeroes. This is because, once restrictions on mass gathering have been dropped, the risks are too high.

Australia is getting closer to the mark, but this is a very persistent virus. It is fair to expect that our Government will be looking for Australia to spend some time at their version of level one without seeing any type of resurgence of the virus.

There is light at the end of the tunnel for several of New Zealand’s listed companies that will benefit from a restart in unfettered trans-Tasman travel, particularly the likes of Auckland Airport, Air New Zealand, SkyCity and Tourism Holdings. However, it is likely that many months will pass before we emerge from that tunnel given what is at stake for both countries.

Sadly, those risks are being all to clearly illustrated in other parts of the world, particularly the US. In the US, states that reopened in mid-May are currently experiencing sharp increases in Covid-19 cases. Many states that reopened in May are reporting more new daily cases than they have had at any previous point in the pandemic.

Arizona is one of the most alarming of these states. It essentially went to its version of level one on May 17, with all businesses reopened and no restrictions on gatherings. This Google chart, that runs from John Hopkins data, clearly shows how the grim mathematics of the virus work when it once again is given the opportunity to spread. In three weeks the daily new cases in Arizona have gone from 40 to over 1,000.

Source: John Hopkins University and Medicine, (VIEW LINK)

It seems very unlikely that this exponential jump in new cases, emerging three weeks after mass gatherings were allowed, is a coincidence. The same John Hopkins data is also projecting that the state will run out of ICU beds for Covid-19 cases before the end of June. In other words, it appears that Arizona is currently on track to return to lockdown in the next few of weeks if it wants to avoid a full-blown healthcare crisis.

While Arizona is the worst case it is not the only state with more daily new cases than previously experienced. States such as Florida, Texas and North Carolina also reopened mid-May. These American states, that appear to have reopened too early, present clear examples of why our Government has in the past week made cautious comments regarding a trans-Tasman bubble.

It will happen but it certainly will not be in the immediate future. All going well, in our opinion, it could be some time in the fourth quarter of this year. In the meantime, the Auckland airport international terminal will remain a very quiet building.

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