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Letting private enterprise handle Covid quarantine is a really stupid idea

Written By: - Date published: 11:55 am, July 27th, 2021 - 31 comments
Categories: act, australian politics, covid-19, david seymour, health, immigration, privatisation - Tags:

The real leader of the opposition, David Seymour, is advocating that we allow private enterprise to take over the country’s quarantine system, the system that so far has managed to shield us from everything but the occasional community outbreak of covid that has been dealt with successfully, at least so far.

From his press release:

“With every passing day, New Zealand’s isolation is turning from its great strength to its greatest weakness. As the rest of the world moves on from COVID, we must be prepared to move with them.

“Under ACT’s plan, owners of currently mothballed hotels could seek a licence to operate MIQ according to strict criteria. These criteria would make for safer MIQ than the standards met by the Government. The criteria are:

Only those with a negative pre-departure test would be eligible

Only vaccinated travellers could use this MIQ

Only vaccinated people could be on site, regardless of their employment status

All people on site would have to be saliva tested every second day

Providers must be licensed, and could lose their licence for breaching these conditions.

“These criteria are much stricter than the Government’s MIQ scheme which takes unvaccinated travellers and tests them only three times in 14 days, and still can’t guarantee that all workers on site are vaccinated or tested.

And so far his proposal has received some positive responses from the media, with no negative push back like saying that the idea proved to be disasterous for Melbourne.

If your criteria is that we need to open up the borders so that farms and orchards and restaurants can employ cheap labour again then the current system is a failure.  If your criteria is that we need to be kept safe then the successful prevention of the spread of covid after 158,014 people have been successfully through quarantine with only a handful of problems would suggest that the system was working rather successfully.  You could loosen things up.  But the threat of the spread of Delta Covid would logically warn against taking this risk.

If you want to see how spectacularly bad private enterprise can handle quarantine then Melbourne in the past 12 months provides a shining example.

The essence of the problem was that the Victorian Government hired private security firms to manage Melbourne’s Quarantine hotels.  The organisation was shambolic and breaches of the quarantine resulted in the three month lockdown that Melbourne endured last year.

The ABC has this description of what happened:

… [A] number of cases of coronavirus in late May and early June (2020) were linked to infection control breaches.

Genomic testing has linked many of the state’s recent infections back to private contractors working at two quarantine hotels.

Reports have also emerged of contractors having sexual relations with guests and families being allowed to go between rooms.

It comes as two men who both spent a fortnight in hotel quarantine in Melbourne tested positive after returning home to New South Wales and the Northern Territory.

Chief Health Officer Brett Sutton on Thursday distanced himself from the decision to use contracted security guards, saying it was not made by him.

“But it was jointly oversighted by emergency management within the Department of Health and Human Services, Emergency Management Victoria and Department of Jobs Precinct and Regions,” he said.

The problem is identified in this article by Richard Holden in the Conversation.  From the article:

But what can economics tells us about why this happened?

Thanks to the literature on “incomplete contracts” that led to a Nobel Prize for Harvard University economist Oliver Hart, quite a bit.

Using private contractors for hotel quarantine was destined to fail. It all boils down to a trade-off between costs and quality.

Using private providers is a good option when keeping costs low is more important than high quality. This was not such a case.

Hart’s classic 1997 paper on “The Proper Scope of Government” (co-authored with Andrei Shleifer and Robert Vishny) mostly considers privatisation in theoretical terms, with some discussion of prisons, garbage collection, schools, health care, policing and a few other things.

The animating idea behind the “incomplete contracts” approach is that there are some contingencies that contracts, no matter how detailed, can’t cover.

This could be because parties can’t conceive of all future contingencies. Or perhaps they understand what’s at issue but it is hard to codify that in a way a non-specialist court could understand.

Making those day to day decisions with a profit margin motivation will always mean that the cheaper rather than the safer option will be taken.  And you can’t draft a contract covering every possible contingency.

As the Royal Commission Inquiry report into the breaches highlighted oversight and responsibilites were confused and there was no training of staff in prevention measures.  From the report:

IPC measures are essential to a successful quarantine program. It was necessary to have those with the expertise in infection prevention and control deliver that training. Nothing short of constant reinforcement, supervision and oversight from those with the necessary expertise was what was required in such a highly infectious environment.

There were no infection prevention and control experts stationed at the hotel sites to give guidance, oversight or supervision on the range of risks to which hotel staff would be exposed and what they needed to do to mitigate those risks.

Advancing a proposal to provide privatised quarantine services may serve ideological preferences but there is a great deal at stake.  And recent experience across the ditch suggests that it is a rather stupid thing to do.  As Richard Holden states some services should be provided by the state and the measure of success should be the overall effect on the community, not on how cheap the job can be done.

31 comments on “Letting private enterprise handle Covid quarantine is a really stupid idea ”

  1. Robert Guyton 1


  2. Andre 2

    Oh I dunno – it looks like a reasonable proposal for how to handle incoming travellers – after everyone in NZ that wants the vaccine has got it.

    Which should be in about five months or so. Until then, what we're doing now is just fine by me.

    • Nic the NZer 2.1

      Your still trying to find a humane way to kill off the ACT support base?

      • Andre 2.1.1

        I'd imagine ACToids are suffering enough right now with severe cognitive dissonance.

        It would be an awesome struggle between what residual genuine libertarian instincts they may have left pushing them in the direction of freedom to refuse vaccination, and their instinct to let the rich and powerful dictate to everyone else – in this case requiring everyone else to be vaccinated so they don't lose productivity through getting sick.

  3. pat 3

    Would the private providers charge the users for such a service?

    • David 3.1

      Yes. From they ZB radio interview yesterday they would also be fully vaccinated.

      • pat 3.1.1

        And did they have any numbers to provide?

        i.e. how much will any user be charged for their quarantine?

        what guarantee the facility will remain operational should it be losing money?

        what happens if they are unable to engage sufficient staff?

        • David

          I guess another way to ask the question is how much are people willing to pay?

          I am close to a split family, both senior oncologists in Auckland with a young family. One parent went overseas in February to attend a funeral. That individual has been unable to get an MIQ spot and remains overseas. They are fully vaccinated. The family here are so distraught they are packing up and moving overseas. Auckland looses two public health oncologists.

          Now if only there was a private MIQ facility…they are very happy to pay…we would still have two senior cancer care specialists in Auckland.

          Oh well, guess we can just backfill their role by employing a couple of locals.

          • pat

            If there was enough liability protection it may be a worthwhile proposition…..how large a (up front) bond do you think may be needed?…It was estimated the Auckland lockdown cost 240 million a week….so say maybe half a billion.

  4. Enough is Enough 4

    And so far his proposal has received some positive responses from the media, with no negative push back like saying that the idea proved to be disasterous for Melbourne

    Melbourne? Where

    • noone had negative pre-departure testse;
    • there werenly vaccinated travellers could use this MIQ;
    • Only unvaccinated people were on site, regardless of their employment status
    • no people on site had saliva tests
    • Providers were not licensed

    So not one of Seymour's criteria was met in Melbourne.

    • mickysavage 4.1

      Even if they were met there would be new issues and criteria arise which private providers would make decisions that erred on the side of profitability and public providers would err on the side of caution,

  5. peter 5

    What's the surprise? Seymour wants private enterprise run schools too.

  6. Ad 6



    This is the biggest test of our entire public service including the military since WW2.

    And the entire population is at stake.

    So our public service better not give Act any excuse.

  7. Muttonbird 7

    David Seymour is probably the most dangerous man in New Zealand.

  8. AB 8

    If you did a risk analysis of passing MIQ duties to the private sector – number 1 on the risk register would be "the profit motive". Sensible people would not bother going to number 2 before pulling the plug. Or, only if the consequences of failure were so trivial that they didn’t really matter, would you consider it.

    • indiana 8.1

      Why should we care if a private service provider makes a profit? At the end of the day, if the government sets the standards to be met, audited by the government as per a contract signed between the government and the service provider. Where does making a profit become a risk?

      Running a MIQ is really not an essential government service, but setting the policy for how a MIQ is run is. This is not limited to sending in essential government services to undertake testing at a privately run MIQ.

      • weka 8.1.1

        Lol, you don't know much about contracted health and disability services in NZ.

        There's a clear conflict of interest between for profit and providing social services. Whatever standards/auditing/contracts Labour set up, National can monkey wrench in power. Thus is the history of healthcare in NZ, only Labour have done some weird monkey wrenching themselves.

        • weka

          From the post,

          Making those day to day decisions with a profit margin motivation will always mean that the cheaper rather than the safer option will be taken. And you can’t draft a contract covering every possible contingency.

        • Rosemary McDonald

          ….you don't know much about contracted health and disability services in NZ.

          Thanks weka. I saw the heading of the post and thought…FUCK! Quick! Remind the good people about how stunningly awesome contracting out core services to the private providers has been for health and disability in Godzone!

          You saved me having to do that.wink

          • gsays

            Not to take away from yrs and weka's point, I want private profit removed from all sorts of state funded services.

            Orderlies, security and food services in hospitals. Electricity, gas and water providers should be run as not for profit, or if there is a surplus it is reinvested.

            An argument can be made for internet access to a certain amount of band width too

            • Rosemary McDonald

              All of that too.

              We can use the disasters, sometimes fatal, in the disability services sector as evidence that private ain't necessarily better, or more efficient.

        • indiana

          I do get what you are saying. However in my mind an MIQ is effectively a hotel, but the patrons can use the facility the same way as they would on holiday or business.

          A MIQ facility does not mean people are getting treatment or any other health services there – apart from providing a sample for testing. If they do get sick, then they are moved to hospitals where I agree the non-profit model should apply. But even in this wonderful ideal non-profit model, not all health services are deemed essential by our governments.

          • indiana

            the patrons can use…should be 'cannot'

          • mpledger

            Then it would be in the private company’s interest to give everyone staying there covid – they can jettison them to the govt MIQ facility and make more room for the next lot of paying people. Higher throughput, higher profit.

  9. Stuart Munro 9

    The response from the howling waste of far right views is nothing if not consistent.

    But not so very long ago, even they were prepared to listen to the best science available. Over the last week, due to patchy internet and inclement weather, I read an old copy of Tom Clancy's Executive Orders I got from an opshop. The bad guy cultivates Ebola, and releases it in America. This Jack Ryan defeats by a lockdown, with far fewer casualties than an 80% fatal disease might be suspected to entail. Published in 1989 – sometime before the Right became so loony they could vote for Trump.

  10. Pete 10

    I can see some entrepreneurial type building an 11,000 bed facility, a veritable town, for quarantine. Near Ohakea so the planes can fly straight in and drop their loads off. A staff of thousands would be housed handy of course as well.

  11. Politicians will say (and do) anything to get headlines/attention. He and his ilk crave media attention.

    Seymour is "jumping up and down and waving his knickers in

    the air".

    My hat tip to Hogsnort Rupert.

  12. seymour wants everything managed HIS way. YAAWN.

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