Beware of the Leopard, and of the Ministry of Health

Dr Eric Crampton
12 October, 2021

In The Hitchhiker’s Guide to the Galaxy, Arthur Dent found the Council’s plans to bowl his house, to make way for a bypass, the day before its scheduled demolition.

The plans had been publicly consulted, of course.

They were on public display.

In a locked filing cabinet, in an unlit disused lavatory, in a basement whose stairs were broken, behind a sign warning, “Beware of the Leopard.”

The Ministry of Health’s proposal to quasi-expropriate Rako Science’s saliva-based PCR COVID testing has enjoyed comparable public consultation.

The plans are on public display, of course.

They are in proposed Sections 11(1)(d)(i-v), and proposed Section 11A, of the COVID-19 Public Health Response Amendment Bill (No 2), available on the Parliamentary website.

They can easily be found and read by anyone who diligently checks the Parliamentary website for new bits of legislation and trawls through them looking for stray clauses that might happen to expropriate one’s business.

The legislation was brought on 29 September. Rako Science found out about it six days later, on 5 October. Jonathan Milne reported on it for Newsroom on 6 October. Submissions closed yesterday, and a truncated Select Committee process will soon begin.

The short set of clauses buried in an obscurely named Covid omnibus bill gives the Minister of Health, and the Director-General of Health, an extraordinary set of powers over Rako Science, New Zealand’s lead provider of accurate PCR testing for the private sector – as well as any other private laboratory handling Covid testing.

The legislation would give the Minister, and the Director-General of Health, the power to requisition supplies from private testing labs. They could also require labs to undertake testing for the Ministry, regardless of existing contractual arrangements.

A Fact Sheet and a rather perfunctory Regulatory Impact Statement accompany the legislation. They provide some pointers to what the Government thinks it is doing. The Government wishes to avoid shortages of consumable materials, like swabs and reagents, used by Covid testing labs. And the Government wants the power to force labs to stop providing Covid testing for the private sector if it wants that capacity for the public response.

On the plus side, the Government seems to have finally recognised that vastly more testing is required as part of the public health response to the growing outbreak. Perhaps the Government had gambled on that the border defences, and elimination, would hold until vaccination rates were much higher.

But even then, more testing would still be needed.

In places where Covid has become endemic, testing is ubiquitous. For example, half of all primary and secondary schools in the state of Illinois, where the Covid-SHIELD testing system used by Rako Science was developed, use that testing system for weekly testing of staff and students. The other half of schools, in Chicago, are covered by a different provider.

New Zealand will need a lot more testing, for rather some time.

While it is laudable that the government is belatedly realising the importance of getting more testing, it seems unlikely that the Ministry or the Director-General have any clue about the likely effects of their proposal. Even if the measures are never invoked, they are likely to cause the opposite of what the government presumably intends.

The Government is giving itself the power to requisition testing supplies to redirect them toward the public health effort. Presumably the Government has seen that its current testing system hits capacity issues rather quickly, and wishes to avoid bottlenecks in the supply of sometimes-scarce materials.

But the power to take, at a deemed market price, during a time of shortage, is really a hefty tax on labs that maintain prudent reserves of testing materials against such potential shortages.

Currently, labs have reasonable incentive to maintain reserves of necessary materials. Testing materials become scarce at precisely the time that testing is most needed: in outbreaks. Global shipping delays means nobody can entirely rely on just-in-time supplies from abroad. Local stockpiles are necessary.

Labs able to credibly demonstrate an ability to continue testing during an outbreak, because they maintain prudent stockpiles, will have an advantage in contracting with businesses and organisations needing that certainty. Rako Science currently contracts with hospitals that provide elective surgery, with power generators who need the lights to always stay on, and with processing plants that need to be able to continue operations safely despite outbreaks.

If the Government wanted more testing capacity, it could have contracted for that capacity. And it still could. But over the past year, the Ministry has repeatedly rebuffed Rako’s offers to provide testing. The Ministry of Health also told Rako not to maintain any extra testing capacity for the Government as its services would not be needed.

Shifting from a view that Rako’s testing were not needed, to that they are so necessary that they could warrant requisitioning, seems somewhat incoherent.

Once the Government has the ability not only to requisition materials away from prudent labs, paying only some deemed market value for the effectively stolen supplies, but also the ability to force those labs to ignore existing contracts and to provide testing for the State instead, bad things happen.

Existing clients would see the obvious threat to the security of their continued ability to undertake testing. That makes contracts less valuable. Labs can purchase sufficient supplies to tide them through shortages and international shipping delays. They cannot purchase sufficient supplies to ensure that they have enough left in the event that the Government decides to requisition all of the testing materials or all of the testing capacity.

And if the biggest thief in Wellington, whose offers are impossible to refuse, sees your prudential stockpile of testing materials as tempting, what incentive do labs have to maintain those stockpiles in the first place? After all, the Government could well instead decide to requisition someone else’s supplies on your behalf, come the crisis.

When all is done, we have a Ministry of Health who, after spending most of the past year seemingly doing its best to thwart Rako Science’s provision of accurate saliva-based PCR Covid testing, and after telling Rako that its services would not be required for the public health effort, is now preparing simply to take Rako’s testing capacity through requisitioning powers. While saying it hopes not to need to use such powers.

It is not right. It will have repercussions for security of contracting and investing in New Zealand. And it will hinder the Covid response.

Outside perhaps of a zoo, New Zealand needs no signs warning us to Beware of the Leopard. But there is a bigger and more dangerous predator in town. A few warning signs about it may be in order.

Stay in the loop: Subscribe to updates