Treasury’s pre-election fiscal update makes for grim reading.

Bryce Wilkinson tallies the numbers, showing the forecasts are based on heroic projections about growth in labour productivity and on greater fiscal discipline than has been the norm. That means debt to GDP ratios will be worse than forecast for longer than is safe in a country subject to many other risks.

The long term is scary. But the next couple of years give me nightmares.

The fiscal update assumes border restrictions can lift from the beginning of 2022, but also provides worse forecasts about what happens if only a limited opening from mid-2021 is possible. In that case, unemployment would be almost a percentage point higher in 2022 and GDP growth rates would be over a percentage point lower in 2023.

Even if an effective vaccine is developed by the middle of next year, scaling up production and distribution will take time. Covid-19 is likely to be around for a while. There is, at minimum, a strong insurance argument in favour of preparing for a worse-case scenario. And there is worryingly little evidence that the Government is preparing for it.

The border’s managed isolation system is straining to handle even 14,000 monthly arrivals. Scaling that system up, recouping costs through user fees, could be well worthwhile. In the scarier Covid scenarios, safely accommodating more entry will help avoid the worst economic consequences. Overseas remote workers could relocate to New Zealand, continue to be paid by their overseas employer, and spend and pay taxes here. Businesses could relocate here as well. But the border system needs to scale up.

This week, Air New Zealand laid off hundreds of air cabin crew, many of whom would need only a little additional training to work in managed isolation. If the Government is preparing for the longer term, where are the staff training programmes for building up managed isolation?

But the policy problem extends beyond the border.

Firms pivoting to new opportunities in desperate circumstances need access to funds. But rather than simplify this, the Government has tightened restrictions on access to foreign capital.

More risk-sensitive approaches for any future Level 3 restrictions still need to be built, along with support programmes suited to a longer-term Covid world.

Setting policy to prepare for that reality would make the outlook rather less grim.