New Zealand is entering its first day in the new, more relaxed orange traffic light setting of the pandemic response. 

The orange mode abolishes capacity limits and seating rules at restaurants and other venues, but face masks must still be used on public transport and in retail. 

Covid-19 Response Minister Chris Hipkins yesterday said positive signs including a fall in new case numbers meant it was time to relax restrictions and depart from the red setting. 

At the zaniest Covid press conference of 2022, Hipkins forgot what new mask rules were and was asked about allowing "pashing" in nightclubs but enforcing mask use in shops. 

Many people are now expected to start returning to workplaces, in some cases after months working from home. 

"There's definitely excitement from workplaces and businesses, with good reason," clinical psychologist Dr Dougal Sutherland told the Herald. 

But he said a return to the office for thousands of people could present major mental health challenges. 

For many, working from home was now normalised and some might struggle with long commutes and other realities of working at the office, Sutherland said. 

He said some staff would be eager to keep working from home at least part of the time. 

"Research around it shows a few days at home are really good for people's wellbeing and productivity. From one to three or four days at home seems to be the sweet spot." 

Companies should establish long-term plans to help employee mental health after the turmoil of lockdowns, Sutherland said. 

"We have made an awful lot of adjustments." 

Businesses were largely expected to welcome the move to orange after growing weary of restrictions the red setting imposed. 

Ahead of the announcement, Auckland mayor Phil Goff and business leaders Michael Barnett and Viv Beck all told the Herald they were hoping for a move to orange. 

But perceived anomalies of the new traffic light setting left a major retail group fuming. 

Retail NZ chief executive Greg Harford said a lack of progress on mask-wearing rules was infuriating. 

"While it is good news that the country is moving to orange, it is absurd that the Government is removing mask requirements in the hospitality and education sectors, but keeping them for retail." 

He said it was ridiculous to suggest masks were needed more in socially-distanced retail settings than in crowded nightclubs, classrooms or cafés. 

"Masks are a source of significant anger and aggression from members of the public," Harford added. 

National Party leader Christopher Luxon said the trouble Hipkins had articulating the latest mask advice showed the traffic light system was too complex. 

"It underscores that it's got very, very confusing very, very quickly. 

"Fundamentally it's a complication and confusion," he added. "I'm just looking forward to having a mask-free dinner with my wife." 

"The traffic light system is redundant," Act leader David Seymour said. "The Government has dismantled their own system to the point it has no reason to exist." 

He said the system was enacted to control crowd limits, encourage vaccination and for contact tracing - but none of those elements were relevant anymore. 

Prime Minister Jacinda Ardern said moving to orange was "fantastic" and would bring benefits today for the hospitality industry especially. 

Ardern said people generally knew it was sensible to wear masks in supermarkets or other retail outlets. 

"Generally, I encourage people to keep using them where it's practical," the PM added. 

Hospitalisations were well down on previous weeks. In Auckland each of the three hospitals had fewer than 100 patients with Covid-19 for the first time since late February. 

University of Otago epidemiologist Prof Michael Baker was confident Auckland had passed the Omicron peak, but other regions were still seeing high case numbers. 

"In some parts of New Zealand, around 80 per cent of schools have got cases – so for most of the country, this risk is far from disappearing," he told the Herald. 

"You only have to look to Northland, where case numbers have only dropped a third from its peak." 

Under the orange setting, the isolation period for people with Covid-19 is still seven days. 

Meanwhile, Associate Professor Donna Cormack of the National Māori Pandemic Group said other viral illnesses such as flu could compound any future Covid-19 resurgence. 

Immunologist Dr Dianne Sika-Paotonu said 72.7 per cent of eligible people had received booster shots but only 57.2 per cent of Māori and 59.3 per cent of Pacific peoples had. 

University of Otago statistics expert Dr Matthew Parry said nationwide daily case numbers were down but the picture was not uniform. 

"In the West Coast, daily case numbers are probably still rising, and in Northland and Southern DHBs, daily case numbers remain stubbornly close to their peaks." 

Modeller Prof Michael Plank said it was good to relax traffic light settings when cases and hospitalisations were falling in most parts of the country. 

He said hospitalisations and staff absences put intense strain on the healthcare system but New Zealand had still flattened the wave of the Omicron curve. 

The Ministry of Education said at orange, face masks were no longer required at school. 

But the ministry said it strongly encouraged students and staff in Years 4 and above to keep wearing face masks. 

The next traffic light system review is expected in mid-May.