By Sam Warburton*
The meth testing debacle is one of the biggest government failures in recent times.
The Office of the Prime Minister’s Chief Science Advisor’s report and the surrounding discussion, much of it predating the report by two years, has shone light on the primary cause: a lack of evidence in policy making.
At Housing New Zealand officials were not only uninterested in evidence (telling one journalist ‘no such advice [about the social impact of evicting people] was considered’), but actively shunned it (dismissing advice from “so-called experts”).
The problem is common in the public sector.
Last year we saw the fatality rate on roads increase about 10% over 2016, and 40% higher than 2013. Officials couldn’t say why and had ignored warnings by others years earlier.
The lack of evidence carried over to 2018 and into the debate about regional fuel taxes.
Regional fuel taxes have many costs and risks, are highly disputed, and burden the poor much more than the rich. To be properly informed, you’d expect detailed analysis and extensive consultation by Auckland Council.
The consultation document was four pages long.
A debate at Council about including a handful more words to the consultation document saw the Mayor Phil Goff worry about adding more detail.
The final debate where Council approved their regional fuel tax wasn’t much better. Sure, as Simon Wilson wrote in the Herald, there were some good speeches. Lyrically at least. But you needed to, with a few exceptions (most notably Councillor Efeso Collins whose speech from 1:03:56 is a must listen), look past the deficit of evidence.
Let’s fact check the text and speeches in Simon Wilson’s story, and from other parts of the debate.
CLAIM: “The regional fuel tax will add 11.5 cents to the price of every litre of fuel bought in Auckland.”
The regional fuel tax is a replacement of property rates and will help fund Auckland’s share of the Auckland Transport Alignment Package.
If not for a regional fuel tax, property rates would increase, or debt would increase to be repaid from smaller rates increases over a longer time period and/or new revenue sources like congestion and road pricing.
Rates are paid by property owners in a region. There is no way for Aucklanders to avoid them.
With regional fuel taxes, however, companies might spread the cost of the Auckland tax from relatively more competitive Auckland to the relatively less competitive lower North Island or South Island.
The Ministry of Business, Innovation & Employment released a report that suggests spreading already occurs with other costs.
If spreading happens with the regional fuel tax, other regions will essentially be subsidising Auckland.
In any event, we should know soon. If Parliament passes the amendments to the Land Transport Management Act, the tax will come into force on 1 July. By mid-August, I expect to have something to say about how much of the tax is being paid by Aucklanders and how much by other parts of the country.
VERDICT: Probably false.
CLAIM: It would take a 13% to 14% rate increase to raise the same money as the regional fuel tax.
This one was Mayor Goff.
Auckland Council officers estimate the rate increase to be between 10% and 11%. This appears to me to overestimate the increase, but if we take it as given, where did the Mayor get 13% to 14% from?
What the Mayor might have done is include rates increases of 2.5% that will be happening anyway this year.
Nevertheless, 11% still sounds like a big number!
There’s another number that sounds bigger though: 17%. That’s how much fuel tax will go up from the regional fuel tax. At 34%, it’s even higher if we include the increase in the national fuel tax the Government is planning.
Here’s the point: By the forecasts, Auckland Council is going to raise between $150 million and $170 million on average per annum for the next ten years. It’s the same amount of money whether it comes from rates or petrol taxes.
An 11% increase sounds disastrous, but so does a 17% increase. They are the same. You can’t reduce the magnitude by switching who pays, just who bears the costs.
VERDICT: False and misleading.
CLAIM: Regional fuel taxes are fairer than rates.
Mayor Goff said rates were unfair because they charge people who don’t drive, highlighting retirees.
He’s right that they charge people no matter how much they drive.
But to be sure about this claim we need to know what the socio-economic distribution of rates are and what the socio-economic distribution of fuel taxes are.
Unfortunately, the Council provided no socio-economic analysis in the consultation document and a total of one sentence in their final recommendations to Councillors.
What I know from my analysis is that fuel taxes disproportionately burden the poor.
The two vehicles below cause, to an infinitesimally small difference, the same wear and tear on roads and the same need for new transport investment. If they were diesel vehicles, the Government would charge them the same amount of road user charges.
If driven the average 10,000kms the Suzuki Alto, disproportionately owned by rich people, currently attracts $300 per annum in fuel tax. The ‘90s Toyota Hiace, owned, and sometimes even lived-in, by poor people attracts $900.
Under the regional fuel tax that'll go to $350 and $1,050 respectively. The national fuel tax increase will take that to $400 and $1,200.
Auckland’s regional fuel tax will, on average, charge:
- Māori 14% more each km they drive and they drive 7% more than others
- charge the unemployed 6% more each km and they drive 3% more than others
- charge sole parents 5% more each km and they drive 28% more than others.
The reason, I think, is obvious. Wealthier people who work regular hours take public transport.
And those averages hide great variability. For example, 30% of Māori households are over-taxed per km by 25% or more, compared to only 16% for NZ as a whole.
Mayor Goff and others have argued that the Government’s Families Package provides up to $75 per week. To this I’ll quote from Councillor Collins’s powerful speech (the $5 per week referred to is about how much many poor households will pay in regional fuel tax):
I’ve heard the arguments: ‘Oh, we’re lifting the minimum wage. We’re going to build more state houses and social housing. It’s going to be great for the people of Manukau!’
But what if you’re still at least $5 behind zero. The people of Manukau are behind the starting line...
... Yeah, I get it. We want Auckland to fly ahead. I understand that argument.
But when you are behind the starting blocks. When you are behind zero, when you are below zero, this is taking food off people’s tables.
Off the family I spoke with just yesterday who live in a 2-bedroom house, solo parent, on Vine Street in Mangere East. That family is saying ‘Efeso, how do we do it’.
And people have said to me ‘Efeso, don’t you want to think regionally. Of course we want to think regionally. Our people have been paying their rates and they never, they never, push back. Well, it’s time to push back. And it’s time for their stories, their experiences, to be heard.
What’s fair depends on your value judgements. You might think retirees are more deserving than that sole parent on Vine Street. You might even think wealthy professionals should have their public transport subsidised.
The claim is false for the technical reason that the Council provided no information by which to judge the fairness of rates versus fuel taxes.
Many people could reasonably say a regional fuel tax unfair. Many people could reasonably say that rates are unfair. What’s also unfair is the false choice between fuel taxes and rates. The Council should have borrowed, then paid back the debt from congestion and road pricing – an indisputably fairer system.
In fact that was the previous Mayor Len Brown’s plan. When the Council and Government signed-up to the Auckland Transport Alignment Package in 2016, the funding gap was to be closed by congestion and road pricing. They should have stuck to that policy; one guided by decades of literature and analysis.
VERDICT: False.
The fallout from Housing New Zealand’s rejection of evidence about methamphetamine has meant unjustified evictions, debt, homelessness and even allegations of death.
Transport agencies’ rejection of evidence has seen over 100 more deaths on the roads each year.
Auckland Council’s rejection of evidence will see poor people further impoverished.
Well, it’s time to push back.
Phil Goff cartoon by Jacky Carpenter. © interest.co.nz
*Sam Warburton is a research fellow at the New Zealand Initiative, which provides a fortnightly column for interest.co.nz.
58 Comments
By this argument the government should get rid of all fuel tax and subsidise roads through the tax system so to not burden the poor. Of course that would result in more people driving, more gas guzzlers polluting, and more tax for the middle classes.
Personally I think it should go the other way and they should remove all road costs from rates and move it to fuel tax (currently non-state-highways are 50% subsidised by rates). Subsidising car drivers leads to bad land use and environmental outcomes. If road users paid the full expense we might not have as much sprawl for example.
If road users paid the full expense we might not have as much sprawl for example.
Yeah, nah. Sprawl is a direct result of dopey planning practices. Read almost anything by unaha-closp on these august pages, and the multitude of expert advice, from the Productivity Commish on down, and see that strangling land supply in a context of increased demand will cause - higher land prices, except at the periphery, tens of kilometres away, so folks trade off commutes for mortgage debt.
SPRAWL101, really.
That is not a given. The whole point of this article is that people who are most impacted by a fuel tax are poor and poor people do not get "given the choice" on purchasing Auckland housing.
To target sprawl through taxation, we would need to raise rates on people who benefit from roads.
Did you miss this part?:
"Many people could reasonably say a regional fuel tax unfair. Many people could reasonably say that rates are unfair. What’s also unfair is the false choice between fuel taxes and rates. The Council should have borrowed, then paid back the debt from congestion and road pricing – an indisputably fairer system.
In fact that was the previous Mayor Len Brown’s plan. When the Council and Government signed-up to the Auckland Transport Alignment Package in 2016, the funding gap was to be closed by congestion and road pricing. They should have stuck to that policy; one guided by decades of literature and analysis."
Heh, Sam. Data. Evidence. I've recycled (spot the virtue signal there) my riff on Data/Evidence:
The classic Sierra Madre clip seems appropriate:
Evidence?
We ain't got no Evidence!
We don't need no Evidence!
I don't have to show you any stinkin' Evidence!
It's a good question and the answer is that congestion charges raise revenue which can be recycled. You only need a small proportion of that, recycled through rates in deprived areas or benefit levels or low-income tax cuts, to leave poor people even better off than before.
Interesting point but that says more about the restrictions on use of revenue that are placed on monies collected via fuel taxes.
The fairness associated with whether to choose congestion charging or a fuel tax relates more to what you are trying to achieve as a regulator.
If the intent is to lower congestion on only those specific traffic routes that are experiencing gridlock - then congestion charging is the way to go (as the charge/tax doesn't capture those vehicular trips that are not part of the problem).
If you are trying to raise new revenue to fund new infrastructure projects, then you choose a form of flat tax on all road users (like fuel tax) that captures everyone, including those who use the congested roads in off peak times and/or against the direction of the bulk of traffic.
So the question is: what is the root problem facing regulators in Auckland? Congestion or (lack of) money for PT?
And moreover, what is the root problem facing citizens in Auckland? Congestion or (lack of) PT.
Fuel tax is a very bad proxy for infrastructure cost as the two vehicle example demonstrates. It's not at all flat.
Road pricing for infrasture.
Congestion charging for congestion. The revenue from the which can be recycled to leave vulnerable people better off and the rest can go to whereever - maybe it's lower rates, lower road prices, lower taxes, more benefits, doesn't really matter.
There is no accountability in this country .... everyone asks for polys heads to roll, but no one kicks out incompetent bureaucrats ... Why?, because everyone is a master spinner and expert in shifting the blame and lose the issue...
Result, the public will pay and the bureaucrats are laughing all the way to the bank every month,
Time to stop being a country of idiots!
Really good analysis and a very thought provoking piece, Sam.
Are you able to tell me or link me to where you got the data in making this claim;
The reason, I think, is obvious. Wealthier people who work regular hours take public transport.
Not challenging it, just curious where the data for Auckland comes from.
Central government could counter some of the punitive effects of this additional tax on the poor by reversing out the tax hikes on tobacco that return them revenue in excess of the smoking-related costs to the health system. If I recall correctly, TSY wrote a paper in 2012 that said the tax take had already exceeded those costs.
I have often thought (and really should write to a Minister!) that if they really want to make NZ Smoke Free - they should simply raise the purchase age of tobacco by 1 year every year. By 2050, only a 50+ year-old would be able to buy smokes. Hence, the already addicted aren't penalised, but our youth never get started.
The evidence on tobacco addiction is clear: if you never start smoking, you never have to break the habit.
On this: "The reason, I think, is obvious. Wealthier people who work regular hours take public transport."
If high income people aren't driving as much, it's not because they're not working, it's because using another mode. It might be walking or cycling, but it'll mostly be public transport. Because it logically follows, I haven't looked up the Household Travel Survey to demonstrate it. Might be worth looking up at some point, but I don't think it's necessary.
You're right about tobacco. Smokers have long past the point where MPs could say it's about the health costs:
http://offsettingbehaviour.blogspot.com/2012/04/cant-kill-bad-stat.html
https://offsettingbehaviour.blogspot.com/2016/06/tobacco-excise-running…
https://www.stats.govt.nz/news/cigarettes-spark-inflation-for-most-hous…
It probably is partly true that rich people take public transport because for one it is actually expensive and another, it does tend to all go towards the central city.
But it is also true that most of the cyclists are the much maligned old white dudes who know whats good for themselves! ie Physical and mental health benefits plus the added bonus of "stuff you Goff/Darby"!
The politics of envy from interest.co.nz's foremost daisy (poppy) cutter..
I have some advice...
Act on the incentive.
In the process you'll drop the beer gut created from years of maligned internet commenting and actually save the country some money.
The reduction in health costs created through incentivising cycling surely outweighs any nominal taxation you could apply to it.
Thanks for the links. Very useful.
What I just can't get my head around re these punitive tobacco taxes is that the whole thing was brought in by the Maori Party - and nothing any government in recent memory has done to further impoverish Maori comes even close to these tobacco tax hikes.
I can see some Waitangi Tribunal in the future researching a claim about these taxes having breached the Treaty in some way - such is the extent of the unequal and inequitable burden they have caused the Maori population.
I do think he is equating "wealthy and/or rich" with those on median wages - and in comparison, he's equating poor to those on or near the minimum wage and/or those on less than the minimum wage (i.e., casual and part time workers, and those not in employment - but who might have to commute children via car to school).
I suppose someone on a minimum wage, or lower would view a median wage as 'wealthy'. It's all relative.
Are you referring to my idea about raising the age of tobacco purchase by one year every year?
If so, thanks for the encouragement :-)!
About enforcement. At point of sale, not a real problem, ID required just as for alcohol. Fines for retailers.
In terms of on or above age purchaser buying for those not of age, I've thought on that a lot.
I keep asking myself, why would anyone already addicted to tobacco want to facilitate the addiction of others not yet addicted? My parents smoked and never once offered me one - and I never asked because I wasn't a smoker.
The only reason illicit drug dealers promote drug use is for the repeat business associated with the sale.
And I don't see older folks, already struggling to pay for their tobacco addiction, wanting to start the younger generation on a path to lifelong addiction and the associated financial burden.
I think most young people who start smoking do so because their peers of a same/similar age have taken it up. That's how I started at 18 years of age - a girlfriend at uni smoked. She bummed me a few here and there, and after a while I started feeling guilty about smoking hers - so I bought a pack of my own and returned the favour.
I'm just thinking that, if no one in your peer age group is smoking, then that peer/social pressure becomes non-existent.
As years go on, the only people who do smoke will get older and older than young people (i.e., the age gap will widen), and I just don't see that (i.e., old folks smoking) as an image-identifier (i.e., smoking being cool/attractive) as drawing young people's desire for the product or the addiction.
But these are just thoughts based on no evidence whatsoever.
Evidence please that public transport use is dominated by wealthier people? In my experience it seems really mixed.
Also if Auckland's public transport is meaningfully improved, won't that mean some of the extra fuel cost will be offset by improvements in congestion? (Or at least limitting deterioration with regard to congestion).
Auckland public transport third most expensive in the world.
Can't believe you're so pumped about the $3.30 lol!
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12067987
Have you ever tried to park an X5 sized car in the Civic car park? Free entertainment while you wait for the bus watching the stoners getting their feed at the White Lady and you contribute less to the COL coffers with bus fares. It’s a win all around and from next month the Tamaki link bus is every 15 minutes. The boomers from the Bays love it.
The reason, I think, is obvious. Wealthier people who work regular hours take public transport.
Rich people can afford more housing choices. High paying jobs are concentrated in proximity to well heeled neighbourhoods. Low paying jobs are widely distributed, but poor people have to live in low cost housing.
Basically, rich people can afford to have a shorter commute.
I do not think the rich take more public transport.
If most council funding comes from Rates isn't it obvious that the wealthy pay more than the poor for council services? Even more so when the poor often live in overcrowded houses while the mega-mansions are inhabited by couples rattling around their multiple bedrooms, bathrooms and living areas. hat is the way it is and maybe the wealthy should just be paying a little more - I wouldn't mind paying more rates if it meant fewer working families living in garages and motels. Unfortunately it seems as if my ever increasing rates are going to ever increasing Council staff and consultants and their vanity projects.
What I find interesting, and disappointing, is that no evidence is acted on, and evidence - not acted on.
So we get the Science adviser calling the myth on P contamination, saying that mouldy housing was far more dangerous, - yet not calling for the evacuation of mouldy homes, when the evidence is clear that many hundreds of such types of mould infected homes are causing serious health issues, and even deaths attributed to mould.
It seems convenient to demonize the lack of evidence when it allows housing to be put back into circulation, but not the lack of action on evidence that would result in housing being taken out of circulation.
Maybe the social impact of evicting people from mouldy houses was deemed more worthy than the effects on their health if they are allowed to stay.
How about we try something really different, and allow people to stay in healthy homes.
That wasn't the point I was making. It was the fact that it the decision to release the P houses was because there was no evidence of harm.
So as validation of that argument, you would expect action where evidence said action was warranted.
And as you have pointed out, no one has provided the environment (ease and cost of material, labour, and skills) for that to happen.
But if we just looked at our present capacity, what we could do in the immediate, medium and long term is to stop right now building houses that, because of how they are built, will become mouldy. IE build healthy homes. There is no 'magic' needed to know what needs to be done to build a healthy home.
And they only reason we talk about 'magicing' up things, is the same reason when people are in a crisis/disaster that they want a helicopter to 'magically' to come to the rescue.
The fact that in a disaster it is too late to help some people, should not stop us from immediately (in parallel to helping victims with the limited resources we have) taking steps to prevent the disaster from happening again.
So the first thing we need to do is, within our present capacity, is just use the resources we have got better.
It's the present policies that give us unhealthy housing, and will continue to do so.
For example, insulating your house, either new or renovating, before you have controlled the flow of moisture movement, almost will guarantee that you will have further excess moisture issues long term that will lead to having more mould than if you hadn't insulated.
What the Govt. has failed to do is align policy with the correct desired outcome. The right outcome in housing would for the legislation to require as a minimum that houses build to a standard of structure and durability that makes them warm, dry, healthy and can be built at an affordable price. Our present building code and surrounding legislation allows us to build houses that do not provide these things.
If we were doing the right thing, then things would be getting better, not worse as they are doing. And I mean worse as in no real time progress politically, and in a crisis the action has to be real time.
Any real progress and benefit is coming from individuals that are battling the system trying to do the right thing, and some succeeding in spite of the political apathy, and in many cases interference.
A fairly sensible article on the whole but you mix apples and oranges when you analyse poverty like this:
"" Māori 14% more each km they drive and they drive 7% more than others
charge the unemployed 6% more each km and they drive 3% more than others
charge sole parents 5% more each km and they drive 28% more than others. ""
The unemployed might find a job and the solo parent can find a partner but what can a Maori do? The system is unfair to the poor in Auckland but it is not unfair to the multi-millionaire Maori family my son is good friends with. No need to bring race or ethnicity into a strong argument unless you are writing about specifically Maori topics.
It's a nice piece of work, and I do wish we had govt driven and acting more on analytically driven decision making processes. But evidence is irrelevant in the era of feelz driven policy. Politics is the art of the possible, and what is possible while trying to appease Greens, Winston and Unions will seldom be rational.
Yeah, my gut instinct is that folk at the top are aware this tax will disproportionately affect the poorer folk living further out, but it suggests that wealthier folk who live closer in for some reason matter more to them. The most likely alternative was to raise rates for them.
History gives us examples of Kings advised to kill off portions of their citizenry - many of these Kings declined the advice stating; 'It would be foolish to kill citizens, they're tax payers'.
Auckland has a housing crisis, homelessness and a growing population. Perhaps Auckland should make it easy to build houses, units, etc. More Houses = More Rates = More Council Revenue. It's pretty basic, just reflects the fact Aucklander's have been bad electors at the local-body level.
One of the biggest taxes on the poor is the throttling of money going into the real economy - manly due to the government's obsession with running a surpluses and paying off our national debt (which is already one of the lowest in the OECD).
lapun makes sense on his apple and oranges comment. However not one of you raised the point that Public Transport is 46% subsidised and yet the rural people have the most to pay on Public transport let alone the proposed fuel costs of getting into Auckland from say Pukekohe. 100 km round trip per day. There is no public transport that can get you to where you need to be from out here without it taking at least 2 - 3 hours. No need to reference "poor" - reference those who get ZERO benefit from these fuel taxes as the cost will be greater for those travelling distances - car tyres, services etc. No one has mentioned that cost either.
Make that subsidy 66% or more and the result would be more PT journeys which is good for users whether rich or poor but also a great benefit for those who have no choice but to use public transport because of reduced congestion. If there were twice as many buses and trains then PT would be even more attractive and so on. The best solution for Auckland would be faster trains. From North Shore the buses easily beat cars because of bus lanes and the busway - there has been dramatic increase in use of buses.
Hi DiDi. This is a good point and one I've done work on, just not finalised yet. Auckland gets about 40% more funding than it contributes in fuel taxes and road user charges. Wellington 60%. Other regions are around 40% less.
About a third of that is down to public transport and two thirds Auckland and Wellington getting more funding for roads.
So, yep, massive subsidisation of our two wealthiest regions by poorer regions.
Efeso Collins has a heart. He knows the impact this tax will have on already struggling people. The most impassioned speech Phil has made so far this term was the one defending his right to business class travel. The fact is that everything the council does whether simple or complicated costs far more than it needs to. The standing army of council staff and hangers-on need constant feeding. Corruption either subtle or blatant seems to be just under the surface everywhere. Everyone on the boat is doing well. So why rock it. We need a reality torpedo.
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