Leaving an unexpected fare (it seems) for taxpayers to pay
The Beehive’s on-line bulletin board today brings news of another Minister headed overseas for very important business, another Māori housing project getting under way with the help of millions of government dollars, and beneficiaries being enabled by our beneficent government to beat inflation.
The travel plans unveiled were those of Disarmament and Arms Control Minister Phil Twyford, who will lead New Zealand’s delegation to the Nuclear Non-Proliferation Treaty Review Conference at the United Nations in New York.
The Government has invested $12.31 million, through its Whai Kāinga Whai Oranga programme, to support the $25 million development. Of this, $4.8 million has been funded through the Ministry of Housing and Urban Development’s Māori Infrastructure Fund.
Then came news of a report which shows Government support has lifted incomes for beneficiaries by 40 per cent over and above inflation since 2018.
The report takes into account inflation data from up to March 2022 and reports a 43 percent rise in After Housing Cost incomes, said Social Development and Employment Minister Carmel Sepuloni.
When adjusted for recent changes to inflation, the increase in total incomes in real terms is 40 per cent.
This figure does not take into account the Winter Energy Payment which is currently being received by 1.1m New Zealanders.
“This is the first time this data set has been collected, and it clearly shows Government action is having an impact,” Carmel Sepuloni said.
“This Government made a commitment to improve access to assistance and increase the value of that assistance. This report shows we are making progress.”
Sepuloni has not identified the report in her press statement, nor provided a link.
But social commentator Lindsay Mitchell has drawn attention to a report on benefits and incomes in an item headed Benefit incomes – why it’s not worth working.
Mitchell says the Ministry of Social Development has released a report on benefit incomes, then observes:
“I have long held that beneficiary advocates base their poverty pleading on the basic benefit rate, but those numbers are well under total incomes once the additional top-ups are included. ”
She proceeds to kick a few numbers around to illustrate her argument before inviting readers to go and look at the report, especially the section on inflation.(but don’t be tripped up by the ‘equivalisation’ process, she warns).
Point of Order put aside our reading of the report for now, however, to pursue another promising line of inquiry.
We were prompted to check out what happened to a programme mentioned in a ministerial announcement which we recorded a year ago:
The Government is taking Climate Change Commission advice with measures to increase the uptake of low-emission vehicles to help meet New Zealand’s 2050 carbon neutral target and create jobs to support the economic recovery.
The key points included new rebates for electric and plug-in hybrid vehicles, which started on July 1 with up to $8,625 for new vehicles and $3,450 for used.
Progress reports include:
7 APRIL 2022
Transport Minister Michael Wood announced today that the Clean Car rebate scheme has exceeded expectations by already reaching 12,000 approved rebates.
“The Clean Car Discount scheme is off to an electric start, helping to get more Kiwis behind the wheel of cheaper electric vehicles,” Michael Wood said.
30 JUNE 2022
The Government’s Clean Car Discount Scheme has been a success, with more than 57,000 light-electric and Non Plug-in Hybrid vehicles registered in its first year of operation, the most on record.
“Since the scheme came into force on 1 July 2021 there has been a 56 percent increase in the number of light-electric and Non Plug-in Hybrid vehicles registered in New Zealand, compared to the same period last year.
“The greatest growth has been in the brand-new passenger electric and plug-in hybrid vehicle market, where the sales market-share has jumped from 3 percent in 2020 to 8 percent in 2021 and 20 percent over March/April 2022.
“As a result of the new scheme, New Zealand is now fast catching up with global market leaders,” Michael Wood said.
But (who would have believed it?) you can have too much of a good thing.
No Right Turn reports what has happened under the heading A runaway success:
This year the government finally got its clean car feebate scheme into place. But there’s a problem: it’s been too successful:
Transport Minister Michael Wood will shortly review the cost of the fees and rebates in the Government’s “feebate” scheme after the runaway success of the policy has meant it is paying out millions more in rebates each month than it collects in fees.
The clean-car discount is meant to encourage people to buy cleaner cars by offering a discount of up to $8625 from the price of an electric or low-emissions car. These discounts are paid for by fees of up to $5175 on dirtier cars. The Government said it would regularly review fee and discount levels when it announced the scheme.
The scheme is meant to be self-funding, but it could become a victim of its own success, paying out millions more in fees each month than it collects in revenue. This could mean fees going up or discounts going down when the scheme is reviewed in just a year’s time.
The No Right Turn blogger is a bit bothered by this success.
Firstly, this sounds like the policy has been a huge success at driving the change it was intended to. Which shows just how much difference these sorts of policy pushes can make. Secondly, increasing fees is going to make dirty cars more expensive, discouraging their use even further. The big worry here is that the government will worry too much about making the books balance perfectly, and so undermine the impact of the scheme, when what they should be focusing on is the extremely rapid change they’re driving. Because we need to decarbonise as quickly as possible, and transport is one of the big sticking points in this. The faster we can do it, the better off we’ll be.
But let’s look at the numbers.
According to the NZ Herald, the scheme has paid out nearly a hundred million dollars more in rebates than it has collected in fees.
Until the end of June, the scheme paid out $116.9 million in discounts, but it only collected $25m in revenue.
However, these figures do not tell the full story. The scheme has been offering rebates since July 1 last year, but it only began collecting fees on April 1 this year. In the interim, the scheme was funded by a $300m loan from the Government that will have to be repaid.
For the three months in which the scheme has been collecting both fees and rebates, the numbers are tighter – although the scheme has still paid out almost a third more in discounts than it collected in fees over those months.
In the three months to June, the scheme collected $24.96m in fees and paid out $33m in rebates. In April, the scheme paid out just over $1m more in rebates than it collected in fees, in May, that figure increased to $2m, and in June the deficit was just under $5m.
Wood has said he is confident there is enough funding to cover the scheme.
“The Government has granted a crown loan to Waka Kotahi of $300m, which will be used to cover the cost until the 1 April 2022 changes can cover the cost of the Clean Car Discount. We’re beginning to see parity between the fees and rebates, and we are confident that there are enough funds to cover the scheme.”
Wood noted that the scheme has clearly influenced importers of vehicles, who in many cases have been importing lower-emitting vehicles into the New Zealand market to meet demand.
“This is the scheme working as it is meant to, to clean up our fleet,” Wood said.
The scheme was mainly designed by former Associate Transport Minister and current Green transport spokeswoman Julie Anne Genter, who tried to enact it in the last Parliament but failed to win the support of New Zealand First.
She, too, said the scheme was working to bring more low-emissions vehicles into the country, “which was exactly the goal”.
“If the rebates are greater than the fees, that means it has been even more effective than expected at incentivising a positive change in vehicle purchases,” she said.
But the National Party’s transport spokesman, Simeon Brown, urged the Government to not increase fees while Act’s transport spokesman, Simon Court, urged Wood to “abandon the policy altogether”.
“It doesn’t reduce emissions at an acceptable price and it’s putting additional cost on the productive sector,” Court said.
Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton