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Dunne Speaks: Don't Get Too Excited By The "ute" Tax Delay

This week’s announcement that the introduction of the government’s proposed “ute” tax is being delayed by three months until 1 April next year will have been welcomed in many quarters. Those who joined the recent Groundswell protests will see it as vindication of their efforts and a sign that the government has listened to what they had to say. They will be encouraged to believe that their “Howl of a Protest” in July pushed the government this far, and that their “Mother of all Protests” planned for November will finish off the job, and lead to the “ute” tax being abandoned altogether.

They are almost certain to be disappointed. The government’s decision had little to do with their protests and much more to do with the impact the Covid19 pandemic is having across every area of government activity. It is one of many planned government initiatives, often far away from any direct connection with the management of the virus, that are being postponed or delayed indefinitely, because of Covid19. In some cases, this is occurring because of a direct transfer of resources into the pandemic response, while in other cases, the virus is being used as a convenient bureaucratic excuse to delay work and projects that might otherwise be awkward or unpopular.

But the impact is undeniable. Slowly but surely, the pandemic is strangling the process of government. And it is set to continue to do so for some foreseeable time yet. As the extent to which the government can borrow offshore to fund recovery programmes diminishes, and the capacity to recruit quality staff reduces because of ongoing border restrictions the pressure on existing resources in the public and private sectors will intensify. More government programmes, large and small, significant and not so, will be either squeezed, delayed or dropped to meet the demands imposed by the pandemic.

Last week, the government announced that its flagship Climate Change Reduction Plan, which has already been the subject of so much debate and consultation, has been postponed by five months. The official explanation is that this is because the new timing better aligns the plan with the government’s 2022 Budget round. But this excuse is somewhat hard to swallow. Climate change has been a dominant part of all governments’ activities since the Clark Labour-led government first implemented an emissions trading scheme well over a decade ago. A considerable amount of work has already been undertaken by successive governments of which the Climate Change Reduction Plan is the culmination. What the delay decision really means is that the government no longer has the resources available this financial year to proceed with implementing the plan according to the timetable originally intended.

The significance of this should not be under-estimated, especially with the international Glasgow Climate change conference looming. New Zealand was already about two months late in reporting its climate change response intentions to the United Nations even before this additional delay of the Climate Change Reduction Plan until next May was made public. Sadly, taken together, these delays will weaken considerably any moral authority we might have been seeking to display and exercise in Glasgow, which must be a bitter pill for the Climate Change Minister and his delegation to have to swallow on the international stage.

Elsewhere, with house prices continuing to soar, social deprivation on the rise, and health and social inequities between Māori and Pakeha still pronounced in some areas, the government’s energy for reform has been similarly sapped by the exigencies of dealing with Covid19. Even the review of the role of the government’s drug buying agency, PHARMAC, has been stalled. It further deepens the mystery of why PHARMAC has been so shut out of any role in negotiating the purchase of the Covid19 vaccinations the country needs.

Yet to some extent, it could be argued that all this represents nothing more than the normal ebb and flow of being in government and that the art of government has always been about determining the attention to be paid to competing priorities. According to this argument, governments have always had to cut their cloth according to the pressures of the time, and that what is happening now is really no different, albeit somewhat more challenging, than the norm.

However, while elements of that do apply in the current pandemic response, the overall situation is different – simply because of the scale of Covid19’s impact – from previous situations. Even comparisons to World War II are misleading. During World War II large sections of the domestic economy were turned over to munitions and food production that produced an economic and employment benefit, whereas the Covid19 response so far has relied more on government support payments for individuals and businesses whose capacity to produce and earn has been disrupted or stopped altogether by the virus. It has been more focused on retaining what we have, than expanding the economy because of new opportunities created by the pandemic.

There are no easy answers in this. People rightly expect the government to do what it can to protect the public health from the ravages of the virus and to make sure it has the necessary financial and other resources available to do so effectively. But they also expect that the other issues they care about – climate change most obviously, but not exclusively – will not be lost sight of in the process. It is a difficult balancing act, and the government has few precedents to draw upon as it sets out to achieve it.

Therefore, in the meantime, more short-term deferrals like the “ute” tax and the Climate Change Reduction Plan seem on the cards. There will come a point, though, when either the public becomes tired of the Covid19 excuse, or the other issues become so pressing in the public mind that they cannot be delayed or put to one side any longer. And the much wider question, far more difficult to resolve at this point, is what our society will look like then, and what the impact will be on generations whose futures and prospects are being shaped by the decisions made today.

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