Covid quarantine fees about emotion not economics

Analysis: Overseas Kiwis affected by the new managed isolation fees say the policy doesn’t stand up to the usual tests of efficiency or fairness. Laura Walters reckons this debate has more to do with emotions than costs

When Megan Woods announced a new user-pays managed isolation system, expat Facebook groups quickly became crammed with impassioned comments.

Over the past few weeks these groups have been dedicated to mounting a co-ordinated, sustained and well-reasoned opposition to a fee for Kiwis coming into the country.

There have been surveys, petitions and legal advice, as well as the exploration of potential human rights breaches and breaches of Te Tiriti o Waitangi, should a charge be introduced.

The pages have been filled with tear-inducing stories about those who would be cut off from spouses, children and parents.

At first glance, the Government has done exactly what many overseas Kiwis feared: there will soon be a $3100 fee for the first person’s two-week stay in managed isolation, with a $950 charge for each additional adult, and $475 for each additional child.

But a second look shows that’s not really how the policy would work in practice.

Anyone moving home permanently would be exempt. Those unable to pay: exempt. People with sick or dying relatives: exempt. Other extenuating circumstances: probably exempt.

It’s those occupying the “squeezed middle” who look most likely to be affected. A small number who aren’t in financial hardship, but generally live paycheck to paycheck, and would struggle to travel with this added cost.

Given there’s such a long list of exemptions: why bother at all?

The fees are expected to apply to just 10 percent of those using managed isolation.

And the amount the Government expects to recover in costs is between $2 million and $9m. It’ll cost $600,000 to administer.

“I suspect efficiency is limited in this case, given regulatory burden and very low revenue likely to be generated.”

When asked if the law was supposed to be a deterrent, rather than a revenue gatherer, she said no.

It’s about fairness, she says.

Sense Partners economist Shamubeel Eaqub says every policy needs to meet an efficiency and fairness test.

“I suspect efficiency is limited in this case, given regulatory burden and very low revenue likely to be generated.”

But not all the costs and benefits are financial, and the trade-off between fairness and efficiency are not equal. 

Some of it is about signalling that the Government is using the country’s collective resources wisely and thwarting free-loaders.

Eaqub says from a purely economic perspective this policy wouldn’t be worth the bother. 

“But from a political economy perspective it is.”

Woods says all Kiwis would agree a fee is fair “in the right balance”.

But with September 19 looming, this decision seems to be more about being seen to be fair, rather than actually enacting a fair scheme.

Infometrics senior economist Brad Olsen agrees this needs to be seen in the context of the upcoming election.

“If everyone benefits, it seems appropriate that everyone (taxpayers and those returning) both shoulder the cost.”

The Government needs to have regard for financial prudence in the face of higher debt stemming from the pandemic, and it doesn’t want to be seen as providing everything for free.

There are no good options here, he says.

But while the small amount of revenue generated hardly seems worth the while, it’s important to remember the country doesn’t have a money tree funding various Covid-related costs.

Everyone benefits from isolation.

“If everyone benefits, it seems appropriate that everyone (taxpayers and those returning) both shoulder the cost.”

But those who have been excluded from the 'Team of Five Million' say this policy doesn’t seem fair.

While the debate began under the guise of cost burdens and the prudent use of taxpayer funds, it’s become about values and a disagreement over what constitutes fairness.

“I was so proud of you all before... Now all you’ve done is show that Kiwis aren’t so kind after all.”

It’s sad to hear those who are usually cheerleading for New Zealand (often ad nauseum) saying they’ve lost their pride in their country over the way the debate has played out.

There has been a string of comments from Kiwis saying people who abandoned their country not only didn't deserve government-funded managed isolation, or call themselves citizens, but didn’t deserve to live.

One expat said they’d never been more disappointed in New Zealand, another said they were embarrassed to be a Kiwi.

“It’s a shame that the team of five million apparently don’t care about anyone but themselves,” one said. 

“I was so proud of you all before. Proud to be a Kiwi watching you come together to protect our country and our people. Now all you’ve done is show that Kiwis aren’t so kind after all.”

Throughout the pandemic, New Zealand spoke about working as a team; about coming together (apart).

Now overseas Kiwis have detailed how this fee will keep them from their spouses, their children, and their parents, at a time when they felt they needed to be together.

For someone like Yvette Webster, it’s hard to sell this fee policy compromise as fair.

Webster lives in Scotland with her husband, and has lost 80 percent of her income due to Covid.

Earlier this year, her father was diagnosed with Stage 3 cancer. He was too sick to attend Webster’s wedding in Scotland, and will undergo surgery later this year, after four rounds of intense chemotherapy.

She was planning on travelling home in December after four years away. Her husband has never met his father-in-law.

“Paying for quarantine will cripple us financially and we would have to borrow money to be able to pay for it.”

Flights, managed isolation charges, and the time off work would put the trip at a cost of $14,000. She has no idea if she would be exempt from the fee.

“The law change is creating a second class of citizens who are deemed as ‘tourists’ in their own country."

Webster says it's unfair expats - and New Zealand-based Kiwis needing to travel overseas to visit family - should be lumped with costs when quarantine benefits everyone.

“The vast majority of Kiwi's are returning home for genuine reasons. I don't think many Kiwis are just planning a holiday - we have a variety of reasons for coming home and the majority of us just want to see our loved ones…

“The law change is creating a second class of citizens who are deemed as ‘tourists’ in their own country."

Like others, she’s eagerly awaiting further detail on how the system will work.

Max Harris, one of the coordinators of advocacy group The Team of Six Million - Kiwis United Against Quarantine Fees says the decision not to charge those returning permanently was good news for thousands of New Zealanders.

For those affected by the scheme, the announcement was a “major disappointment, which could cause “significant hardship”.

“We should not be disconnecting people from support during this global pandemic.”

Harris says his advocacy group, which has about 3500 members, is calling on the Government to leave the introduction of regulations until after the election, when it has a mandate for the changes.

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