The Carrot and The Stick

A conspicious feature of NZ governments in recent decades has been an emphasis on punitive measures over incentives, which can be clearly seen in environmental policy. However, the use of both methods together could greatly increase the effectiveness of legislation.

The Government is currently considering policies to reduce fuel consumption among the nation's motorists. So far all the proposals centre on taxing vehicles perceived to be fuel inefficient. The idea of taxing older cars will fall disporportionately on low- income drivers who have no choice but to drive older vehicles. Another proposal is to tax cars according to engine size. This proposal may seem fair, but cars aren't neccessarily less fuel efficient just becase they have larger engines. These policies don't take into account driver behaviour, how often people use their cars, whether they are petrol or diesel, or how well they maintain them. All these factors have a major impact on fuel consumption. If the fixed cost of motoring is increased for example, drivers may actually use their cars more often, to get better value for money, or get them tuned less frequently to save money.

If recent trends are any thing to go by, the easiest group to influence are drivers of new vehicles. In response to rising fuel prices sales of smaller cars have recently increased, as have hybrid cars that are still new to the market. Hybrid and diesel cars are much more fuel efficient than standard petrol powered vehicles- hence the Government should reduce or eliminate taxes on these cars and maintain the present diesel subsidy.

Low income drivers are much more restricted in the choices they can make in response to fuel price increases. Although many low-income drivers do have fuel inefficient cars they cannot afford to upgrade them. The best that low-income drivers can do is drive their cars less frequently and get them tuned and serviced more often. This means that fixed costs for low income drivers should be kept to a minimum. Low income drivers should also get subsidies or tax relief for getting their vehicles tuned, perhaps with community service cards as entitlement ID.

Admittedly incentives have a major down side- they cost money. In contrast, punitive taxes make money for the Government. An ironic effect of neo-liberal ideology in policy making has been an increase in some taxes because other forms of government intervention have been discredited. In neo-liberal thinking nothing is worse than intervening in the market to make some goods cheaper than others. Although government incentives are often effective , they do need to be balanced by disincentives. Taxes on certain vehicles may be necessary but they must be balanced by incentives to change driver behaviour and vehicle choice.

The cost of increasing fuel efficiency is a responsibility for all vehicle owners, not just low income people.