Why Managed Isolation has been imposed on Cross Border Travellers Entering into New Zealand
The collected isolation fees have been set to regulate New Zealand citizens’ rights to return to their country and the need to pay for the cost of managing isolation units (RNZ, 2020). There are two main reasons why the New Zealand government decided to impose payments for managed isolation facilities. First and foremost, paying for the services at the controlled isolation units would enable the government to continually flow the funds required to settle the substantial financial costs involved in running the isolation facilities. In other words, collecting funds from those returning to New Zealand would reduce the taxpayers’ financial burden when it comes to sustaining the managed isolation units. Also, the charges would help in regulating the number of people who travel outside the country. It is possible to reduce the number of people who travel outside New Zealand for discretionary missions such as holidays by attaching high financial costs on managed isolation and returning to New Zealand (RNZ, 2020). To this end, imposing charges on managed isolation units is a policy tool that would help the New Zealand government to control the number of people who move in and out of the country. Subsequently, the charges help the government minimize the social and economic costs of operating and marinating the managed isolation facilities.
Source: Economicshelp.org (2020)
As shown in the above diagram, having social costs involved in maintaining the managed isolation units higher than the private price going towards the same will result in a loss of social welfare. Such welfare loss is usually known as deadweight loss in economics.
The Economic Cost of Not Charging for Managed Isolation
The economic costs of not charging for managed isolation are huge. Ideally, the total financial cost involved in running controlled isolation would be the sum of expenses required to sustain the people returning to New Zealand. In this regard, the economic costs in the financial resources needed to purchase food, medical supplies, beddings, and other essential services required to keep those returning to New Zealand in managed isolation units (McEachern, 2009). Forfeiting to charge the people returning to New Zealand would mean transferring all the costs of keeping those affected to the government. In short, taxpayers would shoulder all the expenses of keeping the people who return to New Zealand from other countries.
Interestingly, charging no fee would have a ripple effect on managed isolation units’ long-term cost. More people would travel outside New Zealand, including those going for holidays and other discretionary personal missions (RNZ, 2020). In the end, there will be a multiplier effect in terms of the funds and capacity of managed isolation units required to serve people returning to New Zealand. Simultaneously, charging no fee may promote coronavirus spread in New Zealand because having more people traveling abroad increases the probability of igniting subsequent waves of infections of the coronavirus. Unfortunately, having new conditions would require additional funds to support hospitals, purchase medicine, and facilitate the treatment of those infected. In worse scenarios, having subsequent waves may lead to shutting down the economy, losing jobs, and shutting down businesses. Such a step would then have enormous financial and economic costs on the New Zealand economy. Therefore, charging no fee for the isolation units would have massive economic costs in the long run.
Air travel generally prices elastic. Customers are usually very responsive to changes in the prices and cost of traveling. A small increase in the trip’s worth and value would result in a considerable drop in the number of people who travel (McEachern, 2009). Consequently, imposing isolation charges on the people returning to New Zealand would reduce the number of people traveling from New Zealand and back. Thus, airline companies are likely to experience reduced revenues because of the decline in customers’ numbers using their services.
Source: Economics (2020).
As illustrated in the above diagram, a small change in the price and cost of travel would lead to a massive decline in the number of people traveling (McEachern, 2009).
In general, the policy would promote fairness in New Zealand society. People who engage in discretionary travel missions would have to pay a high cost for their decisions. In this regard, managed isolation payments would help prevent discretionary travelers from exerting unnecessary pressure on the managed facilities. Such a step would also help to reduce the amount of burden the New Zealand taxpayers would shoulder in supporting and maintaining the managed facilities.
Why the Government’s Plan would be Beneficial
The government’s plan would benefit society to generate revenues to run and sustain the isolation centers. The government’s approach would reduce the financial burden of managing and maintaining isolation centers. Simultaneously, attaching private costs to isolation would enable the New Zealand government to regulate the number of people who travel outside the country. Only those with pressing reasons would travel when the government imposes a financial cost on those traveling back to the country.
The opposition’s plan would be better in several ways. For instance, such a program would enable the government to collect more revenue from those returning to New Zealand. In the long run, collecting more money would from the returnees reduce the financial burden on taxpayers in terms of managing and maintaining the isolation centers. Additionally, the opposition’s plan would be easier to execute. The government would not need to filter and categorize the people returning to New Zealand based on the time they departed the country.
On the other hand, the opposition’s plan would be unfair to the people who left New Zealand before the law was enacted. Some people go for international trips for business or work assignments, while others usually proceed for such trips on medical grounds. Still, others move to foreign countries to pursue education. Consequently, New Zealand citizens have the right to come back home whenever they accomplish their missions in foreign countries regardless of the New Zealand government’s health protocols. It would be fair to exempt the people who went for their trips before the new legislation was crafted. Consequently, it would be unfair to compel all the people returning to New Zealand to pay for the costs of isolation without considering such individuals’ economic status and the reasons for their travel.
References
RNZ (2020). Parties divided over managed isolation fee legislation. Retrieved from https://www.rnz.co.nz/news/political/422283/parties-divided-over-managed-isolation-fee-legislation
Top of Form
McEachern, W. A. (2009). Economics: A contemporary introduction. Mason, OH: South-Western Cengage Learning.
Bottom of Form
Economics, (2020). Elastic demand. Retrieved from https://www.economicshelp.org/blog/1108/economics/perfectly-elastic-demand/