Sludge is pleased to present Part 2 of the transcript of the speech delivered by ACT MP Rodney Hide at the Investors International conference in Fiji in January last year. In September last year the Securities Commission issued a warning about Investors International – after a principal in the company was arrested and charged with Securities fraud in the United States.
In the second half of Rodney’s Speech he discusses culture shock in Parliament, podiatry (and Jonathan Hunt again), the power of the IRD, the death of Ian Lee Mutton and the path to getting rid of tax – which is, Rodney says, to not ask for anything.
Stories in the Free Money For Greedy Mystery…
- The Sludge Report #12 – Rodney’s Trip To Fiji
SLUDGE TRANSCRIPT BEGINS:
NZ on $100 Million a day
Rodney Hide’s Speech To Investors International conference in Fiji – January 28th 1999
PART 2 - SIDE TWO OF TAPE… See… Sludge Report #14 – Rodney’s Speech In Fiji (1) for part 1.
About this time in Parliament, I realised that I was suffering some sort of cultural shock. Um. When you do any job it has a culture and you quickly learn it and you get comfortable with it. I used to drive trucks a lot as a living and when you’re a truck driver you meet other truck drivers, and talk about horse power and tonage and the quickest routes and who can carry the most the fastest, and you have that smell of diesel about you.
I then went in and taught at university in the same thing you talk about lecturing and about students learning, about research, or students not learning, and that has a culture to. If your in business you have a culture of profit and loss of talking about customers, of talking about what works.
And here I was in parliament and this culture just didn’t fit it didn’t make sense I was out of tune with it I felt like an enemy oh I felt like a person behind enemy lines. The language was all different, the social moray was all different, everything was all different about it to what anything that I had ever experienced in my entire life.
And I’ve discovered what it is, and it because parliament and politics and governments and politicians we don’t produce anything actually, we don’t produce anything.
And it’s very hard to have a culture like that your familiar with if your not producing something. Cause that's what you talk about that's your reason for getting up in the morning to go there and get in that truck and shift some freight, or teach some kids, or make some money. Politics the only thing we do is spend. And that is the culture.
It is a spending culture. Theres not a problem out there that a politician can’t fix by throwing more of your money at it he knows actually and she knows that it won’t fix it, but it looks good, “here you go throw some money that’ll fix it” where the next one and people love you when you throw money at them even though its their money, sort of, with about 50% siphoned off.
On the way so its a spending culture and theres another thing that about politics that I discovered and that is that I call it I call politics decision making without property rights. Because no politician or government official owns anything, they don’t have any assets, and they don’t have any liabilities as we understand the phrase.
So no one fixes problems. Noone says “oh yeah that's a problem lets fix it”. People in this room, you all have assets and liabilities, if your business or your property is in trouble you’ve got to put you hand up and fix it, because it’s your responsibility. You know , and if you don’t fix it you know it’s going to cost you. In politics we’re not like that, of here’s a problem, “oh good shove it to that guy and he gets it”, flick, and he gets it, “oh I don’t want this problem”, flick, and then finally what we do is we just shuffle problems into the future, for someone else to deal with, and then we think that's a solution.
And you can see problems being shunted around in sound bites on TV, we just say, ……… it is nothing like the capitalist process were there is an owner, were there is an asset, were future incomes, incomes streams are being capitalized and the value of that asset. And you have to respond to the cost and benefit of that stream and do something about it. Nothing like that exists in politics. It is all fluff and no substance and that is why that's why we look through the veil of politics and feel so deeply frustrated, and so irritated, because we know no real problems in education and health and with welfare and with government spending, and with bureaucrats out of control. No one in government will put their hand up and say yes I’m responsible for that, watch me, I’ll fix it. Never, they shift the problem on to someone else.
Of course the root cause of all of this is tax, tax. It is the life blood of the political process, it’s our ability to get money out of peoples pay packets, out of their weekly budgets, out of the petrol that they buy, out of everything that they do that feeds us and allows us to survive. And the tax laws, as Dave says, are hugely complex. Noone can follow them.
I recently had the NZ inland revenue commissioner Graeme Holland performing in a select committee, which happens regularly, its one of the perks of office and I said to him.
“Commissioner do you understand the tax laws of NZ?’ he just looked at me then the committee chairman beat me up and said “are you going to abuse the commissioner of inland revenue like that and I said I wasn’t abusing him, I was just interested, does he understand the god damn law that here we are passing, he doesn’t?
The commissioner of inland revenue doesn’t understand all the tax laws. The Dairy owner has to. The plumber has to. Every property developer has to. But no one can.
No one can sit in this room and feel comfortable that they have obeyed the tax laws of NZ because you don’t understand them, and take it from me folks, I sit on the committee in the parliament that passes these god damn things. And we don’t understand them. We do not understand the tax laws that pass in NZ, it’s the same in Australia, it’s the same in Canada, it’s the same in the United States.
We had to employ a QC on the select committee to advise us about what the IRD was telling us about the law, because we couldn’t understand it. He got confused. They ended up concluding that the law - this was on international tax - they concluded that it wasn’t perfect, it had a lot of mistakes in it, but would pass it anyway and fix it up next year.
Can you imagine running your business like that? And were running the god damn country!
We not only spend money ladies and gentlemen we make laws, just to put you in the right box. Tell you one law we passed, it was under urgency, urgency is a big deal goes into urgency ooh ooh important things to be done - you sit there all hours and everyone fights and scraps I love it - and came up under urgency people from NZ may have missed this, and people from Australia probably did, but we passed ah in 1997 the medic under urgency the medical auxiliaries podiatrists bill.
There are podiatrists, they are people, they’re foot people you know, they blow your corn off and cut your toe nails. And we had a very serious problem confronting NZ because we have a podiatrists board, just to check that the people that a doing podiatry are kosher.
And they have a set of exams and a certificate that you get and in 1984 the government changed the rules and said because we had immigrant podiatrists and they used to just come in and they’d satisfy the board and they’d get a certificate to. But the government in 1984 changed the rules and said that they no longer can just come in willy nilly but they would have to sit the NZ exam for podiatry in order to be duly qualified that's great that passed in 1984. However no one told the podiatrists board.
And of course you know you remember this, you remember the 1984 to 1996 podiatrists were just sweeping into NZ from overseas, and the podiatrists board was giving them their certificate, if they said they had been taught at Harvard or somewhere else.
But this was illegal and so what we had to do is pass under urgency retrospective legislation that would enable 11 immigrant podiatrists to practice here in NZ like they had been doing for several years.
I don’t know about you folks but I find it sort of scary, that we have a podiatrists board. I find it sort of scary, that you need a licence to cut someone’s toe nails, for a fee. I find it sort of scary, that parliament had to pass a law to make it legal for 11 immigrant podiatrists to practice here. What I find really scary was that our parliament spent one hour and forty minutes debating it. At the time our school were in crisis kids, were going there spending years and years at school not getting educated. Our health systems a mess, 120,000 people something queued up in pain and agony paying tax all their life cant get treated pension schemes busted with a bang it’s bankrupt.
We had the Asian flu and that was watering down the NZ economy, but don’t worry, we’re in parliament under urgency debating for 1 hour and 40 minutes the medical auxiliaries podiatrists bill, to make sure 11 podiatrists weren’t here acting illegally. If you ever wonder why politicians are so boring, you try talking for 10 minutes about podiatry. And about the effect of illegal immigrants practicing podiatry has on the social fabric of NZ. I watched it done.
I started a competition in the back of parliament, who could spell podiatry?
No one could. I then started a second competition, double or nothing. Who knew what podiatry was? No one did.
Except, except Johnathan Hunt. Johnathan Hunt’s so fat that he couldn’t cut his toe nails any longer. And of course the sad thing about Johnathan was no one in the labour party would cut them for him.
I heard a rumor that he was putting around taxi chits to the podiatrist fraternity but I don’t know if that's true.
So we pass laws, we pass laws, we pass tax laws and the tax laws that we have in NZ we don’t understand them, thousands and thousands of pages of these your supposed to comply god knows how you can and think about the power that they shift across to the tax department the awesome powers and the comparison is to the police.
In NZ and it’ll be the same in Australia, the same in Canada, the same in the United States.
The IRD can bust into your business into your dairy, into plumbing shop, into your farm they can bust into it any hour of the day and they don’t need a warrant. The police can’t do. The police might be chasing son of Sam and they’ve gotta get a warrant. They might be chasing the worst rapist in the history and they’ve got to get warrant.
And they’re trained but these IRD officers with very little training go up against - you know really scary people like plumbers and paper hangers people that work for a living – and they have powers to enter your business at the drop of a hat and do a search.
Your parliament gave that department those powers. They have powers, they have powers to require you to answer every question that they put to you.
If you are a scum bag murderer or rapist you get to say, “I’m not answering that question”. But if you are a dairy owner you better, and it’s the IRD you have to answer to, cause if you don’t they can hit you with a fine for $25,000.00.
Are we starting to talk like our values are upside down. That we have rights to protect the criminal class, but the productive class, the working class, the people that create all the wealth, have no rights, when confronted with the tax debt after it’s pound of flesh and it’s pint of blood.
They have as they’ve pointed out, the ability to assert that you owe a debt. It’s your job to prove that you don’t. Nowhere else in our legal processes do we have that. We believe that we have a free society, a capitalist society, a democracy, where you’re innocent until your proven innocent. But your innocent until your proven guilty.
That's true if your a murderer, that's true if your a rapist ,that's true if your burglar, that's true if your a thug, but if you’re a tax payer it’s not true. You are guilty until you prove your innocent.
So the department can allege as in Hendos case a million dollar debt and you have to prove you don’t owe it. How can you prove that you don’t owe it when you don’t even god damn know what it’s about. And they are not required by law to tell you what it’s about, they can just assert it.
Someone said that the title of Dave’s book was wrong that it shouldn’t be called “Be Very Afraid”, we were not talking about us we were talking about them. They’re the ones that should be afraid.
Because we’re not going to take this anymore. Not only can they assert the debt against you, but even before it goes to court you have to cough up half.
Can you imagine that you paying for your lawyers your paying for your accountants you’ve got this big debt, you have to pay half even before it’s earned, this is an outrage.
And these tax laws they having a huge consequence. There are two problems with tax it’s too much and the laws are too vicious… and also within that viciousness there’s a penalty regime.
The IRD made a mistake, a few years back.
They bought in some overseas economists to study the economic impact of tax in NZ.
They discovered contrary to what the IRD thought would happen. IRD believed there propaganda and believed that tax is great and it’s a price we pay for civilization.
These economists searching in NZ said that if we’d had the tax take of 20% or 25% which is still too high, but which is what we had post war through the 50’s and 60’s, if we had that tax take in NZ today, rather than 35%, that NZ would be 50% wealthier.
Can you imagine that, 50% wealthier. It’s not just what they’ve taken off us that we lose, it’s all the lost opportunities, it’s all the investments, it’s all the business it’s all the jobs that would have been, if the tax rate hadn’t been so high.
We would have been 50% wealthier. And as Dolf would say that's the average, that's the average. Imagine how much richer you would have been, if we hadn’t of had tax for all those years. You think the department and the politicians would get that report and say oh – they suppressed it - they wouldn’t release it.
It took me over 12 months hounding the department with official information requests as an MP to get my hands on those documents. This research was paid for with our money, and still they wouldn’t cough it up. And so it is having a tremendous impact on our economies, on our businesses, on out jobs at an economic level, but at a personal level too.
Because how can you operate in business confidently concentrating on your customer , concentrating on your costs, when you’ve got this band of thugs - state sanctioned thugs - ready to pounce.
How can you operate with confidence, and with joy, as you go about your job.
And I wanted to end with just one story. Theres a guy in NZ for those New Zealanders he lived in Otaki - ah lived in Wellington in the Hutt - Ian Lee Mutton was his name. He’s a good guy, father, husband, two little kiddies and his business – he was a good sportsman and he worked and he liked a wee drink and having fun - and his business was and he worked hard at it, was putting in air conditioning units in new office towers. And he had a dream, he dreamt that rather than working for other people he could go out into business on his own, and he did that and he was good at the work but he was a lousy businessman he quoted too low, some of his people didn’t pay, and the costs got out of control.
But he persevered and he learned, he got to the end of one year 1992, and he owed $6000.00 terminal tax. No big deal, he knew he owed it he was going to pay it he then had an accident of a ladder at work, and broke his ankle and couldn’t work he had been assessed for his tax, and the demands keep coming his ACC such as it is for self employed didn’t come even though he had been paying it all these years so he and his family were suffering here he was hobbling around on crutches he went repeatedly to the IRD with his wife saying “look I can’t pay this”. They said, don’t worry, no they said, worry, they wouldn’t listen to him. You have to pay - they are the rules so I’m not working - doesn’t matter he gets back to work some one smashes his utility up, and he has to spend more money so he can keep working, he pays his tax that year. He pays his tax the next year. He pays in his next year. More tax than he has ever paid in his life, as a percentage, and he gets to the end of that year. And he owes more than he did at the start. Because the penalties and the interest are just overwhelming him.
His accountant and his business manager go in to see the IRD begging them to give this guy some relief, he’s working hard here’s all his accounts, give him some relief. They wouldn’t.
His marriage split up, his wife couldn’t take the pressure he was behaving strangely, the pressure was huge on him the bills were just being generated by that horrible computer that the IRD have, and they’d be just arriving at his house in envelopks in the finish he couldn’t even open them, he just through them in the bin.
In his final year he went on the booze a bit he didn’t pay any tax and so it mounted and the debt got to $45000.00. He then snapped out of it he stopped the drinking he got back with his wife, he realized he had to make his business go bankrupt stop his dreams stop his aspirations. And he got a job working in Queenstown putting in air conditioning units, working for someone else.
All he had in the world at that point was a utility worth about $5000.00 and $1100.00 worth of tools. On the day that he was to leave to Queenstown to take up his new job, the IRD turned up at his door. They wanted the ute and the tools to offset the debt.
They were going to take the very means that he had to make a living. He drove the utility up the Otaki gorge stuck a pipe in the window and killed himself. He penned, before he died, a message to the IRD.
Saying that you’re responsible for this, that you have taken everything that I ever had, that I now leave this world like I came into it with nothing. But that I beat you, because you are no longer going to get any more out of me. And he signed. The last thing he did on earth was to sign that note one happy man.
The IRD got that note. They then turned up at the widows house that week wanting the ute and the tools. 3 weeks later, ladies and gentlemen, she goes outside and stands on the porch and sees her 12year old son hanging dead from a tree.
He couldn’t take his fathers death. The IRD have never apologized, never said there’ve done wrong.
And these laws, ladies and gentlemen, they’re not just costing us jobs, they’re not just putting us in fear, but they’re costing good people their lives.
That's what our tax laws are doing in this country. And you know the basic amount of money that the IRD were chasing Ian Lee Mutton for wouldn’t pay for one MP’s taxi for a year. Are our values upside down or what?
I want to leave you with this message. I’m a politician. I’m in parliament, we have the guns , we have the flash cars, and we have the flags. It’s great driving down a car with the flags, but we have no moral authority because we produce nothing, we generate nothing, we’re parasitical on the tax payers of NZ. We’re parasitical on Ian Lee Mutton and we’re parasitical on each and every person in this room.
The moral authority ladies and gentlemen rests with each and every one of you.
Because you are the producers, you are the workers, you are the creators. Not government, not politicians, not bureaucrats, you are. And we will make progress, and knocking back the state, when each of you - and I think every one in this room have already done this - but you need to get your neighbors to do it, and your friends to do it and your family to do it.
To say we are not asking government for anything because it’s when you ask government for things, that is when you lose your moral authority, that is when they get it. And they’re only going to take more than they ever give.
Don’t ask the government for anything that's the key to getting taxes down. And the key to getting taxes down is to say this is my money I earned it, don’t you spend it.
And ladies and gentlemen I truly believe that we are going to have a revolution around the western world, and it’s going to start in NZ and it going to because we’ve had enough. It’s going to start in NZ and spread to Australia, and Australia’s going to start cutting it’s taxes, and when people see what that is doing to our economy and to our people - America and a Canada will follow. Europe will follow, because the world is a competitive place, and if one country’s starts dramatically cutting it’s taxes, all countries will have to follow.
And lets hope and pray and work towards that day. Because ladies and gentlemen when we have that day, we will have more love, we will have more trade, and we will have less guns, and that ladies and gentlemen is something worth working towards.
Thank you very much
© Sludge 2000