Nothing much at stake

I try to have a policy of not writing when I am angry. And I am currently red hot angry.

I also try to write in a way which joins dots with public stuff so that bigger more powerful people – which is pretty much everyone – can’t have a go. So that was the approach I took when I last wrote about the IRD restructure. And at that stage it was a proposal with staff consultation. 

Included in the proposal was that the job I previously did and those of the transfer pricing specialists would be disestablished.  There were similar jobs that could be applied for – but with up to 30% pay cuts. Now yeah we weren’t badly paid in #IamMetiria terms. But given we were the technical leaders for most of the big cases in the last decade and compared to the people we were up against – the taxpayer got serious value for money. Same for the senior lawyers we worked with and the senior investigators. Their jobs also either disestablished or reconfigured for much less money. 

But now it is finalised. And pretty much as bad as proposed.

Now everyone has ‘equalisation clauses’ in their contracts. This means that if a job with a lower salary is taken following a restructure a payment equal to the difference in salary for two years is made. The structure of this also means they can leave the month after the payment is made and be better off. Great for them. For the taxpayer – not so much.

All because why? Because Business Transformation. What? A new computer system? Seriously a new computer means kicking or managing out the people who have delivered the returns over the last ten plus years?

All in a week where Oxfam outed Reckitt for a restructure involving profit stripping. One which looking at their accounts seems to be a transfer pricing wheeze. The same week where the Greens announced a higher top rate with no mention of the trust rate. No need for any high end tax enforcement there

So where is the oversight of this? Is this so operational that Ministers aren’t concerned? Will they be concerned if any new BEPS rules become irrelevant as the capability to enforce them won’t be there? Or is it simply my lack of imagination? The new computer will be so flash it will be able to review accounts; conduct interviews; and analyse several countries tax laws. Digital disruption indeed.

What I do know is that my former colleagues will be just fine. They may have a truly shite period coming up. But they are all talented resourceful individuals. Whether they are still at the department in a year – is another thing entirely. 

So that new computer really has to be something. Because whether it is tax cuts or increased public spending – the money needs to keep coming in. 

Andrea

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11 responses

  1. I have another concern- it seems that they hope to save money on the admin of WFF by real time adjustments. Their examples show how the caregivers income would fluctuate from month to month. How would they determine whether hours of work are being met or relationship status on a monthly basis? Where is the appeal process?
    http://taxpolicy.ird.govt.nz/sites/default/files/2017-dd-mts-9-social-policy.pdf

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    1. I would guess – without looking it up – that the appeals process would be the disputes process that applies to the rest of the Income Tax Act. Hardly user friendly for small people. I guess where the saving comes in is that they are looking to reduce the large amounts that get written off. Maybe this is part of the xtra revenue that is given up in the business case.

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  2. it is a bit like watching Trump happen – too bizarre to be real but it is. Not the smarter organization that BT was going to enable.
    Worth unpacking the part at the end about tax needing to come in; without skilled IR staff its game-on for tax avoidance. All those transactions costs that were being removed from the economy now won’t a real pay-off if IR doesn’t have the skills and resources to understand/question/block avoidance.

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    1. I completely agree. I went back and looked at the business case. There is mention in a reduction in audit costs but mostly it talks about a reduction in admin costs such as processing and queries. And yet all such staff are being confirmed in their jobs. I hope to unpack that a bit more in my next post.

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  3. Utterly bizarre. It really just makes no sense. A powerful computer isn’t going to be able to give an opinion on the application of the GAAR.

    You may recall (if you were there at the time) they did something similar in 2009 when I was working in their call centre. A bungled redundancy announcement that basically led to IRD staff hearing about if first in the NZ Herald, which only ended up being a call for 200 voluntary redundancies. These were taken up with utter glee almost exclusively by people close to retirement age who in some cases got up to a years’ salary paid out if they were particularly long servers (thanks taxpayers).

    Then we of course had a purported wage freeze in 2009 which caused discontent for months but then one day were awarded random and enormous pay rises of around 25% (which, again, we were told about only after we got our pay slips and a healthier than normal looking bank balance).

    What is it about IRD that fosters such chaotic decision making?

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    1. Yes Nick I do remember the 2009 restructure. As I remember it was really quite gentle as yes some staff approaching retirement as well as some young ones wanting to go travelling got redundancy. I also remember the the 2006? Audit Strategy restructure which got rid of the very successful Corporates Unit and FDSD which got rid of the capability in the smaller sites.

      I am not sure though that IRD is any worse than anywhere else. Until now. I really can’t believe it. I keep expecting a reversion. As all those other restructures while annoying and made life harder for the frontline – did no real harm. I can only hope that it is my imagination that is lacking not their judgment.

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  4. Agree with everything you say regarding the restructure. The work has simply not been done to justify any of it. For example,no attempt seems to have been made, or at least published, to compare IRD’s personal costs with those of revenue agencies in similar countries. The new computer will make mass market customer interactions easier, but it will not solve any of the complex issues. The savings which are measurable will be delivered, but they will come at a cost which will be much harder to quantify but I believe much larger

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  5. Katharine Moody

    Do you get the impression, this is a Government only interested in administering GST and PAYE? And if the nation loses revenue as a result of corporate tax avoidance being pushed beyond the boundaries of lawfulness, well, so be it – because they can continue to run down public services (including the IRD!)?

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    1. To be fair I don’t get any sense that this is at all Minister lead or directed. The business case that was signed off made no mention of this. Its focus was on the dept becoming more ‘knowledge based’ which I had always taken as meaning the specialists had a proportionately bigger role.

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      1. Katharine Moody

        It just seems to me to be too big NOT to have had a (Prime) Ministerial lead.

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      2. I would really doubt it.

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