When people die at work it’s always a safety issue

Another tragic fatal injury from a work accident in New Zealand, this time on board a fertiliser ship berthed at Lyttelton, Port of Christchurch.

My heart goes out to the family, friends and colleagues of the deceased man.

What went wrong?

Every accident is preventable, and there is never an acceptable excuse for placing any worker into harm’s way, let alone repeatedly exposing workers to fatal risks. These tragedies were preventable – and so why weren’t they?

For one, the Maritime Union Maritime New Zealand (a government agency) spokesman who said:

“There doesn’t appear to be any safety issues or equipment failures that have lead up to this. It seems to be a wrong place wrong time sort of thing”

clearly does not, to me, understand that the site and its safety management systems have failed this deceased man and his family. It’s good that the Maritime Union is supporting the family and colleagues, and calling for a meeting, but I am not convinced that they anyone understands the magnitude change in culture required.

<Update – I incorrectly attributed the quote above to the Maritime Union, rather than to Maritime New Zealand. My apologies to all concerned. Updates are in italics.>

Even more sadly this is the second fatality at the Lyttelton, Port of Christchurch facility within a month, showing with arguable certainty that this worksite has broken safety systems and processes, leadership and culture.

Is safety even a priority for the Port?

One crude indicator which we can all see, aside from these twin tragedies, is that the Lyttelton Port of Christchurch website carries no reference I can find to either fatality, not even in their media releases. Sure, the fatalities may (or may not) have happened by workers not employed by or contracted directly to the Port, but they occurred on their site.

Another indicator is that finding out about safety on the website is hard – it’s buried within the menu structure, and the result when there is underwhelming.

What should happen?

The Port has faced tremendous challenges following the earthquake, and no doubt the challenges will continue as the rebuild evolves. But challenges to operations should never be a priority over safety.

LPC is a listed company, but 80% is held by Christchurch City Holdings (CCH), who are generally very smart. CCH and the board should be entering crisis management mode, and ensuring that the company responds with appropriate seriousness. At the very least I hope they all understand that this is arguably a lapse in duty of care that could elsewhere remove the site’s “license to operate.”

The board and management team should not rest until they can state unequivocally that the safety systems and culture have changed, and changed for good, and that people on their site can go home unharmed each day.

What would I do?

If this were under my control the port (and any other facility) would be shut down immediately after any fatality, and not reopened until control of fatal risks was regained. I would conduct an all-hands meeting (as suggested by the union) and ask everyone to commit to a tougher set of site safety rules – and enforce them. The rules would include the obligation to stop any observed unsafe work, and I’d hire in external experts to stick around for months to coach everyone through the process. Not everyone will get the new Zero Harm approach, and a small percentage may need to be prohibited from accessing the site.

As an uninformed outsider in any case like this I would stand the CEO down. I would replace him with a new leader with a mandate to place Zero Harm back at the top of the site priorities. I am sure the CEO in this instance is going through hell, and I appreciate that me saying this will not make that better. He may well be superb at his job, but the priorities the board and he agreed to were not correct and an epiphany is required.  So while the CEO may be able to change his approach, he is also somewhat caught in the crossfire here, and in my experience removing the CEO (and at times the management team and/or board as well) is the strongest signal that owners can send to a site that things simply have to change. 

Finding a new CEO who will drive change will not be an easy job, and neither will that person have an easy time of it. He or she will need to work top down and bottom up, and get the support of the Union, employers and all the other players on site to make sure that safety outcomes improve. It’s a challenging job, but one that has been successfully done across a wide range of industries – I’d start by calling recruiters for senior staff in the Australian mining sector.  

The standard is quite simple really – we should all fight to ensure that everyone gets to go home safely at the end of each day. 

Posted in NZ Business | Tagged | 1 Comment

Chorus: Turn around and go.

The short and light on detail Ernst Young Australia (EY) report on Chorus [thanks NBR] shows that while Chorus’s top line “$1 billion shortfall” statement was correct, it was also disingenuous.

First of all, we already knew that the $1 billion gap is until 2020, which is 7 years away, which is an average of just $143 million per year. This may still seem like a lot, but this is for a business with current revenue of over $1 billion and EBITDA of a staggering $663 million.

Secondly, the $1 billion to 2020 assumed that Chorus would make no changes to their current approach business, an inexcusable approach.

Thirdly the EY report, rather embarrassingly for Chorus, identified some simple ways to reduce the gap to $200-250m ($28-36m per year).

  • Chorus had a dividend yield of 10.3% to June 2013, unsustainably higher than the 4.3% NZ and 6.7% Australian peer averages. Their FY13 return on equity was a staggering 29.7% versus peer averages of 12.5% in NZ and 11.2% in Australia. So EY is comfortable recommending that Chorus remove or reduce dividends.
  • EY also point out that Chorus has been operating well away from the danger zone for their debt covenants, and so they can raise more money through debt
  • They also show that there are ample opportunities to save costs and increase revenues.

I’ve seen teams successfully deal with turnaround situations that are a lot worse than this. While the report does not itemise the cost and revenue opportunities, my own experience is that these numbers are easily achievable, especially when we look at the current situation. I say easily achievable, but that’s only if the right approach is taken, which is to create departmental teams with CEO line of sight and authority to prioritise and systematically identify and fix the biggest and easiest revenue and cost opportunities. With the right approach Chorus should be able to eliminate entirely the remaining $200-250m gap, mainly by focussing on increasing fibre revenue per premise.

The huge opportunity

Chorus was formed with one primary goal – to install fibre on the roads past 70% of the premises in the country. The are behind their peers in this, but the industry is lousy at the real primary goal – of converting those premises to being lit fibre customers. Chorus may argue that it’s the RSP’s (ISPs) mandate to convert retail customers, but I hold them firmly to account for not making it easy for those businesses. This, I believe, is the real turnaround opportunity for Chorus.

Internet access is a strange business, where demand rises exponentially at a staggering annual rate. That demand though is largely influenced by the available supply, following an “if you build it they will come” model. The slow conversion of premises (rather than the roads in front of them) to fibre means that Chorus misses out on the essentially free incremental revenue above the fixed price base plans.

Fibre is intrinsically easier to upgrade than any other technology, and will always maintain a physical advantage over alternatives. While the GPON technology used for UFB is a poor choice, once fibre is in the ground then it is eminently upgradeable with newer equipment on each end. The more quickly the industry connects premises to fibre, the more quickly we they will be appreciated and upgraded, and the more money Chorus will make.

Some examples of the current industry pain that need to be fixed are: 

  • Chorus has 24 candidate areas for UFB, and has fibre in roads past 153,000 premises so far. The three other UFB players have just 9 areas, but have passed 94,262 premises, 64% more than Chorus has per area.
  • Multi-family dwellings and offices are placed on hold during months-long waits for pieces of equipment (MDUs) that really should be in stock, or may not even be required in the first place.
  • ISPs dealing with Chorus have to invoke black arts to get their systems to work properly, making installations slower and more expensive.
  • The industry collectively presents poor quality plans and a confusing picture to buyers, which the new broadband product disclosure will help.
  • The Chorus Gigatown promotion-spam debacle is a lottery-like distraction for individuals and towns that all just want Chorus to do their job of delivering gigabit internet to all premises.
  • The international cable bottleneck is still unsolved – and Chorus would be an ideal partner in one or both of the two proposed ventures. They could also work to build or buy backhaul infrastructure, and offer a wholesale internet in a box transit service to RSPs large and small. 

What should Chorus do? 

The UBA decision and the EY report clarify the future for Chorus, and nicely align the public and shareholder incentives to replace copper with lit fibre. It’s time that Chorus embraces their true role of being the champion of this future.

  1. It’s time for Chorus to introduce a culture of continuous improvement, systematically prioritising and removing the barriers to increasing revenue and the wasteful costs.
  2. It’s time for Chorus to move on from playing politics and to place overwhelming board and management focus on delivering lit fibre at ever-increasing data rates. Bring us our UFB future. 
  3. It’s time for this giant start-up to stop on paying out its short term earnings as dividends and instead invest for the future beyond 2020. That future will see ridiculously lower capital requirements, monopoly profits and dividend streams to please any investor.

I suspect that the current board and management felt that they had to give this politicking a go, but they now they have a clear chance to inspire and transform the company, and the country, rather than fight for the copper past.    

 

If the Chorus board and management cannot manage their way out of this, then the logical long term controlling investor to step in is our government. They should then invest with an accompanying mandate to the new board to focus on accelerating the lit fibre rollout to deliver long term value, rather than on the Telecom of old strategy of underinvesting and high dividend streams to shareholders.

I see tremendous long term value in owning a controlling stake in this monopoly player. There are, however, government limits which prevent any shareholder from asserting control – and repeating the Telecom of old mistakes. That’s good, but perhaps the right long term investor is out there (Milford is a start), and if the government is unwilling to step in then this may be a way forward.

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NZ Customs Seizes Electronics – a full enquiry please

In the first week of January I’m leaving a Software Engineering gig for a US defense contractor to move to New Zealand.

It’s great that New Zealand attracts high talented people from across the world, and we certainly need more software engineers from local and offshore sources.

Due to the expense of shipping, my wife and I are only bringing what we can carry, and we’ve taken special care to fit as much of our lives as possible into our electronic devices.

It’s wonderful that we can digitise our possessions, carry a track record of our life online and digitally hold our digital music, book and movie collections.

However NZ Herald reported on Thursday this week that New Zealand citizen Samuel Blackman, had “all of his personal electronic items seized by NZ Customs.” Blackman believes this occurred because he attended a London meeting on mass surveillance. NZ Customs subsequently said that they had seized the equipment (returned on Friday afternoon) because of a “website accessed from a shared internet connection at a student flat in 2007“. That’s a long time ago, and if the website in question really was that disturbing then we have to ask why authorities (which authorities?) tolerated the ensuring 6 years of not following up.

The quotes come from one benjamincburns on Hacker News, and while one person commenting on a news site is not a trend, he went on to say:

the only solution would be either to not go, or to not carry any devices at all…

We need to handle this with great caution as the values that bind us together and attract offshore visitors and business are at stake. I have three concerns and a suggestion.

  1. “Theft” of the devices: Once a computer, phone or hard drive is out of our hands, we have no control of the disposition of the contents, are unable to use the devices while they are gone and can never trust the devices again. I do trust our guys, but this is, for the affected party, roughly equivalent to theft and destruction of property.  Seizure of devices is a valid action by authorities, but should only be invoked with considerable cause, and with full investigation as follow-up if there is nothing found .
  2. Damage to New Zealand’s reputation: This is bad bad press for New Zealand, and detracts significantly from New Zealand’s reputation as a place that treats people fairly, where considerate rule of law prevails and where MPI and Customs officials focus on finding things like rooster testicles. While this incident (devices not roosters) should  only marginally affect our $24 billion tourism industry, I would argue that the resulting publicity will give pause to some considering tourist and business visits. Those rethinking visits will most likely be from the sector of people who read technology news and who coincidentally are often the investors in and drivers of the start-up economy. NZ Customs have a job to protect our borders, but their primary role is to provide a safe and efficient service to everyone while doing so. This action will make it harder for them to be trusted by visitors in the future.
  3. Lack of process: Borders are, by their nature, the places where we have the least rights, and border officials have essentially arbitrary powers to detain, remove or tax possessions, assert criminal charges and/or reject entry to a country. This incident has exposed that New Zealand may be asserting these powers beyond what is reasonably expected, and while one incident does not make a pattern, we need to make sure that the system remains fair and reasonable. I’m not convinced by the explanation offered by NZ Customs. Perhaps an investigation would find that every device owned by every person residing at the 2007 address has been checked each time they have gone through Customs, but it’s doubtful and even if so it’s a strange way to go about the business.

What Next?

New Zealand needs to confidently say to all approaching our borders, visitors and citizens alike, that they will be treated fairly and reasonably.

The lesson so far from the aftermath of the Kim Dotcom raid is that while we can make mistakes, but we can also learn from them, and that our political and judicial systems are strong and we can fix underlying issues.

So I’d like to see this incident followed up at a senior level, with Government oversight. We need an enquiry.

I’d like to make sure that any structural issues are identified and addressed, that people in these positions have the right training and procedures to fit the circumstances, and that taking electronic possessions away remains an extraordinarily rare event, at a level, say, where the person involved is also placed in custody.

The worst case would be for this to be ignored and then it happens again and again in the future. We can expect any future events to be reported internationally again, and each event will have an exponential effect on our inbound visits and economy.

Our New Zealand values are what bind us together. Let’s defend them.

Posted in NZ Business | 3 Comments

Novopay: credit due for the progress

Not many people wanted responsibility for fixing the Novopay school employee payment system, but credit is due for the results as we approach schools’ year end for 2013. Here’s a chart of progress by pay-run from a year ago. 

68 Schools with issues is still too many, but it seems the vast bulk of the problem is solved. So well done.

The government were smart enough to place this in the hands of their fix-it minister, Steven Joyce, and I think the entire house breathed a sigh of relief when he took over.

I’ve said before that Labour and the Greens have to be sure that they have someone of similar abilities on their lists if they hope to be able to govern effectively.

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Why are you accepting fatal risks Heart of Auckland City?

<update: I’ve changed the headline and edited this post as Auckland Council deny that this is under their purview. The Whitcoulls building and the Santa are both private.

I’ve done some digging around, and it appears to be the responsibility of the Heart of the City campaign, who have a 3-day time-lapsed video of the Santa and Reindeer build (perhaps from last year?) The organisation behind the campaign is Heart of Auckland City, a downtown business association. They mention the Whitcoulls’ Santa as part of their Christmas theming of Queen street on this webpage from 2012. From their 2012 annual report we can see that the entire Christmas budget was $460,000 in 2011/12, and the Santa is mentioned again.

Contractor names that I see in the photos include Waikato Cranes/Auckland Cranes, North Shore Scaffolding, Gulf Projects>

The annual raising of the somewhat dubious Santa on the Queen St Whitcoulls was completed this weekend. I passed by and was shocked at the unsafe work practices that I saw. The most concerning fact, aside from up to five fatal risks  was the reaction by the site safety officer who yelled at me and told me to fuck off. But at least he stopped the most unsafe acts before doing so.

The blame for this rests not with the obnoxiously behaved site safety officer, who was clearly out of his depth, and nor the lead contractor, the sub contractors or the workers themselves.

No – the blame resides with the people who hired this crowd to do the work. The folks on site said this was paid for by Auckland Council, and so Auckland Council gets the blame. (I only have the word of the workers for this, so apologies if the blame lies elsewhere. However regardless it’s on Auckland Council’s patch and they should have no tolerance for this.) <update: not Auckland Council as above, but Heart of Auckland City>

Quite simply they should insist that any work performed for them is performed to a high safety standard. Placing five (at least) workers at risk of fatal harm is simply unacceptable, and the Council Heart of Auckland City should give clear direction to all contractors that they should build complete safety into all of their tender responses and work. Yes this costs more, requires more planning and thought on-site and perhaps the work will take longer. But that’s far easier than telling families that daddy isn’t coming home anymore.

I witnessed the raising of the antlers. In general I’ve circled and written about the people working. This is the first photo I took.

Assuming the men on the top are attached to something secure with their harnesses then there is nothing that isn’t safe under NZ law. It’s good, for example, to se the scaffold railing that the person in the middle of the picture is holding on to, and the two gentlemen at the top barely moved the entire time I was there, leading me to believe they were securely attached to the building.

However the work was clearly about to be very unsafe, and on a site I (or anyone else) would have stopped the job.

Now we see the fatal risk occur, above and below.

It’s important when doing a lift that everybody is aware of what’s going on, as if the load slips then people can easily die. So this was disappointing:

As was, a little later, this:

Here’s a close-up:

Meanwhile on of the workers on the lift had clambered up to the top. The work he performed was often under the lift, and it was hard to tell whether he was secured.

x

He was certainly very mobile.

I suspect the harness was off, but it could be argued that this photo shows evidence otherwise. Doubtful, but ideally one would ask the question.

Meanwhile the scaffolders and builders using the long ladder generally, but not always used the ladder with someone holding it. Here’s one case where someone is at least 3m above ground and the ladder unsupported.

That’s a fatal risk. In fact a ladder that high is a fatality waiting to happen, as a fatality from a fall can happen at just 2 meters. There is not much the chap at the bottom cold do if the man in the blue shirt slips. Ideally workers would clip in as they climb, or have scaffolding to make the climb safe. Quite a lot of workers climbed up and down that ladder, arguably all at fatal risk.

But things were about to get a lot worse, ultimately leading me to say something.

The chap in the presents was not only 4-5 meters above the railing, but from my angle it seemed he was at risk of falling over that railing all the way to the ground. Above he seems to be treating the risk with respect, but then he started to work.

Notice that harness is not attached to anything, and with the primary focus on the work there is serious risk of falling, especially if he is distracted by something else happening.

He was joined by a mate.

A defensive argument would be that the person on the left was inside some sort of platform, but it’s clear that the height of the barricade is well beneath is waist, and besides he is leaning over it. I suspect though that the top of the box is either flat or close to it.

Here’s the really disturbing part.

Twenty three (that I counted) workers were on the site, and none saw fit to stop any of the dangerous practices that I saw. That means that they either didn’t have the eye for the hazards, or they did but were too intimidated to say anything. As it turns out I obtained evidence that it was both.

First, with five people that I could see potentially at fatal risk, I called out across a ute to several white-hatted people observing the work. I was not as consultative as I would like to have been, but I simply pointed out that the workers were at fatal risk as they were not wearing harnesses. (Normally one would ask to stop the work, ask about the risks that people see and lead them to the answer. That was clearly not going to fly here.)

To their credit they did agree essentially instantly and stopped the work on the presents, but not the reindeer where they said the men were wearing harnesses. I have no evidence whether they were or were not.

That was good. However a minute or two later the site safety manager came over and started yelling at me.

His bullying behaviour was wildly at odds with the sort of calm authority I would expect from someone responsible for people’s safety. It seemed to me that he accepted no challenge to his authority, and that this would cast a chilling effect on anyone else on site stopping work when they observed risks. It also occurred to me that it was shocking that there was a site safety manager who had been observing the “particularly hazardous work” and yet allowing the fatal risks to occur. I politely stood my ground (on the footpath) even after being told to fuck off more than once. I did like my response to “don’t you have anything better to do?” which was “not when I see five fatal risks at once”. He tried to intimidate me to move away from the area, to stop me taking photos (too late) and to not send the photos to OSH (Occupational Health and Safety). All that of course just made me determined to write this piece and to figure out how to escalate this to “OSH”.

With fatal risks for the two people under the lift, at least two if not five workers working from heights without connected harnesses and countless trips up and down the very high ladder I feel that this was well beyond reasonableness.

But OSH, it seems, no longer actually exists. The Health and Safety Group is part of the Ministry of Business, Innovation and Employment, and the responsible minister is Hon Simon Bridges in his capacity as Minister of Labour. It’s all moving to Worksafe NZ on December 16th this year.

Sadly I could not find a way to easily submit this unsafe act observation on the Health and Safety website. That’s something which the new Worksafe NZ could consider, along with a simple discussion of what the public and fellow workers can look for. We all carry cameras on our phones, and if worksites know that there is a trivial way for people to submit suspected unsafe working practices then overall standards will certainly lift.

I’d like to see active @WorkplaceNZ Twitter, Facebook and email accounts, along with a simple website and form to upload photos and text from computers and mobile phones. I’d like to see those accounts fully staffed by people who proactively and positively reach out to find and fix unsafe work practices, to encourage people to send photos of both good and bad, and to write a blog on the good, the bad and positive case studies.

We need a national conversation about this, and it needs to be focussed on improving safety rather than catching people out. We need to work to remove any defensive and belligerent bullying from the system, and to help workers help each other to be safe. We need to help people commissioning work that safety is not optional, and that jobs will take longer and be more expensive so that people don’t die.

Posted in NZ Business | 3 Comments

Not fair trading

Several of New Zealand’s largest retail businesses have been convicted of breaches of the Fair Trading act within the last five years. Some were smart enough to settle with the Commerce Commission before being convicted, but most admitted a breach of the act.

  • Telecom was convicted and fined $500,000 in 2009, pleading guilty to 17 charges from the nasty 2006 era. They also admitted breaching the act in 2011, refunding over $2.7m to 47,445 affected customers. It’s nice that they found and reported this breach themselves.
  • Vodafone was convicted and fined $960,000  last year for 21 charges, with Judge David Harvey describing calling the campaign “clearly false and misleading” and the conduct “gross carelessness“. This followed 6 other charges successfully prosecuted in 2011.
  • Carter Holt Harvey settled in 2011 and made a voluntary payment of $1.5m to a Christchurch project. The charges were from activity in 1998-2003 where the ComCom alleged that some timber CHH had sold was not up to advertised specification, but CHH did not admit a breach of the act.
  • BNZ settled in 201o with the Commerce Commission after agreeing that its credit card brochures had breached the Fair Trading Act, and acknowledged that they had breached the act.
  • ANZ and ING settled with the Commerce Commission in 2010, and got $45 million repaid to investors in two funds. (It’s nice when the Commerce Commission works this well). In 2008 ANZ was fined $80,000 for a misleading bonus bonds campaign.
  • Air NZ settled with the Commerce Commission this year over price fixing from 2002 to 2006, paying $7.5 million in fines.
  • The Warehouse was convicted and fined $209,600 in 2009 for ‘multiple breaches relating to 2005-2007.

I’ve always been proud of New Zealand’s Fair Trading Act, and the presence of the Commerce Commission.

However Tom Pullar-Strecker writing in Stuff today brings up an interesting point from the delightfully named Licensing Authority of Secondhand Dealers and Pawnbrokers annual report. (I can only find the 2012 version). It seems that companies with convictions in the last five years under the Fair Trading Act are automatically refused a license to buy, sell or otherwise deal in second-hand goods, and in 2013 both Telecom and Vodafone were refused licenses for that reason.

However despite lacking a secondhand dealing license both Vodafone and Telecom are operating a trade-in scheme for mobile phones.

Sure the law might be ridiculously antiquated, but both companies should be aware that they are pushing it here, and it seems they are breaking the law. They should both should stop dealing in second hand phones immediately, but also apply their clearly considerable lobbying power to work to fix the law.

Those Fair Trading convictions are are very serious matter, and while those fines might seem high, they are trivial in relation to the sizes of the companies. It’s especially galling for companies that are so pervasive in New Zealand commerce to mislead us, and I am not unhappy that this somewhat unintended consequence of those breaches has come to light.

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Let’s start paying GST on everything

I paid no GST when I purchased Lorde’s Pure Heroine album from Apple’s NZ iTunes store in September, but I did pay GST when I purchased a MacBook Air from Apple’s NZ online store. And while I do pay tax when I rent or purchase movies from the US iTunes store, but that’s a US state’s sales tax, not GST.

I don’t get charged GST when I subscribe to offshore web-based products like MailChimp, SurveyMonkey or WSJ, but these monthly fees could easily creep up over the GST minimum of $400 per shipment or transaction.

Is this fair?

At the moment when we purchase any item in New Zealand we pay GST of 15%. It’s been lauded as one of the most efficient taxes around, and we are lucky to have it and to have kept it simple. But GST does not apply for purchases from offshore valued at under $400, and with the move to sale of virtual goods online that’s becoming a fairness and revenue problem for NZ. 

So it’s time for a review of how it all works, and Revenue minister Todd McClay is kicking it off with the launch of a discussion paper – soon.

The aim of any taxation system is to achieve the two very difficult goals of fairness and efficiency while collecting sufficient revenue for the government to do their job.

Fairness is making sure that everyone pays their fair share, as dictated by the policies of the day.  I don’t want to get into the argument on whether it is right or wrong to tax the rich or poor, but I do think it is important to make tax avoidance very difficult to do and expensive when caught. Efficiency is more important in many respects, and is the measure of the cost and time burden that results from paying and collecting tax. An efficiently collected tax is generally a simple tax.

My own ambition is that New Zealand sets the global standard for both the fairness (e.g. apply GST to Amazon ebook purchases from the USA) and the efficiency (make it trivially easy to pay GST) of our tax system. GST is one of the most efficient taxes around, and I’d hate to see it become complicated or to see onerous requirements or privacy issues result from poor implementation. 

Proposal 

One proposal is to simply remove the $400 minimum per shipment from the current system, so that GST will apply to every item, physical or virtual, that is purchased by someone in NZ. And then make it trivially easy to pay that GST. 

This could be supported by an annual “GST not charged” allowance for individuals (but not businesses) who purchase goods from offshore, and it may as well be $400 again. Thus if individuals purchase over $400 of non-GST-paid goods from offshore in any one year then they are liable for the GST. 

But how do we collect the tax efficiently? Currently Customs hold physical goods with a value over $400 until tax is paid. This is woefully inefficient in time and dollars, and it slows commerce, adds real expense on top of the tax and doesn’t work for virtual goods. Let’s not do this any more.

Instead let’s just capture the information about the physical goods as they arrive, send a bill to the customer, with system to accept payment. Let’s release the goods before the GST is paid so that we remove double handling and storage costs. I’ve written before about the Customs website for calculating duty as Step 1 of 10 for paying our tax more simply, and it would be nice to see them push this sort of change.

Once the law is changed to remove the threshold then we have the ability to chase the big sellers, and ask Amazon, Apple et al. to collect GST at the source for all transactions delivered here (based on IP address ideally). Like anything there will be some sort of 80/20 rule that applies, and the lions share of the tax will be collected this way. 

We can also place the burden on individuals to collate and pay tax on items they have purchased from offshore, provided the total is above the limit. The focus would at first be on making it easy for people who want to pay the tax to actually comply. Ideally the initial minimum would be quite high and it would drop over time as automation improves. Sure people could avoid the tax by using fake addresses or VPNs or whatever, but the burden is still on them to pay it and the conversation at audit time will be between them and the IRD.

What it means

The big change here will creating the burden for individuals of collating receipts and paying GST where it is not collected by the seller. (Businesses already do this). However the nice thing is that electronic purchases do create a lovely electronic track record, and tools such as bank online systems and Pocketsmith will help.  

But the easy parts are for businesses to start paying GST on everything, for Customs to release all goods before GST invoices are paid and for big foreign sellers to collect GST at source. Those simple moves will capture the lions share of the tax, and the IRD can take a soft line on individual compliance for lessor cases.

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