Cut­ting IRD jobs may hurt all of us

Kapiti Observer - - CONVERSATIONS - GOR­DON CAMP­BELL TALK­ING POL­I­TICS

Job cuts on the scale sig­nalled last week at In­land Rev­enue came as a sur­prise, given that tax law and IRD in­ves­ti­ga­tions are set to be­come in­creas­ingly com­plex over the time­frame en­vis­aged by the IRD changes.

Re­port­edly, the im­pact of dig­i­tal tech­nol­ogy is the main rea­son why the tax de­part­ment is plan­ning to shed a third of its staff – about 1900 jobs – by 2021, even though the New Zealand pop­u­la­tion will have ex­panded to nearly six mil­lion peo­ple by that time.

De­spite as­sur­ances by IRD that its ‘‘cus­tomer fac­ing’’ staff num­bers will not be re­duced, con­cerns are al­ready be­ing ex­pressed that some of the IRD’s key an­a­lysts in­volved in (a) ex­plain­ing the cur­rent tax poli­cies, (b) for­mu­lat­ing new poli­cies, and (c) con­duct­ing in­ves­ti­ga­tions into tax fraud are now in the fir­ing line. Job losses, re-train­ing and pay cuts are part of the pro­gramme of ‘‘trans­for­ma­tion’’ be­ing con­tem­plated.

Ob­vi­ously, dig­i­tal tech­nol­ogy is a use­ful tool for data pro­cess­ing. Just as clearly, com­put­ers can’t re­place the peo­ple who de­vise tax pol­icy, eval­u­ate it and en­sure that cit­i­zens and busi­nesses com­ply with the law.

The tax sys­tem hap­pens to be the main chan­nel through which in­di­vid­u­als and firms con­trib­ute to the fund­ing of es­sen­tial public ser­vices. Its long-term in­tegrity has to be in ques­tion, given the scale of change be­ing en­vis­aged.

‘‘Some very very ex­pe­ri­enced peo­ple are hav­ing to re-ap­ply for jobs,’’ Terry Baucher of Baucher Con­sult­ing pointed out to RNZ.

‘‘We’re look­ing at [los­ing] highly ex­pe­ri­enced peo­ple on the le­gal side of mat­ters, where tax leg­is­la­tion is not a mat­ter of pro­cess­ing, but of in­ter­pre­ta­tion. And also [at peo­ple] on the pol­icy side - in the de­ter­min­ing of how we write leg­is­la­tion, and how we should re­spond to chang­ing events and in­ves­ti­ga­tions.

‘‘That,’’ Baucher con­cluded, ‘‘doesn’t make a lot of sense.’’

Ac­cord­ing to the Public Ser­vice As­so­ci­a­tion, the brief­ings pro­vided to the union in­di­cate that cost-cut­ting has not been the main driver of these changes. Even so, as PSA na­tional sec­re­tary Erin Po­laczuk said last week, the wage rates for en­try po­si­tions ap­pear likely to be re­duced, along with the pay rates of some of the de­part­ment’s ex­pe­ri­enced an­a­lysts.

Such an out­come could well un­der­mine IRD’s abil­ity to re­cruit and re­tain the ex­per­tise it needs to func­tion ef­fec­tively - es­pe­cially on those prece­dent-set­ting oc­ca­sions when IRD squares off in court, against teams of lawyers work­ing for their clients, but with­out the same cost con­straints.

The IRD drama all but over­shad­owed Labour’s re­lease of its al­ter­na­tive Bud­get. If elected, Labour is promis­ing to scrap the govern­ment’s tax cuts and in­vest the nearly two bil­lion dol­lars in­volved in health and ed­u­ca­tion, with enough left over to de­liver (smaller) sur­pluses and debt re­duc­tion, al­beit at a slower rate.

Pre­dictably, Na­tional de­cried this as the ir­re­spon­si­ble ‘‘tax and spend’’ poli­cies of yore. This could be a hard mes­sage to sell, given that the govern­ment it­self is promis­ing to spend the same money on tax cuts, whose big­gest ben­e­fits will ac­crue to the coun­try’s wealth­ier cit­i­zens.

So­cial spend­ing or tax cuts? Un­less IRD can still do its job prop­erly, there may not be money in fu­ture for ei­ther op­tion.

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