Cutting IRD jobs may hurt all of us
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.