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| Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz | ||||||||||||
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Here is how the scam works. A company accumulates GST and PAYE debts. The directors continue to trade, knowing they cannot pay. When the debt becomes unmanageable, they walk away from the company, leaving nothing for creditors. Then they start a new company doing the same thing. The old company dies; a new one rises from its ashes: same directors, same business, no tax debt. It is called phoenix activity. And our enforcement system cannot stop it. The problem is not that companies fail. Businesses go under all the time for legitimate reasons. That is capitalism. The problem is directors who treat tax obligations as optional. Who know the system only catches up when it is too late. Meanwhile, responsible companies keep paying their taxes on time, every time. They face higher compliance costs and unfair competition from rivals who simply do not pay. Why should honest businesses subsidise their dishonest competitors? By the time Inland Revenue moves to recover unpaid tax, the company has no assets. Enforcement becomes pointless – you cannot get blood from a stone. So, the debt gets written off. Germany solved this problem years ago by requiring directors to file for insolvency within three weeks of the company becoming unable to pay its debts. New Zealand could adapt this principle using a clearer trigger: when GST or PAYE defaults occur. Directors who act responsibly get protection – a safe harbour for those doing the right thing. But those who ignore their duties face personal liability. The game stops being worth playing. This is not some radical anti-business measure. It is about basic fairness. New Zealand could adopt a similar approach, perhaps with a slightly longer timeframe – 30 to 90 days – to reflect our business environment. The framework would prevent debts from accumulating while giving directors a reasonable time to address temporary cashflow problems. This is a novel proposal for New Zealand, complete with detailed legislative design principles showing exactly how it would work. We hope politicians will see its merit. Seven hundred million dollars annually is serious money that could fund real services instead of subsidising corporate irresponsibility. The message to directors should be simple: pay your tax or shut down properly. No more phoenixes. To learn more about Oliver's research, read the full research note, listen to our podcast and read more in the NZ Herald and Newsroom. |
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| Dr Benno Blaschke | Research Fellow | benno.blaschke@nzinitiative.org.nz | ||||||||||||
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The underpinning consensus is specific: competitive land markets are the durable path to housing affordability because they maintain threat of entry, enabling land to be brought to market easily and abundantly. This creates downward pressure on urban land prices. Hearing both Sir Bill English and Hon Phil Twyford in the same week brought into focus how unusual this moment is. New Zealand may be doing something larger that wealthier countries have struggled to achieve. Our podcast traces how that view formed. It is a globally significant history in the making. Part 1 closed with recounting Treasury official Chris Parker presenting on competitive land markets to then Minister of Finance Bill English in 2016. In that ‘chew session’, Bill English concluded, “Clarity is emerging from the mists.” In Part 2, we follow Phil Twyford’s story. He describes his early search in opposition for an explanation that could make sense of spiralling house prices and their debilitating costs on society. That search led to an unlikely network of economists, academics and urbanists who had begun analysing the crisis. Land prices were rising because scarcity was designed into the system. Competitive land markets began to “make sense” to Twyford because they explained both the problem and the solution. That idea led to an ideological shift in Phil Twyford. Our conversation reveals how hard it was to convert that insight into policy. Officials struggled with a new paradigm that sought to make room for people who would inevitably join our cities. Ministers were teaching officials, not the other way round. Solving the initial policy crunch led to structural shifts that many countries have discussed but not yet achieved. Although we have yet to fully achieve housing affordability, this period has had lasting impacts on our political and policy landscape. Sir Bill English’s comments show how far that shift has travelled. He links resource management (planning) reform directly to generational fairness and economic performance. He places Twyford and Bishop on the same reform arc set out to achieve competitive land markets. He argues New Zealand is ahead of Australia, where reform has “not even got started.” He frames bipartisan alignment as evidence of a deeper structural change that will outlast electoral cycles. We finish with Twyford passing the torch to current Housing Minister Chris Bishop, who joins us for the final part of this world-leading experimentation in national policy to achieve housing affordability. You can listen to our latest podcast episode with Hon Phil Twyford here. Part 3 of this podcast series featuring Hon Chris Bishop will be released in January 2026. |
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| Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz | ||||||||||||
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The dog lost, but the Simpsons won. Santa’s Little Helper went home with Homer, saving Christmas. It was the very first episode of The Simpsons, which aired at Christmastime 1989. New Zealand’s greyhound clubs will not be having a festive holiday season. Legislation before Parliament bans greyhound racing over animal welfare considerations. Buying out the industry, shutting it down, and rehoming the dogs would seem right if you thought animal welfare warranted it. The legislation instead proposes shuttering Greyhound Racing New Zealand and an assortment of private racing clubs. Their net assets will be handed to a new Greyhound Racing Transition Agency. That Agency will wind down the industry and rehome dogs, with no requirement for compensating either dog owners or clubs. After the wind-down, the Transition Agency’s remaining assets will be redistributed – but not to anyone whose business was destroyed by the racing ban. Thoroughbred and harness racing codes get the proceeds instead, despite the deaths of fifteen horses last year and injuries to over three hundred more. I wish I were joking. Let’s put this plainly: The Bill proposes stealing the assets of greyhound clubs, using the money to cover some of the government’s costs in shutting down the sector, and handing anything left over to the Minister’s preferred horse racing codes. Some unenlightened folks might call it corruption that would embarrass even Springfield Mayor “Diamond” Joe Quimby. I say instead that it could be the start of a new and wonderful Christmas tradition. New Zealand has numerous clubs. Some have assets that some Minister might think could be put to better use. Dissolving the monasteries and confiscating their assets wouldn’t get you much nowadays, but what about golf clubs? Pulling a King Henry VIII move there could work wonders. The government could ban golf, seize the clubs’ properties, and upzone them. A Golf Transition Agency would reconfigure golf carts for retirement village use. Any ‘remaining’ assets, plausibly worth about fifty billion dollars, could be handed over to social housing providers. If your Christmas wish is a family dog, consider rehoming a greyhound. The Simpsons loved theirs. I have a different Christmas wish. That a government claiming to like property rights would stop proposing such awful legislation. |
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