Blog description.

Accentuating the Liberal in Classical Liberal: Advocating Ascendency of the Individual & a Politick & Literature to Fight the Rise & Rise of the Tax Surveillance State. 'Illigitum non carborundum'.

Liberty and freedom are two proud words that have been executed from the political lexicon: they were frog marched and stood before a wall of blank minds, then forcibly blindfolded, and shot, with the whimpering staccato of ‘equality’ and ‘fairness’ resounding over and over. And not only did this atrocity go unreported by journalists in the mainstream media, they were in the firing squad.

The premise of this blog is simple: the Soviets thought they had equality, and welfare from cradle to grave, until the illusory free lunch of redistribution took its inevitable course, and cost them everything they had. First to go was their privacy, after that their freedom, then on being ground down to an equality of poverty only, for many of them their lives as they tried to escape a life behind the Iron Curtain. In the state-enforced common good, was found only slavery to the prison of each other's mind; instead of the caring state, they had imposed the surveillance state to keep them in line. So why are we accumulating a national debt to build the slave state again in the West? Where is the contrarian, uncomfortable literature to put the state experiment finally to rest?

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Wednesday, November 20, 2013

David Cunliffe & Pike Mine Compensation. Immoral, Emotive Politics Again.

I’m aware of the vilification I’ll get for this, but some small-stater has to ask the relevant questions of Labour Leader, David Cunliffe. The relevance to this blog is that there will only be the voluntary and free society, entirely dependent as that is on a small state, if individuals and families take responsibility for themselves, and strive for self-reliance. This includes the range of planning from prudent family size, through to sitting down with a broker once a year to construct an appropriate insurance package to deal with changed circumstances such as death of a breadwinner. Pike also surely shows the need of a system of (natural) justice where the legal benefactors of people  killed by negligence can sue, rather than New Zealand’s government regulated no-faults system which is allowing negligent employers ‘off the hook’.

David Cunliffe has promised that the government will pay compensation to the 29 Pike Mine tragedy families:

Labour leader David Cunliffe has said a government led by him would pay compensation to Pike River families.

He said he would seek to recover the money from Pike River's parent companies.

His comments come on the third anniversary of the tragedy in which 29 men were killed.
"We will then seek to immediately recover the money from the parents' shareholders and directors of Pike River Coal Ltd", Mr Cunliffe told reporters this morning.

"We believe the Government has let the families down, that it has a moral obligation…

The compensation is to be something in the range of $100,000 per family.

We all have empathy for the Pike 29 families, however, if David wants to prove himself responsible to run a country, then he’s got to start thinking through issues such as this wisely, rather than emoting about them to the public press. There are two distinct aspects to what he is proposing.

Firstly, over the year concerned there were 257 road deaths, and including the Pike 29, something like 100 workplace deaths (I can’t find an exact number for this, only that the average for the last five years is around 100 workplace deaths per year). However, although David has announced the Pike 29 will be compensated by government, none of these others are to be so compensated. Why? The initial question he must answer is, how, other than the fact of next year’s election, is the grief of a Pike family, different from that of every other family that has lost a loved one in the workplace, on in a road accident?

I suspect David well knows the answer: money. The taxpayer could not afford this: which is why it remains so important for individuals to make their own arrangements. If all 357 deaths from 2012 were compensated the similar amount, then the cost to the taxpayer would be $35.7 million. That would involve the entire tax take of 1,500 taxpayers who earn $100,000 per annum, or over 5,000 earning the average wage of approximately $47,000. (Indeed, given many families below $60,000 are paying no net tax, after transfers, then the tax take from this group probably couldn’t cover this, and we would be again looking to that 12% of top income earners whom are already having to shoulder 76% of the total tax burden to afford governments $70 billion annual budget). Keeping this simple, regarding the average wage, this would require the total tax take of a town twice the population of the one I’m writing this in, Geraldine, every year.

So not remotely affordable. Which brings the question back to: why are just the Pike families to be compensated?

Secondly, I know David will find a lot of sympathy for going after the parent companies and directors: I probably agree with him, but does he mean law changes away from our no-faults system? If so, good, let’s get rid of ACC and go back to private provision and ability to sue for negligence for all such victims, not just one visible, symbolic group in an election year. That’s government playing favourites in a sick way.

Although I disagree with David about going after Pike’s shareholders. He’s got to think prudently and intelligently about a precedent set, over political expediency. To create a precedent of removing company limited liability and making shareholders responsible for the obligations of companies will destroy New Zealand’s investment markets and see a capital flight from the country. The NZX would be crushed. It’s important for an investor that though they are risking their (direct) capital invested in any firm, they are not putting up as guarantee their homes and private assets. It’s hard to think of a precedent more damaging to our economy.

So, David needs to explain the selective compensation being applied here, and how it is not just cynical, shameless, emotive electioneering. How is the grief of the Pike families, (or the value of the lives lost), different from every forestry death so far this year?

And none of the above is a slight on the Pike families, whom to my knowledge have not asked for such compensation, just fair restitution from the company and directors concerned (natural justice).

Finally, to those who rightly say on Twitter if we can give $35 million to the America's Cup why not compensate the Pike 29? I agree, why are taxpayers forced to subsidise that sport of the rich: yachting. Again, compensate Pike families, then it’s got to be everyone, which no country could afford, nor should it. Let’s just stop treating the hard working taxpayer like a bank for every appeal or political dream.

Update 1:

From comments section below, regarding the fair point made by a respondent that “The government has a moral obligation to pay because … it was partly to blame.”

My response:

I have sympathy with that view to a point, however, the fault in the legislation is surely the no-faults system? The taxpayer has paid once already: per RNZ two days ago, $7 million ACC, with another $20 million over time to the families (from memory).

Plus the private trust that was formed of roughly $5 million.

Although in principle the private gifting is irrelevant, taxpayers have paid once, that payment under a no faults system: to break that by a second payment from taxpayers pockets via a moral obligation caused by being at fault, sets a further precedent that undermines no fault proper. I’m more than happy to go that way, and wind up ACC, but I’m not happy about continuing with no faults, while being forced to pay twice in this instance.


  1. Hi Mark

    A very sound, well reasoned post.

    Thank you.

  2. how, ... is the grief of a Pike family, different from that of every other family that has lost a loved one in the workplace, on in a road accident?

    There is nothing different about their grief, of course. However, with Pike River there was a Royal Commission that found that "failures include the way the legislation was applied and the failure of the Labour Department in its inspectorate role."

    The government has a moral obligation to pay because a) it was partly to blame, and b) those who are more directly to blame, and are subject to a court order to pay, have not. Once the government has paid, it should attempt to recover at least a proportion of payment from the other responsible parties.

    1. I have sympathy with that view to a point, however, the fault in the legislation is surely the no-faults system? The taxpayer has paid already: per RNZ two days ago, $7 million ACC, with another $20 million over time to the families (from memory).

      Plus the private trust that was formed of roughly $5 million.

      Are you in favour of creating the precedent to go after shareholders?

    2. The court ordered payments were ordered in addtion to any ACC payments. The court would presumably have considered greater payments if there was no ACC system.

      The private trust is irrelevant.

      Creating the precedent to go after shareholders who fail to obey court mandated orders? Seems that precedent already exists.

    3. No. The rule of law must not go after the shareholders. Do you agree that if we create a precedent which removes limited liability for shareholders, that has massive, deleterious implications for investment in NZ firms?

      Regarding your first paragraph, you have a good point. But shareholders are not liable for the actions of the companies they invest in, or directors.

      I admit that there is an injustice when a judgement against a company is not paid because it can't afford to. It's not a perfect well, that's why, harking back to my first paragraph of the header proof, the onus is on all of us to insure ourselves and our families against the worst happening.

    4. WTF are you talking about Mark? Directors are responsible for the actions of the companies they direct, directly to the extent that they instruct the company to engage in these actions, and indirectly to the extent that they fail in their duty to see the company run legally.

      Your comment, "I have sympathy with that view to a point, however, the fault in the legislation is surely the no-faults system?" Is not even coherent, there was a court decision and it found that the company (by proxy its officers) was to blame, there is no no-faults system.

      Further more limited liability is not even a relevant issue,

      "Judge Farish said she could rule not to impose reparation if she thought the company was unable to pay but she believed it could be paid by existing shareholders or directors.

      The directors had insurance worth a considerable amount and NZOG had gained benefit from keeping the company in receivership rather than liquidating it.

      Pike River was a shell company and the directors had resigned. The remaining proceeds of $25m were contingent on the mine being reopened."

      Marks call is simply for the directors and shareholders to be fully compensated with the profits resulting from their corporate manslaughter.

      This entire post is a disgusting exercise in victim blaming.

    5. Your final sentence is wrong and offensive. Your usual.

      Nowhere have I said the directors aren't liable. They are the ones who are. A suit againstt them: yes. Appropriate, if negligent, as might be the case. The directors should pay, not the taxpayer, nor the shareholders. If I've not made that clear, I am now.

      Although a no faults system does obfuscate that liability: that is the problem with it, which is also the point. We would be better to drop it. The Judge in this instance, by suggesting shareholders should pay is making a mish mash of our existing law. There were many 'ma and pa' investors in this company who have lost their entire investment in it, as they should, but their liability is limited to that.

    6. Because it's summer, before Xmas so most of our weekends are full for a while catching up with friends around BBQ's, let me head off your next post, Nic.

      This is the argument you need to break, in which case you have to have better legal knowledge than this National government's lawyers.

      National cannot pay due to current law; otherwise they would be paying if the court directed them. They would have to. Cunliffe is saying he will compensate under a moral obligation, not a legal one. The problem here is the families cannot, under amendments to our no fault system in 1974, sue the company or its directors, which they should be able to under natural justice. The only exceptions are some extreme instances of medical misadventure.

      So, you tell me why National's lawyers are wrong?

    7. National is the party of government.

      If National truly believes that the law is preventing them from taking the right, moral course, National can change the law. Under urgency even.

    8. Which is also precisely the problem. Governments with so much power, and no written constitution, that can make huge changes to our lives, taking our incomes to do so, merely by enacting words in the Fortress of legislation.

      Minarchy please.

    9. Except, of course, that Pike River, especially the lax legislative environment it was allowed to exist within, is the end result of a minimised Department of Labour.

    10. Fair point. By the bye, related, I love your phrase:

      ... the lax legislative environment it was allowed to exist within ...

      That's also what is wrong.

    11. And lo, a balance sheet miracle did occur, and Peter Whittall did find 3.41 million dollars which was suddenly available to pay court ordered reparations to the victims of Pike River Coal Ltd (which had previously been penny-less) and everybody was happy because the National government was spared Peter Whittall defending himself in court (close to an election) by pointing out that the Ministry of Business Innovation and Employment had repeatedly failed to enforce regulations on Pike River Coal Ltd. and everybody was happy because the evil immoral leader of the opposition was no longer able to cynically make political capital, over the issue of a company declaring bankruptcy in order to skirt paying court ordered reparations.

    12. On hearing news of the miracle (and undeterred at this being made impossible due to New Zealands ACC no-faults system), the victims families yesterday threatened to proceed with civil action against Peter Whittall.

    13. Nothing on what I have posted is incorrect vis a vis our no faults system. My understanding is the payment comes from Whittles directors insurance, the company paying it voluntarily.

      Outside my post, I think a good result. I don't think - purely personal opinion - Whittle deserved to be the target for the scorn of everybody: a lot of factors went into that disaster from Whittle, to the on-the-ground safety officers in charge of day to day safety, to the miners themselves, if reports of them covering methane meters are correct.

      Since Pike mine, 30 forestry workers have died on the job: where is the indignation over these deaths? Though as the Pike families believe this to be blood money, perhaps they could give it charitably to the families of these forestry families whom have had not Trusts, etc, in addition to the compensation they have received from ACC.

    14. You really enjoy writing from a soapbox of self avowed ignorance don't you Mark. One of the reasons that there is not massive indignation over 30 forestry worker deaths is that a government ministry is not palpably failing to enforce its existing regulations (though that figure is obviously awful). Some how you elected to ignore the palpable government responsibility to enforce its own regulations and couched a disgusting piece of victim blaming in reference to a government which supposedly had no moral obligation because it knew nothing about problems with this mine (I guess this is the key context of the piece which I dropped?).

      You will notice of course that the company was pleading bankruptcy to the courts at the same time as withholding several million dollars to be used to protect the CEO, which has now magically become available. This appears to be one of many cynical actions of Peter Whittall, both while acting as CEO, or in response to the court case. Or as you said the company is paying court ordered reparations voluntarily, how generous of them.

      I hope the families accept the money, and use it to fund a civil case as far as it will go (though I think this is a very long shot to succeed). Though that is really up to them. The government has let them down here however, and the most charitable interpretation of that failure is that it was simply incompetent to bring charges. The uncharitable interpretation being that they decided not to bring charges from political expediency have made a mockery of NZs system of justice at the same time.

      I see you are now pinning the blame on the safety officers, and miners over Peter Whittall. Well maybe its time to actually read some commentary of the crown report before sticking your foot any deeper into your own throat. The main safety officer was Neville Rockhouse, and a guy called Masaoki Nishioka was heavily involved in engineering.

    15. See, regarding my previous remarks about your toxic personality, I read the first sentence of your above post and couldn't be bothered reading further. You don't make me want to read your sniping bile. So other than saying 'well this is my soapbox', I won't be reading further than that.

      You are the most dreadful, stalker type I've come across online, and that's saying something.

  3. Cunliffe is going after every issue that pushes peoples indignation button, with no thought to the consequences of his absurd grandstanding. Expect more of this nonsense through till the election.

    1. Yes. Looking like 2014 is unfortunately going to be a lolly scramble of an election. Keynsian David loves to spend your money.

  4. I'm not sure of the current position with the companies involved, but my understanding is that the court judgement is against them and that Cunliffe was going to attempt to exert any pressure he was able to to push this compensation to the front of the queue?

    And the jibe about Keynesian lolly scrambles is an absolute joke considering the current asset garage sale going on. What's ours is yours to profit off. If promising to ensure that the families of a 29 people killed in one mining accident (which the current leaders were happy to get publicity of standing with the miners as the nation mourned initially) get their court decided compensation is a 'keynsian lolly scramble' compared to the untrumpeted or unpublicised wealth redistribution from this current government, well...

    Anyway apart from that partisan jab at Cunliffe, I'm not exactly aware of who is liable and I haven't read up on it. My understanding is that the remaining pay out was from the company which is pleading poverty or taken some kind of bankruptcy so can't pay, and that Cunliffe's first option would be to lean on them to do the right thing.

    I believe Cunliffe wishes to ensure the families receive the amount that has been decided and a direct payout from the state is not his preferred option.

    I also don't necessarily think Cunliffe is a massive Keynsian. We'll see, but I think fiscal responsibility and prudence is surprisingly enough when you look at much of the evidence a Labour value. He may right some imbalances created by the current tax system and labour market regulations which have squeezed wealth up into the middle and upper segements of society, but I don't think there is much to spend- let alone hundreds of millions on consultants to hock the furniture!

    1. Re the points in your first paragraph, yes, I understood that was the case when I wrote this, but vis a vis the no faults system we have, that doesn't necessarily change what I said.

      My Keynesian 'jab' was in comments not my main post, and refers to next years election. And you bet David's a Keynesian devotee; alarmingly so. I first became aware of it 25 March, 2010 when he wrote the below post on Red Alert ... you'll see I'm in the comments of that one. No time to create a clicky today, so you'll just have to copy and paste the url:

      Cheers for reading.

    2. I think these are things that he was reading at the time- however, he is also ambitious and learned his craft as a minister under Clark. Compared to the massive stimulus packages of the US, I think he can be considered much less inclined to spend than that.

      Ok I'll put that another way- while Cunliffe may believe in pump priming during a recession I think he'll be extremely anxious to establish himself as a credible financial manager. His appointment of David Parker and the push to extend the super age suggests this. This is just my instinct based on his signals so far- while he has read some economic theory he is also ambitious and aware of some political realities.

    3. You may well be right: I certainly hope you are. Although given how he played up his socialist credentials to win over the unions and the leadership, that will create a lot of disappointed supporters, and will be a problem in itself for him.