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.