The rhetoric over the past decade or so has painted tax as a ‘burden’ from which we need ‘relief’. But PSA national secretary Erin Polaczuk argues that tax isn’t a burden nor a necessary evil, but something paid by Kiwis, for Kiwis.

The Spinoff is hosting Tax Heroes – a series covering tax, who pays it and what it means. Click here to read more.

Something is happening in New Zealand. We’re at a turning point, in so many ways. We’ve been given a chance to take a step back and decide what kind of country we want to be. Individualistic and money-driven, or collective and people-driven? As unlikely as it seems, tax is proving to be the canary in the coal mine.

Since the new government came to power late last year, the National government’s reputation as a clever and innovative economic steward of the economy has proven to be complete rubbish. A lie as toxic as the black mould in the walls of Middlemore Hospital. In his piece for The Spinoff, Dr David Galler painted a picture of staff trying to do their very best in impossible conditions, with a government that was unwilling to tackle either the drivers of the community’s needs or the severe underfunding of the health service.

Make no mistake, Middlemore could not be a clearer symbol of what happens when tax is seen as a burden and public spending as a necessary evil. That’s been the rhetoric over the past decade or so. Tax is a ‘burden’ from which we need ‘relief’. It’s a drag on the market economy, which always believes private enterprise does better. Not only is this not true, it’s not a responsible way to run a country.

Bill English constantly talked about “investment approaches”, as if New Zealand were some kind of hedge fund where one could contribute as little as possible and see healthy returns. The flaw in that thinking was to see a thriving Pacific country of 4.5 million people as a business. It’s not. It’s a society where our quality of life directly depends on the quality of the public and community services available to us. These services are the ties that bind us together and the net that catches us when we fall. Cutting away at those ties makes the ties weaker, the net smaller. It’s the very opposite of an investment approach.

When the tax pool is smaller, even essential spending becomes a nice-to-have. Maintenance becomes about patching holes, not checking for problems you can’t see. Services go to those in the direst need, rather than supporting the vulnerable before they reach crisis point. Money becomes the driver because it has to be. Social and environmental costs are huge, unquantifiable and have to be ignored lest the enormity of the problems breaks the whole system.

This isn’t the Aotearoa we want, and it isn’t the Aotearoa our members want. They’re working hard to do their best. They’re not on fat salaries with hefty expense accounts. In fact, many struggle to meet their day-to-day living costs, especially in Auckland. They’re largely driven not by money, but by the desire to do good: the DOC rangers looking after our native wildlife, the border control agents keeping our borders secure, and the home and disability support workers looking after our most vulnerable people are all funded by taxes. The PSA has more than 64,000 members working across the public service, the state sector, local government, the community public sector and DHBs. They’re all providing services our country needs. They’re all funded by our taxes.

Before the 2017 election, the PSA put together a book on tax. It seems like a long time ago now, but at that point, we genuinely thought we could be looking at a fourth term for National who could have squeaked into victory with a straight-up bribe in the form of tax cuts. We wanted to turn the conversation around. Tax cuts would have meant little to the vast majority of New Zealanders, but a hell of a lot to the public services that make our country a great place to live in. We needed to talk about that. And fast.

In the foreword, we talked about the two prevailing metaphors around tax. First, tax as a subscription fee we pay to enter a club, which needs upkeep and maintenance for its members to properly enjoy it. Second, tax as a long-term savings account, where we pay money knowing that one day we’ll need to draw from it in the form of healthcare and social support costs.

The problem, though, is that our present situation here in New Zealand isn’t either of those things. If we’re a long-term savings account, we’re one where the promised return on investment isn’t materialising. If we’re a club, then our management has become so obsessed with offering membership discounts that they’ve been overlooking the raw sewage running down the walls.

We kicked off the conversation, and we could not have been more delighted by what happened next. Right-wing commentators might have disagreed – and boy, did they disagree with some of the arguments – but they talked about it. Our members talked about it. Unity Books agreed to stock some copies and we were amazed to see it inching up its bestseller lists. And now, we have a progressive coalition government which has launched the Tax Working Group.

Make no mistake – all these outcomes are good. Tax is by the people, for the people, about the people. We should all be talking about tax. The question now is what happens to that talk and where it takes us.

As I’ve said, successive governments have looked at tax with the wrong values. They thought the “tax burden” should be as small as possible, and the best way to minimise it was a sinking lid on baseline funding for essential public and community services.

Here’s the pivot point. Here’s where Labour and its support partners need to do better. The Tax Working Group cannot recommend a few tweaks at the margins. We need a change in values. It’s happening. New Zealanders want it. Let’s make sure we make this conversation count.

The PSA has three challenges for the government:

1. The Tax Working Group – so far, so good. The proof now needs to be in the way it carries out its work. It needs to hear from as many New Zealanders from as many diverse groups as possible. This will take a lot of proactive work but it’ll directly impact on the quality of its work. The PSA will support and encourage its members to take part, but others will need to do the same.
2. We need to genuinely consider raising more tax revenue but from different sources. The easy fix is to raise income tax and GST, but this will hit the same groups it always does – workers. And the lower your income, the harder you’re hit. We need to look at wealth taxes and make sure corporations are paying their fair share.
3. The Budget Responsibility Rules need to be revised. Pure and simple. It’s going to take a lot of money to undo the results of decades of underinvestment, let alone the good progressive change that this government’s promised. Existing baselines will not be enough
4. Tax isn’t a burden. It isn’t a necessary evil, unavoidable as death. Tax is something paid by Kiwis, for Kiwis. New Zealand’s ready for a change in values – the recognition that we’re all in this together, he waka eke noa. This government needs to be ready for that change.

The Spinoff’s business section is enabled by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.

Check out how Kiwibank can help your business take the next step.

Every week on The Primer we ask a local business or product to introduce themselves in eight simple takes. This week we talk to Jimmy Hayes, co-founder of premium bags company Minaal, which has raised more than $700,000 USD in crowdfunding.

ONE: How did Minaal start and what was the inspiration behind it?

My co-founder Doug Barber and I were terrible employees, continually harming our career prospects by making snap decisions to grab cheap flights and head out on the road. Eventually, we realised if we could make a living while on the road, all our “problems” would be solved. Thanks to an unfortunate moment on the Shanghai subway (Doug) and a 17-hour stopover with a 90+30L bag in Singapore (me) we were “inspired” – by emotional pain – to build a better carry-on bag.

The mission for Minaal gear is to help people be faster, happier and more efficient in their travel, work, and daily transitions.

TWO: Did you have any interest/experience in business or entrepreneurship prior to starting Minaal?

Doug is a born entrepreneur (read: he’s unemployable). Meanwhile, I was never the kid hustling lemonade on the street. But my dad was a small business owner so I always had an appreciation of the hard work, sacrifice, and self-determination that goes into starting your own thing.

In terms of experience – or what one might call trial and error – before we got to Minaal, there was a TV pilot, travel shirts, and a stint driving an ice cream truck (long story).

THREE: What sort of thought goes into designing a Minaal bag? (utilities, essential features, durability, size etc etc.)

It begins with every member of the design team staring at people in airports and public places like absolute creeps. Please ignore us: we’re not checking you out, we’re looking at your bag. How do you swing it off your shoulder? How do you access stuff on the move? Do you make a face when you put it down?

From there, we launch into more active, less voyeuristic user research by getting our beta testers to thrash product samples and discuss their feedback in a built-for-purpose private forum.

The final step is to add our design ‘opinion’ to everything we’ve learned and turn information into a product. This is the part where we have five-hour calls about zips (joking! It was six hours).

A more indirect way we ensure a thoughtful product is by intentionally restricting our range. People intuitively understand when you make two models, instead of 100 new ones each season, you’ve taken a lot more time to consider each design and how people will actually use it.

FOUR: What are the differences between products like the Carry-on and Daily? How much stuff can each bag fit?

There are a ton of feature-level differences, all of which are driven by use case. Generally, the Carry-on is built for long-haul trips while the Daily is for more day-to-day usage – although there’s a lot of variation based on individual needs. Some things stay consistent between the bags: a patent-pending suspension system for protecting your electronics, for example, and a blend of top-end outdoor components and minimalist aesthetic. We also worked hard to ensure the accessory range works equally well with both bags.

Regarding capacity, there’s an interesting (says the bag nerd) tension between communicating litre capacity and real-world capacity. There’s no measurement standardisation across the industry, so one bag’s 45L can be another bag’s 30L. We’re nominally at 35L for the Carry-on and 21L for the Daily, but people are generally surprised how much they can fit, given how minimal the design silhouette is.

If readers want some more insight on packing and fit, we’ve put some resources together here.

FIVE: I understand you run Minaal from overseas. What’s the reasoning behind that and what are the challenges/benefits of doing so?

We’re proudly Kiwi-owned, but we spend the majority of the year running the business on the road. We decided early on that we’d employ a strategy of ‘getting close to the fire’ which means building relationships and solving problems in person wherever we’re most needed, whether that’s in Hong Kong, Houston or Helsinki. The benefits of the strategy are both numerous and obvious – we honestly would’ve failed if we’d sat in New Zealand sending emails trying to launch this business.

The challenges of running a global operation with a distributed team centre around communication, whether that’s trying to brainstorm creatively with people in different time zones and levels of connectivity, or just getting on calls at 3am wherever you might be (hot tip: jet lag helps). Thankfully, having built the organisation around a distributed team model from day 1, we’ve found a lot of ways to mitigate the downsides of our setup – and simulate the upsides of other models.

SIX: I also understand you’ve run a Kickstarter campaign or two to help Minaal get off the ground. In what ways has that helped the business?

We wouldn’t be here without Kickstarter, but that doesn’t mean it’s for everyone. I always tell people there are five main benefits to crowdfunding:

1.  Reversing the cashflow cycle – having cash in hand before you make the product is a game-changer for small businesses.
2. Reaching new audiences – Kickstarter has a really robust internal discovery ecosystem, and before we launched we didn’t realise that some people actually hang out on the platform looking for new things to support.
3. Product development feedback – you have a chance to get real-world feedback at scale then make tweaks before committing to production.
4. Product viability – it’s a lower-risk way of testing whether a product will be successful.
5. Social Proof – the campaign pages exist forever, and people still come across ours and discover a business that publicly beat their deadlines and made their users happy. That level of trust is super hard to generate.

My other advice to people is: don’t underestimate the ridiculous amount of work that goes into a successful crowdfunding campaign. We worked on our first one for about a year solid before launching, which included multiple trips through Asia and the US. It’s great, but it’s not something you slap together.

SEVEN: Do you any other plans to scale/grow further and if so, what are they?

Our goal is just to work on interesting things with great people, and so far that’s led to strong growth. Because we have varied interests, and we like to keep our range minimal, you’ll likely see different types of products/businesses which serve the same principles and lifestyles as the bags.

EIGHT: Lastly, tell us about a start-up or business that you really admire right now.

Kirsti and Lance at Populate have an inspiring strategy and a laser-focused product.

Arjun of Quick Brown Fox and Harpoon Cold Brew is also on a beautiful trajectory. I’ve seen the whole journey unfold and it’s incredible how many times he’s levelled up.

---

The Spinoff’s business content is brought to you by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.

Check out how Kiwibank can help your business take the next step.