Tuesday, September 05, 2006

Sinister Elements: Pete's Story

A close friend of mine (for the purposes of this post, I shall call him “Pete”) works for a large consulting firm. Pete has a nice home in an exclusive Auckland suburb. He and his wife drive new model European cars. He plays golf on Friday afternoons. He earns well over $500,000 a year. He has little interest in politics.

Pete guy lives a privileged lifestyle. He has done exceptionally well over the last seven years. Although the economy has been pretty good, and he has property investments that have funded his retirement twenty years before he is entitled to superannuation, he owes much of his success to Helen Clark, Michael Cullen, Trevor Mallard, Annette King, and Steve Maharey. Between them, these five Ministers have presided over the fastest growth in the State Sector that New Zealand has seen since 1935.

It is difficult for those who live outside Wellington to comprehend just how enormous this public sector growth has been. The ballooning of the state is the direct reason why 62 of New Zealand’s 100 largest employers are in the state sector.

This development has been very beneficial to certain business interests who have been smart enough to engage with Wellington politicians and bureaucrats. Pete is at the centre of one of these business interests. Like all good businessmen, he goes where the money is. And the amount of cash flowing out of government departments on very large-scale, multi-multi-million dollar projects, is astronomical. The State is spending seventeen billion dollars more today than it is six years ago. Pete’s very happy with how this Labour Government has helped his business.

Pete lunches and socialises with Cabinet ministers and senior officials on a regular basis. He is not the biggest biller of services to Government by any stretch, but his firm will probably provide $10 million in services to various government departments in the next financial year. There are some players in Pete’s industry that will bill an individual government department several times more than that on a single project.

Pete is a sensible guy. He gets good personal financial advice. He’s not a genuine high-net-wealth individual, but he’s getting there. Pete has structured his income through various legal devices so that he is paying tax on only $60,000 a year, and the rest of his income is attributed to loss-qualifying companies. Pete pays a net 6% income tax.

Pete doesn’t stand to gain from tax cuts under a National Government. He’s paying bugger-all tax as it is. His company is rolling in cash, based on services he’s selling to Government clients that have no commercial sense. They don’t know what they’re buying. Government doesn’t care what it’s buying. It has the money, so it must spend. And they’re buying from Pete and many other Petes in Wellington.

Just over a year ago, things changed for Pete. He understood that it’s sort-of fun for a while increasing margins to government clients who don’t care what they’re buying, and making large sums of money in the process: Pete became involved with a project working with people in another company that was charging even more outrageous amounts to Government departments that cared even less what they were buying. Project schedules were over-run, service levels on the project weren’t achieved, and project costs snowballed. The Government client paid the bills, and nobody on the project—the external firms, nor the department’s internal managers, the public servants—were held accountable.

Pete’s outrage at the waste and over-indulgence in the public sector that was making him so much dosh drove him to loathe the current government, and how it was blowing away titanic sums of money for no effect. The issue for him was no longer personal business gain, but core belief. Pete was not a political guy. He could talk to politicians and bureaucrats, and sell them ideas, but he kept out of politics. He didn’t particularly have a great affection for the National Party, but he could see how Labour was destroying New Zealand.

Pete’s decision to donate to the National Party didn’t come lightly. He did so very cautiously. He did it anonymously, without ever having met any National candidate or official. It wasn’t an astronomical sum, but enough for it to be declared. On election day I asked him if he wanted to come to an election-night party; he declined because it didn’t interest him, but wished us luck all the same.

This guy has never met a National Party official. Don Brash has never heard of Pete. Nor has any senior National Party official. And if Pete has it his way, they never will know that he was the source of a donation inspired by his anger and outrage at Labour’s excess in the public sector.

But that wasn’t the only reason Pete wanted to remain anonymous. Just as Pete, and countless another anonymous donors in 2005 donated to Don Brash’s National Party because they were disgusted with the thought of three more years of Labour’s squandering of opportunity, Pete wanted to remain anonymous out of fear. Just as Labour Ministers are now inventing fictitious insurance backers of the National Party, Pete knew the consequences of Labour Ministers knowing of his donation.

The Labour Party is vindictive. There was never going to be a guarantee that if he made a contribution to the National Party, that National would win the election. And Pete and his wife still have to make a living, whether or not Labour is in power. Pete knew that would have been a whole lot harder if his name had ended up on a National Party donors’ list.

History has shown Labour’s motivation to target people it does not like. The public sector's tentacles are very long, and Labour has tamed them reach in every corner that serves its interest. It is these sinister elements drive people to make anonymous donations. Those elements are the fear of reprisals by the Labour Government to a known anti-Labour supporter.

I don’t personally approve of anonymous donations to political parties. If the culture of fear has become so great—and Labour has shown that it will do anything to remain in power, even steal an election with taxpayer funds—then in my mind that shows even more reason why we should stand up and be counted. Far more people need to have the courage to stand up to Labour and say that we will not support graft, vote-buying, and corruption. The more people who are prepared to put their names to their support for National, the easier it will be for others to join us.

And the sooner we do that, the sooner we will be rid of this corrupt gang of political hooligans.


iiq374 said...

The Taxblog is currently running a story about how Hendo is getting audited again.
First look that has nothing to do with the above story. Second look shows that it has *everything* to do with the above story.

paulscottfilms said...

You better get pete to take me on as a consultant, like for hardly any of his funding of NAT party \
[who can't ever get anything done till they get charisma and violets in the leader] Pete, he don't have to believe my advice, just send me out and for lunch with them and I will just poison the sminister this way he skill two bird with one stone,

peterquixote said...

hendo who hendo

Anonymous said...

I remember talking to guy in Wellington down in a bar one night about what he did.

He said he was a consultant that did work for government departments auditing there IT departments.

I asked was it very difficult and he said no. He would go in for a week and write a report and get paid.

He said the firm he worked for charged about $20,000.00 + depending on the size of the job and he would collect $1000.00 a day for doing the work.

His opinion was that government departments these day had money to burn and it was always better to be over budget than under.

peterquixote said...

less government dudes

Insolent Prick said...

I had a similar revelation in a bar, Anonymous. Was talking to an American guy who had been working on a large Government project for a year. Asked him what he was charging. Expected him to say he was doing it for around $150 an hour.

He answers: "$280 an hour."

I said to him: "Holy fuck! How the fuck does somebody like you get away with charging $280 NZ an hour for your work on that project?"

He answers: "No, not NZ dollars. US dollars. And they fly me back to the states every month for four days off."

Anonymous said...

Sadly you are right The irony is Im currently trying to get some government organisations to sign up for high quality international level programmes in the area of good goverance and admin compliance etc etc. Their not interested.Their budgets dont stretch to that sort of thing. Not surpising considering the appalling level of governance.

libertyscott said...

The irony is, compared to the US, UK and Australia, NZ government departments are fine models of fiscal prudence and accountability. My experience with bureaucracies and projects in those countries says that the larger the country, the more wasteful the government. Fortunately the processes are in place to be able to cut back, the State Sector Act makes this all quite transparent - and it will require a government with balls to do it.

rightkiwi said...

Outstanding post.

Stenerud said...

A genuine question:

Isn't much of the work private companies provide to Government organized through tender processes? Even if not, are you sure that the processes aren't transparant enough to limit the scope for revenge from a vindinctive government/party?

KG said...

Great post!

KG said...

Placed a link to this post on my (new) blog, but don't expect to be deluged with hits as a result. :o)