Agent's 17-year fight for justice
The Commerce Commission is sticking to its position over a case retiring speaker Lockwood Smith cited among his biggest career failures in his final speech to Parliament last week.
"Another failure I'm less proud of, though, was my failure to successfully help a former constituent with a grievance with the Commerce Commission, despite a 17-year battle on his behalf."
Smith was referring to the case of Northland stock and station agent John Dickson who lost his business after the Commerce Commission bungled in allowing a merger between Wrightson and Dalgety in 1986.
The commission allowed the merger with conditions that would have allowed Dickson continued access to stockyards. However, that access was subsequently denied to his company Dickson Lambeth & Associates and he complained to the commission about breaches to the conditions. To no avail.
"The problem was, not only could the conditions never be enforced under the law, but as the Ombudsman subsequently pointed out, even the decision itself was unlawful," Smith told Parliament on Thursday.
"My deep concern over all the years has been that the Commerce Commission failed to acknowledge their stuff-up and failed to advise my constituent that the conditions of the merger could never be enforced until it was too late for any legal remedy."
Smith said he was not troubled by the unlawful decision itself because "mistakes happen".
"It is the length that officials involved went to, spending tens of thousands of taxpayers' dollars on Queen's Counsels to argue that black was white, including the final advice from a Queen's Counsel that the unlawful decision involving conditions that could never be enforced, represented 'best practice'.
"Three separate select committees in three Parliaments considered this case, all of them expressing serious concerns, and two of them writing damning reports on the performance of the Commerce Commission, yet my former constituent's life remains in tatters.
"I can only apologise to him for my failure, a failure I feel very deeply."
The Commission referred the Sunday Star-Times to a statement it made on the case in 2010, saying its position had not changed since then. That statement only acknowledges that in hindsight it could have communicated better.
With a report from the Ombudsman outlining a series of errors by bureaucrats and a third select committee report, this one unanimous, recommending an ex gratia payment be considered, Dickson could have been forgiven for thinking his battle was all but won.
But then Commerce Minister Simon Power ruled against any such payment. No compensation has ever been granted.
The Commerce Commission said six years after the merger, in 1992, it informed Dickson that its ability to enforce the conditions it set were "questionable" due to differences between the Commerce Act 1975, under which the merger application had been lodged and decided, and the new Commerce Act 1986.
That delay effectively closed the door on Dickson seeking other forms of legal redress. Dickson's business went into liquidation in early 1993.
The commission said there were "complex issues" at play arising out of the transition from the previous legislation to the new Commerce Act in 1986.
"At the time, the commission felt that it acted appropriately in its dealings with Mr Dickson. However, in hindsight we accept that the commission could have communicated more clearly with Mr Dickson," said former commission chief executive Nicholas Hill.
Dickson is continuing his fight. Last October, after petitioning Commerce Minister Craig Foss, he told the Sunday Star-Times he would not back down until justice was served.
"I have been fighting this fight with the New Zealand Government for far too long to give up now," he said.
"I am not backing down or going anywhere until justice is served - that I can promise you," Dickson wrote to Foss in July.
Dickson was claiming $5.9 million for the destruction of his business, but that has now grown with interest to nearly $20m, excluding legal costs. He said last week his latest appeal is with the Prime Minister.
Smith told Parliament some commentators assess MPs on how successfully they play the political game.
"But to me, what sets a member of Parliament apart is how much they care about the impact of the state on an ordinary person, and how far they are prepared to go in representing people whose lives can be so knocked around by actions of the State."
"I remain distressed by the whole matter," he told the Sunday Star-Times last year.
In his valedictory speech to Parliament, veteran MP and speaker Lockwood Smith remembered the seven years of work he put into a radical new tax scheme, work that if done in a university, he said, could have earned him another PhD.
The work tried to find a way round the churning involved in employers deducting PAYE only for the Government to pay it all back to some employees in family tax credits.
"My research unravelling that interface soon got into the challenging area of effective marginal tax rates. At the time, a single parent with three dependent children seeking to work their way off the Domestic Purposes Benefit, and trying to get from $10,000 earned income a year to $25,000 would have had to work an extra 20 hours a week at, say, $15 an hour.
"The problem was the effective tax on that extra $15,000 of earned income was round about $13,300, meaning that even though the parent was paid $15 an hour, their take home pay would have been little over $1.50 an hour."
Smith said things have improved since then, but high effective marginal tax rates still remain a significant disincentive.
"I developed a model that completely integrated those three components, income tax, benefits and family tax credits, a model that had tax-free zones for low income earners only, managed and declining effective marginal tax rates until a flat top tax rate was reached, and all family configurations covered."
Invited to present the work to a round table of tax experts in Melbourne, the Centre for Independent Studies in Australia asked him to prepare a paper for them to publish.
"At the last minute it was pulled for fear it might be seen as official National Party policy, which it wasn't. I can't claim it even made it to the trash bin of political history. But that's politics where you take success and failure on the chin."
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