A Little elephant in the room – Part 3

Where were we? That’s right, it had just been established that the Council of Trade Unions via then-head Helen Kelly had issued a “please explain” to Unite Union and Matt McCarten. But it is McCarten’s response to Dominion-Post journalist Rebecca Stevenson that is the most enlightening:

Unite head Matt McCarten confirmed yesterday that the union owed money to the IRD but said he had made choices to pay for union campaigns rather than clear the debt. “I don’t shy away from these decisions, I make the calls.”

So Matt McCarten, is now Chief of Staff for the Leader of the Labour Party, fellow former union boss Andrew Little. But some time around the time of the 2008 General Election, McCarten made a conscious decision not to pass on PAYE deducted from Unite Union staff to the IRD as he is legally required to do.   

You see, the IRD is very clear about an employer’s obligations. Every employer should have an IR335 Employer’s Guide, which sets out exactly what employers are legally bound to do. Firstly, employers are legally required to DEDUCT monies from employees, with strict penalties for non-compliance:

Failing to make deductions

Employers must deduct PAYE, KiwiSaver deductions, ESCT, student loan repayments or child support when required, from any payments made to employees. Failure to do this is a serious offence and can result in penalties and fines being imposed.

Anyone who knowingly fails to make deductions can be fined up to $25,000 for a first offence and $50,000 for subsequent offences. Shortfall penalties may also be charged.

Matt McCarten or someone else at Unite Union HQ did indeed make deductions, so he’s in the clear on that count. But having made the deductions, every employer is then legally required to pass them on to IRD. The penalties for failing to pass deductions on are even more sever, including imprisonment:

Failing to pay deductions

Employers must pay deductions to us by each due date.

The money deducted doesn’t, at any stage, belong to employers. Under no circumstances should the deductions be used for any other purpose than for payment to us. We’ll help employers who try to meet their responsibilities but will take action against employers who don’t comply with the tax laws.

Failing to pay deductions to us is a serious offence and can result in prosecution. An employer who is convicted may be:

  • fined up to $50,000 and/or
  • sent to prison for up to five years.

The name of anyone convicted will also appear in the New Zealand Gazette.

Let’s not beat around the bush here. Unite Union broke the law, and should have been prosecuted. Matt McCarten admitted that he “made choices to pay for union campaigns” with money the IRD makes abundantly clear did not, at any stage, belong to him or to Unite Union. He put union activities ahead of paying tax.

Interestingly enough, the next paragraph in the IR335 specifically refers to tax evasion:


Anyone convicted of knowingly attempting to evade their responsibilities can be fined up to $50,000 and/or be imprisoned for up to five years. It’s also illegal for an employer to aid or assist another person to commit an offence.

There is no doubt whatsoever that what Matt McCarten did on behalf of the Unite Union was tax evasion. But that did not stop Andrew Little getting on his high horse in the General Debate on Wednesday of this week, when he said this:

Once upon a time, they used to say that John Key’s moral compass was broken. It now turns out that he never had one at all. Of course, it is no longer just his moral failure; it is the entire moral failure of that National Government and every backbencher who supports it. You see, it is not just the Prime Minister any more. Even their finance Minister, Bill English—this master of small government—cannot face up to the real challenges of young New Zealanders who are desperate for opportunities and to get a job. He just writes them off.

This is a dreadful, shabby little Government that has nothing to offer the future of New Zealand and New Zealanders. We now see the real world of John Key being opened up for all of us to see: a world that was never shown to New Zealand until now. Once upon a time, we all thought that John Key was this easy-going, charming, affable sort of leader—a man of the people, a man for everyone. But he is not, because we know who his friends are, we know whom he associates with; and we know whom he takes his advice from.

 It is those who live in that world of enormous, of extraordinary, of just plain mega wealth, who will do anything that they can—take all the advice that they can from the high-paid lawyers and accountants—to avoid their civic obligations and to avoid paying the taxes that they should pay.

Even as Andrew Little was yelling these words in Parliament’s Debating Chamber, Matt McCarten was back in the Leader of the Opposition’s office planning and scheming. As Little was railing against John Key, National, the mega wealthy and tax evaders, a tax evader was hard at work in Andrew Little’s own office. Don’t you think that’s just a little bit (or maybe that should be “Little bit”) hypocritical?

Andrew Little can talk all he likes about “John Key’s moral compass”. Sometimes it takes someone from your own side of the political divide to tell you things as they really are.

Blogger Idiot/Savant from No Right Turn is as hard Left as they come. But he was dead right when he said this about Matt McCarten on 27 July 2011:

If you’re a left-wing union organiser, who opposes corporate tax cuts and favours higher taxes on the rich, you’d be consistent and pay your fair share, right? Wrong:

Inland Revenue is chasing unionist Matt McCarten’s Unite Support Services Ltd. for $150,750 in unpaid taxes after the department forced the company into liquidation last month.

McCarten’s vehicle, which supplied administrative support services to the youth-orientated union Unite Inc., was put into liquidation by a High Court order last month after the tax department pursued it for “failure to provide for taxation,” according to the first liquidator’s report.

“Failure to provide for taxation” is a polite way of saying “couldn’t be arsed paying”. Which makes McCarten a hypocrite on a grand scale. As Commissioner of Inland Revenue Robert Russell so eloquently said this morning,

[p]eople who are non-compliant are basically stealing from their neighbours.

McCarten should stop doing that, and start paying his fair share. Otherwise, he’s no different to the rich pricks he rails against.

How can Andrew Little have any credibility whatsoever on the subject of tax evasion as long as he continues to employ a self-confessed tax evader as his Chief of Staff?

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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

To read Cam’s previous articles click on his name in blue.