Elevate CA Blog

Would a “fat tax” be a step too far?  Could the tax system perhaps encourage Kiwis to be healthier?

It already does.  Imagine how many more Kiwis would die prematurely from smoking related conditions if not for the fact that cigarettes are artificially expensive with around 70% of their price made up of tax?

Who would seriously argue the excise duty on cigarettes should be removed?  Not many, I’d say.

So I followed with interest the debate around Labour’s proposed removal of GST on fresh fruit and vegetables.  A significant number of Kiwis die prematurely each year from conditions related to obesity, so maybe Phil Goff was onto something with this one?

Labour’s premise was that if fresh fruit and veges were less expensive, Kiwis would on average substitute them for less healthy options and the overall health of the nation would improve.  Interventions through the tax system clearly work for smoking, so why not use the GST system to fight obesity?

Not unreasonable on the face of it, I thought.

But I had my doubts about the success of this particular concept.  Food items are carefully priced to the market – almost always at a price that ends in .99c.  If bananas sell for $2.99/kg now they would not stay for long at $2.60 after the removal of GST – they’d soon creep back to $2.99 with an increased margin for the retailer.

And with the election behind us, we’re unlikely to put that debate to the test in real life New Zealand any time soon.

But the idea of using the tax system to influence behaviour hasn’t gone away – and nor is it the exclusive territory of the Labour party.  John Key removed depreciation allowances on buildings because he also believed that changes to the tax system could be used to modify people’s behaviour – in this case dampening the Kiwi love affair with property investment.

So back to the idea of using the tax system to fight obesity.  Is that workable, or would such a scheme just amount to meddling around the edges of a larger problem?

By looking to Denmark we can soon get the answers to those questions.

On 1 October the Danish parliament introduced a new “fat tax” with the intention of reducing cardiovascular disease, obesity, and diabetes.  The tax imposes a price increase based on formula of 16 krone per kilo of saturated fat on any food that contains more than 2.3% saturated fat.

Bold.  And a world first.

Will the fat tax change behaviour enough to increase the average Danish lifespan or improve the health of the Danish people?  I guess we’ll know for sure in ten years or so when the results of longitudinal studies become clear.

But how about us Kiwis?  Is this the sort of intervention our political leaders should be considering?  Would this be too much intrusion into our lives – and an affront to our free will?  Or is it appropriate that the state puts some energy into countering the millions spent by multinationals who market tobacco and calorie-rich convenience foods that on average reduce our life expectancy?

I think it’s an interesting concept that has merit – and I’ll be watching with interest to see how this unfolds in Denmark.

 

What a difference one word makes:   From 1 April 2011, the Employment Relations Act was amended to change the test of whether a particular action by an employer was justified – for example a dismissal.  Before 1 April, the key question was what “would” a fair and reasonable employer have done in the circumstances – but since 1 April the question is what “could” they have done.

So what?

Good question – and one that has now been addressed by the Employment Relations Authority (ERA) in the case of Sigglekow v Waikato DHB.

Mr Sigglekow was a psychiatric nurse employed by Waikato DHB.  Under his care were patients with mental health issues and criminal histories.  Over time, there had been a number of incidents where Mr Sigglekow had been discovered sleeping on the job.  He was dismissed on the basis that sleeping on the job amounted to serious misconduct.

Sounds reasonable on the face of it, right?

Mr Sigglekow took a personal grievance for unjustified dismissal, which gave the ERA a perfect opportunity to put the 1 April amendments to the test.  And the ERA ruled in favour of Mr Sigglekow finding that his dismissal was unjustified.

The ERA found that the dismissal was unjustified because the DHB had been inconsistent in dealing with the incidents of sleeping on the job.  They had not dealt with earlier incidents severely, then they had dismissed Mr Sigglekow for a later incident.  Also the DHB had failed to conduct a full and fair inquiry into the incidents – and had failed to seek Mr Sigglekow’s response to the information they had.  In short, the ERA found that a reasonable employer “could” not have dismissed Mr Sigglekow because insufficient enquiries were made into the allegations – and because no action had been taken when the employee was first discovered sleeping on the job.

Under the 1 April amendments, the ERA must now consider what “a fair and reasonable employer in the circumstances of the actual employer could have decided and how those decisions could have been made”.

Interestingly, the commentary around this decision seems to suggest that the resources of the employer will be relevant; that the bar is higher for an employer with for example a dedicated HR person – and perhaps higher still where there is an HR team or department.  Well-resourced employers will need to take extra care to ensure that allegations are investigated thoroughly and that they get the procedural elements right.

But rather than dwelling on the semantics of “could” versus “would” when making decisions that might later be challenged, we suggest that business owners  use good faith as their guiding principal when dealing with their crew.

When investigating allegations of serious misconduct, an employer acting in good faith should always do these things – regardless of whether the circumstances seem as cut and dried as a person sleeping on the job while responsible for the criminally insane:

Properly investigate any allegations;

Put the allegations to your employee without withholding any relevant information you might have;

Genuinely consider the employee’s responses to the allegations;

When considering an appropriate response, you should take into account how other similar instances have bean dealt with in the past – whether in relation to the particular employee or to other employees.  And finally before acting, ask yourself “could a reasonable employer take your intended action given all of the circumstances?”

It will be interesting to see where the ERA and the Employment Court might go from here in further interpreting the 1 April amendments.

 

“What doesn’t kill you makes you stronger”.  Friedrich Nietzsche famously said that in 1886.  And Kelly Clarkson said it again this year, so it must be true.  

The last few years have been tough, but almost without exception our clients have emerged at the end of 2011 stronger and more confident about the future than they were  this time last year. 

It has been a huge year at Elevate CA – and a huge year for our clients, so we’re looking forward to a relaxing Christmas break.  We’re hoping you do the same!

 

The Elevate CA office will close on Friday 23 December – and we will reopen for business as usual on Monday 16 January.  If you do need to get in touch over the holidays, Rebecca, Fraser and Dean will check emails every few days.  Contact details are here >>>.

 

Hope you have a fantastic and well deserved Christmas break, and we look forward to working with you refreshed, revitalised and ready for action in 2012.

 

 

This is a story of a bank and a careless email.

Since Alan Bollard reduced the OCR in response to the Christchurch earthquake, three year fixed interest rates on residential mortgages have been somewhere just under 7%pa.  With floating rates down around 5.75%pa, there hasn’t been a lot of incentive or urgency for Kiwis to fix their rates.

But in the past fortnight we have seen the June quarter annual inflation figures well above expectation – as well as higher than expected economic growth.  Many borrowers are figuring that time has run out for comfortably biding time floating while planning to fix just before rates rise – and we are already seeing some fixed rates creep upwards.  Many folk who are a little risk averse with interest rates are starting to figure they should “do it now”.

So here is the response from a bank on Friday to one client’s request to negotiate a favourable 36 month fixed rate:

 

Thank you for your email.

With regards to your enquiry on a negotiated rate for clients Xxxxx Limited, I am pleased to advise that we can offer 5.75% for 36 months to retain your client.

Based on the information supplied, can you please confirm if your client would like to proceed with the fixing of their 02 suffix. 

If accepted the offer will only be valid as quoted until 5.00 pm at the end of the next business day (25th July 2011)

 

Amazing.  A 36 month fixed rate of 5.75%pa has been unheard of ever – except maybe during a few brief weeks in the depths of the GFC around February 2009.  Surely that was a typo?

Of course our client responded within the deadline for accepting that nice rate – and also arranged to break their other existing fixed rates in order to jump onto this rather incredible deal.

Soon afterwards, the bank contacted our client explaining that the 5.75% offered in Friday’s email was indeed a typo – and that it should have read 6.75%.

Hmmm.  So now where does the bank stand?

 

From my Commercial Law 101 days I know that the three main prerequisites to the formation of a binding contract are these:  (1) offer and acceptance (2) consideration (3) an intention to be legally bound. 

 

It seems to me that all three essential elements are covered right there in the email history between our client and the bank.

And as luck would have it, the director of our client company had a previous career as a lawyer – and she knows a lot more about offer and acceptance than I ever will.  She pointed out to the bank in no uncertain terms that they had made a written offer which was accepted – and that a binding contract had been made by email.

The bank relented – and our client’s company will now enjoy the very nice rate of 5.75%pa fixed for the next three years saving a rather healthy sum.

So the moral of this story actually has nothing to do with interest rates or the unnamed bank.  Really it’s all about this:

 

“Be very careful about what you commit to by email.  Contracts made by email are legally binding in the same way as contracts made in writing or face to face.”

 

Quickbooks are encouraging users with older versions to upgrade by offering a carrot. 

We’re not in the business of necessarily pushing Quickbooks in preference to other packages like Xero, MYOB, Cash Manager, Bank Link or the many others.   But if you are a Quickbooks user and you haven’t yet upgraded to the 2010 / 11 version, this seems like a no-brainer: 

The QuickBooks 2011/12 release is less than a month away – and if users of older versions upgrade to QuickBooks 2010/11 now, you will be entitled to an additional free upgrade all the way to version 2011/12.  This offer applies to those who upgrade to 2010 / 11 from 16 April until the official release of version 2011 / 12 on 16 June.

The Quickbooks promotional material lists the new features of the 2011/12 version as follows:

 

Customisable company snapshot.  The new company snapshot tool allows you to customise fields and graphs to design a ‘snapshot’ that presents the most significant information that impacts your business decisions – with the ability to drill down into transaction, customer or supplier details.

Office 2010 compatible.  With the 2011 / 2012 version it is easier to export data from QuickBooks into Microsoft Office 2003, 2007 and 2010.

Wildcard search.  The wildcard search feature makes it easier to find customers and suppliers. 

  

Free upgrade redemption forms will be included in the QuickBooks 2010/11 box.  To redeem your free upgrade you need to ensure this form is filled out and send back to Reckon no later than 16 June.  And if you don’t have a redemption form, here’s >>>one you can download as a pdf.