Stonefruit Stalinists

Orcharding, like every agricultural activity in New Zealand, is a risky business. There are droughts, floods, winds which arrive right on pollination and blow the bees to Bali Hai. There can be freak hail storms in the middle of summer, ruining a crop of apricots or apples in five minutes, and this year, in Central Otago, there was the threat of bush fires.

But that's nature, and farmers work out ways to beat these obstacles, installing irrigation, better drainage, crop covers. Some of them give up; most of them survive; a few thrive. What they don't anticipate, however, when they purchase a few acres and plant a few fruit trees, is that by the time they've paid their taxes, their ACC levies, their FBT and whatever else the bullies at IRD hit them with, they're still not at liberty to keep the rest of their income. Within their very own industry lurk those empowered to take more of their money, by force, with almost as much legislated backup as the IRD. The orchardists have to pay up or face a $10,000 fine.

Elisabeth Hinton was born in Holland and married into a New Zealand family which has been growing fruit in Alexandra since 1911. "We're described as large orchardists," she says, deliberately coy about exact acreage for reasons which will be revealed later. "We grow apples, pears and stonefruit," the latter including apricots, cherries, nectarines, etc. They make a decent living out of it and they prefer not to reveal the precise details of just how much fruit they produce each season. But in minding their own business, they are breaking the law. On 23 February 1999 Elisabeth and her husband were summonsed to appear in the Alexandra District Court on charges that they had "failed without reasonable excuse to submit (within the time required) notice in writing of details of pipfruit production" for three years since 1995. In other words, they had not handed over their accounting books, recording their production figures, to be compulsorily audited by Pipfruit Growers New Zealand Incorporated (PGNZI). What business, you might well ask, has this private organisation in prying into the personal financial affairs of Mr & Mrs Hinton?

Anyone can set up an organisation which purports to represent a sizeable number of individuals or businesses in a certain industry. Then, so this organisation has a guaranteed income it can ask the people it represents to pay an annual fee. So far, fair enough. However, under the Commodity Levies Act 1990, the organisation can apply to government to have these fees made compulsory, so that everyone in that particular industry, whether they belong to this organisation or not, support it or not, by law must pay this levy each year. A compulsory levy is a tax. Taxation is legalised theft.

The Minister can grant permission for these levies to be made compulsory providing he is "satisfied that the industry organisation requesting the levy adequately represents the levy payers and that a majority of those responsible for paying the levy support its imposition on the commodity." There are other conditions, of course, but essentially these are peripheral to the principle: One mob can force another mob to pay up.

In fact, in the case of the PGNZI, majority vote in favour of the levy was not received from all those affected — only a majority of the small number who bothered to vote. Elisabeth Hinton, who started protesting against this levy back when the PGNZI was first formed in 1991, has obtained under the Official Information Act a large amount of documentation. A sixteen-page briefing to the then associate Minister of Agriculture, Denis Marshall recommends that the Minister agree to the levy being made. The introduction states: "Richard Easton, the chairperson of Pipfruit Growers New Zealand Incorporated wrote to you on 6 September 1995 to apply under the Commodity Levies Act 1990 for a compulsory levy on all New Zealand grown pipfruit. The proposed levy is based on the total production of pipfruit and is proposed to be spent on funding the activities of PGNZI."

Elisabeth Hinton scoffs at that. "What PGNZI actually do is somewhat of a mystery. They claim to represent the growers to the government. What views are they representing? We vehemently object to the monopoly powers of ENZA [export arm of the Apple & Pear Board], but I don't see PGNZI representing those views."

As Elisabeth points out, they already pay a levy to the Fruitgrowers Federation, which is based on how much land they have in their orchards (one of the reasons for many growers' often being somewhat vague about the size of their orchards — they, understandably, try to avoid paying as much of this compulsory levy as possible). The Fruitgrowers Federation supposedly represents growers' views to government, she says, "So why do we need PGNZI to do it as well?"

Another of PGNZI's activities which the organisation deems important is the production of a one-page newsletter. "Seeing we already have The Orchardist [published by the Fruitgrowers Federation] with a section on pipfruit, is this really necessary?" she asks. "Occasionally someone from PGNZI goes tripping around the world on a 'fact finding' tour. This is ludicrous. Not only does ENZA have a monopoly on selling fruit overseas, but ENZA also has to work in the real world of fruit selling, so PGNZI have no influence whatsoever, and would not know which side is up in the world of business.

"They also claim they advise ENZA on grade standards. This is a joke. Grade standards are determined by the market place and the market dictates what grade or quality is acceptable." One after another, Elisabeth Hinton points out that in every area where PGNZI reckons it represents growers, some other organisation with a compulsory levy, is already there 'representing growers'. "They're all in each other's pockets and with all this 'representation and lobbying' they do, they must be supping tea with MPs all day long."

And there are a long list of organisations waiting to collect their dollars from the beleaguered fruitgrowers. ENZA, through which apple growers must by law export their fruit, collects its share before the money is returned to the grower. The Fruitgrowers Federation's levy, as pointed out, is calculated on a grower's total planted area (whether it's in production or not). The Fruitgrowers Federation February 1999 newsletter dealing with this levy states: "You are required by the Federation's levy order to advise us of any changes in the area of your orchard. If your fruit types or areas are incorrect please provide the amended details in the space provided on the reverse side of your invoice. Please note that over the past year we have updated our database with information supplied to us by Quotable Value NZ so you should check the area we have recorded." In other words, don't try and fudge your acreage.

Then there is the Summerfruit Commodity Levy, payable to Summerfruit NZ Ltd, because the Hintons grow just that — summer fruit. That levy is a standard 1 per cent of the gross amount received for their fruit, and is deducted by the marketer. In other words, if cases of apricots are sold at auction by Turners & Growers, then they take their commission, plus the 1 per cent which they pass on to Summerfruit NZ Inc.

Elisabeth acknowledges that some of the activities undertaken by the Fruitgrowers Federation are valuable but, as she quickly adds, "if what they offer is valuable, people will support it voluntarily. There are levies on asparagus, avocado, citrus, kiwifruit, nashi, persimmon, potato, tamarillo, tomato, etc. etc., in fact more than 30 in all and I don't know which ones are compulsory and which ones are not, but some of the industries do actually run on a voluntary basis…I have been writing away to other organisations, such as Master Plumbers, Master Builders, Landscape designers, motel organisations, etc., to get comparisons. These people all have substantial investments in their businesses and many employ labour, as do fruitgrowers. Their national organisations are voluntary. They don't have 100 per cent participation rate."

And yet the world doesn't come to an end. Witness the recent television advertisement for the Master Builders Federation, which gives an 0800 number to phone and check if that chap knocking your bearing wall down is registered. The clear message is if you don't check up, it's your lookout if the house falls down.

These national organisations also use their combined clout to lobby government and keep members informed with changes in the industry, etc. But they can also protect the consumer. Who cares, when buying a kilo of cherries, whether the person who grew them belonged to some state-backed organisation? Makes no difference to the quality of the cherry. So who, exactly, do these fruit growers organisations serve?

A look at PGNZI's budget gives a clue. In the 1996/97 year, the first year of compulsory levies, total income was $428,718. That's nearly half a million dollars from around 1700 growers. For the year to 31 July 1998 income was a little less — $361,863. Ten per cent of this, $34,406, was spent on the newsletter, "issues investigation", and "research & development". $181,112 was spent on meetings, executive, administration, managerial, etc. — in other words, the bureaucracy needed to keep collecting the levies. "None of these levy collecting agencies can keep money into another year," Elisabeth says. "Therefore they all spend up large, even if they don't have anything to spend it on, it doesn't matter."

Even if it does matter, organisations such as PGNZI have no right to use the gun to take money from growers. The Hintons are not alone in their fight against the levy, though Elisabeth concedes there are many growers who pay the minimum they can get away with, then "shut up and don't protest, so they don't get audited." In a recent newsletter, PGNZI has stated that it "has begun debt collection and legal proceedings against a small number of growers. These growers have consistently refused, or ignored their industry commitments by either not supplying production information and/or not paying their levies." Under the Commodity Levies Act, PGNZI has the power to enter and search the premises of orchardists who refuse to comply with the Act. When Elisabeth Hinton complained of this to the Associate Minister of Agriculture, in 1991 he wrote to them: "The search and entry powers that you object to in the Act are standard powers for legislation of this nature and are included because any legislation that is produced must be enforceable. Such powers are needed even though they may be used only occasionally. These powers may be needed by an industry organisation wishing to examine the records …to determine whether levies have been paid." Ja, mein fuhrer.

So the Hintons have refused to pay the levy, and refused to supply their production figures. They are no strangers to conflict — for years they have been advocating abolishing the monopoly ENZA situation, wanting to do their own apple exporting. "We actually applied for an export licence, which was promptly ridiculed by the establishment," says Elisabeth. On legal advice, she gave PGNZI the production figures they demanded. "Our lawyer said that if we went to court [on 23 February] the judge would have just told us to do that, because it's the law, and he's there to uphold the law." But that doesn't mean she's given up her stand against compulsion. "I am totally committed to fighting this as best I can. Quite obviously we don't believe our production figures are any of their concern. The whole organisation is a total fraud and joke, and it really is appalling that [PGNZI] is compulsorily funded."

The Hintons and their supporters are pushing for a judicial review of the Minister's granting of a compulsory levy. PGNZI did not have anywhere near the majority support in their application as required by law. MAF's briefing to the Minister confirms this — of some 1850 pipfruit growers, ballot papers were sent to only 1780. Of that number 570 responses were received of which 431 votes were supportive. This is fewer than 25 per cent of growers giving their support for a compulsory levy. On these grounds alone, Elisabeth reckons, the Minister should not have granted a compulsory levy.

However, even if the majority of growers supported the levy, that wouldn't make it right. If the majority of orchardists believed the industry would benefit from the compulsory growing of Granny Smiths, would they have the right to force that onto other growers who only wish to produce Galas? It is this principle which makes Elisabeth Hinton furious, but her battle has only just begun. As this story went to press, Elisabeth found that the Otago landowners are to be hit with yet another levy, this time from the Animal Health Board which wants to tackle the problem of Bovine Tuberculosis and is going to levy all Otago rural landowners with more than four hectares, regardless of land use. "This is just another example of industry groups being able to go to the Minister, putting together a convenient case and getting permission to tax people."

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