The 1979 Muldoon Boat Tax

How an unhinged accountant scuppered  a nation. His grand followup was the 1982 – 84 Wage and Price Freeze. And car-less days!

I seem to remember that the fatal news was delivered on 1st April 1979. Muldoon – with some help from his Minister of Customs Templeton – had created a new sales tax on boats, pottery and caravans. Actually the tax cut through NZ industry much worse than most people will recall.

• 10 % Sales Tax on the wholesale price of pottery. Retrospective.
• 20% Sales Tax on the wholesale price of boats. Retrospective.
• 33% Sales Tax on the wholesale price of motor body building (of which caravans were a small part. Retrospective.
• 50% Sales Tax on the wholesale price of aircraft spare parts. Retrospective.

Muldoon’s dream (based on a childish VisiCalc spreadsheet) was to use the huge revenue gained to subsidise farmers. He even started a ‘family-benefit’ scheme for sheep! Muldoon’s revenue collapsed as he almost single handed (remember Hugh’s help) wiped several huge NZ industries from the face of the earth. Anecdotal evidence at the time suggests that Muldoon and Templeton had blood-on-their-hands. Yes – business owners died – maybe from broken hearts. Skilled workers became labourers.

In five years of trading Sisson Industries Ltd had grown rapidly.

Huge diversification can be seen in the list below. In addition Sisson Industries Ltd undertook significant low-volume-run precision metal lathe machining. Some Prestocure HPSD equipment orders were gained.

• Making clay extraction frames for the huge business – Potters Clay
• Three man team lead by Tim McDowell making – on average – 22 kayaks per week. With a clearly recalled maximum weekly production of 32. Exports to Asia and USA were regular. Our USA export agent TNL Group chartered Bristol Freighters to fly the US bound kayaks to Auckland. TNL also sold kayaks to the Middle East.
• A two man team building GRP (fibreglass) parts for the motor body building industry. Minibus liners. Mitsubishi ute tail light holders. Bus roof ends. The list was endless.
• Aircraft parts for Hughes 500 helicopters used by the deer recovery, forestry and farming industries. Wheel spats and wing root fairings for Cessna planes. The list was endless.

Welcome to the commercial world of reality Mr Muldoon – the pottery, boat, minivan, and aircraft customers – closed their chequebooks.

This high intellect decision (possibly made whilst boozing at the local gang headquarters) was accompanied by changes for many government services increasing exponentially. For instance –  Postal charges trebled.

Many of my regular kayak customers moved to Australia

selling their kayaks in the glutted market cheaply. These kayaks satisfied the market demand.

Never mind – Muldoon had the answer.

A kayak that had wholesaled for $1000 would have retailed for about $1300. With 20% rammed onto the wholesale the new retail would be $1920.

Our kayak sales were not helped by two of our customers – who launched into a severely flooded Aorere River – drowning. The very next day another Riwaka canoeist (not our customer) – drowned.

The canoe business traded as WILDWATER CANOES. Hardly the best marketing.

The Nelson Mail Newspaper front page story – halted forever – mothers calling in to buy a canoe for their family!

By August 1980 we were booming in kayak sales. That month we received one kayak order. One (1) taxable domestic–market-kayak was built in 18 months. What about the missing 1315 kayaks NOT manufactured in that time! Anne Dwyer imported about 300 kayaks into the US – which helped.

We also managed to sell a few Nelson Luggers sold as row boats. Three sets of Bumpa Boats. Farmers were purchasing Prestocure HPSD timber treatment equipment.

• Our customer Potters Clay moved from 24/7 production to about 6 hours per day – made possible only because they exported. We did not hear from them again.
• Working out of a factory (as apposed to a van) I was the only Nelson Boat Builder to survive. I lost contact with Anne Dwyer in California (Kiwi Kayaks – of which I was the kiwi designer – royalties were never paid).
• Nelson Motor Body Builders lost their Mitsubishi Ute tray orders and they contracted rapidly. We did not receive another order from NMBB.
• Our industrial estate was called Airport Estate. We did not hear from our Nelson Airport customers again.

Click here to read about a caravan builders loss.

By Easter 1981, Anne Dwyer had set up her own US production – on which I received (never happened) a royalty.

The Bumpa Boat orders were almost complete. The workload collapsed totally.

I had to arrange another job for my loyal foreman worker Tim McDowell. We remain good friends. I became a one-man-band surviving (at times) making items like tanks and fertiliser hoppers for – those subsidised – farmers. Also kept busy (at times) with fibreglass repairs. January was always the worst month. So we cut a deal with the Nelson City Council to hire canoes at the Tahuna Modellers Pond. At its peak Armorguard picked up the cash about midday. Our cash haul was too obvious – and we were being ‘monitored’ by the unsavoury opportunists. The Modellers Pond cash flow saved the business.

In order to try to stimulate boat sales we published a price list with huge retail margins – thus minimising the wholesale price – and the 20% sales tax.

Imagine our 1982 amazement to wake up (yet again) to more Muldoon wizidary. We lived through a Wage and Price Freeze for two years. Which killed my desire to sell unprofitable boats. Other kayak manufacturers changed small model details and renamed their canoes with ‘new’ prices. I could not bother because that terrible WILDWATER weekend was still too recent.

Turning the clock back to 1980 you may recall the Moscow Olympics. The style-of-the-day was to boycott these games because of the Russian invasion of Afghanistan. Muldoon was best-friends with Harry Julian – head of the NZ sailing contingent to the Moscow games. Harry Julian also saved our business by pulling the 110 (?) sailors out of Moscow – in exchange for the removal to the 20% (wholesale – 40% retail tax) tax off “Sailing boats under the sail-away price of $5000 – in order to assist the youth of NZ”.

The Nelson Lugger which retailed for less than $5000 also saved our business. We built about 200 hulls. Some we finished ourselves. The rest were fitted out and retailed by Walker Marine – who had assisted in the initial product development.

Curiously the Nelson Lugger complete with all sailing gear was cheaper than the Nelson Lugger sold as a simple rowing boat.

We retro fitted a few centre cases to in-stock Nelson Lugger row boats.  And added a few masts.

Most athletes pulled out of Moscow – except Ian Ferguson, two other kayakers, and Team Flag Bearer Brian Newth. We made approaches to Templeton to cut the Sales Tax on canoes “to assist the youth of NZ”. This was never going to happen.

Canoeists were the lowest of the low – according to Muldoon and Templeton. Then – out-of-the-blue – some absolutely marvellous news.

Thanks 100% to Marilyn Waring.

Read about how Marilyn took down Muldoon by clicking here

Things returned to normal in 1984 when the new Labour government killed most Sales Taxes and introduced 10% GST – across everything. At last a level playing field.

Read about Rogernomics. The farmers lost their subsidies and in some cases their farms. Farmers closed their cheque books. At Sisson Industries it was just like 1979 – Again! Sales of Prestocure HPSD ended – forever.

When will this madness ever end?

We killed off Sisson Industries and changed the name to Sisson Kayaks – then got stuck in. The rest you know.

We abandoned the ‘family floater’ market totally. We concentrated only on the Lion Brown Coast to Coast and upper-end sea kayaks.

Out of all disasters a degree of humour can be enjoyed.

In 1979 I met Graeme Skinner – Sales Tax Inspector for the Customs Dept. Graeme scanned our files and discovered.

• As a result of a contra deal with US based Anne Dwyer (California Rivers and later Kiwi Kayaks), Graeme discovered that we owed thousands in import duties.
• Customers who had deposit-paid pre-ordered kayaks were hit with the RETROSPECTIVE need to stump up with the Tax.

Graeme’s future visits moved out-of-the-office – and closer to the factory. In the end I set him up a desk in the fibreglass grinding booth. That day I had a lot of fibreglass to grind. My Airstream helmet and coveralls placed me inside a virtual clean-room. I was possibly inconsiderate when considering the angle the grinder sent the debris – away from the extraction zone. Graeme had a very sparkly appearance as he left the factory. Graeme was never seen in his official capacity again.

If I did this today I would be charged with assault.

Sometime in the 80’s I received a friendly personal visit from Graeme – and we shared a good laugh about the manner in which I had dispatched him from my life.

Finally

The rapid business growth prior to the Muldoon disasters can be attributed to Tim McDowell and I working together as a team.

The day after Tim left was a very sad day. Tim has gone on to become a Master Locksmith. If you are a bank and your keys are locked inside the strong room – phone Tim. My loss!

Think Big

Carrying on from the above ‘successes’ Muldoon

decided to borrow billions of 1980’s dollars to fulfil his economic miracle list shown below.

Methanol (click here).  Urea (click here). Synthetic petrol (click here). Oil refinery (click here). Steel (click here). Electric train set (click here). Smelter (click here). Clyde Dam (click here) and (here)

Some of these projects have been successful. Profitable for the current owners. Who purchased them at ‘fire-sale’ prices during the term of the David Lange lead Labour government. Rogernomics followed by Richardsonomics!

The New Zealand public are still repaying the borrowed construction funding. And why – did public funding expand privately owned business – in the first place?

Just an idiot.

Finally some light-hearted banter (click here) relating to the pre-politician skill set training of Muldoon’s right-hand man (and so many others). Hilarious!

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