ATO law expertise: Evolution or revolution?

Section 1: ATO skills and expertise

There are some stereotypes that are hard to shift about the ATO. For example, when I was the Deputy Commissioner in Wollongong in the early 1990s, there was a commonly held perception of the typical tax officer as a middle-aged male auditor doggedly pursuing a minor issue.

But I'm happy to say that the experience and skills our staff have has dramatically changed since those days, when lawyers were relatively rare - particularly outside national office. I'm sure you will find this current snapshot of the ATO makes for an interesting contrast from past perceptions:

• 54% of the ATO is female!
• About one-third - roughly 8,500 people - have spent less than five years with us and another 40% - or nearly 10,000 people - between five and 14 years.
• According to our personnel data, 70% of our permanent employees hold university diplomas or degrees, significantly higher than the overall APS result of 57% which was reported in the recent State of the Service Report 2010-11.
• Unsurprisingly the most common degrees within our Tax Counsel Network and Centres of Expertise are law and accounting. Interestingly, many of our younger staff hold double degrees.
• Our average age for the past four years is 43 and, defying the baby boomer effect, has reduced from around 47 years.
• Over the last seven years, 68% of Executive Level 2s and 53% of our senior executives were recruited from outside the ATO.

Meeting the demands of tax administration requires constant renewal and a focus on constantly increasing the skills, experience and expertise on offer in the ATO. For example, each year we recruit hundreds of new starters in our graduate program in the fields of law, accounting, business management and design, people management, marketing and communications and information technology to feed the six main professional streams of work the ATO offers. A priority area where we are currently strengthening our skills and professional qualifications is in our auditing and active compliance functions.

I noticed among the topics you are discussing is teamwork. Teamwork has been fundamental to our work for many years. It is also important that our law experts be "multilingual" in a sense, able to work with experts from other professional disciplines. The obvious interactions are between law, accounting and economics - which are crucial to understanding and resolving the complex tax and superannuation interpretative issues. But they also need to speak the complex language of information technology and operate within that context - not just because we are a technology-based organisation, but because our law experts have to be able to work with our IT experts to assure the operations our systems perform conform with the law and any changes we implement will also do so!

With our increasingly globalised world, the emergence of China and India as economic powers, burgeoning international trade and the effect of e-commerce on global markets, the need to be multilingual in the traditional sense will also become more valuable over the next few decades.

We have recently centralised our learning and development on which we spend about $70 million a year. This includes a wide range of formal in-house training, external programs and conferences to develop industry knowledge as well as providing study leave to staff to achieve professional qualifications. Last financial year more than 1600 of our people took the opportunity to boost their credentials.

Last year, 406 people were recruited through our Graduate Program and Indigenous Cadetship Program - our largest ever intake - and about 300 graduates will be joining us over the next few weeks. We strive to make our graduate program among the best in both the private and public sector, and I'm happy to say the ATO was rated the top Australian Government graduate employer in 2011. In addition, our graduate retention rate is in the top seven percent of all graduate employers.

We are also improving how we interact with tertiary institutions. A single point of contact is being established for the ATO's relationship with tertiary education institutions, including contracts for provision of services, involvement in research, awards sponsorship, the provision of subject matter experts and support for educational initiatives. This will also link in with the Tax Studies Institute announced on 5 October 2011 by the Deputy Prime Minister and the Treasurer, the Hon Wayne Swan MP, in his closing remarks to the Tax Forum. The Government is providing seed funding of $1 million per year (for three years) to:

"create an independent Tax Studies Institute, as a centre for research excellence, linked to our universities. The institute will look at things like the design and simplification of the tax-transfer system. Because the tax system affects all Australians, the institute will accept tax deductible funding donations. And because the tax system affects all governments, I will welcome state government contributions."

We are seeing an unprecedented demand for our knowledge and expertise to be shared across the APS, not just on our core expertise but also because as a large APS organisation we have experts in a whole range of areas that are relevant across the APS more broadly. Accordingly, we have significantly increased the number of people we second to other departments. Currently we have 45 staff seconded to other departments, with 27 at Treasury. We also have staff seconded to the Public Service Commission, the Department of Climate Change, the Inspector-General of Taxation, Department of Finance and Deregulation, the Board of Taxation, Australian Federal Police, the Australian Crime Commission and the newly established Australian Charities and Not-for-Profit Commission. This helps develop our staff's experience of broader public service issues but also importantly gives them valuable up close experience in policy development. In particular, those who are seconded to the Treasury are provided with an insight into tax and superannuation policy development.

As I foreshadowed earlier, sometimes we are asked to share our expertise in areas beyond tax administration. For example, as a result of the ATO's experience in implementing large policy programs and as a statutory regulatory organisation, I was invited to participate as an independent member of the Carbon Price Implementation Board that is steering the implementation of the new carbon price regulator.

The ATO contributes its administration, law interpretation and design skills to the development of major tax policy initiatives in many ways. We work closely with Treasury contributing our administrative experience in the design of taxation laws. For example:

• We are engaged with the Policy Transition Group for the Resource Rent Tax arrangements. As I noted earlier, this group requested that we provide early guidance on how the ATO would administer the new arrangements.
• We were central to Treasury's Stronger Super Peak Consultative Group and other working groups to effect improvements to the superannuation system.
• While the department of Climate Change is responsible for the implementation of the carbon price, we were consulted in relation to tax aspects including the interaction of the carbon pricing measure with fuel tax credits and excise, and on the tax consequences of permit trading which is due to commence in 2015.

This increase in interaction is all the way up to our most senior levels. For example, since taking up this role I have been involved in a range of consultation processes, including:

• the Government's consultation panel for the precursor of the Minerals Resource Rent Tax, the controversial Resource Super Profits Tax,
• the Tax System Advisory Board Consultation panel that has recently reported to Government on an Advisory Board for the Tax Office, and
• supporting the Government's Business Tax Working Group established following the Tax Forum to advise the Government on how the business tax system can be improved to enable business to make the most of challenges and opportunities arising from transformations in the broader economic environment.

As an aside, when I was studying law the emphasis was on judicial analysis. It is, of course, still of fundamental importance, but on a day-to-day basis tax and superannuation law experts inside the ATO and in the tax advising profession are engaged in statutory interpretation. I am not sure if this shift is fully appreciated in the designing of curriculums. So, for those experts wanting to be engaged in consultation on policy and law design - and most do - expertise in how changes may affect their clients as well as law interpretation to assist in designing effective law are highly valued skills to bring to the table.