Deregulation – balancing our service delivery and regulatory roles in a real time environment

Chris Jordan, Commissioner of Taxation

Address to the Council of Small Business of Australia 12th National Small Business Summit 2014

Melbourne, 8 August 2014

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The ATO has an important role to play in Australia’s social and economic prosperity as a large government regulator. We are the major revenue collection agency for government and regulator for the superannuation system.

I want the ATO to be relevant and valuable to the Australian community for the long term. To be trusted and respected and considered a leading and contemporary organisation that supports small business in Australia.

As the first ‘outside’ Tax Commissioner to be appointed to the ATO, I bring experience of the system from various perspectives and a fresh pair of eyes, not wedded to the past. I am, of course, a taxpayer and like you, I have run my own small business and have experienced the effects of over-regulation, bureaucracy and excessive process. I know how this can affect your business by reducing productivity and motivation.

Now as Commissioner, in the business of running the ATO, my aim and commitment to you is to change how we regulate for the better.

Based on the feedback from small business, partnerships such as the one we have with Peter Strong and the Council of Small Business of Australia and the Productivity Commission’s report into the impacts of regulation on small business, we know that there are some things that the ATO is doing well. However, there is much that we can improve on. We hear you when you tell us we can do better, and that meeting your obligations takes you away from your real business and what you are good at. These are the unintended consequences of regulation.

We have to introduce changes and design solutions that really work for small business and the only way to achieve that is by co-designing with you. We’ve recently held one-on-one co-design sessions with 24 small business owners; sole traders and small businesses in industries including retail, construction, hospitality and services, to understand how we can make it easy for small business to get things right around tax and super. This is what they told us:

  • We need to master the basics – cut call centre wait times, provide consistent advice, make it easy to find content on, reduce use of technical jargon and facilitate quick access to our business portal from different devices like mobile phones and tablets.
  • If we’re going to go digital, we need to get it right. ATO systems should fit with natural systems used by businesses and guarantee security and privacy.
  • No-one wants to wait 28 days for a written response.
  • There is a lack of confidence in the technical advice and information we’re providing, particularly in relation to complex matters.
  • We must better appreciate the unique pressures on small business to comply. For example new research shows tax compliance is costing small to medium businesses $18.4 billion every year, and that due to complexity of law and the volume of paperwork, small businesses often feel forced to use intermediaries.

So, to be a leading and contemporary organisation that works well with small business, the ATO has to:

  • Provide more personalised, accessible and reliable services using the latest technical and communication practices. A transformed client experience combines technology and personalised assistance.
  • Think about the effects our activities have on cash flow, and how they impact the everyday running of small business.
  • Work harder to ensure our information is timely, streamlined and personalised – and to ensure we provide accurate and consistent advice.

I am committed to addressing these issues for you.

Within the ATO, we need to undergo our own simplification – to streamline our internal systems so we can streamline the tax system and the regulation that accompanies it.

The obvious way to begin this streamlining at the ATO is to declutter the organisation and that means looking around at the bureaucratic processes and layers that have built up over time. It’s easy to justify introducing new procedures but we rarely take the time to remove old ones. So, we are taking stock – looking at what change is necessary and how we go about making sure it works for all our key stakeholders.

I think this is a worthwhile undertaking in any organisation or business, regardless of size. You too might have things in your business that need clearing out and decluttering.

Streamlining our internal processes and structures is well under way – without, I might add, any discernible reduction in the quality of assurance the ATO Executive receives. I see this as an important first step to enable the same streamlining to be done in our dealings with external parties. For example:

  • New external consultation arrangements have moved from nearly 1500 external people in 230 meetings a year as part of 68 ongoing committees, to eight formalised stewardship committees and short-term project-like consultation on specific issues.
  • Early in 2014 we revamped our formal small business consultation arrangements. The resulting Small Business Liaison Group has a broad strategic focus around identifying opportunities to improve the administration of our tax and superannuation systems for small business both now and into the future. Members of the Group are collaborating with the ATO in designing and improving new initiatives including the Small business newsroom which I will talk about shortly.
  • We have significantly streamlined our internal governance and reporting arrangements and drastically reduced the number of ongoing internal committees and meetings.

Many of the layers of bureaucracy and red tape that existed were self-imposed but as we work through them, we’re also finding some that have been put in place in response to regulation imposed on us by others.

In fact, it might surprise you to learn how much organisational scrutiny the ATO receives. To give you a picture of the ongoing scrutiny:

  • We have 10 audits and reviews under way.
  • Six Inspector-General of Taxation reports in the last year totalling 917 pages with 81 recommendations.
  • The Australian National Audit Office and its performance audits – six tabled totalling 758 pages and containing 12 recommendations.
  • The Commonwealth Ombudsman referred 217 complaints of which the ATO was required to respond to 100.
  • The Australian Information Commissioner – 820 Freedom of Information matters were finalised – that’s around 500,000 pages reviewed.
  • An independent Integrity Advisor.
  • Senate Estimates.
  • The recent addition of the House of Representatives’ Standing Committee on Tax and Revenue.
  • Plus around 480 reporting and conformance obligations for our Annual Report and public service commitments.

If you think about what’s involved in all that ‘regulation of the regulator’, all that scrutiny; the number of people and hours it takes to research, write, review and respond to these committees and reports – you have to wonder, is that really cost effective for the benefit we might receive? Is the time (and therefore money) invested in creating these briefings and reports, reflective of the government’s push for efficiency improvements and reductions in red tape, and does it make things better for everybody?

Interestingly, this level of scrutiny and oversight hasn’t resulted in a perfect tax administration and it didn’t prevent loss of confidence in the ATO.

With our new leadership team now in place, we are focused on a holistic program of transformation – reinventing the ATO to be a contemporary and more client-focused business.

It’s our job to contribute to the economic and social wellbeing of Australians by fostering willing participation in the tax and superannuation systems.

So what is participation in a tax system or super system? And how do you foster willing participation? Think about the difference between the concepts of participation and compliance – what would be needed to foster or increase willing participation?

We are asking ourselves what motivates small businesses to do the right thing and what stops some of them? How do we better support small businesses that just need help through complexity versus those who don’t want to play ball at all?

Our challenge is to design a tax and super system where your experience is streamlined and tailored based on our knowledge of your tax and super affairs and in consultation with you. I’m looking to strip out red tape and reward transparency and willingness to participate by making it easier to comply.

How then, do we reduce the burden and simplify interactions to give small businesses the space to focus on running and growing their businesses and making it easy to comply?

We have already made some progress in this space with a number of new initiatives co-designed with small business and we are getting very positive feedback. Our focus is providing convenient, accessible and contemporary personalised service for your small business, for example:

  • Our app includes a range of small business and super information and tools and we continue to develop this from your feedback. 80% of users are giving our app a four or five star rating and the feedback is very positive.
  • After piloting the idea last year, we’ve now introduced an after-hours call back service so that small business owners can book a time to talk to the ATO when it’s most convenient for them. This service is now permanently operating between 6pm and 9pm weekdays and calls can be booked online for your preferred day and time through our Small Business Assist tool.
  • We continue to refine our online business viability assessment tool to help your businesses manage cash flow and debts and we’ll soon add this to our ATO app. Please use this tool, it’s there to help you understand and manage the state of your business.
  • This year, we invited small business owners to join our new Small Business Consultation Panel to help cut red tape and view our activities through your eyes. To date, panel members from a range of industries have worked in partnership with the ATO on:
    • the one-on-one co-design sessions I mentioned earlier, and
    • developing contemporary communication initiatives tailored to small business.
    The panel continues to grow and there are now 100 small business owners registered to help us on an “as needs” basis. You can talk to the staff at the ATO booth if you are interested in joining our panel.
  • Taking advantage of the expertise our consultation panel provides, we’re also working closely with small business in a unique way to identify and remedy specific issues through our cross-agency ‘Small Business Fix-it Squads’.
  • These Fix-it Squads are rapid-design groups made up of small business operators and intermediaries, and representatives from federal, state and local government, all working together to examine problems and solutions from the perspective of small business.
  • The pilot squad considered the issue of ‘Reducing red tape when selling or closing a small business in Queensland’. Within a matter of months, fixes recommended by the squad are already in place, including:
    • a streamlined 'transfer of business name' process implemented by the Australian Securities and Investments Commission, and
    • a re-write of the "selling or closing a business" topic on the site from a whole-of-government perspective.
      There are also other recommendations from the squad in the pipeline, such as:
    • enhancements to the small business support line run by the Department of Industry
    • work on an ATO calendar app as the first phase of a whole-of-government calendar reminder app for small business
    • other educational products about selling or closing a business, and
    • exploring ways to encourage the adoption of Standard Business Reporting (SBR) software by small business.
      Through this unique way of consulting with small business, the next Fix-it Squad will examine ways to help small business when changing legal structuring from a sole trader to a small proprietary company.
  • We are providing a reporting facility for you that is integrated with business and accounting software. As you may have heard from ATO Deputy Commissioner Mark Jackson earlier today, Standard Business Reporting or SBR is essentially a technology that allows computers to talk to each other, eliminating the need to fill in some forms and reports. SBR is one of the essentials for a business in contemporary Australia. I am confident that SBR will create efficiencies all-round, saving small business time, effort and money, and I encourage its take-up.
  • We’re listening to small business and developing digital services that are available anytime, from any location, and accessible from a range of devices. Our key focus areas include:
    • online BAS lodgment for businesses, government and non-profit entities and schools
    • reducing paper by removing unnecessary forms and correspondence, streamlining them or changing to digital formats
    • promoting digital services through existing touch points such as through call centres and shopfront visits
    • updating reference systems, including, and
    • providing support and education, including assistance with registering for AUSkey and ATO Online.
      Small businesses will progressively move from paper to digital activity statements in the coming months and we have support in place to help that happen. We acknowledge this may be difficult for some and we will be working with those businesses to support them.
  • When it comes to small business debt, our focus is on preventing it – understanding what drives and creates debt as well as how we can work with you to get you out of debt. While this is not strictly a new technology or service, it is a new business-friendly approach to managing debt.
    We are also making it easier for taxpayers to self-manage their debts through our expanding digital service offerings.
    My message remains, if you run a small business and you get into trouble, pick up the phone or go online and let us know so we can work with you to find a solution that suits your circumstances.
  • Making life easier for small business is a priority for the ATO and today I’m very pleased to announce two new initiatives – the small business newsroom and a web-chat pilot.
  • We hear you when you tell us that doing business is your priority. You don’t want to spend time wading through complicated tax information. You want us to tell you what you need to know, when you need to know it.
    Heeding this call, we’ve worked with small business representatives to develop a new online news service which I’m pleased to launch today, the Small business newsroom.
    You may well have seen it at our booth at this year’s summit. If not, I urge you to check it out, subscribe and tell us what you think.
    When you subscribe you will be able to choose your topic preferences and an important key feature of the newsroom is the ability for you to ‘switch off’ general, non-personalised letters as part of the email subscription process and read about it in the newsroom instead. This will result in fewer letters from us, saving you time and effort.
    The Small business newsroom is a move away from multiple newsletters, giving you a one stop online shop where you get tax and superannuation news and alerts.
    As well as receiving the latest news, you will be able to watch short video clips, add tax dates to your own calendars to create reminders and share articles with each other.
    Your feedback and subscription selections will help us continuously evolve and enhance the Small business newsroom.
  •  In our continued efforts to expand the support provided to the small business community, I am also pleased to announce that from October, we will pilot a web-chat service – also known as ‘click to chat’ – for clients accessing information via our Small Business Assist online tool. This means small business owners will be able to have a real-time, online conversation with an ATO customer service officer, to provide guidance on particular topics and additional information. The pilot will allow us to understand your requirements and how best to support you via this new channel. 

Let me stress that this is just the beginning – we will continue to seek your feedback and ideas as we progress along this journey of reinvention. We know we need to put our clients first, modernise our service offerings, provide targeted, streamlined, contemporary services and ensure that taxpayer satisfaction is the standard by which we measure our performance.

We are heading into an era which is more dynamic and less predictable than ever before and businesses of all types are under increasing pressure to adapt. Our challenge is to respond in ways that are smart, responsive and agile. We cannot avoid or ignore change – we must position ourselves to cope with it, and even thrive on it.

I put to small businesses the same questions we’ve been asking ourselves at the ATO – what does a successful small business look like in 2020? How does it operate? How do your customers interact with you, and what can you do to remain prosperous and valued into the future? In your quest to maintain a successful business, how will you deal with your obligations under various regulations efficiently and effectively?

If regulation is the price we pay for a civil society, then we can be certain it will remain our obligation into the future. We must ensure that the laws, structures and processes we impose are there to enable that outcome - a fair and decent society. Governments and public service agencies have a responsibility to reduce the regulatory burden and concurrently, you must accept that some level of regulation is necessary, do what you can to manage it effectively and work with the regulators – if you are to survive and prosper.

We need to work together to address our common challenges – productivity and making life easier.

I look forward to taking some of your questions in the panel discussion.

Thank you.

Last modified: 06 Mar 2015QC 41707