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  • What are regulators doing to help small business?

    Commissioner Chris Jordan AO

    Opening remarks at the regulators panel at the Council of Small Business Organisations Australia National Small Business Summit

    Thursday, 29 August 2019


    (Check against delivery)

    Good morning and thank you Elizabeth (Skirving, COSBOA Director) and Kate (Carnell, Australian Small Business and Family Enterprise Ombudsman) for chairing our panel this morning.

    I’d like to thank COSBOA for offering me and my fellow regulators the chance to speak today. The ATO has had the opportunity to work with John (Price, ASIC Commissioner), Sandra (Parker, Fair Work Ombudsman), Gary (Johns, Commissioner of Australian Charities and Not-for-Profits) and Geoff's (Browne, Australian Financial Complaints Authority Lead Ombudsman for Small Business) agencies in many ways and it’s great to see each other outside of parliamentary inquiries!

    I hope my colleagues will agree that our role as regulators of small businesses is about fairness: about protecting the system against inequity, and making it as easy as possible for everyone to comply with the law.

    Collectively, we want to help viable small businesses thrive. We want to regulate objectively, and not get in the way unnecessarily. With fairness in mind as our goal, how do we measure our success? How do we identify opportunities to improve?

    As a tax collector, one measure of our effectiveness is the tax performance across different segments in our economy.

    We measure the difference between the amount of tax we would have collected if we had full compliance, and the amount we actually collected.

    This work is known as tax gaps, and it’s a common way that revenue authorities around the world measure their performance.

    This week, we released figures showing that when you exclude black economy activity, the small business segment is paying about 95% of the income tax they should. This goes down to a bit below 90% when black economy activity is taken into account.

    This is a solid achievement. It paints a picture of a segment where the vast majority of small businesses are doing their best to comply. Not that it’s a competition, and comparisons are difficult across borders, but it is pleasing to note that internationally we are performing well in terms of small business tax performance.

    Of course, with a small business income tax gap of over $11 billion, there is still work to be done, and we’ll hold to account those who try to cheat the system to protect those doing the right thing.

    More than two thirds or $7 billion of the gap can be attributed to black economy behaviour. This is why we are making a concerted effort to target people deliberately engaging in the black economy.

    With the introduction of new legislation supported by additional funding from Government, we’re hoping to see the black economy change from black to a lighter shade of grey.

    Importantly, our work in this space won’t just raise additional revenue but it will also increase confidence and fairness across the small business market. By creating a level playing field, honest businesses will find it easier to compete and thrive.

    And by bringing this black economy money back into the tax system, we will return it to the public purse for all Australians to benefit from.

    You’ll be familiar with measures such as:

    • the extension of the Taxable Payments Reporting System to new industries like cleaning, couriers, road freight and IT. This will enhance the program that has already prevented $2.7 billion from being lost to the black economy in 2015–16
    • the introduction of a new tip-off hotline for the black economy
    • and plans to visit close to 10,000 businesses around the country each year to help them stay on track.

    We’re also working with the Phoenix Taskforce to clamp down on illegal phoenix activity. Our aim is to protect the community against and ultimately stamp out those who persist in ripping off small business suppliers, sub-contractors, creditors and employees, through dodgy business arrangements.

    In the nearly five years since the Phoenix Taskforce was established in November 2014, $540 million has been collected and returned to the Australian community.

    We’re making things fairer so honest small businesses can thrive. In addition to these measures, we are also making internal changes to improve the system in operation.

    This follows our reflection on feedback we’ve received, and identification of where we can do better.

    That’s why today I’m excited to talk about a new program of work we’re launching called Better as Usual.

    Led by Jeremy Hirschhorn, our Second Commissioner of Client Engagement, Better as Usual includes four work programs that collectively will improve our clients’ experience with the tax system.

    Firstly, we’re reviewing what we call the ‘pipeline’ – the series of interactions a client has with us that forms their whole-of-system experience.

    A taxpayer may see many faces of the ATO, and we know it is frustrating to feel you have to start again when dealing with a new area or different people.

    We’re committed to ensuring that every time a client deals with us, we understand the end-to-end experience they have with us: from lodgment to disputes and debt management; and perhaps most importantly to their lodgment again next year.

    Secondly, we are looking to improve our quality feedback loops. In a number of objections or complaints there is a story; there is something that has gone a little bit off track rather than any purposeful recklessness. We know that by better understanding and documenting our past experience we can make better decisions in the future. We have to better distinguish between things getting off track and reckless indifference or blatant evasion.

    Thirdly, we have created a dedicated team to work on our most complex cases. They are able to devote the time and the resources necessary to deal with those prickly and complicated affairs that fall outside our normal processes so that businesses just struggling to survive are treated with more empathy than those purposefully not doing the right thing.

    Finally, we’re implementing a series of procedural and cultural safeguards to reduce and ultimately eliminate any cases where our mistakes could have a severe impact on the client.

    We know this is something that is particularly needed in the small business market and we will focus our initial efforts in this area.

    I’m proud to speak of this work today, and I’m confident it will drive improvements.

    While we’ve made progress in my tenure as Commissioner, it is time to take things to the next level.

    We’ve cut red tape, we’ve made our systems more user-friendly, we’ve made our web advice easier to understand, and we’ve made our call centres more responsive.

    But we know we have further to go, and that constant improvement needs to be the norm, not the exception. That’s why we named this program Better as Usual: because we will be making these changes with an eye to the future and an understanding that we need to be making better as usual, business as usual.

    At the ATO, we put the taxpayer at the centre of our work, and as a regulator dedicated to fairness – in all its forms – we see our job as building a positive end-to-end client experience, particularly for small businesses.

    At a higher level as regulators, my view is that we must join forces across government in conjunction with organisations like COSBOA to help small businesses through the combined complexity of our laws, regulations and systems and allow them to thrive.

    I am looking forward to a positive discussion during today’s panel.

    Last modified: 29 Aug 2019QC 60032