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  • Transforming the ATO's culture: Changing attitudes and behaviours to support the new finance function

    Frances Cawthra, CFO

    Speech to the Public Sector Network Financial Efficiency Roadshow

    Brisbane, 12 February 2019

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    Transforming the ATO's culture: Changing attitudes and behaviours to support the new finance function

    Good morning everyone and thank you for having me along today. It’s great to be here in Brisbane taking part in this event amongst a stellar line-up of speakers. I’m looking forward to participating in the panel discussion just before lunch. But right now I’m here to talk about tax. I do want to make it clear that I’m not an accountant, so I’ll be talking less about numbers and more about people and culture – specifically how we are continuing to change the way we work in finance to get some big wins across the line.

    It seems appropriate given the theme of this roadshow for me to touch briefly on the future of our organisation and our aspirations.

    Commissioner Chris Jordan has a clear vision of where he wants us to be by 2024. He wants the ATO to be comparable with the best of any large organisation anywhere in the world with a large and diverse client base where the community, stakeholders, partners and governments have trust and confidence that we are fair, effective, and efficient in carrying out our mission. In short, our vision is to be not just a leading tax and superannuation administration, but also known for our contemporary service, expertise and integrity.

    With an eye on the future, we have two key aspirations for 2024: the first is to build trust and confidence in the tax and superannuation systems and the second is to be streamlined, integrated and data-driven.

    It’s no secret that the tax system is complicated. Our client base is large and varied. Sometimes it feels like we have more clients than stars in the sky! We interact with 11.5 million individuals, 3.8 million small businesses, 935,000 employers, 617,000 super funds, 203,000 not-for-profits, 167,000 privately owned and wealthy groups, and 34,000 public and multinational business groups. And of course we also work closely with the 35,000 active registered tax professionals who provide services to these clients.

    In order for us to deliver on our vision and aspirations, we need effective relationships with these clients and stakeholders.

    We’re currently rolling out the public beta of our new Online services for agents system. All BAS agents now have access and all tax agents are expected to have access by the end of March this year. This new system was co-designed with the tax profession – we listened to feedback from our private beta participants and made a range of improvements to enhance the experience for all users. Through this consultative approach, we gained valuable insight into the needs of stakeholders, which we used to refine the service before public beta testing kicked off last month. I want to emphasise that this wasn’t just a PR exercise for us; it was a key part of the design of the service to ensure it meets user needs.

    And the feedback we’ve received so far has been encouraging.

    In an interview with Fairfax last month, tax partner at business accounting firm Trust One, Kathryn Harris, who has been part of our private beta said it has saved her ‘hours a week’. Kathryn referred to the new system as ‘just awesome’ and commented that it's allowing her team to do their jobs better because there is much more functionality.

    I love stories like this. Because it demonstrates that we’ve built an effective partnership when co-designing services for our clients and stakeholders.

    As I’m sure you are aware the ATO is also a large employer, we have more than 20,000 employees with just over 3,000 here in Brisbane alone.

    It goes without saying that our internal clients and stakeholders also expect effective partnerships from us when it comes to our finance functions.

    As CFO one of my biggest challenges is balancing the books on our $3.3 billion operating expense budget. But my team of about 520 people are more than ‘number crunchers’ and ‘box-tickers’.

    Aside from being very good at Microsoft Excel, we strive to be valued as key enablers to the business of the ATO and engaged as a trusted advisor.

    We manage an extensive property network and ensure the security of our people and property. We ensure that the ATO manages its own tax compliance (we of course need to be a model taxpayer). We provide strategic procurement advice not only to ensure proper compliance with the Commonwealth Procurement Rules but also to secure savings, innovations and efficiencies with all contracts and purchases.

    Our Portfolio Management branch provides governance around our large programs and project management. Effectively managing the demand in any PMO is a skill set in itself and we are challenged daily. The way forward for us is to drive the organisation to ‘start finishing things and stop starting things!’ And our two Finance Service Delivery branches service our internal business partners.

    I expect my finance professionals to be able to join the dots across the cosmos of the ATO, not just count them.

    It goes without saying that the finance function in a large organisation needs to be positioned as a strategic business partner, focusing on considered leadership and advice, empowering and helping others to overcome challenges and solve problems.

    According to a Spencer Stuart study, ‘CEOs expect CFOs to provide an organisational view of risk and how to manage it, especially at times of heightened risk in the marketplace. It is the role of the CFO to find solutions that better balance risks with rewards, rather than defaulting to a risk-averse approach.’ There are always competing tensions between conformance and performance. Challenge the organisation but don’t let anything go wrong.

    The finance function has traditionally been likened to that of a historian. We would look back at the year that passed and report back. Did we balance the budget? What were the variances? But I think it’s fair to say that the finance professional needs to also somewhat of a navigator: helping our business partners predict challenges, chart their future course, warn about consequences, and provide advice on the best path to take to make it safely through stormy seas or the odd potential ‘meteor showers’.

    We are in a unique position to be able to bring laser-like focus through things like benefits management, risk identification, costs and highlighting unintended consequences.

    Internally, we decided we wanted to be known as the strategic enabler, and to do this we wanted to be the provider of safe passage to get things right, the provider of safe harbour when things go wrong, and a function that can be relied on to deliver and achieve critical outcomes.

    There are a few fundamentals we’ve embedded into our work which I think are sending us down the right path to being a principled, resilient, and sustainable finance function.

    We need to ensure we know what the basics are for our job and make sure we get them right. Doing the basics brilliantly 100 percent of the time! I think organisations can overlook this fundamental. You expect big complex processes to throw up issues, but generally it is the simple or basic that everyone expects to just happen that will trip you up every time! That trip, in my experience, usually delivers an exponential sting in the tail that is costly. So do the basics brilliantly. This builds integrity, credibility and trust. Trust delivers confidence which then delivers outcomes.

    We keep an open mind and are open to trying new things.

    We raise issues and challenge the way things get done. Stand back and question why we are doing these things. We ask ourselves: what is the outcome we are trying to achieve? Is the information helping you or your client make a decision? And if the process does not get us to where we need to be, then we need to change the way we do it.

    We need to empower and trust our people and assign work accountability.

    Our managers check in with their teams regularly to see how delivery is progressing, and offer assistance if things are not on track.

    We need to have courage, influence and communicate well. We get to know our business partners and share our points of view. It’s about networking and knowing how to start the conversation.

    Finally, we make sure we’re visible and have a solid reputation.

    If we get these fundamentals right we’ll be better placed to position ourselves as strategic partners rather than an afterthought.

    Other steps we’ve taken in our transformation have included:

    • Engaging in key decision-making committees either as permanent members or advisors. The CFO role at the ATO now sits as a permanent member on the ATO Executive. This has only happened in the past few years and it’s a move that I think demonstrates the shift from ‘historian’ if you will to ‘navigator’.
    • Implementing strategies to further increase competence and awareness about finance and governance with our internal clients.
    • Working harder to be agile and responsive to our internal clients’ needs.
    • Making sure that our advice is about more than spreadsheets and numbers, and provides useful and tailored insights that our non-financially focused stakeholders can understand.
    • We too often gather data and provide information, but we need to do is then provide insight and intel that enable people to make more informed decisions.

    We want our internal clients to:

    • Spend less time and effort on finance matters
    • Have options for self-service as well as having a contact they can speak to if required
    • Have certainty about financial matters and be able to trust our advice
    • Receive tailored communication in plain English, and
    • Have streamlined dealings with us that are unambiguous.

    I expect my people to be responsive and to be able to think outside the boxes, not just tick them. We have shifted from being the conformance police that says ‘no’, to problem solvers and enablers. So we can show that while ‘X’ is not possible we can get the same outcome through ‘Y’.

    So what is the future for the finance skills and capabilities?

    Where does robotics and artificial intelligence fit in? I don’t think any of us have the total answer, or the magic wand. What we think we know is that previously considered ‘technical’ work is likely to be automated.

    What we are grappling with is how to up-skill our current workforce to deliver value-add. I believe our journey is from the historian, the spreadsheet, technical to the strategist, integrity advisor and relationship builder.

    Someone who understands how the organisation works, someone who can balance the need to work through the organisation and ‘break through’ when needed. These skills you will not find a textbook. Some of the things we are doing include:

    • broadening the experience of our people and our recruitment including multi-disciplined qualifications
    • recruiting broadly, both from different sectors and criteria, for example we shouldn’t overlook people with experience in change management and large people leadership.
    • actively exchanging and promoting people to go into the business and for business people to come into finance
    • having regular conversations about the challenges, including making sure our people understand that it isn’t just going away
    • building development plans into regular feedback, and
    • encouraging our people to challenge business partners if required.

    You can put all of the learning and development in place, but without context and buy-in, without the open and continuous conversations, you end up with a different type of technical expert but no real change.

    A level of intellectual curiosity is needed to dig deeper into issues where the finance function can help find a solution. We need the traditional financial skillsets – that’s a given. But a finance professional in 2019 must also be a ‘people person’ and engage well with our stakeholders; have conversations and get real and actionable insights. To be able to gather data, create information and provide insights that underpin strong decision making.

    Our service commitments line up nicely with the ATO’s broader cultural traits:

    • Client focused
    • United and connected
    • Empowered and trusted
    • Future oriented
    • Passionate and committed.

    Put simply, I want my people meet with and talk to their internal clients and colleagues in other agencies. They need to get invited to meetings from the inception – not as an after-thought – and prove their ‘value add’. This can be a difficult, even uncomfortable concept for people. But it’s been working well so far and paying dividends.

    I’ll end with a case study that I’m particularly passionate about to illustrate how we’ve delivered on a finance initiative as part of our transformation.

    Supplier Diversity is one of the initiatives delivered by the finance function across the whole of the ATO.

    Supplier Diversity is our proactive program promoting equal opportunity in the supply marketplace by encouraging the purchase of goods and services from businesses owned by, or who assist, under-represented groups. These groups include Indigenous and registered Australian Disability Enterprises.

    As well as achieving measurable social impacts, Supplier Diversity drives a range of business benefits including investment, employment, sustainability, flexibility, innovation, value and a sense of belonging.

    A recent study has shown that growing the Australian Indigenous Business Sector can have a significant, measurable and positive impact on Indigenous families and communities. Indigenous businesses are key to creating jobs and employing more Indigenous Australians.

    Before the Commonwealth announced the Commonwealth Indigenous Procurement Policy, the Commissioner was ahead of the game in his expectations of Indigenous procurement expenditure.

    Commissioner Jordan has made it clear that he wants the positive impact of our Supplier Diversity initiative to be one of the ATO’s key achievements. He doesn’t want tokenism; he wants to see real outcomes that support systemic change for Indigenous people and communities.

    As one of its largest agencies, the ATO has a clear responsibility to lead the Australian Government’s approach to social engagement as it aligns with its core business of contributing to the social and economic wellbeing of Australians.

    The ATO is committed to leveraging its spending to make real progress and improved outcomes for Indigenous communities as part of our Reconciliation Action Plan.

    And we’re getting solid results that are far from tokenistic.

    We’ve dramatically increased our contract commitments with Aboriginal and Torres Strait Islander suppliers from less than $10,000 in 2013, to $22 million spread across 131 contracts as at 31 December 2018. We reached a peak of $36 million in contracts with Indigenous suppliers in 2017–18 and we are on track to surpass our targets for 2018–19.

    We won the Government Member of the Year at the Supply Nation Awards in 2016 based on our performance and commitment to supplier diversity, and were runners-up in at same awards in 2017.

    This initiative was driven by us in finance through a dedicated procurement team. It’s a fantastic example of how we’ve changed the way we work with our business partners across the organisation to deliver an ever-improving finance function. It shows how we’re no longer just a cog in a process but are now driving strategic thinking from the get-go.

    Thank you for your time and I’m happy to take a few questions.

    Last modified: 12 Feb 2019QC 57886