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Last updated 11 November 2010

I flew to Sydney as part of the process of researching this history of the Australian Taxation Office (ATO), to look at old documents and talk to current and retired tax officers.

The flight was as pleasant as air travel is these days but there was cloud all the way so not much to see. But as the aeroplane came down through the cloud base Sydney, one of the world's great cities, was suddenly spread out below us as far as we could see.

There were houses, streets after streets of houses, roads, freeways and bridges, railway lines and stations, parks and gardens, sporting grounds and golf courses, shopping centres and malls, warehouses, factories, churches, schools and hospitals and everything else that goes to make up a modern metropolis. And as this panorama of human achievement flowed past below us it came to me that almost everything I saw had been touched in some way by the ATO. The infrastructure had been paid for by taxes and taxes were attached to most of the human activities that took place in this great city.

It is a staggering thought to realise what a vital role tax plays in our lives. It pays for so much of the amenity that we enjoy and it helps ensure the peace and prosperity of our nation. Think about it the next time you find yourself flying over our land or walking down one of its streets, where is the ATO not present in the lives of everyday Australia and Australians?

The ATO is a national institution, nationwide and inextricably bound up in the nation's daily life. Not only does it collect the revenue that 'pays for the Australian way of life',2 the ATO is one of the pillars of our Australian nation because the way tax is collected creates nations. A well-run and fair taxation administration, free from political interference, is vital to a sustainable democracy but when tax is poorly administered, or the system is seen as unfair, it becomes the source of great community complaint and changes nations. This is demonstrated by some of the forces that have created the way Australia is today.

Our Westminster system of democratic government is the direct result of the way in which tax was collected in England in the early 17th century. The English Civil War was fought over whether the parliament or the monarchy had supreme power and a key issue in that struggle was how the king raised revenue. After a decade in which the king raised revenue through increasingly unfair means, parliament rebelled, the king and his supporters were defeated, and the monarchy abolished. The monarchy was later re-established, but on parliament's terms. This created the basis of the form of government we have in Australia today, with a limited constitutional monarchy and actual power in the hands of a government holding a majority in parliament.3

The British colonisation of Australia took place for several reasons, one of which was the loss of its colonies in North America, and a major cause of that was unfair taxation. The British parliament raised taxes in the American colonies but the colonists had no representation in the parliament. That became a source of great resentment and led to the slogan 'No taxation without representation'. Unrest grew, the colonists rebelled, created the United States of America and drove out the British. As a result, Britain had to look elsewhere for military bases and convict colonies so that the colony of Sydney in New South Wales began British colonisation of the Australian continent.4

Today's Australian democracy is also partly the result of the way taxes were collected in Victoria in the early 1850s. Several British colonies in Australia were granted self government at that time but voting was limited to men with land or wealth. The discovery of gold in Victoria at that time attracted thousands of men and women from all over the world and the colonial government reacted by imposing heavy taxation to help pay for the goldfields administration, in the form of a Miner's Licence. The tax was very high and brutally enforced, leading to widespread dissent and the rebellion at Eureka in December 1854. The uprising was rapidly crushed but one of its demands, that included much wider political representation, became very popular and had to be granted. This set the tone for democratic reforms across Australia that set the model for our modern government.5

These events not only helped create modern Australia but helped shape its taxation system. The ATO is set at arm's length from the political process - as are the legal systems and the police services - so while politicians enact the laws to levy taxes in parliament, the ATO is expected to enforce them impartially and effectively, without fear or favour. The public outcry that results when something goes wrong with the taxation system is a sign that the community expects the ATO to always act with honesty and integrity and in the best interest of the community at all times, but often the public does not get the full story and the ATO is not in a position to defend itself. In the media battle for hearts and minds, the odds are sometimes stacked against the ATO.

This history tells the story of the creation and evolution of the ATO over one hundred years. It is not to be confused with the history of taxation in Australia because there is already a vast literature on that while the history of the ATO has not been told. However, that story is important because the success or failure of the ATO's administration of Australia's taxation system is a key to understanding something about the success or failure of the Australian nation. If Australia has become a peaceful and prosperous commonwealth then the work of the ATO has played a part in achieving that.

We call this a brief history of the ATO, not because it is particularly short but because it could have been much longer. Bear in mind that the history of the ATO begins in the first decade of Australian federation and that everything that has happened to affect and change our society has also affected the ATO. Consider that the ATO has been present all over Australia and that many tens of thousands of Australians have worked for it in its hundred years. And, like all large organisations, the ATO also had, and has, its own internal life which also gave a sense of character to what it did and how it did it. As a consequence, this history has only been able to touch on highlights of the ATO's history rather than go into great detail of particular trends and issues.

The ATO is an agency of the Australian Public Service and the people who work for it are public servants. Almost without exception they have known that the work they did created the lifeblood of the community that paid for its many needs. From the beginning, tax officers have understood the necessity for integrity and honesty in their work. It has become ingrained in the character of the ATO and is taken for granted in the daily working lives of tax officers, reinforced by the knowledge that there are other tax officers always watching for things that might go wrong. Tax officers have also held positions different from most other public servants because they routinely deal with the most personal details of taxpayers' lives, so when they join the ATO they sign a declaration that they will never disclose any information unless it is necessary in their work.

Living links with the past, four Commissioners of Taxation around 2000. Left to right: Sir Edward Cain, Michael Carmody, Bill O'Reilly and Trevor Boucher. Between them they had held stewardship of the Australian taxation system for more than 25 years and had a memory of the ATO from the 1930s.

Living links with the past, four Commissioners of Taxation around 2000. Left to right: Sir Edward Cain, Michael Carmody, Bill O'Reilly and Trevor Boucher. Between them they had held stewardship of the Australian taxation system for more than 25 years and had a memory of the ATO from the 1930s.

However, tax officers are people like everyone else and the things that affect other Australians also affect them. This means that as the Australian society has changed so has the ATO, its people and how they did their work. This is a major theme of this history.

When you read this history you will note some of the most important changes that have occurred in Australia over a hundred years including gender and racial relations, and rapid changes in technology. In 1910 Australia was almost monocultural and now it is multicultural. It was once a society in which women and men had separate roles and now it has almost gender equality. You will also notice the great changes in the tools the ATO has used, from early adding machines and pencils and paper to the almost paperless, screen-based information technology-using ATO of the new century. Changes in transport and communications have also changed the ATO from a regionally-based organisation to one nationwide organisation.

Since this has had to be a short history of the ATO I have not been able to include other important social changes. One that I want to mention here in passing is the great social change that has taken place in the role of religion in Australian society. When the ATO was created religious bigotry was commonplace with a dominant Protestant and Anglo Australian majority and a Catholic and Irish-Australian minority. The antagonism between them ran very deep and affected most aspects of daily life. Even into the 1950s, newspaper job advertisements commonly included the phrase 'Catholics need not apply' and religious segregation extended into every corner of society where exclusion of and discrimination against Catholics was taken for granted. For their part, Catholics responded by setting up their own education systems and social and political organisations.

Even in the 1960s it was well known that some public service departments were dominated by Protestants and others by Catholics, and many people say that the ATO was a Catholic department. There is little written to substantiate this but there are many stories that support it. Some people say that the Brothers who ran Catholic schools told their boys that they should seek careers in the public service, preferably the ATO, and in Perth it was said that Catholics could only get jobs in two places, Aherns (the Catholic-owned department store) and the ATO. A strong Catholic population in the ATO might have created a general Catholic ethos there, but what might that mean? Perhaps it means that Catholic values of obedience and service became embedded in the ATO from its beginnings, combined with, as one tax officer told me, 'a very strong Protestant work ethic'.

Religious bigotry and segregation began to dissolve in Australia in the 1960s, one of many other important social changes, so there is little historical evidence left to indicate any lasting Catholic influence on the ATO. However, the fact that Catholicism is no longer important in the ATO reflects something important about the way in which Australia has changed during its history.

This history has tried to avoid discussing the social impact of taxes because they are the result of political decisions and outside its scope, for the most part. However, the social implications of taxes affect the lives of tax officers who not only collect taxes but also pay them, like everyone else. Tax officers also experience the benefits that result from how governments spend the revenue they collect, as citizens and in government financial policies that affect the operations and working conditions of the ATO.

The dispensation
Lionel Jones muses on a curiosity of ATO life.

When I entered the Tax Office in 1951, and until half way through my career, the overwhelming culture of the office was Irish Catholic. Although I bear the most common of names, I met very few named Jones in the Tax Office, where the most common name was Murphy. A sort of green Mafia watched what you ate on Friday.

For a retirement, it was usual for a dinner to be held in the staff cafeteria, after work, and for obvious reasons, on a Friday. Tables were set, laid with plates, knives and forks, and a long line of tables to one side groaned under cold cuts, sausage rolls, chicken legs and party pies. Everyone stood around, chatting with drinks, except for an official table for the seated Senior Officers at the end of the room, a sort of bridal party table. Cordial membership of this elite was graciously accepted, providing it could not be said of a Senior Officer that 'We don't want him at our table, he doesn't drink.'

At a ceremonial moment, one of the elite would click his glass with his knife, stand, and with great solemnity announce 'I have spoken with Monsignor O'Flaherty this afternoon. We have dispensation for this evening'.

Without a smile, without a wink, everyone picked up his plate and lined up at the serving tables eager to fill his plate, while it lasted, with cold cuts, sausages rolls, chicken legs and party pies. No one noticed my suppressed grin.

After Vatican II, what ever happened to all those poor Tax Office souls burning in Hell for eating a crumb of sausage roll without the good Monsignor's dispensation? If I were them, I'd sue.

People are the key to the history of the ATO but only a handful are named in this history, mostly Commissioners. It would have been unfair to pick out and name the achievements of a few tax officers and leave out the rest, because so many have made their contribution to the evolution of the modern day ATO. However, the excerpts from people's conversations and the photographs help to convey something of the lives of the people who made the ATO what it was, and what it is.

Staff of the ATO's Wollongong branch gather for a group photograph to mark its opening.

Staff of the ATO's Wollongong branch gather for a group photograph to mark its opening.

Today the ATO is recognised as a world class tax administration and a leader in many aspects of revenue collection and distribution. This journey began a hundred years ago when a handful of men met to plan the introduction of a new tax to the newly-created nation and it has been achieved since then through generations of hard mental and physical labour. The Australians who have achieved this were people just like you, but what they did has helped make us what we are today.