Tax Institute 2014 Tasmanian State Convention

Country Club, Launceston 16-17 October 2014

Richard Glenn, Deputy Commonwealth Ombudsman

Introduction 

Thank you for the invitation to speak to you today.

First of all I’d like to acknowledge the traditional owners of the land on which we meet, and pay my respects to their elders, both past and present. 

It’s a pleasure to be here in lovely Launceston today to talk to you about what’s happening in the world of the Taxation Ombudsman and public-sector complaint handling. 

To paraphrase Oliver Wendell Holmes, we pay our taxes because “with taxes, we buy civilisation”. 

Or as Franklin Roosevelt said, “taxes are dues that we pay for the privileges of membership in an organised society”. 

In the 2012-2013 financial year the ATO collected: 

And it refunded $31.7 billion in individual income tax refunds. 

Not surprisingly, as the Government’s principal revenue-collection agency and one that interacts with most of us, the Tax Office is one of the most scrutinised organisations in the country/ It’s also one of the most complained about.

And just in case all that work and all that scrutiny wasn’t enough, it is also in the process of shedding more than 3000 staff Australia-wide as part of staff reductions to the public service – a major transformational change. 

In Australia we rely on – and for the most part have confidence in – the Australian Taxation Office to administer our taxation system. 

A quick look around the world and around our region shows how lucky we are to have a tax authority of integrity and professionalism.

The points I am making here are that: 

During this presentation I will talk about the role of the Office of the Commonwealth Ombudsman. 

I’ll then discuss some of the issues we’re seeing with the Tax Office, and finally I’ll touch on our role in dealing with cross-agency issues (because tax and the ATO don’t exist in a vacuum). 

Background on the Office of the Commonwealth Ombudsman 

In Australia, people expect to be treated fairly by their government. We value principles like accountability, transparency and integrity, and we strive to protect them. 

We have a right to complain when we are dissatisfied or things go wrong, and to have our complaints resolved on merit, without hindrance or fear of reprisal. 

This process is part of the fabric of our modern, engaged, democratic society. 

The concept of an ombudsman as an independent person who can investigate and resolve disputes between citizens and government has been around for more than 200 years and has spread to more than 120 countries.

An ombudsman is now considered an essential accountability mechanism in democratic societies. 

In Australia, the Office of the Commonwealth Ombudsman exists to safeguard the community in its dealings with Australian Government agencies, and to ensure that administrative actions by those agencies are fair and accountable. 

The Ombudsman Act 1976 confers six specialist roles on the Ombudsman, including the Taxation Ombudsman, whose role is to investigate actions taken by the ATO. 

Conducting complaint investigations and own motion investigations (that is, investigations conducted on our own initiative) are traditional ombudsman activities, and they account for most of the work done in the tax area. 

The purpose of an investigation is to examine whether an administrative action is unlawful, unreasonable, unjust, improperly discriminatory, factually deficient or otherwise wrong. 

At the conclusion of an investigation, we may recommend that corrective action be taken by an agency, either specifically in an individual case or more generally by a change to relevant administrative policies or procedures. 

It has been said that while the office of the Ombudsman was “not very well equipped for hunting lions...it could certainly swat a lot of flies”

In other words, our role in the early days was to resolve complaints (or swat the flies), rather than tackle the systemic issues within an agency which led to the complaints in the first place (hunt the lions). 

As time has passed, so has our focus. We now set out to hunt more lions, with the belief that if we remove the things that attract flies (the complaints), the flies will disappear of their own accord. 

So over the past decade or so we have moved from being simply focused on individual grievances, to working more with agencies to equip them to both deal with immediate complaints and help them create systems that enable them to learn from the experience. That is, working to produce systemic improvements. 

We know there are no perfect administrative systems or policies, and things will invariably go wrong. 

We listen to what complainants tell us and fairly and objectively analyse this information to bring to an agency’s attention gaps in policy and weaknesses in its complaint handling. 

Our ability to do this within and across agencies is our strength and it is what sets us apart. 

The Tax Office 

And so to the Tax Office. 

At this point it’s worth mentioning that in this year’s Federal Budget the Government announced the transfer of the tax complaint-handling role from the Taxation Ombudsman to the Inspector-General of Taxation. 

The transfer requires changes to the legislation of both agencies and, until such legislation is passed by Parliament, we will continue to deal with complaints and systemic issues concerning the Tax Office. 

The ATO is a substantial source of complaints to our office. It is currently the fifth most complained about agency or program, behind Centrelink, Australia Post, Immigration and Child Support. 

The fact that it is fifth on our list overall is not surprising given, as I mentioned at the start, the size of the agency, the nature of its function and the frequency of its contacts with members of the public. 

The 2012-13 ATO Annual Report shows that it had more than 22 million interactions with taxpayers in the financial year, but only 26,431 complaints. So on the whole the interaction worked for most taxpayers. 

It is when things don’t go so well, of course, that taxpayers or their representatives contact us. 

But it’s interesting to note that the ATO has dropped in our rankings. In 2012-13, the Tax Office was our third most complained about agency. We received 24% fewer complaints about the ATO in the financial year just ended than in 2012-13 – a larger decrease than any other comparable organisation. 

Lower complaint numbers is not a good thing per se – there can be lots of reasons for complaint numbers dropping. But in the case of the ATO we think it is good, because we know the efforts they have gone to in recent years (with our assistance) to improve their complaints systems. 

My perspective on disputes is primarily based on complaints received by our office. Complainants are mostly individual taxpayers or small business owners who encounter a problem with the ATO somewhere along the taxation journey, whether it be at the lodgement, audit, objection, review, debt collection or litigation stages.

I think most people would agree that government compelling anybody to pay money, whether it be tax, superannuation, a parking ticket or speeding fine, can lead to a disagreement. 

But a disagreement only becomes a dispute when one party can’t live with the consequences of the disagreement and insists on a different outcome. The reason a dispute arises usually holds the key to its resolution.

So how do disagreements end up as disputes? Taxpayers and their agents have said these sorts of things to us: 

The audit personnel keep changing, which means I have to explain my situation each time.” (In one example staff changed three times.) 

The auditor treats me like I’m a tax cheat and trying to hide something. I don’t know what the ATO is looking for. It’s like a fishing trip, even though nothing is found it seems the audit will continue until something is found.

I lodged an objection which still has not been finalised.

When the ATO asked for information, I had a short period in which to respond, but it took an unequal period of time to review my documents.

My tax agent told the ATO he will respond to the audit on my behalf, but the auditor keeps ringing me insisting I provide information.

Even though I have provided information to substantiate my position, the auditor will not change his view and seems intent on continuing on the same path regardless. I need someone to intervene.

The House of Representatives Standing Committee on Tax and Revenue is inquiring into tax disputes. The ATO’s submission to the recent hearing of the Committee stated that “a tax dispute occurs where a taxpayer disagrees with an opinion or decision of the ATO”. 1

The comments we receive from taxpayers tend to suggest that the seeds of dispute are often sown well before the decision is made. 

This seems to be supported by the ATO’s own complaint statistics, which show that in 2013- 14 almost 57% of complaints it received about audit decisions related to the conduct of an audit rather than the outcome of the audit. 

At the Committee’s hearing in Melbourne2 , Mr Greco from the Institute of Public Accountants said: 

“In an ideal world/tax disputes should not happen...the biggest problem is getting the right people to look at it early in the process. Once it progresses, generally more skilled people are involved and the matters are dealt with in a reasonable fashion.

This is also our experience. Complainants tell us that while they can seek a review of the ATO’s decision, the need for a review could have been avoided if someone more senior had intervened, allowing for a fair and reasonable consideration of the facts. 

While it is pleasing to read in the ATO’s submission3 and Dispute Management plans that it has instigated strategies to achieving/improved skills of audit and objection case officers including/using a communication style that encourages open communication, I cannot emphasise enough that auditors need to listen to the issues because the disagreement may be a call for help, rather than an attempt to hide. 

George Bernard Shaw said, “The problem with communication is the illusion that it has occurred”. 

Our experience with complaints management tells us that when communication breaks down, objectivity evaporates and generally terms like bullying and intimidation become part of the taxpayer’s complaint.


As reported in the ATO’s 2012-13 Annual Report4 , from 16.2 million returns lodged with the ATO, only 26,500 objections5 were received. 

Of the 675 cases commenced in a court or tribunal, only around 115 proceeded to a decision. The clear majority of matters are settled. 

Complainants, particularly individuals and small-business owners who find themselves at the pointy end of the dispute process (the litigation and settlement stage), have expressed concerns about what they perceive as a power imbalance, or a heavy-handed approach by the Tax Office. 

With limited resources and time, small-business owners told us they felt pressured to agree to an offer of settlement during the proceedings; even, in some cases, on the steps of the court or tribunal. 

Complainants sometimes tell us that they made attempts to resolve the dispute before it got to the court or tribunal, but found it difficult to negotiate with the ATO. 

They complain that the ATO did not respond to their offer of settlement, did not provide a suitable point of contact or did not respond to requests for meeting. 

In short, complainants say that once the dispute progresses to the litigation stage, the lines of communication close. 

I think we would all agree that it is better to avoid a dispute than have to spend time, energy and dollars resolving it. 

In recent times the ATO has demonstrated a commitment to continuing to get it right more often. It has made much ground on integrating learning from complaints into its quality assurance mechanisms and product design, as demonstrated by its reduction in complaints and increase in compliments. 

Right now, on social media, the Tax Office has received significant positive feedback, which was not always the case.

So as I have said, the challenge remaining for the agency is to engage with taxpayers early, before issues become disagreements and then disputes.

Engage with taxpayers often, learn from the exchange, from the feedback and from complaints and, when a dispute arises, be prepared to identify opportunities to engage early in alternate dispute resolution and keep the lines of communication open.

That means there is a corresponding obligation on the part of taxpayers and their professional advisers to also maintain calm, clear and constructive dialogue with the ATO. 

The Ombudsman and cross-agency issues

One of our strengths is the ability to gather intelligence from individual complaints and objectively analyse it to form a cohesive message about strength and weaknesses in an agency’s administration, and in public administration as a whole. 

Our position and role means we can help agencies learn from the experiences of all agencies in our jurisdiction. For example, lessons learned in relation to the complaint-handling practices of the Australian Securities and Investments Commission and the Tax Practitioners Board can be applied to other agencies, such as the ATO. 

Because of our position we are well placed – and I believe uniquely placed – to deal with cross-agency issues. 

Sometimes it’s not just about tax. Because the ATO has a tax, transfers, superannuation and business-register role, there can be flow-on effects when problems occur in the ATO space. 

For example, serial non-lodgers of income tax returns may be avoiding child support assessments, and this could also have Family Tax Benefit consequences for ex-partners who are often powerless to rectify the problem. 

Because these impacts can be obscured by the cross-agency interactions, we have an important role bringing these issues to light, especially because complainants often tell us that they feel like they bounce between agencies with neither willing to take responsibility for their complaint. 

We also encourage agencies to see complaints as “a river of gold”- that is, to see the value in complaints, so that they inform the development of future products and services to clients. 

In this way we also encourage agencies to stop wasting energy “swatting flies”, but to instead make meaningful improvements to their products and services to avoid future complaints. 

This is especially relevant in light of an ANAO report that indicated it costs an average of $611 every time someone makes a complaint to the Tax Office. 

In the past few years the Tax Office has made a number of improvements to its complaint handling and, as I mentioned, we have seen a reduction in the number of complaints we receive. 

But we believe there is still more work to be done – especially because the world is not standing still. 

The landscape is changing quickly for Australian Government agencies. Citizens have become more actively and directly involved in monitoring public authorities and in demanding better policies and practices. 

This is aided by the expansion of information and communication technologies. People increasingly want to be able to communicate electronically with government agencies and want – and expect – immediate answers to their questions. 

Against this background we are seeing a reinvention of the ATO – a changing of its culture, putting the client first, and providing more contemporary products and services. 

Key changes include: 

These changes have been well received by large groups in the population and there are undeniable efficiencies in making them. However, what is a welcome change for some can be challenging for others.

For example, the ATO’s decision to no longer provide paper forms through newsagents in an attempt to encourage more electronic lodgement led to complaints to my office about accessibility. 

Some people do not have access to a computer or the internet, or believe they have been discriminated against due to their lack of computer literacy or accessibility. 

Let me give you two examples: 

The big change for taxpayers this year has been the use of the myGov system to deliver prefilled tax returns. 

We prepared to receive complaints as a result of the change, but in fact we have received a very small number of complaints about the myGov system – so far only 10. 

The complaints related to difficulty accessing myGov, and some people were unhappy about the need to establish a myGov account to lodge a return. 

Tax time of course is a very busy time for the ATO, but it is also a busy time for us.

With so many taxpayers contacting the ATO and lodging tax returns over a short period, problems can arise despite prior planning and system testing by the ATO. 

These problems can lead to complaints to the ATO and, if unresolved, to the Taxation Ombudsman. 

This year we are trialling the use of Facebook as a means to provide up-to-date information about Tax Time 2014 from the Taxation Ombudsman’s perspective

We have also published information as frequently asked questions on our website. The information addresses common complaint issues and typical causes. 

We find that a better understanding of the processes followed by the ATO can help to manage people’s expectations and often avoid the need for a complaint. 

The issues around government online services are not unique to the ATO. As more agencies take up the Government’s digital initiative, my office is seeing more complaints. 

Our aim is not to unwind or undo the whole-of-government digital initiative – it’s a great idea! 

But it is our role to take the information gathered from complaints and feed it back to the Tax Office and others to give voice to individuals (particularly the vulnerable) affected by big service-delivery changes. 

Own-motion report into complaint handling 

There is one final thing I’d like to mention before I finish. 

Our office is about to release a report from an own-motion investigation into complaint handling in Australian and ACT Government agencies. 

The report will be the most comprehensive snapshot of Commonwealth complaint handling that has ever been done. 

Our investigation had three main strands: 

The report will be available to agencies by the end of this month, but I’d like to share some of our broad findings with you now. 

Our analysis of the survey results is mostly qualitative, but it still paints a good picture of what is important when looking at complaint handling. 

In our survey we asked agencies whether they thought the quality of their complaint handling had improved or deteriorated. 

Not surprisingly, no agency admitted to having worse complaint management than they did five years ago. In fact by far the biggest group thought the agency had improved markedly in the past five years. 

Even allowing for a bias towards positive self-reporting, this shows complaint management tends to be included in organisational continuous improvement. 

Agencies were asked what elements contributed to improved complaint management. 

Improved processes was the most common reason, which was not unexpected.

But the second cause for improvement was less expected; not because it isn’t important but because we didn’t think it happened that much: senior leadership support.

Senior leadership support is vital for organisational changes, particularly cultural changes such as creating or fostering a culture that values complaints. 

In our survey we specifically asked who the senior management owner of the complaints process was. Fifteen responses nominated the Chief Executive Officer or Commissioner, 58 indicated a Senior Executive Service level officer, and a further 10 stated it was a manager. 

Even allowing for discrepancies in position titles, the responses show that complaints processes are commonly the responsibility of senior officers. 

The other critical element the report shows are the challenges that still exist. Most agencies we surveyed deal with vulnerable or marginalised sectors of our society. 

It is vital that vulnerable people are considered in the design of complaints process because they are more likely to fall out of the machinery of public administration. 

Problems with access, literacy, mobility and understanding lead to greater difficulty in accessing public services, or a greater likelihood of falling foul of regulatory authorities. 

The natural tendency is for public sector organisations, with limited resources, to focus their attention towards the greatest good for the greatest number, with fewer resources devoted to those who are more problematic and need more intensive support. 

But the role of a good complaint system is to act as a safety net and put people safely back in the system with no loss of entitlement, and with a minimum of stress to all concerned. 

However, this process is made more difficult by the very attributes that make it more likely that people will have a complaint in the first place. 

It is therefore critical that a complaint system places a great deal of emphasis on being accessible to vulnerable groups, even where this level of accessibility is unaffordable across the broader organisation. 

Our survey uncovered – or confirmed – four key aspects to providing flexible complaint handling systems. 

First, you have to remove the barriers. Reaffirming the right of a client to complain, and making a public statement of your organisation’s commitment to that right, is not merely words. 

Second, make lots of channels available. People want to choose how to interact. 

Third, assist people through the process. Five organisations stated specifically that they took action to modify the complaint process to meet special needs.

For example, the ATO advises that it can meet complainants face to face if necessary, at a location convenient to the complainant, and outside their offices where required. 

Finally, and perhaps most importantly, build a culture that supports complaints. One of the main influences on best-practice complaint handling is fostering a culture that values complaints. 

Good complaint management requires individual staff members to identify and support complaints, which in turn requires those staff members to see complaints as valuable and to know that dealing well with complaints is an important part of their job.

Conclusion 

The ATO is well advanced on its journey to improve its complaint handling and dispute management processes. But of course there is more to be done. 

The Ombudsman’s office will continue to play a role in helping it to improve. 

Thank you for listening and I wish you all well for the remainder of the conference. 

1 ATO submission July 2014, page 7, What is a tax dispute? 

2 Hearing 14 Aug 2014. Hansard page 6 - opening statement 

3 ATO submission July 2014, page 9 paragraph 24 

4 ATO Annual Report 2012-13 Part 2 Performance reporting – Income tax disputes in 2012-13 

5 ATO Annual Report 2012-13 - Resolving Disputes, page 57

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      16 October: Acting Ombudsman – Delivers keynote address on Tax

      Tax Institute 2014 Tasmanian State Convention

      Country Club, Launceston 16-17 October 2014

      Richard Glenn, Deputy Commonwealth Ombudsman

      Introduction 

      Thank you for the invitation to speak to you today.

      First of all I’d like to acknowledge the traditional owners of the land on which we meet, and pay my respects to their elders, both past and present. 

      It’s a pleasure to be here in lovely Launceston today to talk to you about what’s happening in the world of the Taxation Ombudsman and public-sector complaint handling. 

      To paraphrase Oliver Wendell Holmes, we pay our taxes because “with taxes, we buy civilisation”. 

      Or as Franklin Roosevelt said, “taxes are dues that we pay for the privileges of membership in an organised society”. 

      In the 2012-2013 financial year the ATO collected: 

      • $156 billion of tax from individuals 
      • $66.9 billion in company tax 
      • $3.9 billion in Fringe Benefits Tax 
      • $48.3 billion in Goods and Services Tax. 

      And it refunded $31.7 billion in individual income tax refunds. 

      Not surprisingly, as the Government’s principal revenue-collection agency and one that interacts with most of us, the Tax Office is one of the most scrutinised organisations in the country/ It’s also one of the most complained about.

      And just in case all that work and all that scrutiny wasn’t enough, it is also in the process of shedding more than 3000 staff Australia-wide as part of staff reductions to the public service – a major transformational change. 

      In Australia we rely on – and for the most part have confidence in – the Australian Taxation Office to administer our taxation system. 

      A quick look around the world and around our region shows how lucky we are to have a tax authority of integrity and professionalism.

      The points I am making here are that: 

      • people love to complain – and there’s absolutely nothing wrong with that 
      • the taxation process always has and always will generate a large volume of complaints 
      • the ATO continues to do its job and do it, for the most part, well. 

      During this presentation I will talk about the role of the Office of the Commonwealth Ombudsman. 

      I’ll then discuss some of the issues we’re seeing with the Tax Office, and finally I’ll touch on our role in dealing with cross-agency issues (because tax and the ATO don’t exist in a vacuum). 

      Background on the Office of the Commonwealth Ombudsman 

      In Australia, people expect to be treated fairly by their government. We value principles like accountability, transparency and integrity, and we strive to protect them. 

      We have a right to complain when we are dissatisfied or things go wrong, and to have our complaints resolved on merit, without hindrance or fear of reprisal. 

      This process is part of the fabric of our modern, engaged, democratic society. 

      The concept of an ombudsman as an independent person who can investigate and resolve disputes between citizens and government has been around for more than 200 years and has spread to more than 120 countries.

      An ombudsman is now considered an essential accountability mechanism in democratic societies. 

      In Australia, the Office of the Commonwealth Ombudsman exists to safeguard the community in its dealings with Australian Government agencies, and to ensure that administrative actions by those agencies are fair and accountable. 

      The Ombudsman Act 1976 confers six specialist roles on the Ombudsman, including the Taxation Ombudsman, whose role is to investigate actions taken by the ATO. 

      Conducting complaint investigations and own motion investigations (that is, investigations conducted on our own initiative) are traditional ombudsman activities, and they account for most of the work done in the tax area. 

      The purpose of an investigation is to examine whether an administrative action is unlawful, unreasonable, unjust, improperly discriminatory, factually deficient or otherwise wrong. 

      At the conclusion of an investigation, we may recommend that corrective action be taken by an agency, either specifically in an individual case or more generally by a change to relevant administrative policies or procedures. 

      It has been said that while the office of the Ombudsman was “not very well equipped for hunting lions...it could certainly swat a lot of flies”

      In other words, our role in the early days was to resolve complaints (or swat the flies), rather than tackle the systemic issues within an agency which led to the complaints in the first place (hunt the lions). 

      As time has passed, so has our focus. We now set out to hunt more lions, with the belief that if we remove the things that attract flies (the complaints), the flies will disappear of their own accord. 

      So over the past decade or so we have moved from being simply focused on individual grievances, to working more with agencies to equip them to both deal with immediate complaints and help them create systems that enable them to learn from the experience. That is, working to produce systemic improvements. 

      We know there are no perfect administrative systems or policies, and things will invariably go wrong. 

      We listen to what complainants tell us and fairly and objectively analyse this information to bring to an agency’s attention gaps in policy and weaknesses in its complaint handling. 

      Our ability to do this within and across agencies is our strength and it is what sets us apart. 

      The Tax Office 

      And so to the Tax Office. 

      At this point it’s worth mentioning that in this year’s Federal Budget the Government announced the transfer of the tax complaint-handling role from the Taxation Ombudsman to the Inspector-General of Taxation. 

      The transfer requires changes to the legislation of both agencies and, until such legislation is passed by Parliament, we will continue to deal with complaints and systemic issues concerning the Tax Office. 

      The ATO is a substantial source of complaints to our office. It is currently the fifth most complained about agency or program, behind Centrelink, Australia Post, Immigration and Child Support. 

      The fact that it is fifth on our list overall is not surprising given, as I mentioned at the start, the size of the agency, the nature of its function and the frequency of its contacts with members of the public. 

      The 2012-13 ATO Annual Report shows that it had more than 22 million interactions with taxpayers in the financial year, but only 26,431 complaints. So on the whole the interaction worked for most taxpayers. 

      It is when things don’t go so well, of course, that taxpayers or their representatives contact us. 

      But it’s interesting to note that the ATO has dropped in our rankings. In 2012-13, the Tax Office was our third most complained about agency. We received 24% fewer complaints about the ATO in the financial year just ended than in 2012-13 – a larger decrease than any other comparable organisation. 

      Lower complaint numbers is not a good thing per se – there can be lots of reasons for complaint numbers dropping. But in the case of the ATO we think it is good, because we know the efforts they have gone to in recent years (with our assistance) to improve their complaints systems. 

      My perspective on disputes is primarily based on complaints received by our office. Complainants are mostly individual taxpayers or small business owners who encounter a problem with the ATO somewhere along the taxation journey, whether it be at the lodgement, audit, objection, review, debt collection or litigation stages.

      I think most people would agree that government compelling anybody to pay money, whether it be tax, superannuation, a parking ticket or speeding fine, can lead to a disagreement. 

      But a disagreement only becomes a dispute when one party can’t live with the consequences of the disagreement and insists on a different outcome. The reason a dispute arises usually holds the key to its resolution.

      So how do disagreements end up as disputes? Taxpayers and their agents have said these sorts of things to us: 

      The audit personnel keep changing, which means I have to explain my situation each time.” (In one example staff changed three times.) 

      The auditor treats me like I’m a tax cheat and trying to hide something. I don’t know what the ATO is looking for. It’s like a fishing trip, even though nothing is found it seems the audit will continue until something is found.

      I lodged an objection which still has not been finalised.

      When the ATO asked for information, I had a short period in which to respond, but it took an unequal period of time to review my documents.

      My tax agent told the ATO he will respond to the audit on my behalf, but the auditor keeps ringing me insisting I provide information.

      Even though I have provided information to substantiate my position, the auditor will not change his view and seems intent on continuing on the same path regardless. I need someone to intervene.

      The House of Representatives Standing Committee on Tax and Revenue is inquiring into tax disputes. The ATO’s submission to the recent hearing of the Committee stated that “a tax dispute occurs where a taxpayer disagrees with an opinion or decision of the ATO”. 1

      The comments we receive from taxpayers tend to suggest that the seeds of dispute are often sown well before the decision is made. 

      This seems to be supported by the ATO’s own complaint statistics, which show that in 2013- 14 almost 57% of complaints it received about audit decisions related to the conduct of an audit rather than the outcome of the audit. 

      At the Committee’s hearing in Melbourne2 , Mr Greco from the Institute of Public Accountants said: 

      “In an ideal world/tax disputes should not happen...the biggest problem is getting the right people to look at it early in the process. Once it progresses, generally more skilled people are involved and the matters are dealt with in a reasonable fashion.

      This is also our experience. Complainants tell us that while they can seek a review of the ATO’s decision, the need for a review could have been avoided if someone more senior had intervened, allowing for a fair and reasonable consideration of the facts. 

      While it is pleasing to read in the ATO’s submission3 and Dispute Management plans that it has instigated strategies to achieving/improved skills of audit and objection case officers including/using a communication style that encourages open communication, I cannot emphasise enough that auditors need to listen to the issues because the disagreement may be a call for help, rather than an attempt to hide. 

      George Bernard Shaw said, “The problem with communication is the illusion that it has occurred”. 

      Our experience with complaints management tells us that when communication breaks down, objectivity evaporates and generally terms like bullying and intimidation become part of the taxpayer’s complaint.


      As reported in the ATO’s 2012-13 Annual Report4 , from 16.2 million returns lodged with the ATO, only 26,500 objections5 were received. 

      Of the 675 cases commenced in a court or tribunal, only around 115 proceeded to a decision. The clear majority of matters are settled. 

      Complainants, particularly individuals and small-business owners who find themselves at the pointy end of the dispute process (the litigation and settlement stage), have expressed concerns about what they perceive as a power imbalance, or a heavy-handed approach by the Tax Office. 

      With limited resources and time, small-business owners told us they felt pressured to agree to an offer of settlement during the proceedings; even, in some cases, on the steps of the court or tribunal. 

      Complainants sometimes tell us that they made attempts to resolve the dispute before it got to the court or tribunal, but found it difficult to negotiate with the ATO. 

      They complain that the ATO did not respond to their offer of settlement, did not provide a suitable point of contact or did not respond to requests for meeting. 

      In short, complainants say that once the dispute progresses to the litigation stage, the lines of communication close. 

      I think we would all agree that it is better to avoid a dispute than have to spend time, energy and dollars resolving it. 

      In recent times the ATO has demonstrated a commitment to continuing to get it right more often. It has made much ground on integrating learning from complaints into its quality assurance mechanisms and product design, as demonstrated by its reduction in complaints and increase in compliments. 

      Right now, on social media, the Tax Office has received significant positive feedback, which was not always the case.

      So as I have said, the challenge remaining for the agency is to engage with taxpayers early, before issues become disagreements and then disputes.

      Engage with taxpayers often, learn from the exchange, from the feedback and from complaints and, when a dispute arises, be prepared to identify opportunities to engage early in alternate dispute resolution and keep the lines of communication open.

      That means there is a corresponding obligation on the part of taxpayers and their professional advisers to also maintain calm, clear and constructive dialogue with the ATO. 

      The Ombudsman and cross-agency issues

      One of our strengths is the ability to gather intelligence from individual complaints and objectively analyse it to form a cohesive message about strength and weaknesses in an agency’s administration, and in public administration as a whole. 

      Our position and role means we can help agencies learn from the experiences of all agencies in our jurisdiction. For example, lessons learned in relation to the complaint-handling practices of the Australian Securities and Investments Commission and the Tax Practitioners Board can be applied to other agencies, such as the ATO. 

      Because of our position we are well placed – and I believe uniquely placed – to deal with cross-agency issues. 

      Sometimes it’s not just about tax. Because the ATO has a tax, transfers, superannuation and business-register role, there can be flow-on effects when problems occur in the ATO space. 

      For example, serial non-lodgers of income tax returns may be avoiding child support assessments, and this could also have Family Tax Benefit consequences for ex-partners who are often powerless to rectify the problem. 

      Because these impacts can be obscured by the cross-agency interactions, we have an important role bringing these issues to light, especially because complainants often tell us that they feel like they bounce between agencies with neither willing to take responsibility for their complaint. 

      We also encourage agencies to see complaints as “a river of gold”- that is, to see the value in complaints, so that they inform the development of future products and services to clients. 

      In this way we also encourage agencies to stop wasting energy “swatting flies”, but to instead make meaningful improvements to their products and services to avoid future complaints. 

      This is especially relevant in light of an ANAO report that indicated it costs an average of $611 every time someone makes a complaint to the Tax Office. 

      In the past few years the Tax Office has made a number of improvements to its complaint handling and, as I mentioned, we have seen a reduction in the number of complaints we receive. 

      But we believe there is still more work to be done – especially because the world is not standing still. 

      The landscape is changing quickly for Australian Government agencies. Citizens have become more actively and directly involved in monitoring public authorities and in demanding better policies and practices. 

      This is aided by the expansion of information and communication technologies. People increasingly want to be able to communicate electronically with government agencies and want – and expect – immediate answers to their questions. 

      Against this background we are seeing a reinvention of the ATO – a changing of its culture, putting the client first, and providing more contemporary products and services. 

      Key changes include: 

      • moving from a high-touch to a low- or no-touch service to reduce the complexity of compliance 
      • using the myGov website as a single entry point for key government services  
      • releasing apps and launching interactive online tools. 

      These changes have been well received by large groups in the population and there are undeniable efficiencies in making them. However, what is a welcome change for some can be challenging for others.

      For example, the ATO’s decision to no longer provide paper forms through newsagents in an attempt to encourage more electronic lodgement led to complaints to my office about accessibility. 

      Some people do not have access to a computer or the internet, or believe they have been discriminated against due to their lack of computer literacy or accessibility. 

      Let me give you two examples: 

      • Case 1: Mr  did not have internet access/ He was dissatisfied with the ATO’s response to his complaint about paper forms no longer being available at newsagencies as, although it also provided him with options to contact the ATO by phone or at an ATO shopfront, it directed him to use e-tax (which requires internet access) or to obtain the paper products online (which again requires internet access).
        He believed he was being discriminated against for not having access to the internet. 
      • Case 2: Mr H complained that he experienced “extreme difficulty” lodging his tax return because he had cognitive problems and was computer-illiterate. He experienced difficulty ordering paper forms when he tried to do so both online and over the phone, and was eventually sent the incorrect forms.
        It took about three months longer for him to complete his tax return than it did when he could get the paper form from a newsagent. 

      The big change for taxpayers this year has been the use of the myGov system to deliver prefilled tax returns. 

      We prepared to receive complaints as a result of the change, but in fact we have received a very small number of complaints about the myGov system – so far only 10. 

      The complaints related to difficulty accessing myGov, and some people were unhappy about the need to establish a myGov account to lodge a return. 

      Tax time of course is a very busy time for the ATO, but it is also a busy time for us.

      With so many taxpayers contacting the ATO and lodging tax returns over a short period, problems can arise despite prior planning and system testing by the ATO. 

      These problems can lead to complaints to the ATO and, if unresolved, to the Taxation Ombudsman. 

      This year we are trialling the use of Facebook as a means to provide up-to-date information about Tax Time 2014 from the Taxation Ombudsman’s perspective

      We have also published information as frequently asked questions on our website. The information addresses common complaint issues and typical causes. 

      We find that a better understanding of the processes followed by the ATO can help to manage people’s expectations and often avoid the need for a complaint. 

      The issues around government online services are not unique to the ATO. As more agencies take up the Government’s digital initiative, my office is seeing more complaints. 

      Our aim is not to unwind or undo the whole-of-government digital initiative – it’s a great idea! 

      But it is our role to take the information gathered from complaints and feed it back to the Tax Office and others to give voice to individuals (particularly the vulnerable) affected by big service-delivery changes. 

      Own-motion report into complaint handling 

      There is one final thing I’d like to mention before I finish. 

      Our office is about to release a report from an own-motion investigation into complaint handling in Australian and ACT Government agencies. 

      The report will be the most comprehensive snapshot of Commonwealth complaint handling that has ever been done. 

      Our investigation had three main strands: 

      • to describe the existing state of complaint management, which will provide us with a benchmark into the future 
      • to analyse what is not working and why. This will allow us to identify high-risk areas and trigger points 
      • to revise our Better Practice Guide, setting out the principles of good complaint handling and what an effective complaint handling system looks like and needs to have. 

      The report will be available to agencies by the end of this month, but I’d like to share some of our broad findings with you now. 

      Our analysis of the survey results is mostly qualitative, but it still paints a good picture of what is important when looking at complaint handling. 

      In our survey we asked agencies whether they thought the quality of their complaint handling had improved or deteriorated. 

      Not surprisingly, no agency admitted to having worse complaint management than they did five years ago. In fact by far the biggest group thought the agency had improved markedly in the past five years. 

      Even allowing for a bias towards positive self-reporting, this shows complaint management tends to be included in organisational continuous improvement. 

      Agencies were asked what elements contributed to improved complaint management. 

      Improved processes was the most common reason, which was not unexpected.

      But the second cause for improvement was less expected; not because it isn’t important but because we didn’t think it happened that much: senior leadership support.

      Senior leadership support is vital for organisational changes, particularly cultural changes such as creating or fostering a culture that values complaints. 

      In our survey we specifically asked who the senior management owner of the complaints process was. Fifteen responses nominated the Chief Executive Officer or Commissioner, 58 indicated a Senior Executive Service level officer, and a further 10 stated it was a manager. 

      Even allowing for discrepancies in position titles, the responses show that complaints processes are commonly the responsibility of senior officers. 

      The other critical element the report shows are the challenges that still exist. Most agencies we surveyed deal with vulnerable or marginalised sectors of our society. 

      It is vital that vulnerable people are considered in the design of complaints process because they are more likely to fall out of the machinery of public administration. 

      Problems with access, literacy, mobility and understanding lead to greater difficulty in accessing public services, or a greater likelihood of falling foul of regulatory authorities. 

      The natural tendency is for public sector organisations, with limited resources, to focus their attention towards the greatest good for the greatest number, with fewer resources devoted to those who are more problematic and need more intensive support. 

      But the role of a good complaint system is to act as a safety net and put people safely back in the system with no loss of entitlement, and with a minimum of stress to all concerned. 

      However, this process is made more difficult by the very attributes that make it more likely that people will have a complaint in the first place. 

      It is therefore critical that a complaint system places a great deal of emphasis on being accessible to vulnerable groups, even where this level of accessibility is unaffordable across the broader organisation. 

      Our survey uncovered – or confirmed – four key aspects to providing flexible complaint handling systems. 

      First, you have to remove the barriers. Reaffirming the right of a client to complain, and making a public statement of your organisation’s commitment to that right, is not merely words. 

      Second, make lots of channels available. People want to choose how to interact. 

      Third, assist people through the process. Five organisations stated specifically that they took action to modify the complaint process to meet special needs.

      For example, the ATO advises that it can meet complainants face to face if necessary, at a location convenient to the complainant, and outside their offices where required. 

      Finally, and perhaps most importantly, build a culture that supports complaints. One of the main influences on best-practice complaint handling is fostering a culture that values complaints. 

      Good complaint management requires individual staff members to identify and support complaints, which in turn requires those staff members to see complaints as valuable and to know that dealing well with complaints is an important part of their job.

      Conclusion 

      The ATO is well advanced on its journey to improve its complaint handling and dispute management processes. But of course there is more to be done. 

      The Ombudsman’s office will continue to play a role in helping it to improve. 

      Thank you for listening and I wish you all well for the remainder of the conference. 

      1 ATO submission July 2014, page 7, What is a tax dispute? 

      2 Hearing 14 Aug 2014. Hansard page 6 - opening statement 

      3 ATO submission July 2014, page 9 paragraph 24 

      4 ATO Annual Report 2012-13 Part 2 Performance reporting – Income tax disputes in 2012-13 

      5 ATO Annual Report 2012-13 - Resolving Disputes, page 57