Give Tax a break for a Change
Considering the circumstances the Australian Taxation Office's (ATO) Change Program has been operating in over the last few years, it really hasn't been going too badly.
Yes, there have been budget run-overs to the extent that the new Change Program spend is expected to be around double the planned costs from 2004. Yes, it should have been finished in 2008 not 2011. But the office has also had to deal with the government changing the taxation rules every single year, which has had the agency bouncing on its toes trying to keep up-to-date — with quite legitimate funding increases to pay for it.
Of course, there were also budget increases where there were no direct lines to the legislation costs, which is easy to criticise. Yet to really be able to stick it to the agency for these increases, there needs to be some horrendous error on its part which occasioned the budget inflation. I can't see what that is.
Some might suspect a bad relationship with key program partner Accenture for the increases. However, Second Commissioner of Taxation David Butler said that the relationship was positive and responsibilities were clear when they needed to be.
Others might say it was the fault of bad governance. But I don't get the feeling there's a lack of oversight on the project. The Change Program's steering committee was scheduled to meet today and will meet again later this month, all to make sure the next release — set to be the income tax upgrade, the big one — won't go ahead unless the office is ready for it.
David Butler
(Credit: ATO)
The agency is also very aware that everything it is doing on the Business Activity Statements release might be changed by the government's response to the Ken Henry review and not rushing the design so as to try and minimise what it has to do twice.
I'd say the problem causing the delays and cost hikes is more likely the scope of what the office has been doing and the myriad of other jobs it has on its plate, as mentioned in the ATO's annual report for 2007-2008:
Post-budget assessments indicate that we will continue to experience considerable pressure on the delivery of our information technology systems in 2008/2009. This reflects our significant work program, including implementing the government's tax policy changes, our own internal business process improvement program (the Change Program) and our contribution to whole-of-government improvement initiatives... Software developers face similar pressures to update products that support taxpayers and their agents to meet their obligations or to access benefits.
If the Australian Taxation Office has been guilty of anything, it's been a surfeit of optimism. Certainly when it set its original timetable and costing it was "ambitious" as the audit office said in its recently released review of the program.
Yet the auditors seemed to find it a tough ask to find things to criticise about the program, only releasing four fairly general recommendations, most of which, if you listen to the ATO, were either already implemented or weren't really applicable. The audit office has also admitted that although delayed, benefits had been realised from the part of the Change Program which has been done.
Maybe, as the audit office says, the ATO does need to count its costs more carefully and make sure the lines are clearly drawn where Accenture is concerned. But my opinion is that the ATO's transgressions are fairly minor and that, despite the costs, the Change Program will have been worth it.
The ATO employed 22,429 people at 30 June 2009. It had an operating expenditure of $3 billion. It collected $264.5 billion in net cash, provided over $17 billion in transfers and payments, and collected around $41 billion in GST for state and territory governments.
All this was being put at risk by out-of-date IT systems. An excerpt from the audit report said:
By 2000 it was clear to the Tax Office its ICT systems were unsustainable. It was taking too long to respond to government policy initiatives, the community was getting less efficient service and Tax Office staff were finding reduced capability in the Information Technology (IT) platform. In addition, the Tax Office had been aware for some time of inefficiencies in the ICT systems on which the administration of Australia's taxation and superannuation systems depended.
If the ATO's tax systems fall in a legacy heap, the whole country will stumble. Yes, the project being late will cost us money and delay benefits. But, considering that it doesn't seem the ATO has been guilty of gross incompetence, how much would it have cost Australia's tax system if it had done nothing?