Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Standing Committee on Tax and Revenue, I present the committee's report entitled 2018-19 Commissioner of Taxation annual report, together with the minutes of proceedings. I seek leave to make a short statement in connection with the report.

Leave granted.

I have often said in this place that tax collectors are not the most popular people in the world. Indeed, the Bible records that, when Jesus was asked to find the lowest of the low to show the populous of the Roman Empire that we should be forgiving of all people, amongst those most hated were tax collectors that he invited into his home for dinner. We, I am happy to say, on the House committee for tax and revenue find tax collectors in Australia to be very pleasant individuals who we would happily have dinner with at any particular point in time.

We have over the last two years faced enormous challenges in this country. Literally, at one point we thought that we would see most of the economy fall off a cliff. In that moment this parliament, this government and the people of Australia relied more than ever on the Australian Taxation Office to deliver payments to people who were most in need of them in an efficient and effective way that ensured that it was not to be abused in the long or the short term. This is something that very few other nations have the capacity for and the ability to do and to rely on. We take many of our bureaucratic functions in this country for granted. Indeed, we are very good at, from time to time, being abusive when it doesn't go our way, but the Australian Taxation Office showed in this moment and at that time both the importance of investing in these institutions and the bureaucracy that allowed us to move from one side of that crisis to the end of that crisis. Warren Buffett says that you should criticise in general and thank specifically. I don't have time to thank all the people in the Australian Taxation Office who made this possible, but I would like to note the leadership of Chris Jordan, Jeremy Hirschhorn and Melinda Smith in achieving this magnificent outcome.

The report that I have just presented to the House makes a number of recommendations which I would like to note, but there are three that I would like to note very quickly. The first is the Australian Business Register. This is a critically important piece of infrastructure. If implemented properly, it could see the end of phoenixing in this country and the end of abuse of people who have no opportunity or recourse to the court system to ensure that they can have their debts paid. Our report urges the federal government to go further than it already has on this and look at implementing blockchain as the underlying infrastructure for those registries, in ensuring that we have world-best outcomes that will enable all sorts of people to undertake data analysis to ensure that phoenixing doesn't occur.

The second is the Australian Charities and Not-for-profits Commission. The deputy chair, the member for Parramatta, was intimately involved in the establishment of this commission, so I bow to her greater knowledge. But during the inquiry what we found was that there are a number of organisations that sit within the ACNC, such as the Catholic school system, who are already heavily regulated by a number of other bodies. The inquiry queried not so much whether they should or shouldn't be regulated by the ACNC—my personal view is that they shouldn't—but what level of regulation they have while we have other charities which are fundraising for noble causes but where the people giving those charities money take that on trust. We have too many charities in Australia whose cost-to-income ratio is above 90 per cent on marketing and administration, and that is not what people believe that they are giving their money to when they donate those things. So a better allocation of resources by the ACNC may see a major improvement in that sector.

It was the Emperor Diocletian, who saw the decline of the Roman Empire, who said that civil liberties are adjusted to tax systems; tax systems are never adjusted to our civil liberties. Our tax system has too many disputes, it is too complex and it is too difficult for ordinary Australians and small businesses to navigate. This report makes some very specific recommendations around the implementation of a taxpayer advocate similar to that in the United States: a person who sits and is embedded in the tax office to represent the interests of ordinary Australians in how the tax system is administered. The Inspector-General of Taxation has done an excellent job. Her role needs to be upgraded, and her role needs to include sitting in the board meetings and management meetings of the ATO. We have seen in the US that the implementation of a taxpayer advocate has led to the cost of collecting tax declining, has seen trust in the tax system and the administration of the tax system go up, has seen disputes fall and has made it possible for the United States government to administer their tax system in a more efficient and effective way, and I suspect it has also had the result of better and more effective tax regulations coming to the fore in the United States, as people were able to take into account what was going on where the rubber meets the road at the coalface of the collection of tax, rather than the sort of ethereal principle that we can sometimes talk about in this chamber.

The importance of the taxpayer bill of rights also should not be underestimated. You can't have a taxpayer advocate unless ordinary Australians have a bill of rights that they can find themselves relying upon. In Australia at the moment, the onus of proof for a tax debt lies not on the tax office, not on the government, but on the individual. This is onerous and unfair and reverses all the principles of common law that we understand and know. That needs to change, and a bill of rights should enshrine that. The second thing that most Australians will be surprised to hear is that, once the tax commissioner decides that they owe the tax office money, that debt becomes payable even if it is in dispute, even if it is in front of a court being argued about. That needs to change as well. A debt should only be payable once it has been confirmed by all the proper rules.

The truth is that Emperor Diocletian was right. It is the role of this chamber to ensure that our tax system adjusts to the civil liberties of ordinary Australians and not the other way around. I commend the report to the House.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

by leave—I'm really pleased to stand and speak on this report. It is an important one. As the chair has said, there are a number of recommendations in this report that ask the tax office to go further in a range of areas. But, before I go to that, I just want to add my voice to something the chair said, and acknowledge the work that the ATO staff have done over the last little while, not just during the COVID pandemic but before that. They are an institution in this country that has done remarkable work over many, many years. The last decade has seen extraordinary challenges as the world has changed and extraordinary opportunities as technology has made it possible for them to rethink entirely the way they interact with the general population. These are extraordinary times for any organisation. During these extraordinary times we've seen them also take on the Australian Business Register, the Australian Charities and Not-for-profits Commission and the super clearing house. They have undertaken a digitising and streamlining process. They've introduced online tax professional platforms, Single Touch Payroll, activity statement financial processing, greater tax compliance and less tax avoidance, a training program for small business.

Then of course came the COVID pandemic, and they were doing early release of superannuation, JobKeeper—extraordinary additions to what was their workload a decade ago, and, in many areas, the world was changing so fast and the opportunities and the possibilities were changing so fast that it wasn't really possible for anyone to be in front of that, particularly people that work in an institution that has to be as precise as the ATO. They did a really clever thing early on with their practitioner lodgement service, which allows software vendors and digital providers to sit on the back end and allows taxpayers great flexibility in the process that they use to engage with the tax office. That's a possibility that needs expansion, by the way, because, as the world changes and, around the world, the technology becomes more interesting and opens up more opportunities, we in this country want to be leaders. We want our software and software vendors to be leaders in finding those solutions for the full range of taxpayers, being there on the front line and exporting to the world. And congratulations to the ATO for what they've done there.

There is one paragraph in this report that I want to come to next, and this is a statement made by the Inspector-General of Taxation. It is referenced on page 13:

The IGTO noted in its submission to the Committee that while the ATO has had its functions extended over time, its workforce has experienced the opposite fate. The agency's 2018-19 annual report noted a reduction in the number of employees, both ongoing and non-ongoing, of approximately six per cent over the reporting period.

So, while we had this extraordinary increase in opportunities and challenges, we had a reduction in the resources that the ATO had to apply to this extraordinary time that they find themselves in. The chair is also right that this chamber is responsible for the vision that the ATO follows. This chamber—government specifically, but all of us in this chamber—forms part of the process that guides the ATO and ensures the ATO has the resources it needs to be a world-class leader in change management for the change that is taking place right now in our tax systems right across the world.

You have to remember that we have a tax system essentially that began in the agrarian age. A monk developed the accounting year, which was perfectly fine before you had industrial equipment and depreciation, perfectly fine when you had an annual thing. Christmas decorations would work under the same process. Then suddenly we had capital equipment, so we had depreciation. Then suddenly the business cycle wasn't a year, so we had loss carry-back, and we added to it. Then we had multinationals. Things changed. We had business. We had PAYG. Now we have contractors. The world has changed so much. We've added bits and pieces of tax law to make it work, until the tax act is like this. The chair is right: there are processes we could find that would simplify the law for sections, and that process that the ATO introduced that allows software vendors to develop software packages specifically for different sectors of the community is really important in helping to make that happen. But we are at an extraordinary time and I'd say again that, whether we're talking about multinational tax avoidance or compliance generally, there is much greater role for this chamber in providing the vision and the resources the ATO needs to lead. It is an organisation that has some amazing people and they are capable of much more than they are doing. Again, when they read this, they will probably notice that most of our recommendations ask them to do more. And, every time we ask them to do more, we then ask them to verify it with data, which means they have to do more to verify that they did it. They face quite a challenge at the moment. So we need to make sure that, if we ask them to do things, we in this chamber are standing with them and ensuring they have the power and the resources to do it.

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

I move:

That the House take note of the report.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The debate is adjourned. The resumption of the debate will be made an order of the day for the next sitting.