Commissioner of Taxation Chris Jordan, AO
Address to the National Press Club of Australia
21 February 2024
(Check against delivery)
Introduction
Good afternoon. It’s a pleasure to be here.
Although I do approach this speech with some trepidation as the last time I spoke here 7 years ago, I was sued for defamation. But I can’t tell you what happened with that as the lawyers said to simply refer you to Justice White’s judgment in the Federal Court.
And I was going to do a humorous line here about some of the other challenges I’ve faced in my 11 years as Tax Commissioner – the death threats, defending allegations of contempt of the Senate to avoid jail time, Paul Hogan calling me a ‘boofhead’. That sort of thing.
But apparently even that can be considered too forthright for a Tax Commissioner. Imagine. Sued for defamation for giving away too much information and censured by the Senate for not giving enough.
It’s a constant balancing act, but as my partner, a journalist, often reminds me – you’re the Tax Commissioner, what do you expect? Well, none of us knew what to expect when I took this job in 2013.
I was the first ‘outsider’ to ever run the Tax Office. It was considered quite ‘radical’ when former Treasurer Wayne Swan appointed me – not just because, as he said, who better to run the Tax Office than a 6-foot 6 ex-copper? I think it was the fact I was not a career public servant, I lived and stayed based outside the ‘Canberra bubble’, that allowed me to radically transform and modernise the ATO over the past decade.
Of course, I did it with the help of a fantastic team. We all had the goal of making the system better for everyone.
Better for our 20,000 employees – in the recent APS census, 79% of our people would recommend the ATO as a good place to work. That’s much higher than any other large agency in the public service.
And better for the more than 13 million taxpayers. In a 2022 survey of 12,000 Australians by the Department of Prime Minister and Cabinet the ATO was named as the most trusted federal agency in the Commonwealth – 81% trusted us. And interestingly, we also had the highest satisfaction rating at 82%.
And we’re the ones that take money from people!
And we’ve even made it better for the international tax system. Our results have not just been transformative here in Australia but globally the ATO is recognised for leading the way especially when it comes to dealing with multinational tax avoidance.
The resource and tech giants are now paying billions more tax overseas and here – some for the first time ever.
After the Panama Papers dropped it was Australia who encouraged countries to act quicker and more collaboratively and this has permanently transformed international tax cooperation.
And key to all this has been the digital revolution within the ATO – and I just want to give a comparison to show how far we’ve come.
Everyone’s heard of the United States’ Internal Revenue Service – the IRS. What you probably don’t know is that they still process tax returns by paper. Picture this: billions of pages of paper stored in enormous warehouses.
CNN reported this manual processing involves steps like removing paper clips and staples and another step involves manually entering each digit from the form into the system. Then re-stapling it all back together. I understand they’ve only just started scanning returns!
Compare this with Australia. Our online tax return lodgment service for individuals is a great example. In 2013, 2.7 million people lodged online through e-tax (which was the predecessor to our current service myTax). Fast forward to 2023, this has more than doubled to 5.5 million. It now takes around half of taxpayers less than 15 minutes to prepare and lodge their tax return! And without a stapler in sight!
If you consider what I’ve just described and how tax returns in Australia are processed in 2024, you can see why the ATO is in demand as a source of advice globally.
Changing course
Looking back, my journey has certainly been less than traditional.
I briefly kicked off my career in the police force, before switching to degrees in law and commerce.
I worked at accounting firm Arthur Andersen and then spent some time in academia at the University of Technology Sydney, before joining KPMG in the 1980s, where I stayed until mid-2012. Along the way I was also an adviser to both Labor and Coalition governments.
Having roles in the private and public sector prepared me for leading the ATO – especially an ATO better attuned to the community’s needs.
A job I had never envisaged. Though I must admit I was as surprised as anyone that I ended up here. When the former Secretary to the Treasurer, Martin Parkinson, approached me on behalf of Treasurer Swan about becoming the Commissioner of Taxation, initially I just laughed! Obviously I took it seriously in the end and I knew it wouldn’t always be smooth sailing.
The brief was to make real change to the ATO; to make it less rigid and isolated – and more in touch with the community’s needs and expectations, to focus on helping people get it right, not just catching people who did the wrong thing.
My private sector experience gave me hands-on understanding about how difficult the ATO could be to deal with, especially when the focus was on processes, rather than outcomes.
Within months of commencing and speaking with some graduates, I discovered our people were bogged down in outdated and redundant manuals which in turn negatively impacted the experience of our clients.
There was a ‘practice statement’ about how to apply sunscreen using approximately one teaspoon per exposed limb. And also, one about how to drive a car saying if you come across a bushfire try to do a U-turn.
In all seriousness, you can imagine what sort of culture this creates and I started by removing 3,000 pages of these pointless instructions for our people.
My mission was to transform the organisation, and I had a mandate from the Government to do so. This marked the beginning of our reinvention journey.
I remember pondering the enormity of the task ahead of us, which certainly wasn’t helped by comments from my friends at weekend barbeques. “It’s a huge ship” they warned me. “You’ll struggle to turn it around, let alone keep it afloat! – are you crazy?”
In moments of uncertainty, I reminded myself of what I had control over – my leadership style. My main message to our people was to be part of the solution – not part of the problem.
Over the years, I’ve also relied on this approach when partnering with the tax profession to solve irritants and deliver the best outcomes for them.
A decade later, I can confidently say the ATO has made significant progress towards our vision of being a leading tax, super and registry administrator, recognised for our contemporary service, expertise and integrity.
How? By emphasising and prioritising a culture where we don’t, and won’t, accept the status quo.
We’ve successfully chartered a massive program of transformation, we did it all in a deliberate and considered way, and we did it all ourselves – without paying millions to consultants.
Over the past 11 years we have demonstrably:
- improved the client and staff experience
- made it easier to comply and harder not to
- cut red tape, and
- modernised our administration of the tax system, as part of the digital revolution to make ‘tax just happen’.
All while operating in a rapidly changing environment.
Post-COVID, we’ve seen a rise in fraud and debt.
Increasing safeguards and resetting our debt collection approach are not always popular decisions, however I am unapologetic about our focus. We have a job to do.
When you pay GST to a store or see the tax taken on your payslip, you rightfully expect this has been paid on to the ATO. Likewise, you expect your super has been paid to your super fund. Some businesses are telling us that they’ve collected GST and withheld tax from your wages and promised to pay super but they haven’t paid it on. We cannot allow that to stand, especially super for their employees. I think you and the community would agree that we cannot allow people to live off money that’s not theirs.
Meanwhile, the risk of sophisticated fraud attempts through the increase in enormous data theft, will only continue to grow.
We are working to harden our own systems and are putting measures in place to help people protect themselves.
I’ve been asked many times what keeps me awake at night and my response is always ‘cyber security’. We hold about 50 petabytes of data, equivalent to 1 billion tall filing cabinets.
Our Security Operations Centre and advanced systems monitor, detect and respond to cyber threats facing the ATO. On average, we defend against 4.7 million attempted cyber-attacks each month targeting our websites, services and infrastructure.
And, while we navigate these challenges, we have to keep pace with technology, while continuing to innovate and expand our use of data to drive digitalisation.
However, I’m not under any illusions the ATO of 2024 is perfect.
In 2017, I shared my intentions in this room of making a good system better. It wasn’t about some silver bullet or simplistic reform, but about significant reforms to make our system and administration stronger, fairer and more contemporary.
As opposed to when I first started, where people told me I was faced with an impossible task, I now hear stories about the relative ease of interacting with us, and the community’s trust and confidence in our professionalism, reliability and fairness. It’s refreshing and reassuring.
Meanwhile, importantly the ATO now looks outside the APS when assessing our own performance. I see a future where the ATO is considered the best when compared with any organisation interacting with a large and diverse client base, anywhere in the world.
The system today
I recently dusted off the ATO Annual Report from 2013 and over the last 10 years much has changed.
The number of small businesses has increased from 2.5 million to 4.6 million. The gig economy has created whole new sets of small businesses such as ride-share drivers and social media influencers that carry with them whole new concepts of what a small business is. The number of wage and salary earners who are also deriving income from a business has increased as well.
The Sharing Economy Reporting Regime is a new reporting requirement for sharing economy platforms. The data collected will help us assist taxpayers to know, comply with, and pay their tax obligations, levelling the playing field.
A couple of months ago, we launched our refreshed website, enhancing navigation and improving search. To give a sense of the scale, ato.gov.au is one of the largest and most accessed Government websites in Australia, with over 40,000 pages and over 115 million visitors annually. The Mandarin reported we updated our website and no one really noticed. This is a good thing! My favourite quote is: “any major government customer-facing website that can flip its entire content management system without significant initial blowback puts similar corporate overhauls in the shade.”
Looking at our core function of collecting the revenue that all Australians rely on – since 2013, we’ve reduced the cost of collecting every $100 of tax from 91 cents to 54 cents.
What hasn’t changed over the years is our commitment to building community confidence by improving tax performance. Making sure the largest taxpayers in Australia pay their fair share is a great place to start.
When I said ‘Enough is enough’ in my Senate Estimates opening statement in 2016, I meant it. I said we would not be stooged by multinationals and we now have the capability to go toe to toe with the best advisers in the world.
The same year we established our Tax Avoidance Taskforce which has secured around $30 billion in additional tax revenue from multinational, large public and private businesses. More importantly, we’ve locked in future tax performance, by requiring companies to agree to the tax treatment of their operations.
Apple, BHP, Chevron, Facebook, Google, Microsoft, ResMed and Rio Tinto have all publicly acknowledged finalising disputes with the ATO.
These are landmark victories. The size of these successes for the benefit of all Australians are without precedent in the history of the ATO.
And our efforts are paying off. During my tenure, I’ve witnessed a considerable shift in the attitude and behaviour of multinationals and large corporates. Our world-leading assurance programs have fundamentally changed taxpaying behaviour.
More and more companies are improving their tax compliance and governance arrangements, with being a good taxpayer increasingly a key aspect of their social licence to operate in Australia.
We use tax gaps to draw insights into taxpaying behaviour. Tax gaps estimate the difference between what the ATO expects to collect and the amount that would have been collected if every taxpayer was fully compliant with the law. The tax gaps act as our annual ‘health check’. No other country publishes such comprehensive estimates.
Our latest estimates prove that when larger taxpayers do the right thing, it positively influences others. A 1% overall reduction in tax gaps may not sound like much, but it reflects more than $5 billion in tax per year available to support the Australian community.
Looking at the tax gap figures for large corporate groups, we are operating at 93% willing tax performance, with 96% after compliance intervention, which is world leading. The reality is, no tax system has, or ever will have, zero gaps. It’s our role at the ATO to keep chipping away at them, with even small gains delivering large value for the community.
Our tax performance program has helped us move away from a ‘gotcha’ mentality to a preventative mindset; shifting our focus away from audit yields to improving tax performance. This sets us apart as a leading tax administrator globally and shapes our future approaches.
Today, we’re announcing at the Self Managed Super Fund Association National Conference for the first time, the estimated size, scale and trajectory of the illegal early access of funds from SMSF accounts. In 2020 over $380 million was illegally accessed from SMSFs and $255 million in 2021. This needs to stop. Super is for retirement. If people are experiencing genuine hardship, there are rules in place for when you can legally access super to help.
I want to make this clear: we don’t ‘set and forget’ when it comes to managing compliance. From multinational tax avoidance to SMSF trickery – we try to be ahead of the game.
The final destination
Our journey is far from over and I’m confident I’m leaving the ATO with strong foundations built through contemporary service, expertise and integrity.
The next part of the ATO’s journey will include being fully digitialised by 2030.
This means we’ll offer real-time tax reporting and payment information; where data will flow from taxpayers’ natural systems to ours, without any extra effort or intervention from them.
We know the community expects all taxpayers to pay the right amount on time and we know the majority do. That’s why we put so much effort into making it easier for people who do the right thing and harder for those who don’t.
Looking further afield, unlike many revenue authorities around the world, we do not have criminal investigation powers. This means we rely on others, such as the Australian Federal Police, to be able to do our job. Unfortunately, this also means we have to get in line with their priorities.
I would like to see more alignment with our counterparts across the world.
The majority of revenue agencies including France, Germany, New Zealand, the UK and even our mates in the IRS with their staplers are authorised to obtain third-party documentary information and conduct searches to obtain necessary evidence.
Conclusion
There is always more work to do. As I stand before you reflecting on my time at the ATO, the words transformation and trust echo in my mind.
And nothing encapsulates the essence of that better than in March 2020. Everyone else was in lockdown. I was the only one driving across the deserted Sydney Harbour Bridge and through the empty city streets, having been called for an extraordinary Sunday night meeting.
A meeting about the multi-million participant and multi-billion dollar pandemic projects – JobKeeper, Cash Flow Boost and Early Release of Super. That night, the Expenditure Review Committee wanted immediate assurance the ATO could deliver what was required, within 6 weeks. With trust in our people, I fronted up and confidently (and somewhat nervously) stated, “yes, we can”.
The government entrusted us to deliver vital stimulus to Australians. This wouldn’t have been possible without immediately and almost overnight redeploying 5,000 of our people from their usual roles to help deliver $164 billion in financial support for Australians when they needed it most.
I know I ‘bang on’ about trust but it really has underpinned our transformation. Trust from government, trust from the community, trust from tax professionals, and trust from our people.
It’s been a privilege to lead a workforce of 20,000 motivated and diverse people who achieve excellence daily, and to serve a community that relies on our commitment to excellence.
So… here’s to the transformation, the trust, and the ever-evolving story of tax. We’re in this together for the benefit of all Australians.
Thank you. And I now welcome your questions.
