The Tax Office administers a range of revenue legislation including income tax, GST, excise and superannuation, which generates 89 per cent of Commonwealth Government revenue and about $35 billion for the States and Territories. Less publicised is that we also provide benefits of about $4 billion to the community.

The Office has about 22,000 staff at around 60 locations around Australia. We interact with just about every segment of the community. There are fairly high annual volumes of phone enquires (11 million), returns for processing (14 million income tax returns and a similar number of activity statements), and debt collections (1.4 million for $52 billion).

Major tax reform was announced by the Government in 1997. It was introduced primarily in 2000/2001 with the GST, the Australian Business Number (ABN) and a series of business and personal tax reforms. Three years might sound like a reasonable period to plan and deliver, but for more than half that period the Government was defining and negotiating what the actual reform was going to look like, so the period for implementation telescoped down fairly dramatically.

In hindsight we can see that, partly because of the ‘telescoping’, but also because of some things we just did not anticipate, our consultation processes were not fully up to the job. Our systems were outdated and fragmented, and we implemented the program internally in a quite devolved style. We had, perhaps, not appreciated how difficult it was going to be to bring about a major reform or change with that sort of fragmentation.

At one level we succeeded – all policies were delivered on time and the revenue came in – but some of adverse consequences started to manifest themselves in 2001 and 2002, particularly amongst the tax agents and business community. This is evident from some media reports of the time.

Basically tax agents said ‘if things do not improve in terms of our experience of the administration, we will stop dealing electronically with the Tax Office’. They knew this would cripple our activities. Suffice to say we were building up a pretty significant set of issues around 2002 which we had to respond to.

So we took a step back and commenced the ‘Listening to the Community’ initiative. This took about nine months during 2002. We listened not only to our client segments – individuals, business, large business, small business – all of whom had some very different perspectives and priorities – but also to our staff. This involved surveys, user clinics and focus groups, and testing prototype products at creative retreats with Tax Officers and the community.

A question often asked is whether the sort of change we subsequently embarked on is best managed from the top down or the bottom up. There is no doubt that establishing the strategy and implementation I will describe later has been driven from the top down, otherwise it would not have worked at all. However if we had not had the bottom up ‘listening’ step first, so that we could distil an agenda to address both client and staff concerns, we could easily have missed the mark.

We distilled many messages and priorities from the listening initiative. I will use an example from the tax agents’ feedback. One of the things they wanted was more detailed and on-line access to the information we hold on their clients. It became obvious that we had to do something about that issue. I will mention later how the tax agent portal, which allows tax agents to access their clients’ information directly from our systems, has been the single biggest benefit to that segment of the community.

Suffice to say we got real benefit out of the listening exercise, and the findings are still a major driver of the current program.

There have been other drivers for change as follows: