Xenophon pushes ATO on Change Program

Independent Senator, Nick Xenophon, has successfully pushed a motion through the Senate calling on the Australian Tax Office (ATO) to allow its staff to talk freely to the Inspector-General without fear of recrimination.

In April, the Federal Government called on the Inspector-General of Taxation to review the ATO’s income tax IT system upgrade in the wake of public complaints over processing delays.

In a statement at the time, assistant treasurer, Senator Nick Sherry, said he wanted the review of the Change Program to cover off all bases.

The Change Program is the ATO's wide-ranging reform program that will see it migrate away from more than 180 legacy and paper-based systems to a single, integrated core IT system.

According to Sherry, this would include the impact the Change Program has had on taxpayers and their representatives, if internal effects have been felt, and whether resources have been allocated appropriately.

Xenophon told Computerworld Australia it “is important to get to the truth of what has occurred”.

"It's important that people be able to talk without fear of recrimination, without fear or favour,” he said. “This is calling on the tax office to say that if anyone comes forward to the Inspector-General, there will be no recriminations against their employees in respect to this."

For its part, an ATO spokesperson said the agency was committed to assisting the Inspector-General with the review.

"Anyone can make a submission, including tax officers, and we would not seek any recrimination against staff who choose to make a submission to the Inspector-General," the spokesperson said. "We do, as usual, expect tax officers to abide by relevant laws to keep individual taxpayer information private."

The ATO also told a Senate committee that an expansion in scope as a result of new superannuation laws has been the root cause of the current IT-related problems.

Speaking at the hearing, ATO Second Commissioner, David Butler, put forward the argument that the work on the ATO’s new $400 million IT system was both necessary – as a result of ageing legacy systems – and subject to scope change during its six-year history to date.

“When work began in 2004 we weren’t able to anticipate what would happen every year -- the increase in time and scope as the result of law changes,” he said at the time. “The law has changed. Superannuation changes added time and cost to the overall work.”

Butler said he was pleased with the work done to date, citing the successful roll-out of income tax system components which had involved the conversion of 32 million accounts from an older system.

In January, that ATO announced it would go ahead with the upgrade of its IT systems and followed up with reports of smooth sailing one week into the upgrade.

The upgrade had previously been described by Butler as the biggest in the agency's history. It decommissioned the National Taxpayer System (NTS), which had been in use since the early 1970s.

In its place, a new income tax processing system is supposed to extend the ATO's "integrated core processing (ICP) system to income tax and higher education loan accounts (HELA)".

Since its inception the Change Program has been hit by delays and budget blowouts, forcing the agency to publicly acknowledge it was under “extraordinary pressure”.

The ATO's annual report, submitted in October last year, revealed the Change Program is high risk, and mostly responsible for the office’s budget overspend last financial year.

The program commenced in December 2004 at an estimated cost of $350-450 million and was set to be completed by the end of 2007. The budget, however, has blown out to double the original figure, hitting close to $750 million.

In October last year, the ATO also accepted the recommendations from the Australian National Audit Office (ANAO) after the latter conducted a performance audit of the Change Program.

However, Xenophon said that, despite the ANAO report being comprehensive, a number of issues had arisen since it was released.

"There isn't an overlap because a number of matters have arisen since that time,” he said. “There is an interface between the two but the button was pushed earlier this year to go ahead with the income tax system upgrade. We've seen the gremlins and the problems in the program since then. I think the ANAO needs to look at some other issues down the track eventually, and that is the whole issue of the cost blow out."

The Change Program problems have also led many observers to question the performance of key ATO partner, global consultancy firm Accenture.

Funding for the embattled Change Program was also conspicuously absent from the Federal Government’s Budget.

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