The Australian Taxation Office has been handed an unflattering report card under an Australian Public Service Commission (APSC) capability review that rated its technology posture execution at a lowly rank of “developing” — the equivalent of a high school C-average.
In a move that could yet cause fissures between technology-led and enabled service delivery agencies and their central agency reviewers and overlords, the capability review takes issue with the ATO’s technology-led service delivery approach, warning that “technology needs to keep up with staff and business needs”.
“While the ATO’s technology is mostly delivering well for external users, internal stakeholders spoke of challenges and risks that may test the ATO’s ability to deliver large ICT projects over the next few years, including Payday Superannuation,” the APSC said.
“For this reason, the [capability] review has rated this capability as ‘developing’. During interviews, staff said they are concerned about the growing cost of ICT [information and communications technology]. There has been significant growth in ICT sustainment costs over recent years.”
It’s a bitter pill to swallow for the agency that delivered the pivotal Jobkeeper program and has arguably made the best progress of all of the public service to deliver a functional, scalable and secure digital identity credential despite copping opportunistic flak from all sides.
“The ATO says the cost of online transactions by individuals has increased by 19% in five years. The ATO has a number of legacy systems and would like to consolidate capabilities onto modern platforms,” the capability review said.
One internal stakeholder said: “We have nine critical systems coming to end of life or out of support, we are having to make trade-offs to keep some on their last legs and invest in others.”
This may all be true, but it belies the fact that other agencies like Services Australia, the NDIS, Australian Securities and Investments Commission, and Defence have all just blithely cratered multiple nine-figure projects.
It also skirts the fact that major technological uplift by the banks to enable more automated taxation has been held back by platform renewal, like the decade-long New Payments Platform, which still can’t process batch-based payroll files.
That’s major because it means that ATO access to pay runs, unless regulated via initiatives like Single Touch Payroll, is systemically held back by the slowest mover.
At least there is technology to complain about.
“The review heard ballooning ICT costs are affecting the ATO’s ability to prioritise other work. As mentioned on page 45, the ATO is reviewing its ICT infrastructure, contracts, and budget. This will continue to be a major risk to the organisation into the future,” the APSC said.
“Some staff said the lack of an agency-wide strategy makes it difficult to prioritise work and operate as ‘one ATO’. Others said there is a reluctance to stop work and redirect resources. The review heard that even when financial decisions are agreed by the ATO executive committee, there can be a lack of discipline in applying them.”
“There’s an appetite to do too much in too many different directions. True prioritisation as a reductive, not additive, process is a challenge for us”, an internal stakeholder is quoted as saying.
“While the ATO has historically been well-resourced, its funding is increasingly tied to specific deliverables. The review heard that most of the agency’s limited discretionary funding goes towards maintaining IT systems, for which sustainment costs grow each year. Over the past four years, the ATO’s Enterprise Solutions and Technology Group has exceeded its budget by $20 million,” the capability review said, without providing the annual budgetary overrun percentage.
“A review of the group’s expenditure is underway, led by the ATO’s chief finance officer. The ATO may need to overcome its challenges with IT sustainment before it can achieve a more flexible approach to funding agency priorities.”
Also noted was that the ATO faces other technology risks, such as “fraud is becoming increasingly sophisticated and complex.”
“The review heard the ATO needs new tools, technologies and skills to keep up,” the capability review said.
“Digital service providers are now an embedded part of the tax ecosystem, but they are not recognised under tax law. This means they have no legal requirements or obligations to the tax system and can decide to withdraw support or make business decisions that do not align with ATO’s vision for future tax administration.”
And then there’s the great and malingering COVID hangover.
“Reducing debt to within an acceptable tolerance will be a significant and complex task. The ATO may need to do more to explain that taxes withheld from individuals and other businesses are the property of the Australian people to be used to fund essential government payments and services, and not a form of business finance,” the APSC noted.
The ATO’s overall score of ‘embedded’ (got it and use it) capabilities versus ‘developing’ was eight to 12, with internal collaboration listed as ‘emerging’.
“The ATO has a long history of efficient and effective tax and superannuation administration, and the review recognised our strength as a world-leading tax administration, and the dedication and expertise of our entire workforce in serving the government and Australian community, as well as supporting the broader Australian Public Service,” taxation commissioner Ron Heferen said.
“The outcomes of the review are particularly timely as we refresh our vision and purpose, and will assist us in considering the impact of future challenges and opportunities on our capability needs. Importantly, the review also gives valuable insight into the capability areas we will need to prioritise and focus on into the future.”
Uh-huh.
Then there’s the bugbear of flexible work.
Under the heading of “Potential priority areas for capability improvement — workforce”, the APSC said that “a hybrid work environment, where many staff spend more time working from home will, over time, generate new workforce and integrity risks the ATO will need to manage.
“The ATO will need to consider ways to make sure low turnover doesn’t limit the networks, empathy and diversity of its workforce. The ATO’s workforce planning capability would be stronger with consistent application and buy-in across the agency.”
The ATO will definitely survive the election. The APSC … well, that depends.
READ MORE:
