ACTING CHAIR (Senator Bernardi)—I welcome Mr D’Ascenzo from the Australian Taxation Office.

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Senator SHERRY—I suspect you are aware that we did have the opportunity to discuss with Mr Vos last night his critique in the annual report—I think ‘critique’ would be an accurate description; in fact there were very strong criticisms contained therein—of the ATO. Why has this occurred and is this justified in your view?

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Mr D’Ascenzo—The tax office is one of the most frequently reviewed government agencies. Over the past two years we have had something like 34 external reviews. I am on record as welcoming constructive criticism from all external scrutineers—including parliament and this committee, the Inspector-General of Taxation, the Australian National Audit Office, the Taxation Ombudsman, the Privacy Commissioner and a whole range of consultative forums that I have with the community. That does not mean that we will always see eye to eye with external scrutineers. If you look at the Auditor-General’s 2005-06 annual report, it says that what is important is that we try to work together to improve administration and there will be occasions when differences of opinion are held.

In the last week or so we have had two annual reports: one by the Inspector-General of Taxation and the other by the Ombudsman. I think we need to reconcile some of the views between the inspector-general’s report and the Ombudsman’s report. The Ombudsman’s report at page 62 talks about complaints handling in particular. That was an emphasis of the review. It says:

This year, we believe the continuing decline in the number of tax complaints is due to improvements in ATO administration, and particularly to the increasing effectiveness of the ATO’s internal complaints process.

I think yesterday, Senator, you and others were talking about responsiveness. The Ombudsman continues:

The ATO’s positive response to that report—

this is the ATO complaints review—

has resulted in a system that reflects best practice complaint management principles and that maintains a consistent approach across the ATO.

You also made reference to culture. The Ombudsman goes on at page 62 to say:

The ATO’s responsiveness suggests a cultural commitment to complaint resolution within the agency. This commitment perhaps offers taxpayers better remedial options than externally imposed rules. While there is always room for improvement, the ATO’s progress during the year in this area is acknowledged.

There are further comments in the report that are relevant.

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Senator SHERRY—Before you go on, I do not think it was me making reference to responsiveness; it was me questioning Mr Vos about his comments in this area contained in his annual report—which, I have to say, are as strong as any comments I have seen on the tax office from any organisation, be it the Audit Office or whatever. Frankly, I am giving you the opportunity to respond.

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Mr D’Ascenzo—I appreciate that, and I did not mean that in a negative way. I just thought there was a question of responsiveness and a question of culture and I wanted to juxtapose the views of one external reviewer with the views of another external reviewer in that context. In terms of the inspector-general’s reports, it is very pleasing that the inspector-general in his evidence yesterday noted that the tax office was very efficient when compared with other tax administrations around the world. This mirrors his 2004-05 report where it said:

It was very interesting to note the high regard the Australian Tax Office is held in by other revenue agencies.

The inspector-general also said, and I think you gave him the opportunity to do so, Senator, that the tax office is providing information that he needs in current reviews. Ultimately the point that I think is important is that the inspector-general’s annual report now needs to be read in the light of the clarifying comments made by the inspector-general last night. My response is that I think it is time to move on from those comments and look at where we can go in the future to try to improve tax administration.

I do not know whether the committee has had an opportunity to see our strategic statement, which we released in August. I wonder whether I can hand that up. I think this is relevant to your question, Senator, and I am pleased that you have given me the opportunity to put it on the record. I will take you through it very briefly. It was published in August of this year. It reflects many of the concepts that I have put on the public record over the course of this year. One of the key points you will see sprinkled throughout the strategic statement is the concept of differentiation. We are trying to develop our systems to be able to identify those people who are trying to do the right thing and those people who are not, with the emphasis being on trying to help those who are trying to do the right thing to get over the line, so to speak, and, on the other hand, trying to ensure that there is a level playing field by having effective deterrents for those who are not. I commend the statement to the committee as valuable background material about the tax office’s values and aspirations for, and cultural commitments to, improving tax administration.

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Senator SHERRY—I took some of the comments made by the inspector-general last night as more a clarification of style than a clarification of comments, because I asked him whether he stood by the criticisms contained in the IGOT annual report and he responded that he did, but he did clarify an approach of style. In the report he effectively accuses the ATO of hindering his inquiries, failing to be transparent and accountable, and issuing sugar-coated information to maintain public image. They are strong criticisms and strong statements. Do you believe they are justified?

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Mr D’Ascenzo—Senator Watson raised questions about their justification, and I think the inspector-general resiled from those comments or put them in a different context. When you look at the seven reports that the inspector-general has produced—the seven out of the 34 that we have had—the most recent one says:

The assistance and co-operation provided by the Commissioner of Taxation and his officers to the Inspector-General and his team during the course of the review are gratefully acknowledged.

This is very consistent in all seven reports.

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Senator SHERRY—In noting that, I find it odd then that he would come to the conclusions of a hindering of his inquiries and a lack of transparency and accountability.

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Mr D’Ascenzo—I think you had the opportunity to question him about that.

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Senator SHERRY—So you do not agree with the specific criticisms that are made?

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Mr D’Ascenzo—I start from the proposition of trying to welcome constructive criticism, and I have put on record our response to other reports and also to the inspector-general’s report, which is one of saying: ‘What is there? What are the insights that we can learn to improve tax administration?’ That is what we are all about; that is what we like to achieve. Part of tax administration of course is trying to ensure that the community has trust and confidence in the tax system and in the administration of that system, and so comments that are perhaps colourful and not grounded on fac