Session 6: Tax system governance
Ladies and gentlemen, could you please be seated? An expectant hush falls over the room and the scurrying of feet to chairs. Because this next section has the riveting title of "Taxation Governance". There is actually a lot more to it than that bald title might suggest. Before we get to that, though, a few words from one of our sponsors. The First Assistant Treasury Bill Shorten, please welcome him.
Good afternoon, everyone.
Steve Martin, the comedian, once said talking about music is like dancing with architecture. I have been thinking, after two days of talking about tax design, are we now at risk of line dancing around the Great Hall to the strains of "Love is in the Air"? Are we getting on to governance? Maybe not.
I think we all appreciate that tax buys civilisation. We know when the taxes are functioning properly - fairly, not corruptly - and are recognised by the public as legitimate and of being properly complied with. We have a tax system which is actually a significant stage of our progress and the quality of our society.
I think everyone here understands that predictable and buoyant tax revenues helped build the public domain, from the street scene, to socialise medicine, to support people with disability. Also, it embodies the trust in public institutions and that Australians can have in each other. That idea that "I am paying because I know you are paying is very important in Australia". We don't have to look too far from here to see the contrasts.
The biggest tax on ordinary workers and their families in so many developing economies, including some in our region, is corruption. Transparency and anti-corruption actions, this has a huge role to play in the progress of our world. In Europe today we see ballooning debt, sovereign risk and austerity measures that brutally dominate the public policy debate. In the US we are seeing a debate regularly hijacked from the ideological militia of the far right. Indeed after an unusually rugged 12 months in our national politics, I believe you here at this forum offer those not here a timely reminder that despite mischief-making in some quarters, we are doing far better than most of our contemporary societies. We are having, I believe, a sophisticated, sensible, informed and gentle conversation about the future of our tax system which is testament to the truth that we understand that Australia is doing pretty well by global comparisons.
We have the ninth lowest tax regime when it comes to taxes. We have an unemployment rate of 5.3% and our net Commonwealth public debt is a touch over 7%. Many other international jurisdictions would give their eye teeth for these numbers. But I think one of our tasks, in my view, at this forum, is to exchange ideas of how to improve our tax system further though. One thing I do believe we can do better, and it has been canvassed repeatedly at the various sessions over the last 12 hours or so, is the tax system needs to be better at listening. We need to be more transparent and consistent and improving the governance of the Australian Tax System will substantially assist this process.
We should recognise the government is simplifying the system. Traditionally, tax time has been an exercise in spending hours finding all the paperwork and methodically spending hours to get the details right. The introduction of e-tax means one can simply log on - except if you are on the Apple system - check the information that the Tax Office has prefilled is right, add any additional information and, of course, tick it off. For the mums and dads and small businesses who do their own tax returns, this frees up time with the kids, and for tax agents it means a greater amount of time to value add their client's tax returns.
Our commitment in the Gillard government to a simpler personal tax system includes introducing a standard deduction of work-related expenses and the cost of managing your tax affairs. The $500 standard deduction will mean from 1 July next year many thousands of Australians can throw away their shoebox of receipts and still claim the cost of their work-related expenses and the cost of managing their own tax affairs. I think this is an important step towards making the system simpler for people.
We are also simplifying the personal tax system by more than tripling the tax-free threshold. There will be a million low income earners with income below the tax-free threshold who won't need to go to the effort of filing a tax return. I think this is good progress but the government is committed to more.
As I said at the outset, the success of a strong tax system is underpinned by an effective institutional framework. Our Australian Tax Office is indeed a world leader in tax administration and innovation and it meets the challenges of tax administration for a close working relationship with the community and a focus on compliance.
Australia's Future Tax System Review and the Joint Committee of Public Accounts and Audit have noted the majority of Australians have a high level of confidence in our ATO. Certainly in my time as Assistant Treasurer, I've been impressed by the professionalism and commitment of all 25,000 staff at the ATO, from the Commissioner right through to the call centre staff. However, it is also crucial that the ATO, as the keystone of the tax system, can continue to meet the challenges of the tax system now and into the future.
It is our government's belief that a tax system advisory board can add value to the administration of the tax system and enhance the reputation of the ATO as a world leading administration. An advisory board with an independent chair would best fit the statutory governance framework applying to the Commissioner of Tax and the ATO and adds value to the administration of the tax system.
The government would likely appoint members to the board and it would be constituted by members with a range of different and diverse organisational skills. The structural effectiveness of the advisory board will depend on building a strong relationship with the Commissioner and the ATO. The board could operate as a small set of trusted external advisers with whom the Commissioner can freely discuss a range of organisational issues and who could offer the Commissioner the benefit of their diverse experiences. Its advisory role would be independent and have a clear statement of responsibility and accountability. Board members should be truly independent of the ATO and would certainly need to manage any other conflicts of interest in order to fulfil their role in the national interest as opposed to pursuing any partisan or vested concerns. But I do see a tax advisory board as an opportunity to bring a level of commercial counsel to the ATO in managing its external relationships with taxpayers and an additional voice for the business and taxpayer communities in relation to the ATO.
I am interested in your views in this session as to how such an advisory board could provide the ATO with an independent external source of trusted advice and counsel on a range of issues and could assist the Commissioner and the ATO in adapting and best positioning the ATO to meet the challenges to administer the taxes and the superannuation systems. Obtaining maximum value out of any board depends as much on people as it does on structure and it is crucial that the board has the right combination of people with an understanding of tax, business, organisational and communication issues. We need to find the right person to take on the key leadership role of independent chairperson to provide strategic guidance on future and current challenges and, of course, working with the Commissioner.
I have been very impressed by the calibre of people in this forum and it could be drawn upon to provide wise counsel for the tax system in the future. We will be announcing in the near future the make-up of the board and the inaugural chairperson. We welcome your comments.
We have in Australia a well set tax design but we have to be open to innovation and change and better listening. Many of you in this room are tax professionals, whether as practitioners, academics or as major users of the tax system. We are fortunate to have here skilled officers of the Treasury Department, which is certainly one of the premier departments of the Commonwealth Public Service.
In the last 12 months I have certainly discovered that good tax design is fundamental to the system from the start. I have discovered sometimes that my role requires me to strap on the metaphorical diving mast and descend below the hull of the ship called "Taxation" to repair potential revenue leaks or address consequences. This is what I would call the "care and maintenance" tax reform agenda that sits alongside the government's tax reform agenda.
Care and maintenance reflects our tax laws and the difficulty of ensuring that the policy intent is matched by the legislation which gives it effect. This work has taught me that a strong, fair and simple tax system needs involvement for those who use it daily. Consulting with business, affected industries, unions, community groups, tax professionals and the broader community, it is essential to providing efficient taxation outcomes.
We have heard over the last day and a half about concerns from taxpayers - the business community, not-for-profits - about system design issues and their effect on confidence in the tax system. The government seeks to continually improve its tax consultation program so tax legislation introduced into parliament could be administered constantly with policy objectives. Successful tax policy design and execution comes from involving the people who will be affected by the proposed tax, especially when their focus is on what is best for the nation.
I believe this government has an evolving record in this regard: through examples such as the MRRT policy transition group, the new R&D tax incentive, superannuation reform and the alternative fuels legislation. All of these were developed, if not universally loved, through intensive, relentless industry consultation mechanisms. I am interested to hear from those of you in this room as to how we can improve upon this base.
To get us started, I would like to make opening suggestions as to issues which the government would appreciate your insight during this session along, of course, with the speeches you wish to give. Suggestions as to how we might establish more stable, and more certain, taxation laws.
First, is there a case for the government to make its intended policy outcomes in taxation laws clearer to the parliament? Currently, few provisions or measures in the taxation laws make explicit their intended policy outcomes. Some may consider this leads to alternative views of the appropriate policy outcome in particular cases and provides no assistance to the ATO or the courts in their search for an interpretation which promotes the policy intent of the parliament. Is it possible or even desirable that all new taxation laws should be drafted to make the intended policy outcomes clearer to the reader, in view of the substance of the relevant transactions? Can this be achieved by using enhanced objects clauses to accompany relevant provisions or by utilising other legislative guidance material?
Secondly, how can improvements be made as to how government agencies and departments interact to provide additional quality assurance mechanisms for taxation legislation and its subsequent administration. The determination of the taxation policy, of course, is a matter for the government and parliament determines the final shape of legislation. Treasury has responsibility for advising the government on tax policy and instructing drafters for the Office of Parliamentary Counsel by implementing that policy via legislation. The policy and legislative design process for new tax measures currently requires the Australian Tax Office to provide advice to Treasury on administration issues relating to these measures. Is this process adequate or could it be enhanced?
The ATO has sole responsibility for interpreting the taxation laws at first instance while the courts are the final arbiters. Refining these arrangements will involve enhancing the process of developing legislation, ensuring there is an understanding of the outcomes between Treasury and the ATO and that the Tax Office makes it clear to parliament that the proposed legislation can be administered in accordance with the government's policy and intent.
Finally, what is the ideal consultation process for tax policy design between the government and private and non-government sectors? The government is interested in establishing a continuous conversation with the end users of the tax system - consultation during policy design, drafting implementation and post-implementation stages. Whilst I believe this government has done more than any before us to make advances on this front, good tax law design involves seeking the views of key experts such as you here in this Great Hall.
In conclusion, I think improving our tax system is not nearly so much about canvassing history, nor even grappling with the peak of the present, but it should reach out to touch the arc of the future. We know this is the Asian century. We know digital information flows are changing how we do business and live with each other. We know we are living longer than before. We know we are driving on an economic highway with lanes of varying speeds. We know women in Australia will continue their long march through the institutions of power and we know our taxation regime has grown to be far too complicated and at times mistakes are made.
Introducing a mining tax, reducing company taxes, bringing in a carbon price, giving hundreds of thousands of small businesses helpful tax write-offs for when they want to buy more equipment, improving the governance of our taxation system, these actions touch the arc of the future.
You are all busy people. You have been generous with your time in the last day and a half and I believe simply through your attendance here you are reaching out to the future as much as the government. So as Assistant Treasurer of the Minister for Tax as it were, thank you very much for attending and let's keep dancing about the tax architecture of the future and its governance. Thank you.
Thank you Assistant Treasurer. "Governance", it is a really good word. It is an important word, although it may in some ways fall short of what this session is about. Perhaps it should be "governance and interaction". Of course, this session is where the rubber does hit the road in terms of doing everything else we have been talking about over the past day and a half or so.
There is a limited amount of time for this session. It is a short session. There is a lot to get through. Some of it is in danger of being arcane but it ranges from the very straightforward questions of the interaction with the Tax Office of individuals, pre-filling through to the details of the tax wars perhaps fought by highly paid lawyers and accountants in courtrooms around the nation. I would ask you all to please go straight to the core of your subject matter. This is a very professional-heavy panel. To kick it off, let's start with Chris Evans from the University of New South Wales.
There are, I think, as the Assistant Treasurer and Michael have just indicated, any number of issues we could potentially be dealing with in this system of governance. It is about transparency, accountability, responsiveness. I think my colleagues from the professional bodies will focus a bit more on those. Most importantly, as far as I'm concerned, it is about the client experience. It is the interaction of individuals, families, firms, businesses with the tax and with the transfer system. Generally speaking, the interactions of taxpayers and their advisers with the tax transfer system is a positive engagement. Most taxpayers voluntarily comply most of the time and most taxpayers trust broadly the tax system and the ATO. The ATO, in its turn, is on the whole doing a very good job. As the Treasurer said yesterday, it's a pretty good system but he also added we can do better. An area where we can certainly do a lot better is in how we manage the complexity in our tax system.
The complex nature of the tax system is of major concern. We are the most tax agent dependent country in the world. It depends how you look at your figures. We have compliance costs that are absolutely high. They are high, between 4% for personal taxpayers, up to 15% for business taxpayers of the revenue collected. They are horribly regressive and they are not reducing over time. For all the initiatives that there have been, we haven't made any impact. Above all that complexity, I think reduce overall tax compliance by both businesses and non-business taxpayers.
Obviously there are a number of causes of that tax system complexity. Life is complicated. We know that. It is never going to be simple. Also, there are other things: like we use the tax system in ways for which it was not designed. It does a lot of heavy lifting on other social and political goals, not just on the revenue raising, and we are very quick to use it that way. There has been tax and transfer proliferation, legislative layering so we get a compounding effect rather than simplification. We set out to simplify.
We got game playing by tax players as well with the result you need more integrity legislation and all those things. I am not so much interested in the cause as to what we can do to mitigate these. We are never going to achieve full simplicity but we can move towards some simplifying. The Henry Review itself puts forward a number of sensible suggestions and the government has acted on some of those. I don't think all of them go far enough, I think they could do a lot more, but many of the recommendations are a good starting point.
If I had something to take away from this forum it is the hope that any proposals for change are only made in the full knowledge of the impact they will have on the simplicity or complexity of the tax system as a whole. It is something where we see lots of lip service but the rhetoric doesn't get carried through into reality. I have got a quick shopping list which I have in mind when framing tax forum proposals. We need to accept justifiable simplicity. Some things will be difficult. Be prepared to accept justice, it is the trade-off on occasions. Sometimes it is not going to be entirely fair but it will be more simple.
We talked about this a lot over the last two days: focusing on low-hanging fruit - there is lots of this; state insurance taxes; leveraging off business processes - so standard business report; removing the duplication; seeing harmonisation; ensuring predictability; proportionated consistency in our legal rules; carefully managing change. That is the consultation process that the Assistant Treasurer just talked about a few moments ago. Do it once and do it right. It is the frequency of change that is often one of the major causes of compliance costs. Be wary of offering choice. Choice is the enemy of compliance costs. Choice chooses compliance costs. If people have two ways of doing things, they will look at it both ways and do one. The standard work-related reduction gives people choice. I fear some of them will keep their shoebox and go for whatever is the better outcome.
Don't expect the tax system to solve all your problems and monitor complexity on an ongoing basis. That is not just a plea for a research centre which can focus on those sorts of things and give us the evidence but it is building on what Ken Henry said first thing this morning; that we need a better informed debate about these things. We need to know what those compliance costs are in order to be able to do things about it.
The one thing I wouldn't go for is an office of tax simplification. It sounds a really good idea but my fear with an office of tax simplification, I have seen this in the UK. Just in the 15 months they have had it, it becomes marginalized. They deal with simplification over there. It is the office. We don't have to worry about it. Leave it to them. As a result, if you don't implement the simplification imperative in every aspect of tax design, it becomes marginalized. So that would be my overall view of it.
Thank you. Don't knock the shoebox. Some of us go and buy a new pair of shoes each year just to get another box for tax purposes. Two opening sessions, the second is from the Institute of Chartered Accountants.
Most taxpayers and advisers would agree the manner in which our tax system is governed is critical to our nation and also in instilling confidence that everybody who is asked to make a contribution does the right thing for society. With all the will in the world, putting in place a robust tax system does not end when the Governor-General claims (inaudible) legislation passed through the parliament. A strong and sustainable system must continue to deliver on the policy objectives set by the government of the day and proved by parliament when that legislation gives effect to the principles that are picked up and interpreted by the Tax Office as well as the estimated $60,000-odd tax practitioners engaged in providing advice to over 7 million Australians or roughly 7% of the taxpaying community.
So a tax system governance takes on a whole new meaning when viewed through this perspective. We need a world class administration, we need the best tax laws mankind can design and we need appropriate checks and balances to make sure the system works in precisely the way it was intended to.
If I was scoring the existing governance arrangement a mark out of 10, I would have awarded 7. I remember when I was at school my dad said to me 7 was nothing to be ashamed of but with a little more effort and determination 8 or 9 was achievable. Precisely the same analysis could be levelled at our existing governance arrangement. We are doing well but we could be doing better.
Let me turn to where we could be better. Firstly, the last few years have served to highlight in stark terms the risks of not investing adequate resources into the process of consulting with key stakeholders outside of the government and the bureaucracy on major aspects of policy and law design. The tax system is complex, we know that, so we should therefore remember, when we are trying to tinker with something as important and challenging as tax laws of the country, you need to get expert help. Most of us would not be game to roll up our sleeves, strip out the transmission and engine of our car and try and fix that without seeking help. The same applies to our tax system.
We need to invest more resources into the tax policy formulation and law design process. There has been good examples of how consultations can work well. Let's take them and apply them as best practice to the maximum extent possible.
Secondly, we need a more powerful amalgamated scrutineer agency to work with taxpayers and the Tax Office in helping to identify improvements that can be made to avoid systemic problems that we recognise will arise across our tax system from time to time. If we consider carefully the merits of bringing together the resources of the existing Inspector-General of Taxation, the Ombudsman and elements of the Australian National Audit Office, we could design a better resourced agency that is more adequately equipped to monitor the administration of the tax system. With a resource base of around 25,000 staff, the Tax Office is an extremely large organisation by any standards of private or public sector comparison.
Whilst I am certainly not suggesting for a moment that the resourcing of the ATO should be reviewed, it is appropriate that it maintain appropriate resourcing to manage our complex tax system but what I am saying is that having a one-stop shop scrutineering agency would undoubtedly help deliver efficiently gains within the Tax Office. This idea should be seen as an opportunity rather than a threat. In the end, we are all in this together but a healthy tension should continue to exist to keep everyone honest and an amalgamating scrutineering agency would help to manage that healthy tension, which leads me to a couple of final remarks about the governance of the ongoing tax reform process.
There has been a constructive discussion here about numerous ideas, perspectives and challenges in relation to the design of our current tax system. Many people in this room know that I have modest expectation of this two-day forum. I did not expect everyone to arrive at a unanimous agreement at the various reform which was canvassed and who would want that? I also did not expect the government to commit itself to a substantial new reform agenda at this point, especially given a number of reforms across the tax system already in place. What I do expect is for the government to add a forward direction about how this community dialogue could continue. It would be easier for the Treasurer to put this discussion on the bookshelf and tick the box on tax reform but I am confident he won't do that. There is an appetite out there in the community for substantial tax reforms that makes things simpler and fairer. I know from 70,000 members around Australia that individuals and businesses are expecting substantial reform to be bedded down over the coming decade.
There has been a discussion in various submissions about the need to establish some sort of independent tax reform commission, but personally, I must say, that I am not convinced. We need to put in place yet another body to take things forward. I believe we can continue the momentum that has started to build by committing to a process that involves bringing together varies stakeholders from the private sector, the Treasury, the Tax Office and other arms of government to begin the hard work of laying out more detail behind the ideas. If we take a realistic view about tax reform being a long-term journey, then we are just setting out on this pathway. The challenge for all of us is to make sure we don't stand still because we know the global marketplace in which we are playing.
So you really do have high expectations then and so much will go forward. We have heard there are parts of the system that are complex and are going to stay complex but maybe some can become a little easier. Obviously pre-filling is an area we look to with much hope. Richard Highfield, Centre for Tax Policy and Administration, a former ATO Commissioner and now bringing an international perspective. You have got some views?
Thank you very much, Michael. First of all, let me just open by saying that having worked for eight years with the OECD and for five years with the IMF before that, I can assure you that the ATO is regarded world-wide as a top class leader of the pack administration. I say that unequivocally. Although I may not be seen to be fundamentally independent of the ATO, I can tell you that with interaction with probably over 50 or 60 countries world-wide, this is a view that is shared well beyond the shores of this country.
I would like to concentrate on the issues of how individuals interact. In particular, as Chris Evans mentioned, there are various models that are used internationally to ease the degree of interaction with the revenue bodies and one of them has a benefit or a perceived benefit of limited filling of annual tax returns. The United Kingdom is a classic example of a country who fits this particular case. However, in those countries - and there are about 15 of them in the OECD - their personal tax arrangements have other unique characteristics that we don't see in Australia.
First of all, they are invariably accompanied by a system of interest withholding tax and dividend withholding tax which applies to residents. So that would be a complexity they would not be able to readily deal with.
They have nothing, as we heard this morning, of the incidence of negative gearing situations and they have very limited capability for providing for reductions. I know from a recent UK experience, particularly with changing employment patterns, that the objective of asking employers to achieve a precise withholding of the employee's taxes over the course of the year, particularly when people move from job to job, is a challenge and one which is causing immense problems to the United Kingdom.
It is for that very reason that the Henry Review came forth with a scenario for the future, which I will call the "Beyond e-tax", and for the majority of personal taxpayers in Australia, the system would be one which was fully automated. That means that the end of year filing process would effectively be done for the taxpayer by the ATO and all that would be required of the citizen is a simple examination, a confirmation or the provision of additional information.
The Henry Review made a number of recommendations to support achieving that particular scenario. The first one is rationalisation of offsets, reform of work-related deductions including tightening of the rules, because there is some extreme interpretation of the rules in practice. It also took account of the fact that applying modern technology, it is capable of achieving an outcome.
Just to demonstrate that this is not a dream, I can tell you today, in Denmark, a country with a similar system to Australia, that over 80% of their citizens receive a fully completed tax return and assessment of each year which they need do no more than confirm with the revenue body. Denmark is not alone in achieving this particular sort of initiative. Sweden, Norway, Finland and Spain all have similarity capabilities. Elsewhere in the world, Chile, Singapore, New Zealand and Hong Kong you will see move in this particular direction.
In terms of where we are today, I think it is fair to say that the ATO has made good progress with its development of the IT capability. I see from reading the press that taxpayers and tax agents love pre-filling. It is used extremely widely. The government has announced a proposal for a standard deduction. A good start, but unfortunately, work-related deductions are a significant area of claims in tax returns. The average claim is over 2,500 when you take into account tax agent's fees. So it is an area where I think the Henry Review recommendation of a more flexible robust standard deduction requires attention.
Another area of concern, of course, relates to gift deductibility. I don't want to put a dampener on this but there are something like five million taxation claims in tax returns each year. These are to be accommodated in some way if we are to achieve a situation of total automation.
I want to end on the note that subject to the sorts of ideas that were discussed in the Henry Review as being taken up, I could see within four to five years it would be achievable to reach the situation in the Henry report and I certainly commend the Treasury and the ATO in heading in this particular direction.
Graham Cooper, University of Sydney.
Michael, I have heard what Chris and Richard have said and I certainly think that there are some opportunities there, using technology like pre-filling to accomplish modest outcomes, but if a politician wanted to be carried on the shoulders of an adoring populous down Burke Street, one thing they would do would be to abolish the interaction between humans and the income tax system. I think you can probably do that for about 8 million voters. That's quite a few if you spread them over marginal seats.
It seems to me that it ought to be possible to eliminate most wages and salaries, to eliminate most retirees, eliminate most pensioners from the need to have any interaction with the income tax systems, who are the hard cases that you would have to deal with. We have heard about some of them. We have heard about people who might have foreign source income. We can't deal with that through withholding taxes on payments. All those 1.7 million people who have got negative gear real estate investment, they would be a hard case to deal with.
The 1.3 million people who report capital gains, you put all of those people together. Pull together small businesses, people with foreign source income, people with capital gains and people with their negatively geared rental properties. You are probably looking at about 4 million people. We get tax returns from over 12 million. If we can't eliminate 8 million people from the tax system, then we are not really trying. That's something worth aspiring too, it seems to me.
Just a couple of things. Richard mentioned gift deductions. The UK has a solution. It is easy. You write a cheque to the charity for $7, they take the receipt and go to the Commissioner and they get a cheque for 3. So I don't claim the tax deduction but the charity gets the benefit of the government subsidy directly. Having charitable donations in the system does not mean that you are going to eliminate gift deductions for charities.
Work-related expenses: we have got a standard of deductions for work-related expenses and you could have something like the US system. If your work-related expenses are so large, I'm sorry, you will have to come in the system but that's not most people.
The other problem area Richard mentioned, we would have to be onto a final withholding tax on domestic dividends, interest and royalties. We would have to pick up a rate for that. Yes, we would. It would be a rough and ready rate, as Chris Evans suggested. Yes, it would. But frankly, for the benefit of never having to think about the tax system again, I suspect a lot of people would be very happy to live in that world.
So if we really wanted to make one last accomplishment out of these two days together, it seems to me the best thing we could offer the Australian population would be to give about 8 million people back a couple of months of every year for the rest of their lives.
Thank you. Michael, the Australian Taxation Office, first of all, you have had your ego polished, the world's best practice. Have you got the IT capability to know everything we are doing?
I think what Graham is talking about is the arc that people could reach for. To get to that arc you would need a lot of policy changes in the law. Whether or not that is feasible or not, it comes up as sort of the questions we had this morning and yesterday. Really, from an administrator's perspective, it is quite daunting in an area of policy. If you say "How can you make it more simple?", one part of it is to reach for clear and simpler outcomes. As an administrator, I'm all for that.
As an administrator, you often have to work with the law you have. Something Chris and Richard put forward is things are doable without much more change but with significant improvement over time. I think I will continue on with Graham said it is modest moving to what is possible, but as far as I am concerned, the journey is important.
It is not just the ATO system that is important here, it is whether or not you can have businesses dealing electronically with government, whether you can have charities and not-for-profits working away that is able to be efficient. It is sometimes a question of whether or not the responsibility for doing things rests with the administration or whether or not you take on board, in the UK system, as Richard said, the employers take a lot of responsibility for their system.
I think the key point is: how do we make the interaction and the client experience it? To use your words, Michael, as efficient as possible. If it is efficient, it is good for the country and good for the person. I think pre-filling has helped and if you want to extend that you can go into the policy arena and whether or not you want to extend the range of matters that want to be pre-filed, you have to think about whether you want to bring forward in a statutory way third party information. If you link that with some of the proposals that come through from having something like an individual portal, you can have people accessing that in a much easier or simpler way.
In terms of small business, Chris talked about standard business reporting. Again it is a very important way of trying to improve our system, to make sure we drive the efficiency that is there for online dealings, encourage people, make it easy for them to be able to move into those online processes, and before you know it, it will be easier. It won't need to fill in 15 regulators. It will be done all at once from the system and I think to make progress along that way is helpful for people.
We talked about the bad in terms of potential collection systems, making it electronic rather than paper. We still have something like 40% done on paper. Converting that into an electronic process is an efficiency. There are a lot of things that can be done and some of them will require policy changes and some of them will dependent on capabilities both of the administration but also of a range of people in the system of how to deal with the system.
Before we move off pre-filling, anyone want to speak against it? Anyone opposed to it or is this something that has universal acclaim? Down the end we have got Paul from CPA Australia.
Thanks Michael. What I would like to say is that our organisation recently celebrated its 125th birthday. As part of those celebrations we brought Neil Armstrong, the first man who walked on the moon, to Australia. That was an event held the other month. The reason we did that is we are looking at pushing boundaries, we are looking at new frontiers, but I guess in the context of this discussion and simplification, it needs to be balanced out and moderated a bit and I am inclined to go with the comments of Graham Cooper. We are partially in favour. The CPAs supports pre-filling and that will only improve as technology improves. I also support the comment Richard Highfield has made. Notwithstanding that, we are concerned. I am arguing this with two hats on. One, I am sticking up with the revenue here; that is, how far do you go before you carve people out of the system such that they never come back? So taxpayers will have the most simplistic affairs, withholding on interest, withholding on dividends that can all be tracked.
Points were made before about rental properties, a few different discussions, business income, business losses, distributions from trusts. There is a very rich matrix and tapestry here of other sources of income all of which are not currently trackable in an e-capable kind of way. So without getting them dropping out of the system, it is also one time of the year where they can actually get some professional advice on their tax affairs, on their investments and on a raft of other things, retirement, savings, superannuation. So it is a hook that delivers a whole lot of other things and it is more pie in the sky than man on the moon to be saying we need to carve all these people out and not lodge our returns either by paper or electronically ever again.
Just before we leave pre-filling alone, could I ask people not to say "I am agreeing with that". I just want to hear people who have a different opinion in this area. Craig, were you next?
I suppose I will just say that by and large Australians like getting their tax refunds and they like getting them quickly. If we were to move to a situation where it was just a case of ticking a box and saying "Yes, I agree with what has been put before me from a pre-filling perspective", I think what we also need to look at is exactly how that works in these foreign jurisdictions. Generally speaking, there is a period of time. In our case, it would be between 30 June and probably two or three months down the track whilst the information is coming in from banks and share registries before the income tax return could be lodged. I think culturally it would be quite difficult for Australians to accept the fact that it would be a few months down the track before they were able to get those refunds.
Could I say something further on simplification? I want to reiterate that simplification really does need to be addressed. I think it needs to be addressed at the drafting level. The laws that are drafted in this country are far too complex. Any concession that is given, roughly 20% of the legislation that is drafted will be focussed on those concessions and probably 80% of it will be focussed on how you can stop people getting those concessions, and I think we need to move to a situation where we are focusing on the 99.9% of taxpayers who want to do the right things rather than the .1% of taxpayers who want to do something different.
I take on Bill Shorten's suggestion about adding clear policy outcomes to legislation. I think that would be a fantastic outcome to, in a few words, explain what is trying to be achieved rather than spending pages and pages and pages saying what we are not trying to achieve.
More than 90% of taxpayers who have no choice but to do the right thing perhaps. Linda Lavarch.
I want to make a comment in relation to Graham's suggestion of the 8 million Australians not having to bother putting in a tax return. Just from a not-for-profit sector perspective and charities, the gift tax deductibility, one would think the ability to have the tax deduction by $2 or more gift would be an incentive to donate to charities. Somewhere around $7-9 billion a year is donated for charities and for not-for-profits. So I want to throw that into the mix.
Peter Strong from the Council of Small Business.
Look, I disagree with everybody but that is fine. The Tax Office, I don't know if they are the best in the world but what they do is put a human face on small business, 96% of people who collect GST. You can't put a better human face on small business than to do that. That is fantastic. We talk to them, they talk to us like we are people. We need to design a business tax system for small business, consult with big business, listen to what they are saying, because it is designed for experts. It will always be designed for experts because that is who they deal with. If we design a tax system for non-experts, we will get there. We have a committee of advisors - this will sound silly but this works and I've seen it work in many places and many countries. Say it is an owner driver. It is a suburban accountant. It is a country town solicitor. It's a retailer. It is a home-based business. It is a small business. They don't meet in the towers of Sydney, Melbourne and Canberra which create windy conditions, they meet in a café or small business which is the world in which we live. It sounds silly but once you drag people into a big building they think they have got to act like big building people, which is not what we want.
Let me say, we have got to design it for people that don't understand, make sure we don't have to pay for the discussions of government. I had discussions about this, saying every time tax rates go up one and a half million people out there have to upgrade their software. It cost me $600 the other week. So you have to upgrade your software because there has been a software change. We are discussing putting a patch up on the website which we can download for nothing which means we can be as compliant as we can and no cost.
These are real solutions to real problems. We have to make sure we don't create six time the demand on small business people. This is not in isolation. We have to deal with OH&S and complicated work-related systems which is constantly changing. We need to design a system for people who are doing it all.
Which I think we heard before. Quickly on this area before I move on. Tom Seymour, a quick point.
Just to change the topic -
If you are going to change it.
I would like to commend the government on the announcement today of an independent board not because the tax office isn't doing a great job. We have heard a lot over the last two days about the changes that have been put forward by various groups in the environment where we have to keep a revenue neutral outcome which creates losers. What we are talking about in this session largely is how do we create the efficiency on a tax reform. That is to some degree low-hanging fruit. You haven't got winners and losers. It is about productivity, international competitiveness but efficiency in our tax system. If we can achieve that by getting better expertise in at the front end to achieve not turning to something that is not working to something that is working but to improve, that is what business is about. That's got to be the case not ultimately in relation to the operation of the tax system but tax reform itself. In tax reforms, when we engage with a broad group of people the government has a policy. Taking that policy from its inception to legislation has to get the right expertise involved. We have seen where it worked and we have seen where it didn't work.
I will take Peter and Tom's submission as a submission to move on to the business experience with the taxation system. The wages slave has been easy fodder. It doesn't employ most of the firms' representative here. The business experience is where we need to push the envelope. We begin to get much bigger envelopes involved. Has the business experience of the taxation system got better or worse?
James McKenzie, I saw you on Lateline Business last night. The business experience, the tax operations experience, would you like to enlarge on that?
I will quantify it by saying I'm 15 years removed from being a tax professional. As someone that engages from a corporate perspective, I think what corporate Australia is looking for is exactly the same as what small business is looking for: predictability and efficiency. We are in relative terms a small economy. The way our tax system works has got to enable us to be agile and responsive in the way in which we deal with corporate transactions, agile and responsive in the way in which we deal with the taxation of our operations, anything that can be done as a result of what Minister Shorten was talking about to facilitate that.
I repeat what I said yesterday and what I said last night. It wasn't an attack on the Tax Office, it was just as much if not more an attack on the tax professional, which, of course, after all, do have a vested interest in the complexities associated with the way in which the tax system operates at the moment.
Has the tax system become more adversarial just like our politicians? Yassa, are your members more likely to put on the gloves to stretch the envelope than they used to or not?
I don't know about stretching the envelope or pushing the boundaries. I think it is more about getting clarity into the system. The answer to your broad question is yes, they are putting on the gloves and they are having to take the fight on because they are not confident that the legislation necessarily delivers on the outcomes that the government may have set for it and that's what goes to the issue that I mentioned from the outset, which is we need to make sure we design rules that are clear and deliver on the government's policy objectives and are workable in the practical sense. The only way to get to that point, because of the complexity of the tax system, is to make sure we do the best job possible in consulting with as wide a group of stakeholders as we can.
But isn't the complexity brought on by the fact you have got so many talented lawyers and accountants looking for the tiny piece of assistance to be able to pull several millions dollars out and take it to tax agents? Isn't there another side to this rather than just blaming the government?
What I hear from the small business sector is there is less conflict with the Tax Office. The Tax Office deals with them in a way I said before. I think we should note that. There is less conflict with the majority of business.
Does anyone want to speak on behalf of the Tax Office in this particular battle, other than the Tax Office itself?
I can't pass up an opportunity, although I did restrain myself previously. 30 years ago unions probably would have opposed introduction of new technology and changes in process of tax returns because we know it means low-level processing jobs will go. I didn't speak up at that point with those things because, like most unions, we don't oppose change, we get involved in it.
I do want to say something in defence of the Tax Office. It is not just that it is world class, it is immensely challenging. Some of the folk sitting around these tables make it a little bit more difficult. I think there is something which comes out from elements of the industry. The Tax Office has this evil plan to maximise revenue and to make life more difficult for business to interpret every little legislation that in a way that is disadvantaging to business. I have seen a little bit over the last couple of weeks that bears that out. The Tax Office operates under enormous scrutiny, enormous accountability, enormous changes about transparency about the way they do those things and I think some of the criticism that has occurred in the lead-up to this forum is a little unfair and a little unwarranted.
I want to get to scrutiny and those other bigger issues before. Teresa from the Law Council of Australia. You had your light on. Was it to attack or defend?
Very even-handed, as always. The most critical thing for good governance and for the team to do their job as well as for advisers is in the drafting. The drafting process has to be clear. That is where you get your predictability and better compliance with governance. The conversation earlier in relation to involving members of Treasury, ATO and private sector in legislative design are very, very important. They have missed out one critical element, which is OPC. It is important to have the actual draftsperson in the room when you are discussing what the policy is so they can hear first-hand what everyone intends it to be.
The idea of having a specific intentions clause or objects clause in the legislation I think is very good and warranted but I don't think it is a substitute for getting the words right in the first place. I think too much recent legislation, there has been a tendency to try to use the principle base drafting or some sort of drafting that has inherent flexibility for future arrangements but it has meant a lot of the nitty-gritty of the legislation and examples explains material which is not accessible by court when you do have a conflict. I think getting it right in the first place is the key to all of the governance issues.
Frank, from Corporate Tax Association of Australia.
Look, the situation between large corporates and the Tax Office is probably a bit more adversarial than it has been in recent years but I don't think you need to pressure us about that. The tax laws are complex and uncertain and there are going to be areas where we disagree about how the law applied. In the last few years the tax laws have agreed with taxpayers. What we are also going through with the Tax Office at the moment is the way the Tax Office is changing the way it assesses risk and that is changing its compliance processes in the way that it is new and different from corporates and it requires a different sort of engagement with the Tax Office about difficult contentious issues. So that is still shaking down and that is creating some tensions too.
Just to hear what business thinks of the Tax Office, we have the Business Council of Australia here, Jennifer Westacott. Your members, they are happy taxpayers?
Absolutely. To make broader points about governance, I think we have to say what is the kind of right governance for the system. I think one of the things we are concerned about is the complexity of the governance arrangements itself. Let me just go through: Tax Commissioner, ruling panel, independent integrity advisor, ATO Audit Commission, Tax Ombudsman, Inspector-General of Taxation -
I'm glad you keep a list of those.
One of our issues is who does what and why. So we very much welcome the Minister's announcement today for a broad oversight but the question will become: what is the rationalisation of all the other entities?
On simplification, if I can make this point. I think we need to take a broader view here and this is one of our concerns: where does complexity come from? It comes from things like the number of taxes, concessions. The last couple of days we have had a lot of discussions about carve-outs, a lot of discussions about tax breaks. They amount to complexity and cost. We need to remember 10 taxes to 90% of the work. So one obvious thing in terms of simplification.
The second thing to remember is simplicity is often the enemy of inefficiency. What we want to see is a clarity of the government's arrangements, a single oversight, some kind of discussion about whether or not we need a body to take forward ongoing tax reform, whether that is a research body or whether it is another independent body; what is the process for engaging the body; and we would, of course, add that we want, as part of linking tax reform, an independent budget commission that actually looks at the long-term budget security of Australians. That is a different matter.
Thank you very much. Ali Noroozi, the Inspector-General of Taxation, does that list of bodies make sense to you?
There is actually three bodies. The others are internals in the ATO. There are three bodies of Inspector-General of Tax, which is me, there is the Ombudsman, who is sitting up the end there, and also, the Australian National Audit Office. There is overlap.
I have put a significant submission to this forum. I have also suggested that perhaps these two bits of the ANAO that deals with overlaps, the tax bit of the Ombudsman and my office, need to be merged into one entity. The reason for that, my particular role is to look at semi-issues in relation to tax administration. If I can exaggerate, I have to wait for a problem to occur, wait for it to become systemic and then throw rocks afterwards. So that's the problem with my role. The Ombudsman has got people going to single issues. As far as I'm aware, most businesses, even with their single issues, come to me and I cannot do a lot about them because I can only deal with systemic issues. There are lots of inefficiencies here in the sense that if there was one body that dealt with single and systemic issues and if that body did its job probably in dealing with the systemic issues, you would know what they are. So I have to go and consult on what the systemic issues are, whereas this is something I shouldn't actually know. There are economies of scale, less cost on the Tax Office in terms of how many different bodies they have to deal with.
Can I move on to a different topic of complexity. Let's be a little realistic. The last time we had a go at trying to simplify stuff we ended up with two different tax Acts. Maybe we should all take a deep breath at the moment.
The other thing I would also say, there are underlying problems here. The underlying problems, there are a number of contributing factors. One that I see in my job is this, and I've been around a lot of consultation tables. What happens is, you get together and they start talking about principle-based drafting, which is good and well, but if you are going to have principles you are going to have grey areas. If you see grey areas, tax advisers are fearful of the Tax Office. They want everything spelt out. Similarly, the Tax Office is conscious of the fact that people rort the system and they want everything spelt out to block those off. The trouble is, that you can only cater for issues you think about at the time you develop legislation. There are many circumstances that come up after the event. When you create legislation like that, what happens when new arrangements come into place, you have amendment upon amendment. We move away from this opinion-based drafting and we have many pages of legislation to deal with everything. What needs to happen, I don't think there is going to be a rosy relationship between the Tax Office and the taxpayers but the current level of communication needs to move so we can move to a more principle-based drafting. Many of the government's arrangements which have been suggested here go towards doing that.
I was heartened by the Assistant Treasurer's announcement today, which was one of the things we had suggested, by having an advisory board which brings in private sector expertise at the board level. I have also suggested the same at the executive management level in the Tax Office, two external Second Commissioners, one to head up a new appeals area. I also suggest that you merge the scrutineer function into one and that scrutineer agency then has some link to the advisory board that the Minister just announced.
That is not going to solve all your problems. Hopefully it will start having the private sector and the Tax Office speaking the same language, having similar expectations. Because that is something we can improve on.
I endorse what Richard says. Yes, the Tax Office is a world class organisation. Yes, the other jurisdictions do look up to the Tax Office as a world leader but that doesn't mean that there is not room for improvement.
I think Ali's paper has a lot to commend it. It is not a matter of who does it, it is a matter of what is done and how well. I would rather talk about the eight million people you dismissed, personal tax payers.
Hang on, I'm one of them. What did I do?
I think there are some really simple things that we can do to make life vastly easier for 8 million individual taxpayers. My criteria for speaking are that we want an evidence-base. We have now been the Tax Ombudsman Office for 16 years and hundreds and thousands of complaints we have had to analyse and look at what is going on. Cost neutral or better? The proposals I will make have a double digit return on investment.
The first of those is the language used in dealing with taxpayers. I lived in the UK for 10 years up until just two years ago and the language there is radically simplified. Not only does the tax code system mean that millions don't even have to lodge returns, but the first person to direct communications with the office, especially trained staff on complaint handling systems, means that the cost and first answer to complaints is very, very high. So I am arguing that a radical simplification of Tax Office language and dealings is going to work really well. Some parts of the Tax Office are already doing that. The debt business line, for example.
The second point, social inclusion. Welfare recipients who interact with the tax system have a very, very hard time. Income support, those dealing with the child support agency and all of those things often have to have multiple interactions and that for folk who are vulnerable they are in trouble, they get confused and don't understand the system. They become a great burden to the Tax Office and the Tax Office becomes a great burden to them. So a new policy on social inclusion would work as well.
Finally, a much better complaints handling system that treats complaints as the river of gold that it is. An organisation that takes complaints seriously, learns from them, does route cause analysis is going to slash its own costs, increase its own staff sense of wellbeing and actually relieve taxpayers of a vast burden as well.
I just want to make it clear that we won't get to everyone in this session, we will run out of time, but don't for a moment think your submission has been lost if you don't get to present it orally here now. They have all been collated. Certainly those of us who have been trying to facilitate this have had the Readers Digest version and Treasury is taking it on board. I want to get to as many people as possible, and I will, but don't hit me and think you have wasted your time if we don't get there. I think I will go to Kamish, who has had some suggestions put at him.
Allen's point about communication is really important. I think it is always a driving need to try to communicate with people. It's very similar to Peter Strong's comment about making language of what we do in tax and super understandable to the people who use it and I am very happy to explore ways of trying to do that. We have done it with my small business consultant forum. I am happy to do it with the Ombudsman. We have 60 consultant advisory forums that dig deeper into the community across different business sectors to try and get that input.
They are working on it.
Again, we think listening to users is important. That's why we have 50 consultant advisory forums. They are there to provide us with good advice and we try to listen to them and work with them. In fact, as part of our corporate value, we have consultation collaboration K-design.
The issue of a more adversarial system, you guys have done some big cases lately. What went wrong? Was it the system? What?
It is a question of whether you look at numbers across the board or whether you see some high profile large cases. We have lost some high profile large cases. They are in very complex areas. There is certainly a lot of tax planning associated with that. The question is, whether or not that taxpayer is beyond payable or not beyond payable. These are decisions that reasonable people can have different views on. In fact, the judges themselves have different views on it.
I think some of the things that Chris said, let's look at the many people, whether they be individuals or small business, and I think some of the three principles were really important. Things like choices in the system, they do add a level of compliance which is quite significant. The frequency of change. When we spoke this morning about the superannuation, we spoke yesterday about small business. One of the big concerns is of people understanding their rights and responsibilities and also, is change. On the other hand, when we look at reform, we have to think about how well people can have that stability to understand.
The third one was the layering of legislation. Some of these big cases fall into that layering of legislation. Yesterday morning I was asked about whether or not there was some agility in the system and I said what we had was an accumulation of some very sophisticated system in the business tax arena and there is engineering to take advantage of those systems.
Kamish, how many of the cases you have lost lately have been about splitting hairs and if there was principle base and more obvious legislation -
Actually, the cases referred to were cases that have been won. In a way it comes back to the interpretation of how far those provisions apply in a very complex factual situation. They are difficult cases, very big complex arrangements with a lot of financial and taxpayers' engineering associated with them.
Which means that tax practices and lawyers and accountants do very nicely. We have 10 minutes left and a lot of opinions. I ask you to make your point hard and fast. From Ernst & Young.
Can I address some of the points the Minister raised in his address. Basically, what we have got to avoid is uncertainty and surprises in the tax system. A key component of that is actually designing the right policy, having the right design followed up by appropriate legislation and then administration that supports the policy intent. We are smarter than what we are doing at the moment. We can easily improve the system. For example, the MRRT legislation, where there was legislation drafted, we went through the whole consultation process in the right way with the PTG and then the ATO designed a ruling that was issued with the legislation so the Tax Office and Treasury had to work hand in hand together so we didn't get to a position where the legislation came out and then the Tax Office, in interpreting that legislation, came up with a slightly different view of perhaps what the professional business community thought the legislation said. So I think that should be a good precedent to keep following so that we go hand in hand with consultation with the private sector stakeholders. From time to time there will be issues that have to be ruled on subsequently, but if we can get the ATO doing rulings on how they are going to interpret the legislation we will go a long way to solving some of the uncertainty that comes from new war.
Yes, I wanted to follow up something from yesterday and it relates to tax governance. We were talking about State taxes and people were talking about harmonising payroll tax. That raises the possibility of the Federal income tax system and the BAS system coming into play where the tax might collected on behalf of States. If we did that with a harmonised payroll tax system, that would be aware of bringing the payroll tax and the GST together and at some stage the penny might drop.
More generally, we are world leaders in the idea of our income tax system being part of our social and economic infrastructure. So we will (inaudible) in income contingent loans because we were thinking of this thing that we had built for all the ways that might be useful other than pure revenue-raising. So we were able to build income contingent loans, we were able to build the child support agency on it to get around the nature of the way in which courts managed to impose their judgments.
There are lots of ways in which the federal architecture could be useful to State governments in that regard. I think in Victoria alone, which is my State, there are $800 million worth of unpaid fines. That could be passed on to the system where we have all the infrastructure there. There are lots of ways we can use our tax architecture as a piece of national, social and economic infrastructure and we should be doing that.
I just want to point out in relation to simplicity. Simplicity is a complex thing. We can focus too much on the beginning and the end of the spectrum. So focusing on simple public policy announcement or simple legislation, or, at the other end of the spectrum, simple form filling, this is what is the most important simplicity of all, and that is simplicity of the behaviour that the tax system causes, in particular the avoidance of distortion and loopholes which lead into fancy footwork.
Jennifer referred to the concessions that people were seeking yesterday. Many of us were pushing to get rid of concession. A much better measure wouldn't be how much Acts we have got. That is a misleading indicator. A better indicator would be actually how many different items are there in the tax expenditure statement. It is the concessions that cause a lot of the complexity and a lot of the people who have the loudest voices in simplicity have the loudest voices in getting rid of those loopholes. I will lead you with an example, which is strange, being tax-free over 60. It creates incredibly complex behaviour.
Susan Ryan, Age Discrimination Commission.
Simplicity is a good thing and we welcome the statements by the dancing Minister for Taxation, and the Prime Minister and the Treasurer. Simplicity is a good thing. However, there is one form of simplification many of us do not want to say. That is the simplification which comes when you are pushed out of the workforce in your 50s or 60s. Very simple. You are no longer a taxpayer. Undesirable.
To the tax professionals over there and to the Commissioner of Taxation, I would say there are many, many people in their 50s, 60s, 70s and 80s who would wish to be taxpayers in employment. They have no performance issues, they have no health issues. They have been pushed out because of age discrimination. Everyone here is in an organisation who could look at themselves and say "What are we doing to retain our older workers? We have suitable vacancies. What are we doing to hire older worker." It is really win win. More tax revenue for the Treasurer, more savings for superannuation. A much later and less call on the public sector for the Age Pension and, of course, medical science tells us people who stay in work are healthier. What are the obstacles? Some of them are tax-related. I don't have time to go into them now but let's fix that up. More taxpayers treasure. What more could you want?
Michael Borowick from the Australian Council of Trade Unions.
There has been a lot of discussion in this session about businesses and their relationship with the ATO. You have been forgiven for thinking that the business community are the only ones who pay tax. The fact is, many people do pay tax. Almost all Australians do pay tax and they need to have a stake in the system. To this point they haven't had much import. If you have a look at current membership for the Board of Taxation, some of the business community is simply not represented. We welcome the announcement today by the Treasurer but if it is going to reflect the success of this forum, if it is going to be an effective body, it needs to have voices other than business voices. The best choir are the ones that have a range of voices.
Robert Jeremenko, Tax Institute.
Graham Cooper, well, I have signed up (inaudible) tax system advisory board announced today by the Assistant Treasurer, an independent chair is a fantastic outcome. That was announced over a year ago in the election and today's announcement, we still haven't seen more details. I urge them to get on with that.
Going to the Inspector-General's point about streamlining the scrutiny bodies, that's a great idea but again it has taken us this long to get a tax advisory board almost up.
Michael, you said for those who have a better chance to speak Treasury will get the submissions together and will be collating. That is great, but we want to get some outcome over these two days. What we have been saying to the Tax Institute, we need some sort of a body, some sort of an organisation that will actually adopt tax reform. It will actually do some of the heavy lifting, some of the detailed work that the government needs to be able to look at how they might implement some of the great tax reform ideas we have had over the two days. Call it what you like, it is something you need.
I just wanted to very briefly speak on two measures to ameliorate the adversarial interactions that would occur with the Tax Office. The first one is an increased and improved community and professional engagement. I think an early involvement is going to be essential to not only add to the confidence in our tax administration but to avoid things like surprises that Alf talked about. I too welcomed the Assistant Treasurer's announcement for an advisory board of a kind that will have external representatives on it.
The second one, briefly, is simplifying the policy development. These are points Chris and Teresa talked about. I think it needs to be implemented in any proposal.
To pick up again on the Assistant Treasurer's point, I think yes, there needs to be an amplified articulation of the clauses. All new proposals should be published (inaudible) assessments on simplicity.
Michael Johnson, very briefly as I run out of time.
Just a couple of very quick things. One of our focuses is on clarity in the law. A few things we would encourage. One is, greater resources in terms of the Tax Office getting more rulings out to clarify areas of the law. For that matter, in converting other ATO announcements, and there are many forms of them, into finding rules which the taxpayers can rely on. Looking at the number of discretions contained within the Act, where there is a discretion in an administrator, it is difficult to self-assess.
One further point I make in terms of the Assistant Treasurer's questions in terms of what they can do better in terms of the consultation process for new legislation, and there is a broad process, one thing they can think about is perhaps compiling taxpayers so when we get to complicated bits of legislation, once you get to where you think you would come to a sensible outcome, various taxpayers have complicated business, of course, in various industry and see how those measures would apply and that might avoid the sorts of issues we have.
Ladies and gentlemen, we have come screaming at 200 k's an hour to the deadline wall. I apologise for those who didn't get to speak in this session. I think you have all spoken at some stage or other in previous sessions. Let me stress again, because you didn't get to repeat your submission or voice an opinion here today or yesterday, for that matter, that opinion has not been lost and has gone into the work that Treasury has done in collating and working up in considering the efforts you have made.
There is one last speaker today at this forum, understandably so. Before I throw to him, I would like, on Paul Clitheroe's behalf and from my own point of view, to thank you all for making our job as good as it has been, as enjoyable as it has been through your lively participation and willingness to overcome the cynicism perhaps of some people who are not here because maybe they didn't have any ideas.
To conclude, wrap up and finalise almost - you are Prime Minister, you can still speak.
Thank you very much. If I can say a few words before Wayne Swan does the final wrap-up. I wanted to lend my voice to thanking everyone for their participation in this Tax Reform, thanking Paul and Michael on what has been an amazing job. They have made this look so much effort less. It is because they have done so much deep work in preparation. Thank you very much for that. You have made a very big difference to it.
I also wanted to thank everybody who is on the organisational side who made this possible, all of the people in Treasury who have worked so hard to deliver the forum. They have done some great arrangements and I think the format of it has worked very well.
But I did want to conclude by saying to you, in my opening remarks I talked about the context in our nation today, I talked about the work in this Parliament House, the facts that you have a parliament that is prepared to face up to big reform challenges. The work that is happening in the ministerial offices in this Parliament House and in my own office as we design and deliver policies and plans for this nation's future.
Against that backdrop of what is happening in our nation and what is happening in this Parliament House, I talked to you about the things I would hope would happen in this room over two days and I believe that those hopes have been realised. I always expected that this would be a discussion with a diversity of views, a mix of voices and that's a good thing. Because we deliberately set this discussion up so that it would be a mix of voices. The voices of people who create wealth in our country, our business leaders from businesses both large and small, joined by the trade union representatives, who are the voice of working people who stand alongside our business community to generate that wealth as well. The voices of experts who can advise us about our tax system, the voices of those from civil society who seek particularly to represent those who without their advocacy, would go without a voice. So with that mix in the room we always expected a diversity of views and that's a strength, not a weakness. But as that diversity of views has come around this table, I think we have not only seen views exchanged in a respectful way but we have seen a common focus on fairness and a common focus on practical change and I do thank people for that.
When I made my opening remarks I invited people to focus particularly on some of the challenges we face in the contemporary age, the transformation that is going on in our economy and the innovation and agility that we will need to show in the face of that transformation so we continue to be prosperous and strong for the future and I do believe that people have risen to that challenge. I believe, people addressed the challenge posed by ageing in our society, what that will mean for our revenue, tax and services, and I thank people for the productive discussions on that.
So we have had a great exchange of views. Wayne Swan and I have worked during the course of this forum to distil those views and Wayne Swan now is going to address what of the discussions here we want to take forward as a government and how we will take those discussions forward. I do want to thank as well the other parliamentary colleagues who have joined us here, the ministerial team, the representatives of Labor Caucus and Andrew Wilkie, Rob Oakeshott, who was so much the inspiration for this forum, Tony Windsor has been here, Tony Crook has been here and of course we have had representatives from the Greens participating as well. I thank them for their representation.
There has been a fair few jokes along the way about age and equity between generations. These things are a little bit on my mind, having celebrated a birthday myself last week, but I hope in these discussions we have borne in mind that we are not only making decisions for today but we are making decisions for the future. We focused on Everald in today's discussions, which is appropriate, and he has brought his special perspective to them. I also had the opportunity earlier today to meet our youngest delegate, Karen, who is 18, and I would like to thank her for her attendance and I hope the decisions that we have thought through here are ones that are going to make a difference for her generation as well.
So thank you very much and over to Wayne.