Senior officials of the Australian Tax Office (ATO) faced a Senate Estimates hearing on 1 June at which they were grilled about delays and problems in the implementation of the ATO ICT Change Program, which was cut over on the Australia Day weekend in January 2010.
Tax Commissioner Michael D’Ascenzo and Second Commissioner David Butler acknowledged the problems associated with the rollout of the program. As of 1 June 2010, the ATO had received 17,000 complaints (out of 3.4 million returns) from tax agents and taxpayers about their personal returns, a five-fold increase from the 2,500 complaints received in the same period in 2009.
Mr Butler explained that there were ‘eight weeks when [the ATO] could not process returns and returns came in’, so that there were ‘four months worth of work to do in two months’.
The first of these periods were the first two weeks in February. A second delay occurred from 6 to 20 March, when the ATO had to change negative figures (used under the new system to show losses) to nil amounts because of the inability of one of Centrelink systems to which the ATO provides data to cope with negative figures. In addition, 140,000 people entitled to a refund failed to receive their refund cheques, the Estimates Committee was told.
Despite these problems the ATO is adamant that the new systems brought in under the Change Program will be an improvement on the old system. Mr D’Ascenzo explained that ‘the old system was very expensive to maintain over a long period of time’. Mr Butler added that the ANAO report (The Australian Taxation Office’s implementation of the change program: a strategic overview) ‘clearly acknowledged that the ATO had no choice other than to replace the 30-year system’. In its 2008–09 annual report, the ATO stated that although ‘meeting the revised schedule remains high risk’ the ‘new integrated systems provide a more responsive framework for new policy and for further innovation’.
The ATO also maintained that it acted to quickly to remedy flaws in the Change Program. The system was retested over the Anzac Day long weekend with the assistance of Capgemini and Aquitaine. As a result, ‘500 e-fixes’ were implemented, which Mr Butler explained was ‘not unusual for a system of this size’. He stated that 1,400 additional staff were engaged, and that there were plans to recruit a further 330 people to assist with the tax time processing of returns, as well as an extension of shift hours for staff and outsourcing of some tasks.
A Sydney Morning Herald report published on June 7 suggested the ATO would ‘terminate its contract with Accenture to introduce the system and engage a separate consultant, CPT Global to advise on how to make it work during the coming tax season’.
However this report is not consistent with statements made at Senate Estimates. Mr Butler made clear that the relationship with CPT Global was ‘not to do with Accenture at all’ and that the Executive Director of CPT Global, Peter Wright, has been engaged as an independent assurer to provide a report on governance practices. Mr Butler added that the ATO had ‘negotiated with Accenture a completion to the current contract and any further work we do with Accenture will be on the basis of the new contract’.
According to a contract notice posted in AusTender, CPT Global has been engaged by the ATO to provide management advisory services from 1 July to 31 December 2010. According to its website, the company was founded in 1993 ‘to provide technical consulting in Capacity Planning, Performance Tuning and Testing’, particularly of the IBM mainframe and mid-range platforms, and has since expanded to include management consulting.
Mr. Butler also explained that the system design had changed since 2004, when it had been intended to be an ‘integrated system for everything’. The ATO was considering whether to proceed with this plan, particularly as the current trend was ‘to interface and integrate - how do you make the two work together?’
Although it had been intended to bring business activity statements (BAS) within the new system, the ATO decided not to proceed with this, in order to have ‘space’ to respond to any recommendations of the Henry, Cooper and other government reviews.
Neither the Business Activity Statement (BAS) nor the Superannuation Guarantee have been built into the new system yet. According to Butler, options for BAS included ‘build(ing) a BAS application into the core processing system’, or ‘smooth(ing) the interfaces between the two systems so that they can work more efficiently together’.
In response to Senator Xenophon’s question that the ATO would be ‘running the 30-year-old computer system in parallel with this system insofar as business activity statements are concerned’, Mr. Butler explained that the BAS, which had been built for the tax reform, was only a decade old, and that the 30-year-old national tax payers system had been replaced.
The ATO intended ‘to build what is called pay-as-you-go instalments’, which would allow the ATO to ‘completely retire the 30-year-old National Tax payers System’ by the end of July 2011.