tip off

Why Swan moved the nation’s top tax man on

Michael D’Ascenzo will leave the Australian Taxation Office later this year. Why didn’t Wayne Swan decide to extend his term? And what is his legacy?

Michael D’Ascenzo is out as the Australian Taxation Office chief. It’s worth examining his departure and legacy.

Treasurer Wayne Swan announced on Wednesday the tax commissioner would leave at the end of the year, completing his seven-year term before commencing a five-year term as a non‑executive member of the Foreign Investment Review Board in a part-time position. A commissioner is eligible for re-appointment by the government after each term in accordance with law — Swan chose not to.

One thing D’Ascenzo will substantially notice when he shifts over to the FIRB is the money. The tax commissioner’s job pays around $630,000 while a non‑executive member of the FIRB receives around $47,000 annually. Go figure. It is even more ironic given D’Ascenzo lobbied hard for the Remuneration Tribunal last year to increase his tax chief salary by 58%. He was successful and his salary would have risen to $740,000 by 2014.

It is interesting to compare how governments have treated his two predecessors, Trevor Boucher and Michael Carmody. Boucher retired in January 1993 and spent two years as Australian ambassador to the OECD in Paris while Carmody was parachuted into the Australian Customs and Border Protection Service in 2005 after a 12-year stint as commissioner. Given D’Ascenzo’s 35 years’ experience where he interacted with key players in government, the legal and accounting professions and the community you would think Swan could better utilise his expertise rather than giving him a part-time job at the FIRB.

The D’Ascenzo reign has had its ups and downs. Just last Friday he was awarded the Chartered Accountants Leadership in government, “Outstanding Contribution to Public Administration Award”. In 2010 he was appointed an Officer of the Order of Australia (AO) for service to public administration, particularly through reform and innovative engagement with the taxation profession and other government agencies. In November 2010 he was awarded the International Tax Review Editor’s Choice award for contribution to taxation in the Asian region.

But D’Ascenzo has also had his detractors. It began in his first year in the job when he locked horns with the government’s inaugural taxation inspector-general David Vos. Vos gained a reputation as a tax office watchdog and a tenacious taxpayer advocate often publicly criticising excessive ATO actions. D’Ascenzo reacted by obtaining legal advice on either issues identified in a review or on the scope of Vos’ powers to obtain information. At this early stage many in the tax industry felt D’Acenzo’s push to make the ATO more transparent was just all talk. D’Ascenzo was backed by then treasurer Peter Costello and in 2008 Vos was not re-appointed to his watchdog role by Swan.

At the coal face many accountants and taxpayers were complaining about ATO actions that never seemed to disappear despite D’Ascenzo’s valiant efforts to push new corporate values and strategic directions that made the tax system fairer. There was a perception that his staff out in the suburban branches were “not living the values” of the organisation he wanted it to be.

More recently, last year Parliament’s all-powerful Joint Committee of Public Accounts and Audit took a shot at D’Ascenzo and called for greater scrutiny of the ATO:

The committee was concerned by the ATO’s reluctance at the hearing to identify areas where it considered improvement was required and to acknowledge the significance and importance of individual complaints. The committee expects, at the next biannual hearing, to see an acknowledgement that ongoing improvements are necessary and that the ATO is making efforts to ensure its culture is one that accepts the importance of complaints and a responsibility for addressing their causes.”

D’Ascenzo gratefully accepted the role of chair of the government’s cross-agency pursuit of rich tax cheats known as Operation Wickenby. In that role he presided over agencies such as the Australian Crime Commission and the Australian Federal Police. The $430.9 million investment by the government has struggled to gain success with only $351 million dollars collected by audit action. On top of that we have had allegations of Wickenby leaking the personal tax affairs of prominent Australians to the media, and the botched criminal investigation into Paul Hogan and John Cornell which cost taxpayers $30 million. Who can forget when Hogan was detained in paradise by an ATO departure prohibition order because he was a flight risk?

You have to wonder if the government was becoming weary of the negative publicity.

So who will replace D’Ascenzo as commissioner? Many are tipping it will be an outsider. I agree — but with a twist. I expect Jennie Granger, a former second commissioner of taxation, who was recently head-hunted by Her Majesty’s Revenue and Customs, the UK’s revenue agency, where she is director-general of compliance and enforcement with a staff of 25,000. When she was in the ATO she tried to change the “gotcha” mentality to one where the emphasis was on helping people and businesses do the right thing.

8
  • 1
    Mike Flanagan
    Posted Friday, 26 October 2012 at 1:09 pm | Permalink

    It could be expected by some, that the head of a department that allowed some hedge funds to avoid the usual legal constraints and remedies to a major tax disputes, might be able to accept some responsibility and perhaps even fall on his sword!!

  • 2
    Dundas
    Posted Friday, 26 October 2012 at 3:37 pm | Permalink

    Moving someone from a job paying $630,000 per year to $47,000 per year implies less than optimum satisfaction with the relationship! It’s like tipping a waiter 10c in a restaurant “for the service.”

    I’m sure heading up a department as complex and as political as Tax carries with it many dangers, but maybe the Government reached its own conclusion after reading Crikey’s article on an ATO whistle-blower last month?

    The ATO has had a bullying culture of the worst kind for some time, and the whistle-blowing case, which apparently still has legs, will bring more to light when it returns to court - later this year, I believe.

  • 3
    sharman
    Posted Friday, 26 October 2012 at 4:35 pm | Permalink

    The ATO is truly bad news and the sooner it gets someone decent in charge the better. The first thing the new head should do is make a policy decision about why it takes on cases and runs them to the High Court. When the ATO loses a case in the High Court there is the usual “well this case is confined to its facts and would not apply widely anyway” (so why run it up to the High Court?) or alternatively, “Well we are going to do a policy statement on this issue that says the ATO is right, so there!”

  • 4
    steinro byn
    Posted Sunday, 28 October 2012 at 7:34 pm | Permalink

    I get paid over $87 per hour working from home with 2 kids at home. I never thought I’d be able to do it but my best friend earns over 10k a month doing this and she convinced me to try. The potential with this is endless. Heres what I’ve been doing, Fox90.Com

  • 5
    John Passant
    Posted Monday, 29 October 2012 at 5:51 am | Permalink

    This Labor Government are angling to put an even more business friendly person in charge. D’Ascenzo tried but evidently wasn’t business friendly enough. Something about foxes and hen houses comes to mind. I don’t think Jennie Granger will get the gig. She presumably bailed to the UK in July knowing that D’Ascenzo was history and she wasn’t going to follow in his footsteps. For what it is worth, and as an ex-Assistant Commissioner of Tax, I have written about this on my blog. I say in part:

    Tax Office staff are in shock over the Labor Government’s axing of the Commissioner of Taxation, Michael D’Ascenzo. More shocks are in store. What better way to gut the Tax Office than for business to appoint one of their own to lead it? Is there an alternative? Yes. Tax the rich and give the ATO enough funding for it to do its job as the collector of tax rather than the handmaiden of business. Make the rich pay. That is something Labor won’t do.

    http://enpassant.com.au/2012/10/26/axed-the-tax-commissioner/

  • 6
    MJPC
    Posted Monday, 29 October 2012 at 8:05 am | Permalink

    Can someone please explain this to me? Mr D’Ascenzo received an AO for service to public administration, a service that he was paid some $630,000. Had he stayed in the role he would have got the princely sum of $740,000 in 2 years; not a bad pasture for a public servant when the going % increase for negotiated certified agreements is about 2-3% pa.
    Could I be wrong in questioning why there is an AO for PA when he is being paid quite substantially for what he was employed to do? In light of this article it would appear his boss (Mr Swan) is not happy with his performance yet has been recognised by a Australian award of some significance. I just can’t figure that.

  • 7
    Dogs breakfast
    Posted Monday, 29 October 2012 at 1:43 pm | Permalink

    It has been hard to tell what he has been like as a leader, only those within the ATO would have a good idea.

    But strategically the ATO has been way off the mark, and if this Ms Granger is going to “change the “gotcha” mentality to one where the emphasis was on helping people and businesses do the right thing.” then this would be a great asset to the nation.

    D’Ascenzo, whatever else, had some large failings as the Commissioner, some of which are covered in the comments already. It’s hardly as though he is going to be struggling for a penny though, all of you who are lamenting his situation.

  • 8
    Peter Kolya
    Posted Tuesday, 30 October 2012 at 1:57 am | Permalink

    All observations here are super without a doubt. Specific acknowledgement: John Passant, Sharman, Dundas, Mike Flanagan, MJPC and remarks of Dogs breakfast. D’ Ascenzo must quickly learn this moral lesson: “Whatsover you shall do to others, the same shall be done unto you” He got David, Peter, Serene and many others out on his own recommendation but he is also getting out in precisely the same way. I commend the decision of the government but call for more action than talk. I am considering legal action against this bloke myself for ocassioning a financial loss to me and to you as a Taxpayer!

Womens Agenda

loading...

Smart Company

loading...

StartupSmart

loading...

Property Observer

loading...