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.