Tax Commissioner Michael D’Ascenzo wants a pay rise.  Not just any old pay rise either.  Try $300,000, a 58% increase on his current salary of just over $500,000.  That’s $445,000 more than what we pay our Prime Minister and three times the salary of his boss, Treasurer Wayne Swan. This is happening at a time when tax office service to Australians is failing miserably while D’Ascenzo awards his senior executives performance pay and supports one of his deputy commissioners being awarded a gong for significantly improving service delivery outcomes.

The Remuneration Tribunal is considering a significant pay rise for D’Ascenzo and other senior public servants to bring their salaries in line with those of the prudential and corporate regulators such as Australian Securities and Investments Commission (ASIC), Australian Prudential Regulation Authority (APRA) and Australian Competition and Consumer Commission (ACCC).  But does he deserve it?

Not according to a couple of Labor senators, including Doug Cameron, who told D’Ascenzo last Thursday at a Senate hearing: “I don’t think sending a memo out (to staff) saying that you deserve a $300,000 increase is probably one of your best managerial decisions but be that as it may …”

The grab for more pay has also got his staff offside at the Australian Taxation Office (ATO).  As Cameron noted, he sent a newsletter to all staff advising them of the Remuneration Tribunal’s consideration of lifting his salary. Tax staff is currently embroiled in a pay dispute where they recently knocked back a 3% increase. One senior staffer told Crikey that, “D’Ascenzo probably deserves a pay rise but not $300,000 and the timing couldn’t be worse as the ATO play Uncle Scrooge with us over our pay claim”.

In the top tax job for six years, D’Ascenzo oversaw the introduction of the new ATO computer system delivered two years late and $300 million over budget. There has also been criticism of the performance of Operation Wickenby, the federal government’s much-vaunted witch-hunt for high-profile tax cheats, which is struggling to make a profit. Last year we saw the debacle of detaining entertainer Paul Hogan in Australia while months later all criminal charges against him were dropped.

The ATO is a vital national institution as the principal revenue collection body for the Australian government, with more than 20,000 staff nationally.  Let’s face it; it’s a big job in anyone’s language and it isn’t nice being the tax man — the most disliked person in Australia. Compare the number of staff at the ATO to those agency heads that are on bigger salaries than D’Ascenzo.  ASIC has about 1932 staff, ACCC has 755, while APRA has only 600. On those figures alone, D’Ascenzo has strong grounds to have his pay cheque lifted to those of the other public service mandarins.

The problem I have with all this is that the ATO has consistently failed the Australian public over the past few years and there is an aura of an institution in denial that it is not meeting benchmarks by providing performance pay to senior executives and awarding gongs to them while at the same time service standards have not been met; complaints from taxpayers have skyrocketed and collectible debt is on the rise.

In 2009-10 the ATO failed 12 of 27 service standards including refunds, written advice and resolving complaints. Complaints from the public rose to 40,665, an increase of 46% from the previous year.  Collectable debt increased by 21% in 2009-10 compared with the previous year, when it grew by 11.6%.

While all these service standards were not being met and complaints and debt increased, you could imagine my astonishment when in the Queen’s Birthday honours list in June one of D’Ascenzo’s chief lieutenants, deputy commissioner Erin Holland, was awarded a Public Service Medal (PSM) for “outstanding public service in significantly improving revenue and service delivery outcomes for the Australian Taxation Office”.

Holland is national leader of the micro enterprises and individuals market segment. This segment attracted 94.1% of all complaints from the public while many of the failed service standards originated from this segment as well.

On top of this, D’Ascenzo personally approved big bonuses totalling $3.7 million dollars in the form of performance pay to 292 senior executives out of a possible 295 for 2008-09, with 90 receiving 5% for being fully effective. Only three fat cats missed out on a big pay packet despite many not meeting ATO benchmarks.

It seems that the ATO is in denial of its failure to properly service Australian taxpayers and this was picked up by Parliament’s Joint Committee of Public Accounts and Audit (JCPAA) recently when it 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.”

The Remuneration Tribunal should link any pay increase to improvements in service delivery to Australian taxpayers.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey