Australia's Future Tax System

Final Report: Detailed Analysis

Chapter G: Institutions, governance and administration

G4. Client experience of the tax and transfer system

G4–3 Building the future client experience

Moving beyond current approaches

Public meetings and submissions to the Review have raised significant issues about the difficulty of interacting with the tax and transfer system, and how this affects the experience of clients. Overall, the current way of interacting results in clients being exposed to cost, risk and inefficiency, as well as driving client disengagement.

There are numerous examples of innovative government service delivery aimed at improving the experience of clients, some using technology and others a more personal approach. The creation of Centrelink in 1997 was itself a reform aimed at improving the experience of clients. It aimed to deliver previously disparate social security payments and services, as well as government assistance, with a consolidated focus and a whole-of-government approach.

A more recent specific example, the Australian government drought bus, provides advice on tax, health and mental health issues in addition to specific drought and flood relief services. This initiative recognises that people in need rarely have problems that are confined to the responsibilities of one agency or service deliverer.

Over the past decade the ATO has dramatically reduced its use of paper forms by offering its clients internet-based options. In 2008, over 2.2 million individuals lodged their tax return using e-tax (ATO 2009c). Benefits include 24-hour availability, faster processing times and automatic estimation of the tax refund or debt. Taxpayers and agents preparing an electronic income tax return are able to utilise pre-filling. Pre-filling partially completes the tax return using information supplied by third parties such as employers, banks and other government agencies. The pre-filled information is the same as that sent to the ATO for information-matching purposes. This initiative has improved the client experience through reducing time and effort spent preparing and lodging tax returns, while improving accuracy and compliance.

While such initiatives will improve the experience of clients to varying degrees over time, most are still primarily organisational or portfolio-specific. Furthermore, the policy and program complexity of the system has continued to increase while these initiatives have been under way. Tax and transfer administrative and technology systems do not have unlimited capacity to absorb this increasing complexity while offering citizens a simple interface.

Without a change in current approach, Australia's tax and transfer system will continue to be designed and administered in ways that do not give primacy to the experience of users. People will be confused about the overall impacts on them and continue to face frustrating processes to undertake basic transactions with government. Carrying out a simple task such as reporting a change of address or a change of partner might still involve being referred to multiple areas and agencies, providing the same information again and again.

A new approach that brings together policy design and implementation across agencies and portfolios is needed to achieve the kind of transformation summarised in Box G4-3 following.

Box G4-3: Transforming the client experience

Old system New system
Limited range of transactions can be performed online. All transactions (except those that need to be conducted in person due to a policy requirement) can be performed online.
Information has to be reported multiple times, sometimes in different ways. Information such as a change in address or new employment details will be provided once and used across the system.
Account balance information for tax and transfers is not easy to access. Totality of financial relationship with government will be accessible online with clients able to see historical data as well as real-time information.
Difficult to calculate how a change in income or circumstances such as having a child or retiring will affect a client's tax liability and transfer entitlements. Clients will be able to see how their tax and transfer situation will change if their income or circumstances change.
Different processes for benefits and transfers administered by different policy departments. Common processes so clients have a similar experience when transitioning between payments.
Many rebates, offsets and deductions providing welfare-type assistance in the tax system. Greater use of standard deductions and outlays.
Information from third parties such as financial institutions and employers is pre-filled in electronic tax returns where available; other information is manually entered. Tax and transfers reporting is designed so that most information can be pre-filled automatically.
Many clients get assistance to manage their tax and transfer affairs. Most clients will feel confident to manage their own affairs because the process is simpler and more automated.
Clients use face-to-face and call centre services to make queries or provide information when they would be willing and able to use self-service applications if they were available. Extensive self-service options are complemented by personalised assistance for those needing more intensive assistance.

Finding

While a range of recent and current initiatives will improve client experience, the system remains confusing, costly and risky for people. A new approach to policy design and implementation is needed which gives primacy to users' experience of the system.

A rapidly evolving environment

The precise trajectory for development of the new client experience and the speed at which it could be implemented, are not clear. Developments in technology and their use in delivering services are occurring very rapidly, creating new possibilities and expectations for government service delivery.

The continuing evolution of technology-based information and communication services is enabling a paradigm shift in delivering services. The world is moving beyond a 'cottage industry' model of technology-based service delivery in which organisations develop and deliver in-house services over the web. Instead the advent of global industrial models for technology-based service delivery is becoming apparent, under which entities would store information and then provide technology-based service delivery on behalf of other organisations to those organisations' clients. Large global enterprises (such as Google and Amazon) are leveraging low-cost technology in sophisticated, disciplined ways to deliver high-quality services at very low cost. Not surprisingly, existing approaches to technology used by the Australian government cannot match this new approach in terms of cost or quality.

At the same time, a more sophisticated version of citizen-centric service delivery is emerging, which some have dubbed citizen-driven service delivery (Di Maio 2009). To date, citizen-centric service delivery models have been characterised by government agencies joining up services in ways they think people will value, rather than letting them do it themselves. New approaches emerging from the private sector would allow citizens to configure services or information directly or via intermediaries to match their needs. For example, citizens today are adopting new information technology that allows them to combine or 'mash-up' existing services and content in ways that fit their preferences. Using mash-ups allows a client to create entirely new services tailored to them. It also allows intermediaries to innovate and mash-up online services in ways they think people will want.

Box G4-4: New technology: Mash-ups

A mash-up is the integration of two of more web services from internal and external information sources (Bradley 2007). An example of this is the iGoogle service, which enables non-expert customers to select the set of services they want to access on a regular basis. Users can create a personalised homepage that combines live content such as news, weather and cinema guides with other tools such as foreign language translators and recipe finders.

Other examples include websites and mobile applications combining public transport timetables with mapping and event information from different sources.

Six enablers for improved client experience

Recommendation 122:

A tax and transfer client account should be developed, based on customer research and with customer input into its design. The account should include at least the following features:

  1. up-to-date presentation of income earned from all sources, taxes withheld, tax liabilities incurred, transfers received and information flows from third parties;
  2. complete information from past periods;
  3. an optional single point for updating personal information, undertaking transactions, and reporting information or making applications, with extensive pre-filling of forms based on information previously provided; and
  4. the ability to test the impact of hypothetical changes in circumstances.

Recommendation 123:

Pre-filled personal income tax returns should be provided to most personal taxpayers as a default method of settling their tax affairs each year.

Recommendation 124:

Existing tax and transfer provisions should be reformed to support improvements in client experience, including greater alignment of income definitions and reporting, rationalising of personal tax deductions and offsets, and streamlining of mandatory administrative requirements. Future new policy proposals should be subject to comprehensive, published expected impact assessments on client experience systems and outcomes.

Recommendation 125:

Where possible, information required for determining tax liabilities and transfer entitlements should be collected from third parties, including employers, government agencies, financial institutions, and share and property registries.

  1. Over time, electronic provision of this information by third parties should be made mandatory.
  2. To reduce current and minimise new compliance costs, reporting obligations should as far as possible be aligned with existing information concepts and systems of third parties, and facilitated through electronic interaction with information held in the 'natural systems' of those entities.

Recommendation 126:

Further approaches (extension to and approaches which build on Standard Business Reporting) should be pursued to reduce the compliance costs associated with business interactions with government.

Recommendation 127:

The government should assist small businesses to be 'business ready' when they begin business. This could be achieved through education and financial assistance, which may include assistance to small business to get ready for Standard Business Reporting (SBR).

Recommendation 128:

Common information standards, leveraging from the standards and governance put in place by the Standard Business Reporting Program, should be developed and adopted to support system interoperability between tax and transfer agencies, and between those agencies and third parties, such as employers.

Recommendation 129:

A modern privacy and secrecy framework should be developed and adopted that maintains and streamlines protection of personal information held by government agencies, and facilitates exchange of information (other than an individual's health information) between agencies to support improved client experience of the tax and transfer system.

Recommendation 130:

A method of linking records, for example by linking existing client identifiers, should be developed to facilitate development of a single client account for tax and transfer financial information. This would allow better service delivery by supporting interoperability and data exchange between the appropriate government agencies, and flows of tax and transfer information from third parties to those agencies. Information should not include individual health information.

Recommendation 131:

A high-level taskforce be established, under central agency leadership, to progress a whole-of-government approach to improving the client experience of the tax and transfer system, with:

  1. membership from relevant agencies, the private sector and client representatives;
  2. terms of reference requiring the taskforce to:
    1. develop, consult, oversee and regularly report to government and Parliament on a whole-of-system reform of the administrative arrangements and technologies that deliver the client experience of the tax and transfer system;
    2. position these reforms within the overall government initiative to improve the relationship between it and citizens; and
    3. lead consultations with relevant stakeholders, including citizens, privacy advocacy groups, professional associations, financial institutions and employers.
  3. a mechanism for capturing feedback from citizens on government service delivery, including both current administration and new proposals.

Despite uncertainty about the pace and direction of these trends, a focus on six enablers will position Australia to deliver improved client experience of the tax and transfer system.

(i) Doing more for people

As noted previously, even a simpler tax and transfer system has the potential to be complex for some people who have to deal with it. Improving client experience will require smart service delivery that makes complexity easier for people to navigate.

A client account

To provide convenient access to information about all their tax and transfer affairs, people should have a single client account (or possibly a structure of accounts) with government, which can be viewed and managed online (see Recommendation 122). The account would provide individuals with a single view of their financial relationship with government, including details of their personal income tax, transfers, repayment of education loans, child support and aspects of superannuation (see Section A2-4 Improving people's awareness of the retirement income system). With consent, the account would also present relevant information of other family members (for example, where entitlement to transfers depends on family income).

People would be able to view how their rolling balance with government is building up during the year, including income earned from various sources, taxes withheld and transfers received. Complete information from previous periods would also be available. The account would provide a single point for updating personal information that would then flow to all relevant agencies. For example, transactions could also be undertaken through the account, with information already provided being used to pre-fill forms. Information flowing from third parties affecting liabilities and entitlements would be visible in real time. Finally, the account would provide people with immediate feedback on the impact of changes in their circumstances (such as having a baby or increasing their hours of work) on their net tax and transfer position, as well as allowing them to test the impact of hypothetical changes in their circumstances to better inform their decisions.

The account is illustrated in Chart G4-1 below.

Chart G4-1: Client account

Chart G4-1: Client account

Developments in information technology and potential privacy concerns suggest that the account may not take the form of single government database. Instead a virtual account would be created whenever a client seeks to access it, drawing information in real time from relevant agency systems. Direct personal use of the account would be optional. People preferring to access information or transact directly with agencies through other channels (for example, by telephone or face-to-face) would still be able to do so.

The specific details and features of the account would be determined in light of research on client preferences and involvement of clients in its design.

Use of defaults and 'nudges', including pre-filled tax returns

As noted above, it is well recognised that many aspects of observed human decision-making differ from the so called 'rational' behaviour of individuals assumed in economic models. This has a major impact on decision-making behaviour. People are fearful of losses, handle risk inconsistently, dislike uncertainty, are prone to procrastination, tend to stick with the status quo and are easily swayed by irrelevant numbers. For all but the simplest of decisions, people generally do not attempt to find the optimal solution, but rather apply simple decision-making strategies rather than searching for the best outcome (Dunstall & Reeson 2009).

Insights from human behavioural research indicate how choices are presented to clients in complex systems, such as the tax and transfer system, can have significant impacts on the decisions those clients make (Dunstall & Reeson 2009). To help clients to make choices in their best interests and so to protect their wellbeing, the Review recommends the application of the results of this behavioural research to the administration of the tax and transfer system. This should include utilising assisted decision-making and choice 'nudging' in relation to complex decisions to alleviate the burden of complexity.

A focus of the application of behavioural research should be on providing people with assistance to comply with obligations they find the most difficult. The major one for most individuals is filing their income tax return. Completing income tax returns is a major reason for individuals seeking the assistance of intermediaries such as tax agents. Greater pre-filling of client information into income tax returns is a major way to alleviate this burden for clients, and to improve their experience of the system. With more information pre-filled, the ATO might be able to send returns directly to people. The ATO might still ask the taxpayer to confirm the information in the return and to add any additional information if the person has more complex affairs. But, for most people, the pre-filled return would be a reasonable default. Those who chose to accept it could avoid the complexity of the process of lodging a tax return, as well as the expense of a tax agent.

Recommendation 123 proposes that pre-filled personal income tax returns be provided to most personal taxpayers as a default method of settling their tax affairs each year.

Box G4-5: How pre-filling of tax returns could assist clients in the future

Providing clients of the future tax system with default pre-filled tax returns will be of great benefit to many people.

People with very simple tax affairs (for example, those with employment or bank deposit earnings that have been reported to the ATO) could be sent a pre-filled tax return by the ATO. If correct, these taxpayers could simply confirm the return's details and finalise their tax obligations for the year without resorting to a tax agent. Based on 2007–08 data, around 11 per cent of tax return filers (around 1,380,000 people) could benefit from this approach.

Again, based on 2007–08 estimates, a further 31 per cent of tax filers (3,820,000 people) with deductions for expenses such as work-related expenses and the cost of managing tax affairs would only need to decide whether to accept the standard deduction calculated and pre-filled by the ATO, or provide additional information where their expenses exceeded the standard deduction threshold. Beyond this, a further 14 per cent (1,790,000 people) of filers would need to provide details of gift deductions.

This means that up to 56 per cent of tax filers, or around 7 million people, could complete their annual tax obligations by accepting the standard deduction and specifying the amount of their eligible deductible gifts.

In addition to these people with fairly simple affairs, a further 25 per cent of tax filers (around 3,160,000 people) would have had only had one further label to complete on their tax return to finalise it.

(ii) Policy reforms to simplify the client experience

Policy changes to align definitions and processes in different parts of the system and to simplify rules for determining tax liabilities and transfer entitlements would make the system easier for people to understand and interact with. It would also assist the system being able to do more for them.

For example, there could be greater alignment of income definitions between the tax system and the transfer system. A large number of different income definitions are currently used for different purposes. Moves towards greater commonality of tax income definitions with the transfer system would reduce complexity and simplify the client experience. They would also facilitate streamlined reporting arrangements for clients.

Policy reform to rationalise the number of deductions and offsets for personal income tax would also simplify the experience for clients. As discussed in Section A1 (Personal income tax), the Review recommends that a wide range of deductions and offsets be rationalised and removed from the system, and that a standard deduction be adopted for work-related expenses and for the cost of managing tax affairs. Rationalising deductions and offsets would reduce record keeping requirements and simplify completion of personal income tax returns. It would also enable the ATO to provide a significant proportion of taxpayers with a substantially complete pre-filled personal income tax return as a default.

Streamlining mandatory administrative requirements for clients of the tax and transfer system would also simplify the client experience. Significant administrative requirements present themselves to tax and transfer clients (especially in relation to applying for transfers) as a large number of forms require clients to physically sign and return them, either by mail or in person. Clients may also need to provide original or certified copies of documents, either by mail or in person, to establish their identity or support their application. These cumbersome requirements are a source of constant irritation for clients. To facilitate an improved client experience, the Review recommends such administrative requirements be reformed to relieve clients of unnecessary contact and administrative burdens and provide clients with more convenient service delivery channels.

To ensure these improvements to the client experience of the system are maintained, future tax and transfer policy proposals should be subject to comprehensive impact statements. The effect new policy proposals have on administrative systems (such as technology and administrative application processes) supporting the client experience, as well as on the overall experience of clients interacting with the system, should be determined. These impact statements should be published.

Recommendation 124 proposes that existing tax and transfer provisions be reformed to support improvements in client experience, and future new policy proposals should be subject to comprehensive, published expected impact assessments on client experience systems and outcomes.

(iii) Greater use of real-time third-party reporting

Recommendation 125 proposes that, where possible, information required for determining tax liabilities and transfer entitlements should be collected from third parties, including employers, government agencies, financial institutions, and share and property registries.

More extensive third-party reporting of information needed to determine tax liabilities and transfer entitlements would mean people would need to do less themselves. Real-time reporting of this information and visibility of these flows through a person's client account would enable the system to be more responsive to changes in circumstances and more transparent to individuals.

A wide range of information about clients is provided to tax and transfer agencies by third parties such as employers and financial institutions. This information is used for a range of tax and transfer (and other) purposes, including confirming entitlement to transfers, but is not generally provided to agencies in real time.

If wage and salary information from employers, information about interest paid into bank accounts and information from property and share registries were reported to tax and transfer agencies in real time, clients would be able to meet many of their obligations under the system without having to do anything further. If salary data were reported in real time to a transfer agency, for example, a client's transfers could be recalculated immediately.

A first impression may suggest that such changes could create (possibly significant) additional compliance burdens for third parties. However, aligning such information reporting requirements with natural systems of businesses (such as the payroll system which processes payment of fortnightly salaries of employees) through the use of current and emerging technology, means that after the transition to these changed requirements is complete, overall compliance costs for businesses may actually fall.

These approaches could build on the experience of the Australian government's Standard Business Reporting (SBR) Program (see Box G4-6). The SBR Program is streamlining reporting requirements for business by working with developers of business software to ensure reporting information is held in a consistent way and reports required by regulatory and revenue authorities can be automatically generated.

Box G4-6: Standard Business Reporting

The report of the Taskforce on Reducing the Regulatory Burden on Business, Rethinking regulation, released in April 2006, recommended a whole-of-government business reporting standard. In 2008, the Council of Australian Governments endorsed SBR as one of nine additions to the regulation reform agenda.

The main goal of the voluntary SBR Program is to reduce the regulatory reporting burden on business by developing a single set of reporting definitions in a single language. A further goal is for the information to be sent directly and electronically from the business' systems to participating agencies.

From July 2010, businesses and their intermediaries will be able to see complete or partially complete reports, edit and confirm the details, and send these reports electronically to the appropriate government agency directly from SBR-enabled accounting, financial and payroll systems. Financial reporting is the initial focus, since this affects most businesses. Forms in scope include the ATO's Business Activity Statement, ASIC's Financial Statement and payroll tax administered by State and Territory revenue offices.

SBR is expected to result in businesses and their intermediaries spending less time preparing reports for government, with savings expected to reach approximately $800 million per year when fully implemented (Madden 2009).

Strategies such as the SBR Program (and approaches that build on it) will not just facilitate improving the experience people have of the system, but will also help improve the experience businesses have of the system. Among other things, such strategies will alleviate business compliance costs that arise out of interactions with government (see Recommendation 126).

The capabilities provided by the SBR Program will produce significant improvements in relation to government reporting for businesses. The benefits to business of using SBR, however, are not limited to government reporting. The use of SBR's reporting definitions, and the process of mapping those definitions to the information held in businesses' accounting and financial systems, offers further potential for improving reporting both within and between business entities.

Box G4-7: Building on Standard Business Reporting — beyond 2010

The current scope of SBR focuses on the high volume and frequent financial reporting by businesses. Once the current scope and base capability of SBR is delivered and bedded down, work will begin on increasing SBR's scope.

The key design principles for SBR involve the development and implementation of a single set of definitions and language for government reporting; enabling business accounting and financial systems to become the portal for business to report to government; as far as possible, making reporting to government a by-product of natural business systems and processes; and applying open and international standards based approaches wherever possible.

These principles have been applied to the current SBR design and it is intended the principles will be applied to other forms of reporting from business to government where information in accounting and financial systems can be leveraged to satisfy reporting requirements.

Further areas of reporting that would quickly leverage the SBR approaches include extension of the use of the 'single SBR credential' to other government agencies; occupational health and safety and workers' compensation reporting; the not-for-profit sector to enable the development of the proposed single chart of accounts; Department of Human Services requirements in relation to employees (for example, those of Centrelink); the superannuation industry; the Carbon Pollution Reduction Scheme; and sustainability reporting.

Given the SBR business model (and possible approaches building on it) relies on reporting directly from the accounting or financial systems used by business, the benefit of such approaches will increase in line with the number of businesses that use them. Use and acceptance of SBR approaches to reporting will be further enhanced by encouraging and enabling small businesses to adopt these approaches wherever possible.

It is well accepted that compliance costs have a proportionally greater impact on small businesses than on larger businesses, and these costs appear to have been growing over time (Board of Taxation 2007). Governments have made progress to help small businesses reduce compliance costs through a mix of education, streamlining administration and tax concessions. A further approach government could adopt to support small businesses to comply with the tax system (and help them improve people's and their own experience of the system) is by assisting them to be 'business-ready' to meet their reporting and compliance obligations when they commence business (see Recommendation 127).

Such assistance would aid small business to cope with their tax compliance obligations and to make informed investment decisions from the outset. Such assistance could include supporting small businesses to obtain professional accounting and legal advice in establishing their record keeping and accounting processes/systems, or assisting them to acquire appropriate technology in order to manage the taxation and other regulatory systems.

Despite the value of existing programs designed to help small businesses with their taxation obligations, there may be opportunities to provide assistance beyond current education and training, such as providing financial assistance to seek professional advice, or acquiring technology that enables electronic lodgement of forms and record keeping. Such an approach would provide an incentive to the software industry to develop products fit for purpose for small businesses but able to be scaled up to larger operations as the business grows. Such assistance, for example, could include providing support to small businesses to help them into (so to receive the benefits of) the SBR Program (see Recommendation 127). This assistance may consist of providing small businesses with a voucher that can be spent on software or technology to enable their business to utilise SBR.

As noted previously, relying on the 'natural systems' of third parties is also likely to improve the integrity of the system through more comprehensive and accurate provision of information.

Greater use of real-time third-party reporting would require legislative change to authorise it and, over time, make electronic reporting mandatory. Currently the rules about electronic reporting to government vary depending on the type of obligation. In some cases only large organisations are required to use electronic channels but many smaller organisations choose to deal with government electronically because of the convenience and efficiency offered. To enable individual citizens to access automated tax and transfer reporting, the third parties with which they have financial relationships will need to provide data to tax and transfer agencies that is accurate, timely and presented in a format that can be used by the client account.

(iv) Information standards to support interoperability

To take advantage of advances in technology and innovations in service delivery, urgent attention is needed to develop and adopt information standards that support interoperability of government and private sector systems. Specific initiatives, such as the client account and enhanced pre-filling, will not be possible without such standards.

Currently, government information management is fragmented. Client information and data are currently recorded in many different ways by various government and private sector bodies. Even simple things such as names and addresses are not recorded in a uniform way by such bodies. To facilitate a better client experience, it is important that information about a client can be recorded in a standard format that is easily interchangeable. Even with advances in information technology and data matching, verification of non-uniform client information can be a difficult and time-consuming process.

Development and adoption of standards is a substantial undertaking requiring a disciplined approach. The SBR Program provides a useful illustration of the processes and governance required to streamline and standardise information collection across multiple agencies and levels of government. The SBR Program has identified a potential reduction of 71 per cent in the number of unique pieces of data that business has to assemble, analyse and report to government — cutting it from 9,648 to 2,838 (Madden 2009).

Recommendation 128 proposes that common information standards, leveraging from the standards and governance put in place by the SBR Program, should be developed and adopted.

(v) A modern privacy and secrecy framework

People will be more willing to engage with a system that they trust and that is transparent to them.

Maintaining trust needs to be married with people's expectations that they should not have to provide government with the same information many times. Under the current tax and transfer system, where clients provide information to one government agency, that agency is sometimes unable to provide the information to other government bodies, due to privacy and secrecy laws. These laws limit the types of information that can be shared with other agencies and the circumstances in which it can be shared.

Having a modern privacy and secrecy framework that facilitates exchange of client information between government bodies would improve client experience of the system. Such a framework would, among other things, support the pre-filling of client information into application forms for transfers as well as the pre-filling of income tax returns.

The Commonwealth's secrecy and privacy laws are currently under examination.10 In line with the general directions for change emerging from these processes, the future client experience will need a privacy and secrecy framework that obtains informed consent for broader use of information collected by any specific agency. This is likely to involve broadening the scope of the 'purpose for which the information is collected' to include supporting the management of a person's financial relationship with government.

Recommendation 129 proposes that a modern privacy and secrecy framework be developed and adopted.

A building block for facilitating information exchange is common authentication processes. For information to be exchanged easily between different types of organisations and entities, a reliable method is required for identifying records relating to a specific individual across different systems.

Currently many different client identifiers are used by federal, State and local government agencies. Private sector organisations use their own identifiers. A more efficient exchange of client information to facilitate improved client experience of the tax and transfer system requires either consolidation or linking of these identifiers (see Recommendation 130).

Linking records can have a number of benefits. These include increased administrative efficiency and enhanced data accuracy. It can also support evidence based policy development by facilitating drawing together administrative data into longitudinal cross agency sets. Academics and other external researchers could then access suitably confidentialised extracts.

On the other hand, linking records raises a number of privacy issues such as a possible change in the relationship between the individual and those they provide information to. Such a change in relationship could occur because the amount of client information available to different government agencies may possibly be broader and much more detailed than what is currently available to those bodies.

Health information is especially sensitive because it is very personal to individuals. For the purposes of privacy law, health information includes details about a person's health, any disabilities they may have, and medical treatments they may have undertaken. Due to the sensitivity attached to this information, it attracts additional privacy protections. Reforms under way to the Commonwealth's privacy laws, as well as initiatives to improve service delivery to individuals, acknowledge the delicate nature of such information. Given this sensitivity, health records should not be linked to arrangements discussed above.

An alternative (or perhaps a stepping-stone) to either consolidation or linking of client identifiers by government could be for clients to choose to link their various identifiers. Where individuals wanted the improved service benefits such linking could provide, they could choose to link their identifiers. As a result, when an individual filed their tax return or applied for a benefit, they might be asked to provide (once) multiple identifiers (for example, their tax file number, Medicare number and Centrelink reference number). Thereafter, these numbers would be linked and their client service enhanced.

(vi) Institutional reform

The existing institutional framework for taxes and transfers makes it difficult to achieve reforms that improve client experience quickly or reliably. As noted earlier, this is because initiatives to improve client experience in the system are largely progressed on a portfolio or organisational basis. Portfolio priorities thus determine what improvements are made. Portfolio priorities also tend to be given greater weight than cross-portfolio objectives, such as improvements in the way clients experience the whole system. Further, new policy objectives adopted in either the tax system or the transfer system (or other parts of government) may compromise future client experience objectives. Improving the client experience of the tax and transfer system requires a whole-of-system approach to governance.

Canada is considered an international leader in integrated service delivery. It has coordinating councils and support organisations that contribute to the development of common standards and approaches to integrating services and technology between agencies and levels of government.

In Canada, the Public Sector Chief Information Officer Council and the Public Sector Service Delivery Council have been in existence since the late 1990s. They bring together federal, provincial/territorial and municipal officials to exchange information on best practices, conduct joint research, adopt common practices and collaborate on service delivery.

Further, the Institute for Citizen-Centred Service (ICCS) is a non-profit organisation with a board of directors made up of leaders in service delivery and information technology from municipal, provincial and federal public sectors across Canada. The ICCS undertakes research to identify citizens' service needs and expectations, to assist the public sector in identifying and applying innovative, best practice service solutions, and to respond effectively to citizens' service needs.

The above initiatives may well be worth considering in the Australian context, but go beyond reforms of the tax and transfer system.

To achieve the narrower objective of improving client experience of the tax and transfer system, the Review recommends that a high-level taskforce be established under central agency leadership with the task of progressing the recommendations contained in this section (see Recommendation 131).

The taskforce could take a similar form to the SBR Program. There would be a small expert secretariat charged with implementing the reforms. It would need members with a mix of skills, with membership drawn from relevant government agencies as well as the private sector, including tax and transfer client representatives.

Key functions of the taskforce would include developing, consulting and overseeing reforms of the administrative arrangements and technologies that deliver the client experience of the tax and transfer system. The taskforce would regularly report on its progress to the Australian government and to Parliament. Additionally, to achieve its aims, the taskforce would lead consultations with relevant stakeholders, including citizens, privacy advocacy groups, professional associations, financial institutions and employer groups.

As a range of government processes are currently exploring citizen-centric service delivery, the taskforce would also be responsible for positioning the client experience reforms within the government's overall initiatives to improve the interaction between government and people.

The Review has gained great value from its public consultations and supports citizens being given more opportunity to contribute to service delivery design of the tax and transfer system.

There are some interesting international examples of getting citizens involved in service delivery reform. In 2003 the Belgian Secretary of State for Administrative Reform was asked to reduce the 'rigmarole' experienced by citizens and businesses in dealing with government regulation. Contact points were set up where people could make remarks and suggestions about administrative simplification. Every day, www.kafka.be received about ten proposals on how to improve existing regulation. As a result, within four years more than 200 laws and regulations were abolished or simplified.

In Australia, the Gov 2.0 Taskforce has been formed to investigate how the Australian government can use new 'Web 2.0' approaches to expand the uses of Commonwealth information and improve the way government consults and engages with citizens. The taskforce will make recommendations on how to maximise the extent to which government utilises the views, knowledge and resources of the general community.

Similarly for the proposed taskforce, a mechanism for engaging citizens in service delivery reform and capturing feedback from citizens on government service delivery, including both current administration and new proposals, would be of benefit. The ability to confirm with citizens what their preferences for improved client experience are, and to test possible reforms before implementing them, would be of great value.

Box G4-8: A day in the life of clients of Australia's future tax and transfer systems

Abby and Hank are a couple with two children. Abby works full time and Hank will be starting a new job tomorrow, after taking a year off from work to care for the children.

Updating his personal details with regard to the new job, Hank logs onto his government client account and in one transaction is able to provide his updated details to all relevant private and public sector bodies. This includes advising his employer of his tax file number and withholding details, and advising Centrelink of his employment income that may lead to changes in family or other transfer payments.

A month later, Hank accesses his client account to see a summary of his whole relationship with government, including his running balance of tax liabilities and transfer entitlements in real time. Hank checks his salary details, tax liability and transfer payments to determine what impact his employment income has had on his transfer payments. He uses a link to his superannuation account to check that payments of superannuation by his employer have commenced. Abby logs onto her client account and verifies that her details about transfer payments are the same as Hank's.

At the end of the financial year, Abby and Hank log onto their client accounts to see what transfers they received and the tax-related information used to finalise their affairs for the year. Using the client account, Abby and Hank's tax affairs are straightforward. Neither has to fill in a tax return as all relevant information has been collected from third-party information systems. They are both provided with a statement of their annual tax result.

The experience of clients of the future tax and transfer system such as Abby and Hank is much simpler, more transparent, accessible and timely than it was for clients in 2009.


10 The Australian Law Reform Commission is currently reviewing the Commonwealth's secrecy laws. The Government's response to the Australian Law Reform Commission report 'For Your Information: Australian Privacy Law and Practice' was released at the Australia and New Zealand Chapter of the International Association of Privacy Professionals conference in Melbourne on 14 October 2009.