Introduction

1. In 2009–10 the ATO employed over 21 000 staff working in 61 locations across Australia. During this period, it managed 39 million taxpayer lodgments, processed over 33 million business activity statements and income tax returns, maintained 23 million active tax file numbers and handled over 10 million incoming phone calls.[1]

2. The same year, 2009–10, also marked the centenary of the establishment of a federal government taxation agency. By comparison, in 1910, the equivalent of today’s modern ATO administered a single tax, the federal land tax, and processed only 15 000 taxpayer returns.[2]

3. As the scope and complexity of government systems has grown, including the taxation and superannuation systems, the expectations of the Australian population in terms of the prompt, efficient and effective delivery of public services have increased commensurately. Within this context, the 2010 Moran Review, Ahead of the Game: a blueprint for the reform of Australian Government administration, proposed a number of improvements to government service delivery to better meet client and community expectations, including the development of a cross-departmental service delivery strategy.

4. The ATO engages with the Australian community through four service delivery channels:[3]

• on-line, where a member of the community can access a range of ATO products and services through the agency’s website;
• on-call services that provide ‘local call’ 1300 numbers to access ATO products and services from anywhere in Australia, including the provision of interactive voice recognition capabilities;
• on-paper communication that includes direct correspondence with taxpayers by letter and fax; and
• on-site, where members of the community can personally interact with ATO staff.

5. The ATO has developed key strategies setting out its future direction for service delivery. These include an overarching Channel Strategy for 2008–12[4] and supporting on-line, on-call, on-paper and on-site strategies. These strategies give effect to the government agenda for a more streamlined and whole-of-government approach, and outline the ATO’s clear preference to increase taxpayers’ uptake of on-line and on-call services.

6. Supporting this direction, the ATO has provided opportunities for improved service delivery through the application of new information technology, and continues to develop web-based options to meet client needs, such as the adoption of the new on-line security credential, Auskey, that provides access to government on-line services. Further, a wide range of ATO services that are managed by the Customer Service and Solutions business line are available to tax practitioners and the community through ‘local call’ 1300 numbers from anywhere in Australia.

7. While the future direction for the delivery of services is through greater use of on-line and on-call facilities, the ATO also maintains engagement with the Australian community through ‘on-site’ services. These services represent approximately three per cent of overall channel use, and are estimated by the ATO to be the most expensive means of delivering a service.[5] Previously referred to as services delivered in a ‘face-to-face’ environment,[6] the ‘on-site’ channel definition is broad and includes any location where members of the community can personally interact with ATO staff, including at ATO shopfronts.

ATO shopfronts

8. ATO shopfronts are managed by the Client Services and Assistance stream in the Micro Enterprises and Individuals business line. Services provided within shopfronts enable members of the community to:

• speak to ATO staff in a face-to-face environment;
• collect a range of ATO publications and brochures; and
• use self-help options to access ATO information and services.[7]

9. Shopfronts have also been allocated additional tasks to allow for a minimum effective operational staffing level. These additional responsibilities are:

• responding to non-interpretative correspondence (NIC);[8]
• resolving a portion of taxpayers’ complaints directed at the
  Micro Enterprises and Individuals business line; and
• assisting the Secondary Schools Education and Tax Help programs.[9]

10. The Alice Springs shopfront also provides additional specific services to Indigenous clients through staffing the National Aboriginal and Islander Resource Centre, and by the manual processing of Indigenous TFN applications.[10]

11. Of the original 27 shopfronts established in the late 1990s,[11] 18 remained operational in or near ATO buildings as at March 2011. Since 2005–06, shopfront interactions have generally been declining, as a result of the greater use of the internet to access the ATO website. During 2009–10, shopfronts had 662 078 general visits, compared to 762 018 in 2005–06.[12] The ATO decided in 2009 to close off-site shopfronts,[13] where practicable, at the end of their lease.

12. As part of a review of shopfronts undertaken in April 2010.[14] the ATO surveyed shopfront clients to identify the characteristics of people who typically conduct their business with the ATO through a shopfront. These clients were identified as people who are not comfortable with other forms of  communication with the ATO, or who believe that they are required to visit in person to obtain assistance. Within this group, migrants from a non-English speaking background and older Australians are highly represented.

Alternative delivery models of shopfront services

13. Three programs are underway to trial alternative delivery methods for some of the services available in shopfronts, and to extend them over a wider geographical base. These programs, involving various placements of ATO staff, publications and services in the public contact areas of other agencies or organisations, are:

• a shared services arrangement whereby Centrelink Customer Service Centres (CSCs) and Medicare Australia outlets display and promote certain ATO publications and services, primarily during the peak tax time period from July to October each year. (This program was trialled in 2008; and extended more broadly in 2009–10);
• shopfront services delivered through co-located sites at four Centrelink CSCs and the Rockdale Migrant Resource Centre in Sydney;[15] and
• services delivered through Australia Post outlets, to administer taxpayers’ tax file number (TFN) applications, similar to the service that is currently available for passport applications.[16]

Administrative arrangements for shopfronts

14. Responsibility for the administration of ATO shopfronts, the shared services arrangement with Centrelink and Medicare Australia, and the trial of co-located sites, rests with the Shopfronts and Shared Services section of the Client Services and Assistance stream, within the Micro Enterprises and Individuals business line. The TFN enhancement project is administered by the Client Account Services business line.

15. The Micro Enterprises and Individuals business line plan for 2010–11 identifies a client base of around 2.7 million micro businesses, 400 000 self-managed superannuation funds, and approximately 12.6 million individuals who lodge income tax returns. The 18 existing shopfronts provide the full range of shopfront on-site services to a small, and declining, proportion of the business line’s client population.

Costs of administering shopfront services

16. For 2010–11, the ATO advised that the average number of full time staff for shopfront operations was 125, with an operating budget of $9.4 million. The operating budget includes the management of the five co-located pilot sites and the shared services arrangement. The cost to the ATO of the shared services arrangement with Centrelink for 2009–10 was $178 192. The ATO bears no additional cost in providing publications in Medicare Australia offices.

17. The ATO also allocated $321 100 for the co-located pilot sites being trialled in four Centrelink CSCs and one Migrant Resource Centre in 2010–11.[17]

Audit objective

18. The objective of the audit was to assess the effectiveness of the services delivered through ATO shopfronts to individual and micro enterprise tax clients. Particular emphasis was given to the:

• delivery of services to clients; and
• planning and reporting processes for shopfront services.

Overall conclusion

19. Shopfronts were established in the late 1990s, to replace the ATO’s Enquiry Counters. The new look, open-plan shopfronts facilitated easy access to ATO staff and publications, as well as providing direct links to ATO phone and web-based services. Over the last decade, however, the provision of
face-to-face or on-site services has been overtaken by developments in service delivery capabilities and approaches, and influenced by whole-of-government initiatives.[18]

20. All existing ATO shopfronts provide a standard range of services to the community that are being delivered effectively. However, the availability of telephone advice, and on-line and web-based services has meant that taxpayers have convenient access to a broad range of ATO services at times of their choosing. Service standards outline the level of performance the community can expect when dealing with the ATO, and the standard relating to general enquiries, which measures client waiting times, is the single service standard reported for shopfronts.

21. On-site services, such as those delivered through shopfronts, may provide a more personalised environment, but are generally the most expensive means of delivering a service, are accessible by only the small proportion of ATO clientele living or working in their immediate vicinity, and, only being available during normal business hours, do not provide the flexibility or range of services available through on-line options. While the personal circumstances of some people in the community preclude their use of on-line or phone services to conduct their business with the ATO, the strategy underpinning shopfronts has not effectively identified the full extent and size of this client group, or developed a specific, targeted service to meet their needs.

22. The ATO proposes to close off-site shopfronts, where it is practical to do so, at the end of their lease, and is trialling alternative delivery programs designed to provide a form of shopfront, or on-site service offer in these locations. The programs also seek to extend selected services to ATO clients across a wider geographical base, particularly those living in more rural and remote locations. The approach adopted for these programs has been based on existing shopfront arrangements involving a model of service delivery utilising ATO staff, located in ATO premises, with direct access to ATO phone and web-based services through its computer systems.

23. Consequently, the alternative delivery options provided through other agency and community sites do not necessarily provide the same level of services available through ATO shopfronts.[19] There is scope to better define the intent of the trials, and to consider if the shopfront service offer is the most appropriate model on which to base the alternative delivery options. The ATO has clearly defined its future strategy for the delivery of services through on-line and on-call services, and extending shopfront services, as is being trialled in the co-located sites, does not readily align with that strategy.

24. The ATO is also currently conducting a TFN enhancement program through Australia Post outlets that is more clearly defined. This trial outsources the processing of TFN applications and proof of identity requirements, using the Australia Post network and new technology. If successful, individual taxpayers will be able to apply for a TFN through any Australia Post outlet, with more flexible means of meeting their proof of identity requirements.

25. The ATO has developed channel management strategies to provide direction for service delivery initiatives across the agency, but the linkages between the development of the shopfront trials, the TFN project and the broader channel and on-site strategies are unclear. The governance arrangements for the management of the channel and supporting strategies have recently been changed, and the new management structure is likely to provide better integration and increased support and direction for all service delivery trials, including shopfronts.

26. In October 2009, the ATO conducted a survey of shopfront clients to assist with better understanding of the reasons clients attend a shopfront. Survey results identified older Australians and migrants, particularly those from a non-English speaking background, as key users of shopfront services. While the survey identified those people who are most likely to use a shopfront where one exists, the scope and design of the survey did not allow for a more comprehensive understanding of shopfront usage. The survey could more effectively have captured information that would be of value to the on-site strategy, such as identifying those clients whose personal circumstances may preclude their use of alternative delivery channels, and facilitate consideration of different options for delivering a service to them.

27. During the course of the audit, the ATO advised that discussions have commenced, as part of the broader channel management strategy, to conduct surveys to identify ways of moving those taxpayers, who still lodge their income tax return via paper forms, to electronic lodgement.

28. The ANAO has made one recommendation aimed at better informing the direction of shopfront services.

Key findings by Chapter

Service Delivery (Chapter 2)

Services delivered through ATO shopfronts

29. Key processes and practices underpinning the delivery of services in shopfronts are sound: the development of shopfront topic boundaries provides consistency in service provision across shopfronts sites; topic boundaries provide staff with guidance on a range of taxation topics and how they should be managed; and the timeliness of services delivered against a general enquiries service standard are monitored.[20] The ATO has also implemented an Integrated Quality Framework (IQF) to support the quality of staff interactions with clients.

30. Relatively few complaints are received about shopfront services. An analysis of 143 complaints received in the Micro Enterprises and Individuals business line, and processed by shopfront staff, indicated that, in 80 per cent of cases, the client was actually seeking information, rather than expressing dissatisfaction about an aspect of service.[21] Only 12 of the 143 complaints reviewed related specifically to shopfronts servicing. The analysis recommended changes to the ATO’s web-site to make it easier for users to navigate, and hence to access information more easily.

31. A range of other tasks are undertaken by shopfronts in order to utilise the available resources and staffing levels. However there is no efficiency measure applied to the allocation of these tasks to shopfronts, and the benefit of this arrangement to other areas of the ATO, as well as services to the community, is not assessed.

32. The Alice Springs ATO shopfront operates a specialised telephone help service for Indigenous Australians, through the National Aboriginal and Torres Straight Islanders Resource Centre (referred to as the Indigenous Hotline). While this arrangement was aimed at improving services to Indigenous clients, it initially resulted in a high volume of calls not being answered. In 2009–10, approximately 35 per cent of calls resulted in the caller hanging-up prior to the call being answered or diverted to a message facility. Over the last two years, however, the ATO has implemented improvements to the management of calls received by the hotline.

33. The Alice Springs shopfront also processes all Indigenous TFN applications, including those accepted at other shopfronts throughout Australia. In 2009–10, the Alice Springs’ shopfront team processed all of the 7402 Indigenous TFN applications within the relevant 28 day service standard.[22] This was the first year that all such TFN applications were processed in the shopfront network.

Services delivered through alternative programs

34. Where practicable, the ATO has decided to close off-site shopfronts as their leases expire, and is trialling alternative models for delivering the on-site services currently provided through its 18 shopfronts. Shopfronts are predominantly located in urban centres, and the shared services arrangement in particular, also aims to extend services to regional and remote locations across Australia.

Shared services arrangement

35. Through a shared services arrangement with the Department of Human Services, some ATO publications and services are available through the Centrelink network; and similarly, through a Letter of Offer, in Medicare Australia offices, during the peak tax period from July to October each year. The arrangement will be in place for each annual tax time period until 2013.[23]

36. While this arrangement extends the geographical range of a limited ATO service, e-tax facilities could not be provided, as had been envisaged for the 2009–10 peak tax period. Monitoring of the standard of services is limited, based primarily on the number of people accessing the service and referred to
Tax Help, and the number of publications that were distributed.

Co-located sites

37. A six month pilot program extending the reach of a range of shopfront services through four Centrelink Customer Service Centres (CSCs) and one migrant resource centre (MRC) was conducted from July to December 2010. Notwithstanding that people from a non-English speaking background had been identified as a key group using shopfront services, only 23 clients had accessed the service between July and September 2010. Given the low up-take of the service, the ATO decided to cease the MRC pilot half way through the trial period, noting that clients from the migrant community could still access services through the local ATO shopfront.

38. An evaluation of the first three months of the project reported that the co-located sites were meeting client expectations and the supporting infrastructure arrangements were generally effective.[24] Findings about the service being provided were positive, based on the ease of access to the pilot sites, and that client information needs had been met. The interim report also confirmed findings from the earlier shopfront review, that the majority of clients visited the shopfront service for two reasons: they preferred a face-to-face service or they preferred to present their original documentation in person rather than via the postal service.

39. The provision of the services through the four Centrelink CSCs was extended for a further six months. However, the pilot sites may not have provided sufficient opportunity to fully meet the intent of the pilot. Only one pilot site offered the full range of shopfront services and the closure of the MRC trial, notwithstanding the limited take up of the target group, reduced the potential to identify specific issues associated with clients from a non-English speaking background. None of the trial sites are located in other than established regional and urban locations, but ATO staff participating in the program experienced some difficulties with technology and the use of wireless laptops to log into the ATO system.

40. A draft of the final evaluation report on the six months trial of the five pilot sites included key findings that:[25]

• ATO and Centrelink staff forged constructive working relationships;
• the ‘full service’ shopfront service model and the ‘by-appointment’ service model were effective;
• the self-help model was not effective; and
• the ‘by-appointment’ service provided through the Migrant Resource Centre was not effective.

41. However, the position of the trial in relation to the broader channel and on-site strategies is not clear. The report states that the intent of the ‘full service’ trial site was to replicate the services provided through an ATO shopfront. This does not necessarily align with the general direction of service delivery being promoted in other areas of the ATO, namely to migrate clients away from on-site, and towards on-line service options.

Processing TFN applications through Australia Post outlets

42. Eighteen Australia Post outlets are participating in a 10 month trial commencing in August 2010, to process taxpayers’ TFN applications. This is the second of a three phase TFN enhancement program directed at improving taxpayers’ experience in applying for and validating their TFN, reducing paper transactions and expanding the use of electronic channels, including for proof of identity requirements. Phase one outsourced arrangements for managing TFN mail, and phase three will provide more flexible options for taxpayers to meet their proof of identity requirements.

43. The outcome of this trial, should it prove to be successful, will substantially reduce the proportion of TFN paper based transactions processed by the ATO, which represents around 18 per cent of the work currently undertaken in shopfronts, including a third of all interviews. To maintain minimum effective operational staffing levels, shopfronts would have to find additional work following any reduction in the volume of TFN related work.

Planning and reporting of shopfront services (Chapter3)

44. The ATO’s Channel Strategy 2008–12 and supporting on-line, on-call, on-paper and on-site channels provide direction for the planning and development of service delivery approaches across business lines, and outline the ATO’s clear preference to migrate taxpayers away from the other channels to on-line service options.

45. The On-site Strategy 2009–12, provides a framework for the direction of shopfront services. The key priority areas for the on-site strategy are to:

• deliver on-site services more tightly to meet the special needs of key taxpayer and intermediary groups;
• identify and transition current on-site services that could be provided electronically;
• enhance the remaining core on-site services; and
• capitalise on whole-of-government initiatives.[26]

46. To implement the strategies, the ATO identified the need for an integrated cross-enterprise approach to channel management, and formed the Channel Strategy Reference Group (CSRG) in 2008 to oversee the delivery strategy program of work.[27] The ATO advised that, while there was broad representation on this group, the terms of reference and composition of the CSRG did not allow for the necessary level of direction and co-ordination of the different service delivery options being trialled across the ATO, including in shopfronts.

47. The CSRG was dissolved in September 2010 and revised channel strategy management arrangements were centred in the ATO’s newly established Integrated Service Steering Committee (ISSC).[28] Draft governance arrangements for the ISSC bring together the responsibilities previously held by the ATO’s Whole-of-Government Steering Committee[29] and will provide support to new enterprise based channel management arrangements, including for shopfronts.

Planning for shopfront services

48. Planning for the operations of the existing shopfronts, the shared services arrangement, and the co-located pilot sites is undertaken in the Client Services and Assistance stream. At a higher level, the Micro Enterprises and Individuals business line plan 2010–11 describes how the business line will deliver on the strategies outlined in the ATO’s annual plan, including the piloting of shopfront services.

49. Combined, the business line and stream plans set out the operational arrangements for shopfronts and the service delivery trials, but there is no reference in either plan to the channel or on-site strategies. There is clear ‘line of sight’ responsibility for decision-making through the Micro Enterprises and Individuals business line. However, the co-ordination of planning processes for shopfronts with the overarching channel and supporting strategies and service delivery initiatives in other areas of the ATO, such as the TFN enhancement program, is less well defined.

Understanding the taxpayer experience

50. Undertaking research is important to providing an understanding of taxpayers’ experience and expectations of service delivery through all the available ATO channels.

51. With the exception of the survey undertaken as part of the shopfront review in April 2010, the ATO does not undertake any specific channel research. Instead it relies on information provided through generic surveys, which provide the ATO with limited information on clients’ preferences and levels of satisfaction with the service provided, or expectations in relation to each channel.

52. Further, the project brief for the shopfront review indicated that the client survey would be conducted at three-monthly intervals to capture details at various trigger points throughout the tax year, and that it may also be of value as part of a longitudinal study to capture and measure shifts in taxpayer behaviour in future years. However, the survey has only been conducted on one occasion as part of the shopfront review, although less detailed surveys have been undertaken as part of the shared services arrangement and shopfront pilot sites.

53. During the course of the audit, the ATO advised that discussions have commenced as part of the broader channel management strategy to conduct surveys to identify ways of moving those taxpayers, who still lodge their income tax via a paper form, to electronic lodgement.

54. There is scope for the ATO to develop a better understanding of client expectations in respect to the services delivered through ATO shopfronts and co-located sites. Such analysis would:

• improve the identification of clients whose personal circumstances may require ‘face-to-face’ assistance, and assist in identifying different options for delivering such a service;
• assist with transitioning clients to use on-line or on-call services; and
• more effectively contribute to the key priority areas in the on-site strategy.

Reporting of shopfront services

55. The performance of shopfronts and the two service delivery trials is adequately monitored and reported within the Micro Enterprises and Individuals business line, notwithstanding that the performance indicators for the shared services arrangements and shopfront pilot projects are relatively limited. However, there would be merit in the reporting of shopfront service delivery trials to other areas of the ATO in order to contribute to the broader channel strategies.

56. Shopfront performance information is reported in the Commissioner of Taxation’s annual reports and information on current year performance against service standards is available on the ATO’s website. The 2008–09 and 2009–10 annual reports[30] also detailed the ATO’s strategy to migrate shopfront clients from on-site to on-line delivery channels, and provided details of the shopfront pilot programs in Centrelink CSCs and the migrant resource centre.

Summary of ATO response

57. The ATO’s summary response to the report is reproduced below. The full response is at Appendix 1 of the report.

The ATO welcomes the Australian National Audit Office’s performance audit report into the Administration of Tax Office Shopfronts.

The report notes that key processes and practices underpinning the delivery of services in Shopfronts are sound and that service provision is consistent, quality-checked and monitored.

The ATO agrees to the recommendation and supports the view that the direction of Shopfront services will benefit from more targeted client research and a more co-ordinated approach to service delivery initiatives across all channels.

Footnotes

[1] Commissioner of Taxation Annual Report 2009–10, Canberra, 2010, p. vi.

[2] ibid., attachment to the report: The Australian Taxation Office Centenary 1910–2010.

[3] A delivery channel is the term used to describe a mechanism used by an agency to provide a service to the community.

[4] A channel strategy is a set of business-driven choices aimed at delivering services to clients efficiently and effectively using the most appropriate mix of delivery channels.

[5] Channel Strategy Reference group submission, Marking Communications Line, 26 August 2009. The unit cost to process a tax file number on-line was calculated at $0.26, and each shopfront visit was estimated to cost $12.08.

[6] The ATO recognises the Australian Government classifications established by the Australian Government Information Management office (AGIMO). Department of Finance and Administration; Delivering Australian Government Services: Managing multiple channels [Internet]; Canberra. 2006; available from <http://www.finance.gov.au/publications/delivering-australian-government-services-managing-multiple-channels/docs/mmc.pdf> [accessed 28 April 2011].

[7] Self-help options, also referred to as self-service options, include ATO telephones, computers and publications.

[8] NIC is a written request received in a ATO shopfront for information covered by the Shopfront topic boundaries. Topic boundaries provide staff with guidance on a range of taxation topics and how they should be managed.

[9] The Secondary Schools Education Program entails ATO staff delivering presentations in secondary schools and processing student TFN applications collected by the schools. Tax Help is a community-based program that uses volunteers working within a network of community centres to assist
low-income and disadvantaged people to prepare and lodge their income tax returns.

[10] Indigenous TFN applications are available specifically for Aboriginal and Torres Strait Islanders who may not have the necessary documents, such as a birth certificate, to prove their identity.

[11] ATO shopfronts were established in the late 1990s to replace ATO Enquiry Counters. Internal ATO document, Shopfront Review Report, Micro Enterprises and Individuals business line, April 2010, p. 10.

[12] Commissioner of Taxation Annual Report 2009–10 Annual Report 2009–10 and 2005–06, Canberra.

[13] ATO Executive Submission, Micro Enterprises and Individuals, 7 December 2009.

[14] Shopfront Review Report, Micro Enterprises and Individuals business line, April 2010.

[15] The formal pilot period ended in December 2010, but the arrangement with the participating Centrelink CSCs was extended for a further six months, to the end of June 2011.

[16] Sixteen Australia Post outlets in Victoria and two in New South Wales are participating in the trial for a 10 month period from August 2010 to June 2011.

[17] This amount includes reimbursement of $80 000 to Centrelink for the provision of a full shopfront service from the Biggera Waters (QLD) Centrelink CSC.

[18] Australian Government Department of the Prime Minister and Cabinet; The Moran Review, Ahead of the Game: a blueprint for the reform of Australian Government administration; Canberra; 2010.

[19] Access to ATO staff may be limited to only a few hours per week; other agency staff can only respond to tax related enquiries by referral to ATO self-help options or community programs; and technology constraints currently limit access to some web-based services, including e-tax.

[20] Under this service standard, the ATO has undertaken to attend to clients within 10 minutes of their arrival at a shopfront, and within 15 minutes during the peak tax period (from July to October). In 2009–10, shopfronts exceeded the general enquiries service standard, with over 95 per cent of clients attended to within the specified timeframe.

[21] The 143 complaints were received in the three months from 1 July – 4 October 2010.

[12] Heartbeat report for fortnight ended 30 June 2010, Client Services and Assistance, June 2010.

[23] This program was trialled in 2008–09, and so the first year, 2009–10 was effectively post the formal trial period.

[24] Shopfront co-location interim report evaluation of July to September period 2010, Micro Enterprises and Individuals business line, 18 October 2010.

[25] Shopfront Co-location pilot evaluation. Micro Enterprises and Individuals business line, 7 April 2011.At the time of the audit, this report was in draft form, and had not been considered by the ATO Executive.

[26] On-site Strategy 2009–12, Micro Enterprises and Individuals business line, July 2009, p. 17.

[27] The ANAO did not review the operations of the CSRG.

[28] Membership of the committee is at the senior executive level, and it is chaired by the ATO’s Chief Operating Officer. The committee reports directly to the ATO Executive.

[29] The Whole-of-Government Steering Committee was established to oversee the ATO’s
Whole-of-Government work program, and was the key internal decision-making and steering forum directing this program.

[30] The ANAO examined annual reports for 2006–07 to 2009–10. Each report included shopfront performance data relating to the number of client visits, the type of visits (for example, did a client require a more detailed interview to answer the enquiry) and performance against the service standard for attending to general enquiries.