Introduction

1. The Australian Taxation Office (ATO) is responsible for administering Australia’s taxation and superannuation systems. It seeks to build confidence in its administration through helping people understand their rights and obligations, improving ease of compliance and access to benefits, and managing non-compliance with the law. In 2012–13, the ATO collected $311.7 billion in net cash from taxpayers, incurred operating expenses of $3.5 billion, and had around 25 000 staff.¹

2. While administrative systems are generally designed to deliver high quality services for clients, they are not infallible, and errors, misunderstandings, client dissatisfaction and unexpected problems inevitably occur. Effective complaints handling assists in resolving problems before they escalate, provides a remedy to clients who have suffered disadvantage, and nurtures good relations between government agencies and the public. Complaints and suggestions for improvement also provide agencies with information about potential program weaknesses and service delivery faults, and can be potential drivers of improvements in administration. Conversely, compliments provide information about potential program and service delivery strengths, which can be applied more broadly in an agency and used to motivate staff.

3. The Taxpayers’ Charter sets out the way the ATO will conduct itself when dealing with taxpayers and underpins the ATO’s complaints management approach. The ATO has committed, in the Taxpayers’ Charter, to respect the right of taxpayers to complain if they are dissatisfied with an ATO decision, service or action.

4. The ATO receives complaints, compliments and other feedback² from taxpayers or their representatives through a range of avenues, including: over the telephone; online through complaints and feedback forms, including the tax agent portal; and by correspondence and facsimile. Complaints and other feedback may also come through the Commonwealth and Taxation Ombudsman (Ombudsman) and taxpayers can write to the Treasurer or Assistant Treasurer, including through their local Member of Parliament, where they have a complaint. A centralised team (ATO Complaints) oversees complaints management, while the resolution of complaints is devolved to business and service lines (BSLs).

5. The ATO has processed around 36 000 complaints, on average, annually for the past five years.³ It experienced a significant increase in the number of complaints received between 2009–10 and 2011–12. A major cause of the large increase in the number of complaints received in 2009–10 was the introduction of the income tax component of the ATO’s information technology Easier Cheaper More Personalised Change Program.⁴ This increase in the number of complaints continued in 2010‒11, before declining in 2011‒12 and 2012‒13.⁵ In 2012–13, of complaints finalised, 16 135 (or around 63 per cent) were upheld.

6. The ATO reported that the main reasons for complaints in recent years were: audit and review activities, in particular concerning the Income Tax Return Integrity Program; refund delays; delays in processing; and access issues, in particular the length of wait times.⁶ The three most common issues for complainants in 2012–13 were: registrations (23 per cent of complaints); form processing (19 per cent); and account management (16 per cent).

7. ATO staff are expected to record compliments, although in practice many compliments may not be recorded. Nevertheless, in 2012‒13 the ATO recorded 1189 compliments and received 2799 other items of feedback through its online feedback form.

8. In 2010, the ATO commenced the Complaints and Compliments Reengineering Project to review its complaints handling arrangements due to the increase in the number of complaints received. Early in this project, the ATO commissioned a consulting firm to review its complaints handling arrangements. The ATO has now re-scoped the project to address the findings and recommendations of this review.

Audit objective, criteria and scope

9. The objective of the audit was to assess the effectiveness of the ATO’s complaints and other feedback management systems in supporting service delivery. To form a conclusion against this objective, the ANAO examined if the ATO has:

• well-planned and designed complaints and other feedback management arrangements;
• sound processes to manage complaints and other feedback; and
• effectively analysed complaints and other feedback to inform service delivery.

10. The focus of the audit was primarily on the ATO’s management of complaints. The ATO’s management of compliments and other feedback was also examined, where possible. The audit did not examine the formal objection process that allows taxpayers to dispute an ATO decision, but did examine the interaction between the objection and complaints management processes.

Overall conclusion

11. While complaints represent a client’s expression of dissatisfaction with an agency’s administration, effective complaints handling can help to restore good relations with the client and inform processes to strengthen administration and reduce costs. As a major Australian Government agency that deals with many millions of clients, the ATO receives a considerable amount of client feedback—around 27 000 complaints and 4000 compliments and other items of feedback in 2012‒13. The significant increase in the number of complaints received in the three years from 2009–10, averaging over 42 000 for that period, contributed to a marked decline in client satisfaction with the complaints handling processes in 2011‒12. The Community Perceptions Survey (July 2012) and Professionalism Survey (May 2012) both identified complaints handling as an area requiring improvement.

12. Avoiding spikes in complaint numbers, or better still reducing the total number of complaints, requires the ATO to proactively address issues that can give rise to complaints. In addition to declining client satisfaction, increases in complaint numbers are costly to manage. In the absence of ATO analysis, the ANAO estimated that, if the number of complaints in that year had been the same as in 2010–11, the ATO would have incurred additional employee costs in the order of $8 million to manage the workload.⁷ Accordingly, it is important that the ATO puts in place strategies to minimise complaints occurring in the first place, particularly when major business and process changes are being implemented and for the annual tax time.

13. The ATO’s complaints handling framework is well-designed and its management arrangements are generally sound. The complaints reengineering project has strengthened complaints handling, and there has been a rebound in client satisfaction and community perceptions in the 2013 surveys. Nevertheless, opportunities remain to more fully address the principles of fairness, accessibility, responsiveness, integration and efficiency outlined in the Commonwealth Ombudsman’s Better Practice Guide to Complaint Handling. There are also opportunities to improve complaints handling practices, including better understanding of issues which were the subject of complaints and the needs of complainants. In addition, there is scope for the ATO to:

• improve reporting against complaints handling timeliness measures, and to develop other performance measures;
• implement a more coherent agency-wide quality assurance framework for complaints and other feedback; and
• limit sensitive information about named officer complaints from being included in records on the ATO’s client relationship management computer system, and implement measures to periodically check that ATO officers have not accessed these records inappropriately.

14. In addition, while there have been instances where the ATO has used complaints intelligence to address systemic issues that give rise to complaints, there is scope for it to better use intelligence from client feedback to more actively inform service delivery and improve efficiency. This includes developing strategies to minimise complaints occurring in the first place and better managing taxpayer’s expectations by keeping them informed throughout their dealings with the ATO.

15. The ANAO has made three recommendations aimed at improving the ATO’s handling of complaints and its monitoring and reporting of performance in managing complaints.

Key findings by chapter

Complaints and other feedback management framework (Chapter 2)

16. The ATO has a sound framework for handling complaints and other feedback that includes: a centralised area to oversee the management of complaints and other feedback (ATO Complaints); detailed policies and instructions on the handling of complaints and other feedback; separate areas within ATO BSLs to respond to complaints in their areas; the use of the client relationship management system to collect information about complaints and other feedback; quality assurance arrangements; and regular reporting of complaints handling performance.

17. ATO Complaints primarily shares information about complaints and other feedback through regular telephone hook-ups with complaints handling staff in BSLs and the National Complaints Forum (a group of key staff in the complaints network) convenes up to six times a year to promote good complaints handling practices.

18. In June 2009, the ATO began using its client relationship management system to manage complaints. This system replaced a dedicated complaints management system and is therefore not as well suited to managing complaints, although it has the benefit of storing all taxpayer interactions in the one place. The ATO has developed a number of templates in the client relationship management system to record complaints and ensure that relevant statistical information can be extracted. However, there is a need for enhancements to the system to make it easier for ATO staff to correctly input data and to enable data to be amended when required.

19. As part of the complaints handling arrangements, it is important to have performance measures in place that provide information on how well complaints are being managed. In this regard, the ATO primarily monitors its performance using two timeliness measures: the time taken to receive and acknowledge the complaint (three days); and the time taken to resolve the complaint (15 business days from 2013–14 and 21 calendar days before then). While timeliness is an important measure, other internal performance measures could be developed to assess the performance of the ATO’s complaints management and help to further improve its responsiveness and accuracy in the handling of complaints. For example, monitoring the percentage of complaints that were resolved at first contact would help the ATO to assess the effectiveness of first contact arrangements.

20. Reporting against the 21 calendar days resolution measure has included complaints completed within 21 calendar days or within any extended timeframe placed on the complaint case. It would increase transparency and accuracy of reporting against this measure if the ATO were to report on the percentage of complaints finalised within the revised 15 business day target without adjusting for complaints that are finalised outside this period; and separately on those finalised within an extended finalisation date that has been arranged with complainants.

21. While the ATO carries out a number of quality assurance activities on complaints handling, these activities are fragmented. Having a more systematic agency-wide approach to the quality assurance of complaints handling would provide the ATO with information that could be used to further improve the processing of complaints.

Process for handling complaints and other feedback (Chapter 3)

22. Most complaints to the ATO are received through the complaints telephone hotline. If possible, these complaints will be resolved at this first point of contact (estimated by the ANAO from BSL responses at around 1 per cent of total complaints in 2012‒13), but in most cases are referred to BSLs for resolution. Complaints received through other channels, such as through the online complaint form, are also referred to BSLs for resolution.

23. Complaints are generally managed by the BSL that caused or triggered the complaint, with other issues being resolved by the areas responsible for those issues. This approach is reasonable, particularly since the complaints are handled by dedicated complaints teams in each BSL. It is important for the ATO to seek to identify the various issues relating to the complaint and involve relevant BSLs in their resolution.

24. The ATO has implemented arrangements for complaints to be escalated to more senior officers where complainants are unhappy with the way their complaint is being handled. Where complainants disagree with the decision on the complaint, they can also ask for the complaint to be escalated to more senior officers or can lodge a formal request for an ATO Complaint review. However, the ATO has not mandated the use of an escalation code within the client relationship management system to identify when complaints are escalated within a BSL. As a result, the ATO does not have accurate information on the number of complaints that are being escalated within BSLs and has not been monitoring the extent to which complaints are being escalated in accordance with its stated policy. There would be merit in the ATO monitoring the escalation of complaints, as the ANAO was advised that some more costly ATO Complaint reviews may have been avoided had they first been escalated within the BSLs.

25. Complainants may ask the Ombudsman to review complaints, where they are dissatisfied with the outcome of the ATO’s consideration of the complaints. In the three years from 2010‒11 to 2012‒13, the Ombudsman received an average of 2367 complaints annually about the ATO and investigated and finalised an average of 465 complaints.⁸ ATO Complaints reviews all complaints that are referred to it by the Ombudsman.

26. In October 2011, the Ombudsman, in co-operation with the ATO, commenced a ‘one last chance’ referral process for complaints that the ATO considered finalised but where a person had complained to the Ombudsman and the Ombudsman had assessed that the issue could be easily resolved by the ATO. Under this arrangement, matters were referred back to the ATO for action within 14 days. The process was revised from 1 June 2013 and renamed ‘second chance’ reviews. The ‘second chance’ process enables the ATO to further review the complaint and, if appropriate, take remedial action before the Ombudsman’s Office makes a decision on whether or not to conduct its own investigation of the complaint. The ATO finalised 39 ‘one last chance’ and 17 ‘second chance’ complaints in 2012‒13, of which 19 were upheld, four were partially upheld and 33 were not upheld.

27. Quality assurance reviews that the ATO has undertaken, and analysis of a sample of 387 complaints records by the ANAO, identified a number of areas where the ATO could further improve its handling of complaints. These areas included: seeking to identify the various issues causing the complaint; accurately completing the complaint templates in the client relationship management computer system to ensure that required information is collected; providing apologies to complainants where the ATO is at fault or to help improve the taxpayer experience; arranging extensions to the 21 days calendar target if it cannot be met; and only including required information in relation to complaints about named officers in taxpayer records.

28. The reengineering project enabled the implementation of an improved enterprise‑wide process to better capture data on compliments. The ATO is also seeking to develop a similar enterprise-wide approach for capturing other feedback. While the ATO compiles details of compliments and provides feedback to the officer who generated the compliment, there would be merit in the ATO also identifying the main reasons for compliments, as this may help to identify opportunities for service improvement.

Assessment against better practice complaints handling principles (Chapter 4)

29. The Commonwealth Ombudsman’s Better Practice Guide to Complaint Handling notes that all systems should meet the key principles of accessibility, fairness, responsiveness, efficiency and integration of complaints handling with an agency’s core business activities.

30. There are a number of channels through which complaints can be lodged—telephone complaint hotline, through the ATO website and tax agent portal and by written correspondence and facsimile.⁹ In 2012‒13, 70 per cent of complaints were lodged by telephone. The ATO internet is an important source of complaints information, and accessibility could be improved by placing a direct link to the complaint page on the ATO homepage. The introduction of a single complaints handling process for complaints received through the tax agent portal has led to a reduction in the average response time for complaints lodged by tax practitioners, but some tax practitioners consider that further improvements are needed.

31. The Better Practice Guide to Complaint Handling states that fairness rests on three qualities—impartiality, confidentiality and transparency.¹⁰ The ATO has effective procedures in place to support the impartial examination of a complaint, which is mostly undertaken by dedicated complaints areas within BSLs. This is reflected in the fact that, as noted at paragraph 5, in 2012–13, 63 per cent of complaints were upheld. However, in relation to the confidentiality of complaints information, the ANAO identified a privacy risk regarding the handling of named officer complaints. Notwithstanding advice that the ATO’s policy is to minimise the incidence of naming the ATO officer in complaints records, including attachments, there were 12 instances out of 20 named officer complaints sampled by the ANAO where the officer’s name, and details of the investigations, were included in linked activities on complaints records. Including such details means that any ATO officer who accesses a taxpayer’s records would be able to examine details of any complaints made about ATO officers and details of the investigations.

32. The ATO is transparent about the way a complaint will be handled, but there was not always evidence that the outcome of a complaint had been communicated clearly to the complainant and that complainants had been advised of their review rights when a complaint was not upheld. This is because most ATO complaints resolution staff do not advise complainants in writing of the outcome of their complaints and in many cases do not make a record that they have advised complainants of their review rights. Where written advice is not provided, complaints handling staff should make an electronic file record of the advice they have orally given the complainant.

33. In terms of efficiency, currently the ATO does not have information on the cost of managing complaints. Based on data provided by BSLs, the ANAO estimates that the average total unit staff cost per complaint was $611 in 2012–13 and $382 per complaint when staff support costs such as analysis, coordination, reporting and quality assurance are not included. There would be merit in the ATO continuing to monitor the cost of complaints handling to help ensure that it is being managed as efficiently as possible.

34. The ATO does, however, regularly engage external consultants to conduct research to gauge how a range of groups perceive either the ATO generally or specific sections of the ATO, including in relation to complaints handling. These include a number of perceptions surveys. Out of 13 areas that survey participants were asked about in the July 2012 Community Perceptions Survey, complaints handling was identified as the area requiring the most improvement. A reputation and service measure identified in the perceptions surveysis that ‘the ATO listens to and responds to complaints’.¹¹ The percentage of respondents agreeing with this statement in the various perceptions surveys has varied between 72 and 80 per cent between June 2012 and June 2013.¹²

35. The ATO has conducted a number of professionalism surveys in recent years. In May 2012, the ATO’s Professionalism Survey showed a decrease in overall professionalism in the ATO.¹³ This decrease was largely driven by three areas, of which complaints was one. The ATO’s ‘overall professionalism’ score for the handling of complaints was 3.02 (out of a possible five), down from 3.63 the previous year. Net satisfaction (the aggregate of ‘very satisfied’ and ‘satisfied’) for ATO Complaints was 42 per cent in May 2012, down from 55 per cent the previous year. However, the results had increased again in November 2012 and May 2013 (54 per cent and 59 per cent respectively).

36. The ANAO contacted a number of the ATO’s key stakeholders to discuss issues relating to the ATO’s management of complaints.¹⁴ The organisations that responded reported that the relationship with the ATO was generally seen to be positive and most complaints were handled properly. However, a number of concerns were raised, for example, in regard to the capability and capacity of ATO complaints staff to resolve complex issues requiring specialist technical knowledge and the length of time involved in lodging and then receiving a response to a complaint.

37. Complaints handling needs to be integrated with other arrangements for reviews of decisions, particularly the objections and review processes provided for in law. However, in some complaints examined by ANAO, it appeared that the complainant may have actually wanted to lodge an objection, rather than a complaint. Accordingly, there would be merit in the ATO reviewing the information it provides on when to lodge an objection or make a complaint and provide better guidance to complaints handling staff on where it would be more appropriate to advise taxpayers to object or use other processes, rather than complain.

Using complaints and other feedback to improve service delivery (Chapter 5)

38. There have been a number of instances where the ATO has analysed complaints information to address systemic issues that give rise to complaints. This has included using lessons learnt from complaints received in 2011 tax time (July to October) about the implementation of the Income Tax Return Integrity program to improve the way in which this program was subsequently implemented. Nonetheless, examination of complaints data indicates that complaints have increased during tax time each year and when major systems or process changes are implemented. This suggests that there is scope for the ATO to undertake further analysis and develop strategies to minimise complaints occurring (for example, by better explaining and publicising tax time changes and any major systems and process changes, to better manage taxpayer expectations), driving increased efficiency and improving client service. In this latter regard, an ATO study of complainant behaviour suggests that, if the ATO provided taxpayers with more information, for example, about processing delays or problems affecting the timeliness of ATO decision making, they would be less likely to complain about these matters.

39. Similarly, given that a major cause of complaints relates to processing issues, there would be scope for the ATO to identify changes to processing arrangements that may reduce the number of such complaints.

Summary of agency response

40. The ATO provided the following summary comment to the audit report:

The ATO welcomes this audit and considers the report supportive of its overall approach to managing complaints. The audit recognises that the ATO’s management of complaints is generally effective with complaints handling being well designed and with sound management arrangements.

The ATO recognises the audit highlights several opportunities to strengthen and further improve the management of complaints and other feedback received, including gaining a better understanding of the needs of complainants and the issues which were the subject of complaints. The ATO also acknowledges the benefit of an increased focus on the use of intelligence gleaned from complaints to improve service delivery and client satisfaction.

41. The ATO’s full response is included at Appendix 1.

Recommendations

Footnotes

[1] ATO, Annual Report 2012‒13, pp. i–vi.

[2] The ATO defines a complaint as ‘an expression of dissatisfaction made to the ATO related to its services or products that requires an individual response to the complainant’. Feedback is defined as ‘unsolicited criticism or comment made by an external source to the ATO about its services, products or processes’ and a compliment as an ‘unsolicited positive form of feedback made by an external source to the ATO about its services or products’.

[3] The number of complaints received needs to be viewed in the context of the millions of client interactions that the ATO has each year. For example, in 2012‒13 the ATO reported that it interacted with 13 million individuals, 2.5 million businesses and 800 000 employees and there were many interactions with a large number of these clients.

[4] To make it easier and cheaper for taxpayers to comply with tax law and to provide more personalised levels of service, the ATO embarked, in around the year 2000, on a program to upgrade its information technology systems. These changes, which took many years to be implemented, were collectively referred to as the Change Program.

[5] The number of complaints to the Commonwealth and Taxation Ombudsman also increased significantly in 2010–11 and 2011–12, reflecting the increase in complaints to the ATO itself.

[6] ATO Annual Report 2009–10, p. 20, ATO Annual Report 2010–11, p. 32 and, ATO Annual Report 2011‒12, p. 23.

[7] This is based on an ANAO estimate of $382 cost per complaint excluding overheads and support staff. Further, the cost of complaints is not fully reflected in monetary terms. Generally, taxpayers contact the ATO a number of times to try to resolve their issue before they complain. For example, in a study of understanding complainant behaviour in April 2013, the ATO identified in relation to ‘debt and payments’ issues that 88 per cent of complainants had contacted the ATO before making a complaint about their issue, with an average of 8.9 calls each.

[8] The remaining complaints were not investigated, for reasons such as the complaint being out of jurisdiction, the complainant not having previously approached the ATO, or the ATO being better placed to resolve the issue.

[9] The ATO has arrangements in place for clients with special needs, including the National Relay Service for people with hearing or speech impairments and interpreters for people from non-English speaking backgrounds.

[10] Commonwealth Ombudsman, Better Practice Guide to Complaint Handling, op cit., p. 9.

[11] ATO website, <http://www.ato.gov.au/content/downloads/CR00341405_2012CPS_AnnualReport.pdf> [accessed 27 March 2013].

[12] In the July 2012 Community Perceptions Survey, 72 per cent of respondents agreed with this statement and in June 2013 this had increased to 80 per cent. In the Micro Business Perceptions Survey 74 per cent of respondents agreed with this statement in March 2012 and 72 per cent in March 2013. This question was also asked of respondents in the July 2012 Small and Medium Enterprises Perceptions Survey, with 78 per cent of respondents agreeing.

[13] Overall professionalism consists of two components, staff professionalism and client understanding.

[14] Eleven organisations were contacted and six responded, with two providing no comments. The four organisations that provided responses were: Institute of Public Accountants; Self Managed Super Funds Professional Association; Taxpayers’ Australia; and Financial Counselling Australia.