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Criticism of Australian Taxation Office tendering procedures

JOHN JOST: Over the past few days, the Australian Tax Office has been examined by members of the Federal Parliamentary Accounts Committee, as to its tendering practices. It seems the department has been surveying Australians to find out what we think of the Tax Office. Why on earth would they need to survey people on that question, escapes me, but it's a funny world, isn't it? Anyway, it seems the department might have broken the rules, how seriously I don't know, but seeing that the Tax Office, and they are a stickler for rules, so as far as we are concerned, but seeing it is the Tax Office, I should say, and they are sticklers for rules, especially as we are concerned, well, I think we might just move ahead and get the full details of this odd little case from a member of the Parliamentary Public Accounts Committee, Senator Bronwyn Bishop.

Good morning, Senator. Senator, tell us, what did the Tax Office actually do?

SENATOR BISHOP: .. and they've got a wonderful title. It was to improve the level of an appropriateness of service given to taxpayers, who object against tax assessments. And they wanted to survey people's opinions and they proposed to spend quite a lot of money doing that. But the problem is this - they are required, as a government department, or government office, to go to tender when they want to acquire services, and the finance regulations provide that if they don't wish to go to tender, then they must seek an exemption, under Section 52 AAA2 of the finance regulations. Now what happened in evidence, is that the Tax Office, very simply said it did not seek an exemption. It presumed that the categories of exemption covered what they wanted to do, ie. public relations consultants, or management consultants, and they didn't bother to comply with the law, because the firm that they actually commissioned, a firm called Yann Campbell Hoare Wheeler, are a survey firm and indeed, do not hold themselves out as a management consultant, which the Tax Office gave evidence they considered the category appropriate not to have to seek an exemption. So you see, it sounds a bit complicated but the bottom line is the Tax Office has not complied with the law.

JOHN JOST: Yes, it's rather ironical, isn't it?

SENATOR BISHOP: Well, it's very ironical when you hear that the Commissioner for Taxation makes statements like, 'companies have to comply, not only with the law specifically, but within the spirit of the law, otherwise we will prosecute them'. And indeed, during the hearing, I simply said to the tax officials, and they were fairly high officials, that if a taxpayer gave the Tax Office the sort of sloppy answers that they were giving to us, that the Tax Office would be down on the taxpayer like a tonne of bricks.

JOHN JOST: And what did they say to you when you said that?

SENATOR BISHOP: I think there was pretty much of a stunned silence.

JOHN JOST: Is there a penalty for breaching this particular Act of Parliament?

SENATOR BISHOP: Well, it's not something I've examined, at this state, but it is something we may have to look at. I do hope that the Tax Office will appear before the committee again, to give further evidence, because if you do have to comply with the tender provisions, then it's a stricter standard that you have to comply with when granting the tender. If you get an exemption, you can spend hundreds of thousands of dollars, without the strict provisions of tender applying. You have a much greater discretionary power.

JOHN JOST: Yes, these exemptions are rather interesting. I understand that they relate to management consultants, public relations officials, and stuff like that.

SENATOR BISHOP: That's right. The interesting thing, of course, is that they can circumvent the tender provisions by appointing a public relations consultant, under the exemption, and then get the public relations consultant to commission the survey, and you circumnavigate it.

JOHN JOST: Now this obviously, this issue, because I raised the tax one because it's part of the much greater issue relating to the use of surveys, which we're going to have a look at over the next few days, Senator, but clearly, that sort of loophole that you just mentioned there, is something that would interest the Public Accounts Committee.

SENATOR BISHOP: Indeed it does.

JOHN JOST: And I imagine that it's just sort of something that's evolved perhaps because the politicians haven't scrutinised the bureaucracy close enough. I don't necessarily, you wouldn't necessarily read into it, would you, a deliberate attempt to bring benefits to outsiders or anything like that, it's just a loophole, is it?

SENATOR BISHOP: Well, I think it's a serious question. We've had some serious allegations made during the course of the hearing, about what purposes various surveys are put, and we are looking at it in a most close and strict way. The hearings on this matter will go on for a little whole yet and then we will deliberate upon the evidence that we heard.

JOHN JOST: Well look, when do you expect the Tax Office to come up before you again?

SENATOR BISHOP: I am not sure at this stage. I had to leave the meeting about a quarter of an hour before they finished giving evidence, to catch an aeroplane, but I certainly said that I had more questions that I wished to ask and I hoped that they would be appearing before us again. Now that's a matter for our committee to determine and I haven't had the opportunity to discuss it with them at this stage.

JOHN JOST: Just a final question, Senator. Do you believe that departments and departmental officials should be charged for breaches like this?

SENATOR BISHOP: Well, it's something that has to be considered. The point that I was very keen to make is that I don't think it's good enough for the Tax Office to have one rule for the taxpayer and another rule for itself.

JOHN JOST: Well, there's a whole question too I think, about bureaucracies not quite, not being as accountable say, as private corporations would be, to the public.

SENATOR BISHOP: That's quite right. Well of course, when we are spending public money, the accountability has to be to the Parliament and to the people, and that's why we brought down a report only a week ago, called 'A Reform of the Audit Act' and we called the Auditor-General the ally of the people and the Parliament, because that is the only link that the Parliament has, to many organisations, to scrutinise expenditure of public moneys and have answerability to the Parliament.

JOHN JOST: Well, I am aware that you're probably an enemy of big government. Where you do have big government, it would be your philosophy, I assume, that it's got to obey the rules to a very rigorous standard.

SENATOR BISHOP: Very much so and in fact, I think when you are expending public moneys, the standard has got to be so rigorous because you're not answering just to shareholders, as you are in the private sector, you are answering to the taxpayers, whose money you have collected, as a government.

JOHN JOST: Thank you for talking to me today.