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Economics Legislation Committee
Australian Taxation Office

Australian Taxation Office


Senator O'NEILL: Firstly, I will go to evidence that you gave on 20 February to Senator Ketter around the ATO office in Gosford. Is there somebody who's got a pretty detailed knowledge of that here?

Mr Chapman : Yes, Senator.

Senator O'NEILL: Much has been made by the local member of there being 600 jobs. It's been a signature theme. At any point in time, have there been 600 jobs filled in the Gosford office of the ATO?

Mr Chapman : Not to date. The site was expected to achieve 600 roles across a number of agencies—300 of those by the ATO and the balance across other agencies. Whilst there were a number of agencies that had initially expressed interest, they did not proceed with that interest. As a result of that, we have to date had 542 people recruited into the site, 490—

Senator O'NEILL: I will get all these aggregated figures from you if I can, but I want to interrogate that number. That is a little different from the last time that we were here. Can you—

Mr Chapman : Can I just clarify, Senator, we've used the same point-in-time figures.

Senator O'NEILL: What point in time are we talking about?

Mr Chapman : That is as at the end of February.

Senator O'NEILL: Let's talk ATO jobs. In terms of the ATO jobs, do you want to tell me exactly how many there are?

Mr Chapman : To date, we have filled 498 ATO jobs as at the end of February, of which 406 are currently filled. We have also got—

Senator O'NEILL: Just talk me through the gap there. There are 498 but only 406 filled?

Mr Chapman : There are 406 filled at the moment. We have had exits from the site in the order of 92.

Senator O'NEILL: You've had 92 exits?

Mr Chapman : Yes, that's correct.

Senator O'NEILL: That's a lot of people leaving work in a place with a relatively high level of unemployment?

Mr Chapman : It's not disproportionate to what we would have expected when opening a completely new site because we were bringing in so many people at one point in time. We do have people who either decided that it wasn't the sort of role that they were looking for or who perhaps we decided weren't necessarily working out as well as we had hoped. Also, a portion of the workforce is casual and we do tend to see higher turnover in casual staff. However, we have seen recent activity to convert some of our casual employees to both non-ongoing and ongoing employment as well.

Senator O'NEILL: I never hear this differentiation when, 'It's 600 jobs.' It's supposed to be fantastic. Everybody thinks they're full-time jobs with great pay and great conditions. The reality seems to be that there is some considerable difference from that articulation. Take me through the 498. Is that the maximum number of people you've had employed there for the ATO at any point in time?

Mr Chapman : I wouldn't say at any point in time. In the period of a bit over 12 months that the site has been opened, we have provided ATO jobs to 498 individuals.

Senator O'NEILL: You currently have filled 406 jobs.

Mr Chapman : That's correct.

Senator O'NEILL: Can you take me through exactly what those jobs are? How many are full-time ongoing?

Mr Chapman : I can't give you the split between full-time and part-time. I can take that on notice, Senator.

Senator O'NEILL: I think that was something you were going to do last time, but I haven't been able to get those numbers either.

Mr Chapman : Sorry, Senator. We did table the response, but it wasn't a split between full-time and part-time. I think it was a split between ongoing versus non-ongoing and casual. Within that 406, we have 306 ongoing staff, 21 non-ongoing staff, 64 casuals, 13 labour hire and two external contractors.

Senator O'NEILL: Hopefully they get paid every fortnight or so. Somebody's got to know how many full-time and part-time there are?

Mr Chapman : Yes, we can provide that on notice, Senator.

Senator O'NEILL: I'd prefer to get it today if possible, if anybody is listening in or if you can ask one of your staff. Surely that should be a figure that's easy to come by?

Senator Seselja: They've taken it on notice, so if it's able to be made available—

Senator O'NEILL: Yes, I know. I'm over the protection racket that's being run here, because the truth needs to be told.

Ms Curtis : Senator, if we can get that information to you today, we will.

Senator O'NEILL: There could be 100 full-time jobs and the rest are part-time. Let's find out the reality of what's going on in there.

Ms Curtis : The thing about the workforce mix is that, in any of our sites, we would always have a mix of full-time and part-time, because obviously we like to offer flexibility to our staff. That's one of the requirements of a modern employer—casuals, contractors et cetera—and, also, the nature of our work is that it's not consistent throughout the year. In the Gosford site, we have set up to have a variety of all the different functions from compliance right the way through to service delivery staff and the workforce mix is always changing. That's why you will see in the numbers that there is fluctuation—ons and offs. And, as Mr Chapman just said, originally we were filling for 600 jobs with other agencies and there has been some difficulty in actually getting the other agencies on board with this. We do have people in there from the NDIA, for example, and that's working very well. And we're also running recruitment campaigns to try and recruit more staff. But one of the things that we have found in this location is it's very difficult sometimes to actually get the staff with the skills that we need. So we are making our very best efforts to get the office up to the 600 jobs, and we continue to do so.

Senator O'NEILL: Have you had any conversations with the local TAFE about providing high-quality, properly funded skills training for the population? They're desperate for jobs, I can tell you, but many of them can't afford to pay the TAFE fees.

Ms Curtis : I would have to take that specific question on notice, but I do know that Mr Chapman has been working with the local university. I don't know if you can add anything more to that?

Senator O'NEILL: I noticed your evidence around that; thank you very much. And the university is doing quite an extraordinary job, but this problem of the gap between the skills that are supposedly absent and the capacity to gather them and get the jobs in our local community is a very significant failing. It's certainly not 600 jobs. Going to the 64 casuals, how long are the average shifts the casuals get? How many hours do they get a week?

Mr Chapman : I'd have to take that on notice, Senator. We do offer different arrangements based on the individuals and their desire, what shifts they're available for, so our staff can actually nominate different shifts. I can take it on notice.

Senator O'NEILL: Would it distress you, Mr Chapman, if I tell you that people who have been employed as casuals there are very, very unhappy with the kinds of hours that they're being offered?

CHAIR: Senator O'Neill, I think you're going to have to provide some evidence for that assertion.

Senator O'NEILL: I'm a senator who has been talking to people in the community, and I've come and put it on the record right here, right now. There are many people who are contacting me who are very concerned about what they thought they were going to get when they were employed and the very short hours that they're getting—women who were trying to juggle two and three jobs to make ends meet and people who thought they'd have secure work with a government department who were let off just before Christmas with no funds and no work at all over the Christmas period. That's certainly not the impression that they were sold.

Mr Chapman : If I could just clarify, Senator, the ATO doesn't tend to let casuals go over the Christmas period, but certainly we advertise that the ATO closes down between Christmas and New Year as per a lot of government agencies. It is something that we certainly advertise to the community around our opening hours and that has a flow-on through to our casual workforce, because our casual workforce assists us, in particular, in managing peaks and troughs in our workloads.

I think a couple of key points of interest is that we have actually recently seen a number of our casual employees switched over, if you like, from casual work to non-on-going contracts and to ongoing roles as well. In fact, across the ATO's various sites, Gosford is one of our highest engaged sites. Notwithstanding that, I'm sure there are employees who would appreciate more hours; but, of course, we also have a seasonal workload as we go through tax time and then other quieter periods of the year.

Senator O'NEILL: Could I ask about the labour hire? What are they doing?

Mr Chapman : As at the end of February, we had 13 labour hire staff on the site and they were working on lodgement project work—so projects around securing lodgements for outstanding obligations.

Senator O'NEILL: Okay. I think I understand, but can you do it in ordinary speak for me? What are they doing? Are people just putting in their tax return?

Mr Chapman : No, it will be contacting taxpayers or perhaps tax practitioners who are representing clients who have not met their lodgement obligations. So they may not have lodged an activity statement or a tax return, and it's outstanding.

Senator O'NEILL: Why is that a job for a labour hire company that can't be a full-time job within the ATO? Is it full time? Are labour hire companies employing people full time?

Mr Chapman : I'd have to take it on notice for those specific employees, but certainly some of our labour hire employees work the equivalent of full-time hours, and often they may be additional resources to assist us with peak workloads.

Senator O'NEILL: Mr Chapman, you said last time: 'Our labour hire workforce tend to work full-time hours. Our casual workforce tend to have more varying shifts.' My question to you is: why do you have a labour hire workforce of full-time people but you can't provide those full-time ongoing positions with security through the ATO?

Mr Chapman : The labour hire arrangements may be where the particular project, say, specific lodgement projects, a particular focus area, is determined that it will go for six or 12 months or for a particular period but not necessarily be an ongoing piece of project work. As an office, we are continually making improvements into our systems and processes and making it easier for members of the community to meet their obligations. So there are some workloads that we recognise or we expect to see decreases in moving forward. Therefore, we don't want to be in a position where we, in fact, bring in more ongoing staff than we would require to do that work only to then have them at risk of not having sufficient work available into the future and potentially being made redundant.

Senator O'NEILL: Thank you for your answer. Who are the labour hire companies that you have engaged?

Mr Chapman : I'd have to take that on notice, but happy to provide those details.

Senator O'NEILL: Are they specific to the Gosford site or are they a labour hire company that you use in multiple contexts?

Mr Chapman : We have a panel established that we draw from. Certainly my assumption would be that it would be a firm that we are using in other sites as well, but I'll take that on notice and confirm.

Senator O'NEILL: Okay. With regard to the site itself, there were lots of concerns about the design of it, the way in which the work was commissioned and the build—you would remember it was quite problematic—and then finally it was opened. How many desks are provided in there for people to work at?

Ms Curtis : I have to ask our CFO, Frances Cawthra, to come to the table.

Ms Cawthra : The Gosford office, as you would be aware, was opened on 3 December for occupation and formally opened on 26 April. I'd have to take on notice exactly how many desks there are available, but there are sufficient desks in there to be able to cater for 600 staff.

Senator O'NEILL: But that's not being utilised at the moment, is it?

Ms Cawthra : At the moment, no, but we do have other agencies and we have other work spaces, and we're arranging a flexible opportunity for agencies to be able to work in and out of our office in addition to that.

Senator O'NEILL: Ms Curtis indicated that there have been some difficulties in getting other agencies there.

Ms Cawthra : Initially, to fill the building, there were some difficulties.

Senator O'NEILL: There must still be some because it's not full.

Ms Cawthra : Well, they're not difficulties, Senator. Other agencies have to make decisions regarding their workforce, as we need to make ours. But we do have what we're calling a flexible workspace, and other agencies who need to come in and work for a short period have desks available for them to do so.

Senator O'NEILL: So it's a hot-desk centre now?

Ms Cawthra : It's not a hot-desk. There is a portion of the workplace that has space available so that, if agencies choose that their staff need to come and work somewhere in the Gosford area for some reason, there is space for them to do so.

Senator O'NEILL: Well, I'd call that hot-desking.

Ms Cawthra : Hot-desking is a little bit different. Hot-desking is set-up specifically around maximising the space available for a large range of resources to access.

Senator O'NEILL: But that's not a problem we have in Gosford, because we haven't got a building teeming with people, have we?

Ms Cawthra : We do have a relatively full building. It's well over half full, and we do have this space where people can also have the opportunity to work, which is a great benefit for other agencies where they're seeking workspace that is available to work from the Gosford office.

Senator O'NEILL: How frequently is that occurring?

Ms Cawthra : I'd have to check that for you to can confirm that.

Senator O'NEILL: Thank you. Could you explain to me the transfer of ownership that occurred from DOMA Development to the new owner and the transaction details?

Ms Cawthra : We rent our buildings, and transfer of ownership between buildings is regular across our portfolio. It doesn't change our position. It doesn't change our contract. It's quite standard that developers build them and we rent them and they change ownership.

Senator O'NEILL: What was the cost of the building?

Ms Cawthra : Our rent out over the next 10 years, including things like electricity et cetera—the operating costs—was $71 million over 10 years.

Senator O'NEILL: So, essentially, $71 million for rent and utilities?

Ms Cawthra : There's a whole range of things in there. There is rent, lease uplifts, reviews, things like guarding and security—all of the things you need to functionally run a building.

Senator O'NEILL: What's the square metreage of that building? That seems like an extraordinary amount of rent for that period of time in Gosford.

Ms Cawthra : I'll have to take that on notice.

Senator O'NEILL: Could you find out the square metreage of the building and indicate how much of that square metreage is actually occupied by full-time employees?

Ms Cawthra : I'll see what I can do to get the best and closest information for you.

Senator O'NEILL: Yes, by full-time employees. So, the ownership of the land: what's the status of that currently?

Ms Cawthra : The land was a commercial negotiation between the developer and the New South Wales government. It is not part of the ATO's remit. We rent the building from the developer.

Senator O'NEILL: From the developer, or the second purchaser? Is the developer still the owner?

Ms Cawthra : Well, it's whoever we have the contract with that contracts to the next person. Our lease is not relative to the purchase of the land or the commercial arrangements between the original developer, which was Doma Group, and the New South Wales government, in which the land you're referring to was purchased. The building was then onsold to the new owners and we continue to rent under our contract to the new owner.

Senator O'NEILL: What was the purchase price of the land?

Ms Cawthra : That's a negotiation between Doma and the New South Wales government, and I don't have that.

Senator O'NEILL: Who paid for the building?

Ms Cawthra : Doma Group.

Senator O'NEILL: And how much did we pay them to do that?

Ms Cawthra : We rent the building. We don't own the building. So, we don't pay them on the ground. We rent the facilities over a negotiated period with a lease in place.

Senator O'NEILL: Can you provide any details of the original lease agreement and any changes that happened when there was a change of ownership?

Ms Cawthra : Certainly. I can get that on notice for you.

Senator O'NEILL: And there was a change of ownership, wasn't there?

Ms Cawthra : There was a change of ownership, certainly. But our lease remains in place.

Senator O'NEILL: Okay. So, basically it went like this: there was a school there, the school was removed, the community expected that there would be investment in community infrastructure, the land was sold by the New South Wales Liberal government to Doma Developments, with the support of the federal government. Doma Group built it and have sold it. There's a lot of activity there of private entities.

Ms Cawthra : What I can say is that the ATO had an agreement and made a lease with the Doma Group to lease the building. That is our interest, and that's sort of the box in which we have worked. We are not privy to any other commercial arrangements between the Doma Group, the New South Wales government or anyone else.

Senator O'NEILL: So, $71 million, and we've got 306 full-time jobs in there of what was promised—600 full-time jobs. That's a lot of money.

Ms Cawthra : There were no promised full-time jobs. It was 600 jobs across a range of agencies—

Senator O'NEILL: I can tell you from on the ground that it was promised. You might be a bit more careful in the way that you use that information, but certainly the local member keeps talking about 600 jobs, and she implies that they're full-time every single time she says it. So, that's rather a problem for us.

Senator Seselja: I think now you're just verballing the local member.

Senator O'NEILL: Yes. It's frustrating to see people get away with that for all this time.

CHAIR: Could I just clarify: in that 600, or in the number of jobs that the ATO have just reported, does that include the NDIA component? And how many people work at the NDIA and the ATO offices?

Mr Chapman : As at February, there were 39 NDIA staff members.

CHAIR: That's on top of—

Mr Chapman : In addition to the ATO staff.

CHAIR: Okay. That takes us a but closer, doesn't it?

Senator O'NEILL: And how many full-time NDIA workers do we have there?

Mr Chapman : That would be a question for the NDIA.

Senator O'NEILL: Full-time? Part-time?

Mr Chapman : I can tell you that of the ATO staff who are ongoing and non-ongoing, only 35 of those staff are part-time, with the remainder being full-time employees. The ATO, as Ms Curtis mentioned, has certainly been promoting flexible work arrangements. Those part-time staffing arrangements, I believe, are all driven by the employees seeking part-time work, not by the ATO requiring those employees to only work part time.

Senator Seselja: Senator, if I can just understand your critique, your critique is that Lucy Wicks, as the local member, managed to bring over 500 jobs to her community, and you're criticising her for that. Is that the general tenor of this question? It's extraordinary—over 500 jobs.

Senator O'NEILL: No. Jobs for the coast is fantastic. I support jobs for the coast every single time.

Senator Seselja: What an outstanding local member. Perhaps you should congratulate her.

Senator O'NEILL: But you shouldn't lie about the number for six years. You shouldn't be lying to the community.

Senator Seselja: You haven't been very good on numbers today, Senator O'Neill. You claimed your $200 billion tax increase wasn't in fact real when I put that to you. Is that still your claim?

Senator O'NEILL: I don't even know what you're talking about now. Let's just go back to the reality here.

Senator Seselja: We've got an outstanding local member who has delivered over 500 jobs to the Central Coast, so well done.

Senator O'NEILL: How many agencies are anticipated to go in there? Do you have an idea, Ms Cawthra?

Ms Cawthra : We don't have any firm plans from other agencies at this time.

Senator O'NEILL: No firm plans?

Ms Cawthra : We haven't had anyone sign up. We are in discussions with them.

Senator O'NEILL: The number of jobs that are there now, in total, is 406 ATO, because we've had 92 exits?

Mr Chapman : Yes, 406 ATO, and 39 NDIA.

CHAIR: It would be interesting to get a gender and age breakdown of your employees there too, if you can provide that.

Mr Chapman : Yes. We can take that on notice.

Ms Curtis : I think the other point of interest is the demographic mix of employees. We've gone, in this particular site, deliberately out of our way to try and recruit people from all sorts of backgrounds. Diversity is a very big focus for us in the Gosford site. We do believe that's one of the reasons that the engagement in the site is so high. Whilst the numbers are, as they stand, in the 400s, since that building has been opened there have been over 500 jobs created in the Gosford site.

CHAIR: How many employees participate in the university program? That sounds quite interesting.

Ms Curtis : I'll have to ask Mr Chapman.

Mr Chapman : We certainly had four new commencements on the ATO's graduate program in the Gosford site during February, and we have other university programs, such as our university partnership entry program. I can take on notice how many we have in that particular program, but that's—

CHAIR: I would imagine that those employees would seek flexible employment arrangements so that they could participate in those sorts of programs.

Mr Chapman : Yes, definitely. In fact, they tend to be in that casual pool, so they can adjust their shifts around their studies whilst they're on that university program. I should mention that we expect to engage a further 60 staff into the site in the coming two months.

Senator O'NEILL: Full time or casual?

Mr Chapman : I think it's a mix—some full time, some casual.

Senator O'NEILL: If you're planning to do it, you must have a plan with an indication of how many full time, part time, ongoing, non-ongoing, casual, labour hire.

Ms Curtis : As Mr Chapman said, sometimes people actually prefer part-time work; they actually ask us to offer that employment type so that they can fit around school hours or they can fit around other things—they might even have a second job. The fact is that, in all of our sites, we have a mix of functions and a mix of employment types. We need to do that because our work is not consistently standard—we have peaks and troughs. That's why you see in all of our sites the flexibility not only to offer different employment arrangements to staff, because that's what's required in a modern, contemporary organisation, but also—

Senator O'NEILL: Absolutely. I've got no problem with flexibility, but there is significant underemployment because of the casualisation of the workforce. That is made very clear to me by many people who have contacted me who are working in that office who are very unhappy with the level of hours that they're being offered, forcing them, against what they were hoping would occur, to try and juggle that commitment with other work so that they can feed their children. That's the reality on the ground.

CHAIR: Perhaps, Ms Curtis, you could provide Senator O'Neill with the name and number of the person within the ATO that those people could speak to to adjust their working hours in a flexible and appropriate way.

Ms Curtis : Absolutely. We can do that. We'll find the name of the officer. But there are obviously people within the ATO in HR, in particular, or direct managers who can look at the hours that people are working. As we said earlier, it is one of the sites with the highest engagement. To my knowledge—I don't know if Mr Chapman has any more information—we haven't had any issues raised with us. So we will look into that, and we will definitely provide that information to staff in the office.

Senator O'NEILL: In terms of the levels of the staffing, how senior are the full-time staff? What's the mix?

Ms Curtis : We'd have to take that on notice as well. We wouldn't have that with us today.

Mr Chapman : No, I certainly don't have the break-up, but I can tell you we have APS levels all the way up to and including Senior Executive Service officers based in the Gosford site.

Senator O'NEILL: Do you have management of sites like this that have been established around the country?

Mr Chapman : Sorry, Senator. Could you clarify—

Senator O'NEILL: There are other sites of a similar kind to this. I understand that there's one in Albury.

Mr Chapman : Yes, we certainly have sites around the country. We've got 22 sites at present.

Senator O'NEILL: So what happens when the lease runs out in those contexts? What's been happening?

Ms Cawthra : Three years out from when the lease is due, we prepare and we go to market. We approach the market for the competitive opportunity to find someone or a place. Either we will stay where we are or, if we find a better opportunity and something of better value for the Commonwealth, we will move sites.

Senator O'NEILL: What certainty is there for the workforce that you will stay in that region?

Ms Cawthra : We have committed to a range of local regions. For instance, we've made a commitment to Townsville, we've obviously made a long-term commitment to Gosford, and we have a range of other areas as well that we make long-term commitments to.

Senator O'NEILL: So is 10 years your long-term?

Ms Cawthra : It's 10 years, plus there are options on that depending on the site. Generally, property is a 20-year proposition. It's 10 years plus two five-year extensions where we can extend should we choose to or we can test the market, because we do need to make sure that we're continually getting the best value for money.

Senator O'NEILL: One of the arguments that were put for why this had to be the size and the shape of the building that it is was that the ATO needs to be in a standalone building. Is that correct?

Ms Cawthra : I'm not aware of any instruction around that.

Senator O'NEILL: The argument, as I recall, was that there are security issues around the ATO that mean that it can't share buildings with other agencies, but that doesn't seem to be the case here.

Ms Cawthra : We build and have security requirements. Other Commonwealth agencies generally have the same security requirements that we do, and therefore we can sublease should we choose to in our buildings. We've done an awful lot of work around subleasing to other Commonwealth agencies. There are other concerns and things that must be considered around security should we think of, for instance, going with the private sector, but at the moment our buildings are in a position, generally, when we build such that we can have other Commonwealth agencies join us. We try to make the building facility as flexible as possible so that we can seal off or quite deliberately have a security floor where other people can use those accesses.

Senator O'NEILL: Given you have no firm plans for other agencies and you have unused space, do you have any plans to sublease parts of the building?

Ms Cawthra : We have certainly had discussions with a range of Commonwealth agencies, and we have certainly had some discussions with state government agencies. At this moment, none of those plans have any signature on paper as to them taking over additional space. But certainly, if other Commonwealth agencies wanted to join us, we would be able to facilitate that.

Senator O'NEILL: Are you in discussions with any private entity?

Ms Cawthra : Not at this time.

Senator O'NEILL: Thank you very much.

CHAIR: It being nearly four o'clock, I think the committee might break for 15 minutes now. Are there further questions before we do for the Revenue Group or the ATO?

Senator KETTER: I have just a few further questions for the ATO. It might be quicker if we just did those now.

CHAIR: I'm happy to extend another five minutes or so, but I don't want to throw the committee out further.

Senator KETTER: I suspect I know the answers to these questions, but I'm just very interested in the ATO's consideration of the Parliamentary Joint Committee for Corporations and Financial Services report into the Franchising Code of Conduct. The report is only very recent—it was released on 14 March. There was a recommendation that the ATO, amongst other agencies, conduct investigations into the operations and dealings of Retail Food Group. One of the issues to be looked at was the potential for tax avoidance. You might be able to answer this. Have you considered the report?

Mr Hirschhorn : We are aware of that report. We cannot disclose what we're doing in relation to particular taxpayers, but we are aware of that report and, where appropriate, we act on things that we become aware of.

Senator KETTER: Has the government provided you with any instructions regarding any outcomes from that report?

Mr Hirschhorn : I'm not aware of any specific instructions from the government in relation to that report.

Senator KETTER: There has been no government response.

Mr Hirschhorn : Of course, the government has funded us for a range of task forces that look at things like phoenixing, the superannuation guarantee and the black economy, and there is the Tax Avoidance Taskforce. To the extent that any matters fall in a sense under one of those general topics, you could say the government has given us a general instruction to pay attention to these things. I'm not aware of any discussion in relation to that particular organisation.

Senator KETTER: So you're not able to confirm that there is an investigation going on in relation to RFG?

Mr Hirschhorn : I can't confirm or deny, on the basis of privacy, that there's an investigation going on in relation to RFG.

Senator KETTER: The recommendation from the committee was for the ATO, ASIC and the ACCC to conduct investigations and to look at:

… its former and current directors and senior executives and companies and trusts they own, direct, manage or hold a beneficial interest in, with regard to matters including, but not limited to, the Australian Consumer Law, the Franchising Code of Conduct, insider trading, short selling, market disclosure obligations (including related party obligations), compliance with directors' duties, audit quality, valuation of assets (including goodwill), and tax avoidance.

Tax avoidance is potentially—without confirming or denying what's happening—one area that the ATO could be involved in. Of the list I just read out, are there any other areas that the ATO might have an interest in?

Mr Hirschhorn : I'd say just generally that those topics are matters for other agencies.

Senator KETTER: So the only one you would have jurisdiction—

Mr Hirschhorn : We are very interested in tax. Where it is possible for us to help other agencies, although that is in limited circumstances, we will help other agencies. We, of course, are most interested in tax.

Senator O'NEILL: Mr Hirschhorn, how carefully have you read the report?

Mr Hirschhorn : I personally have not read the report.

Senator O'NEILL: Is it your responsibility?

Mr Hirschhorn : It falls under my responsibility, but, to give a sense, I have about 2,000 people dealing with private wealth and complex compliance matters. I would not expect to read every report.

Senator O'NEILL: Certainly not, but I want to point out to you that it is not just Retail Food Group, although that's the nature of our questions here. We saw evidence before this committee of very high levels of churning and the incredible impact on small business owners who thought they were buying into a safer model of small business with franchising support. I think the committee's unanimous report indicates that there is high risk in this—certainly risk to individuals, risk to the tax paid by those people and risk to wages and flow-on. So there are quite a number of strands that I suggest very much interact with what the taxation department might be interested in, and I encourage you to have a look at it because, as a unanimous report, it does document a very significant number of businesses that are operating across the country under this model, and there is a degree of fragility about it that I think is very concerning.

Mr Hirschhorn : As I say, we're are very aware of that report; we're very aware of that sector. As I understand it, many of the concerns of the report are the position of the franchisee and, in a sense, the abuse of power between the franchisor and the franchisee.

Senator O'NEILL: Yes.

Mr Hirschhorn : Just respecting the limited nature of our bailiwick, we are, of course, interested in the tax affairs of the employees of the franchisee, and that also goes to their superannuation entitlements. We are interested in the tax of the franchisee, but, generally, a business which is failing will not have tax obligations, because they're not making a profit. So, from a compliance perspective, in a sense, it's not a tax compliance issue. It might be a market abuse issue and an issue for one of those other agencies, but not for us. We are then, of course, also very interested in the tax affairs of the franchisor and the owners of the franchisor, but I just want to emphasise the point that, because we are interested in the tax elements, we will be interested in particular pieces of the position of the franchising industry, not so much in the entire confronting report, but there are some elements of that which are just not, in a sense, relevant to us as an agency.

CHAIR: Mr Hirschhorn, this will probably come up with the ACCC tomorrow, which might be the more appropriate agency.

Senator O'NEILL: Yes. The particular point at which RFG transitioned to a publicly listed company and the activity that followed immediately afterwards is a period of particular concern from that company, based on the evidence that we received, so I very much encourage you to look quite closely at the report—at chapter 4.

Mr Hirschhorn : Yes, thank you, Senator.

Senator Seselja: Chair, just further to an answer earlier in relation to jobs on the Central Coast, I can confirm that, in addition to the 500 jobs we discussed, I think the unemployment rate in Robertson is down from 5.1 per cent when we came to office to 4.6 per cent. Again, obviously, in addition to the 500 jobs, Lucy Wicks is doing an outstanding job in growing the local economy and having more jobs in Gosford and surrounds.

CHAIR: That is indeed very encouraging news. Thank you very much for that. The committee will now go to a break—

Senator O'NEILL: Underemployment, insecure employment, youth unemployment, lack of access to TAFE—

CHAIR: Senator O'Neill! The committee will now go to a break until 20 past four, when we will resume with the Inspector-General of Taxation. We'll let Revenue Group and the ATO go. Thank you very much for your appearance today.

Proceedings suspended from 16:07 to 16:20