Statement of intent 2011–14

B-23 SOI (2011)
Statement of intent
2011–14
Crown Copyright © 2011
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ISSN 1176-6654 (Print)
ISSN 2230-4053 (Online)
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Presented to the House of Representatives pursuant to section 39 of the Public Finance Act 1989.
CONTENTS
Minister’s foreword and statement of responsibility
4
Chief Executive’s statement of responsibility
5
PART 1 – Introduction
7
Commissioner’s introduction
8
Nature and scope of our functions
10
PART 2 – What we aim to achieve
11
Environment
12
Our strategic direction
15
Performance measurement framework
17
PART 3 – Transforming the way we work
25
Transforming the way we work
26
PART 4 – Organisational capability
33
Governance and risk management
34
Capital and asset management intentions
36
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3
Minister’s foreword and Statement of
Responsibility
As New Zealand comes to terms with the twin impacts of a
period of economic downturn compounded by the devastating
Canterbury earthquakes, the need for fiscal consolidation has
become ever more necessary.
The tax system lies at the heart of the economy and the
Government’s responses to events such as the earthquake and
economic turbulence. A sound tax system allows us to respond
to and withstand these shocks better, while still providing
economic conditions that encourage economic growth.
Inland Revenue’s response to the earthquakes has been swift
and well-targeted. The policy and operational measures
introduced have been well-designed, ensuring that practical
help which would be of real value to the people and businesses
of Christchurch has been provided.
Inland Revenue itself was affected by the earthquake with
alternative office space needing to be found. The department’s
staff in Christchurch have shown themselves to be highly
resilient and dedicated.
Inland Revenue’s business transformation programme is
important for all New Zealanders. As a big government
department, operating in a more efficient manner without
compromising the quality of its services will help produce a better,
smarter public service. The first steps are already in place, and
when the programme is complete, New Zealand can expect far
more integrated, customer-focused service delivery and progress
towards delivering the Government’s priorities of building a
stronger economy and better results from public services.
Clearly, there are challenging times ahead for all New Zealand.
I take heart however, from the fact that our tax system
and Inland Revenue’s administration of it will help with
consolidating the gains made by the 2010 Budget.
I am satisfied that the information on future operating
intentions provided by my department in this Statement of
Intent and the Information Supporting the Estimates is in
accordance with sections 38, 40 and 41 of the Public Finance
Act 1989 and is consistent with the policies and performance
expectations of the Government.
A balance needs to be struck between providing all the support
necessary for recovery efforts in Christchurch while still
maintaining the integrity of the tax system. It is crucial to retain
the focus on the Government’s priorities for Inland Revenue:
""
Budget 2011
""
international tax reform, and
""
business transformation.
Hon Peter Dunne
Minister of Revenue
Over the term of the current Government, Inland Revenue
has significantly contributed to the re-engineering of the tax
system. This work will continue in Budget 2011. Completion of
our international tax rules review remains a priority.
4
New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
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Chief Executive’s Statement of
Responsibility
In signing this statement, I acknowledge that I am responsible
for the information contained in the Statement of Intent
for Inland Revenue. This information has been prepared
in accordance with the Public Finance Act 1989. It is also
consistent with the proposed appropriations set out in the
Appropriation (2011–12 Estimates) Bill, as presented to the
House of Representatives in accordance with section 13 of the
Public Finance Act 1989, and with existing appropriations and
financial authorities.
Robert Russell
Chief Executive and Commissioner of Inland Revenue
Countersigned by:
Scott Scoullar
Chief Financial Officer
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5
Part one
introduction
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PART ONE INTRODUCTION
7
Commissioner’s introduction
Inland Revenue’s mission is we contribute to the economic and
social wellbeing of New Zealand by collecting and distributing
money. Our success is reflected in our two outcomes:
""
Revenue is available to fund government programmes
through people meeting payment obligations of their own
accord.
""
People receive payments they are entitled to, enabling them
to participate in society.
Responding to Government Priorities
Inland Revenue makes a substantial contribution to the
Government’s priorities for 2010–11 to build a stronger
economy and achieve better results from public services.
Our tax policy work supports the Government’s programme
to move the economy towards savings, exports and investment
and away from borrowing and government spending. In
our policy work will focus on continuing international
2011–12,
tax reforms, helping Inland Revenue’s business transformation
and responding to the Christchurch earthquake.
We are improving the quality of our services to make it easier
for customers to self-manage their compliance obligations. We
are also developing working relationships with other agencies
and the private sector as we seek to ensure that our services
meet customer needs.
Responding to the Christchurch
earthquake
The February 2011 Christchurch earthquake had a substantial
impact on our Christchurch-based staff and customers. As our
Christchurch building is within the inner city cordon, most of
our people are currently working in temporary premises. Many
are working with other government agencies supporting the
community.
We will work proactively with customers to ensure that they
can meet their obligations to the best of their ability and we
will use the flexibility in recently announced policy measures to
assist those in difficulty.
Progress since the 2010–13 Statement
of Intent
During the past year Inland Revenue made progress in key
areas, including:
""
launching IR for the future
""
delivery of the tax policy work programme including
Budget 2010 reforms
""
improving our performance measurement framework and
updating our output performance measures
""
progressing our business transformation programme and
working with other agencies (such as the Ministry of Social
Development and Department of Internal Affairs) to
develop more effective and efficient government services for
customers
""
continuing to improve compliance as outlined in Inland
Revenue’s Compliance Focus 2010–11, including particular
focus areas on the hidden economy, property compliance
and proactive debt management, which we received extra
funding for in Budget 2010.
Transforming the way we work
In April 2011 we launched a new strategic document, IR for the
future, which describes our aspirations for the organisation.
IR for the future identifies our mission, vision and culture. We
developed these with input from 2,500 of our people, who
participated in workshops or contributed to an online forum,
and we believe that this really represents the views of our people.
Inland Revenue aims to be a world-class revenue organisation
recognised for service and excellence. To achieve this we want a
culture that reflects the attributes and behaviours we value most:
""
Trust and integrity
""
Valuing people
""
Innovating to make a difference
""
Working together.
At the same time, we have made savings through improved
efficiency and reducing discretionary costs, and we have
operated with a significantly smaller workforce.
IR for the future lays out our six strategic priorities that focus
on our information and intelligence capability, improving our
systems, aligning our resources and investing in the people
skills we need for the future. There is more detail on these
priorities in Part 3.
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New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
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Conclusion
The next few years will be a challenging time for
Inland Revenue. Our transformation programme will mean
significant change for Inland Revenue and our people. We will
need to ensure that our people have the skills and leadership
necessary to become the world-class revenue organisation we
want to be. I am confident we will continue to deliver efficient,
high-value services that meet the needs of the Government
and our customers.
Robert Russell
Chief Executive and Commissioner of Inland Revenue
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PART ONE INTRODUCTION
9
Nature and scope of our functions
Inland Revenue collects government revenue and makes
payments for social policy programmes. We employ
5,6191 people and have offices in 17 locations throughout
New Zealand.
We deliver paid parental leave payments for the Department
of Labour to parents who take leave from their job or business
to care for a new baby.
We deliver our services through business groups that provide
information and assistance, undertake high-volume processing
of returns and payments, and carry out compliance actions
such as audit, debt management and litigation. Specialist
groups provide corporate and information technology
functions, adjudication and ruling services and policy advice.
Figure 2–
Social policy programme customers
2005–06 2006–07 2007–08 2008–09 2009–10
(000)
(000)
(000)
(000)
(000)
Student loan
borrowers
Child support
(paying)
Working for
Families Tax
Credits2
Paid parental
leave
KiwiSaver
members
Collecting revenue
We assess and collect over 80% of core Crown revenue. The
majority of the revenue we collect is from income tax and GST,
but we also collect several special purpose duties and levies.
We also administer unclaimed money.
Figure 1–
Revenue collected
2005–06 2006–07 2007–08 2008–09 2009–10
$billion $billion $billion $billion $billion
Direct tax
Indirect tax
Total tax
37.3
9.5
46.8
38.5
10.1
48.6
41.3
9.9
51.2
38.7
10.4
49.1
34.2
11.8
46.0
Administering social policy
programmes
499
530
562
587
172
174
173
176
178
159
190
198
203
201
20
25
26
27
27
n/a
n/a
717
1,101
1,460
Providing policy advice
We provide advice to the government (with the Treasury) on
all aspects of tax and social policy measures that interact with
the tax system, draft tax legislation, support bills through the
parliamentary process, negotiate New Zealand’s international
tax agreements and forecast tax revenue.
Major legislation we administer
""
Child Support Act 1991
We usually work with other government agencies to deliver
social policy programmes.
""
Estate and Gift Duties Act 1968
""
Gaming Duties Act 1971
We distribute entitlements for Working for Families Tax
Credits to support families in work. The programme is jointly
administered with the Ministry of Social Development.
""
Goods and Services Tax Act 1985
""
Income Tax Act 2007
""
Stamp and Cheque Duties Act 1971
We develop policy and manage service delivery for child
support, as an intermediary between paying parents and
custodial parents.
""
Student Loan Scheme Act 1992
""
Tax Administration Act 1994
""
Taxation Review Authorities Act 1994
We are the central administrator of KiwiSaver, collecting
payments and sending them to scheme providers for investment.
""
Unclaimed Money Act 1971
""
Parts of the KiwiSaver Act 2006
""
Parts of the Parental Leave and Employment Protection
(Paid Parental Leave) Act 1987.
We collect student loan repayments from borrowers. The
programme is jointly administered with the Ministries of
Education and Social Development.
As at 31 March 2011.
1
10
470
New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
Families receiving monthly or fortnightly payments.
2
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Part two
What we aim to achieve
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PART TWO What we aim to achieve
11
Environment
Inland Revenue operates in a dynamic environment,
with developments in New Zealand and internationally
impacting our business. Each year, we evaluate our operating
environment to identify existing and emerging trends and risks.
Knowing what these trends and risks are allows us to respond
appropriately and deliver better services.
We will continue to focus policy development on the following
areas.
""
Budget policy advice.
""
International tax review. We continue to build on previous
reforms to bring New Zealand tax rules more into line with
those of its major trading partners. This helps New Zealand
businesses competing offshore and helps make New Zealand
an attractive place to base a business in. It also includes
negotiating updated tax treaties with its major trading
partners and new tax information exchange agreements.
""
Business transformation of Inland Revenue. Policy work is
focusing on helping Inland Revenue to operate in a more
efficient manner through greater reliance on electronic and
web-based communication, and on the necessary changes
to tax secrecy rules to support this.
""
February 2011 Christchurch earthquake response. The
initial response resulted in a package of policy measures
announced in March 2011. Work on the development and
implementation of measures will continue. Further work
in support of the recovery efforts is likely as other issues are
raised.
Government priorities
The Government’s priorities3 for 2011 focus on two goals:
""
building a stronger economy
""
building better results from public services.
Inland Revenue contributes to the Government’s priorities by:
""
""
delivering an effective and efficient tax administration
which supports the Government’s objectives, especially
contributing to the Government’s efforts to consolidate
New Zealand’s fiscal position and providing better, smarter
public services.
ongoing delivery of our transformation programme, which
will transform Inland Revenue from using paper-based
systems to smarter, more automated operations. This will
give customers greater certainty and speedier interaction
with Inland Revenue. It will also give us the benefit of
reduced operating costs, which provides the Government
better value for money.
Policy and legislation
The Government’s economic programme aims to move the
economy away from excessive borrowing and government
spending, towards savings, exports and investment. Linked
to these goals is lifting public sector productivity to deliver
more efficient, innovative services that provide better value for
money to taxpayers and the Government.
We develop tax policy supporting the Government’s
programme in accordance with the Generic Tax Policy Process
(GTPP), ensuring effective tax policy development through
early consideration of key policy elements as well as revenue
impact, compliance and administrative costs. Consultation
and feedback are integral parts of the process.
The Minister of Revenue’s other priorities for policy development
include work on charities, child support and income sharing.
We are also doing work on remedial and base maintenance
items required to protect the tax system. These are typically
policy issues identified by Inland Revenue in the course of
delivering services. Other mechanisms to identify such issues
include consultation with the tax profession and the Rewrite
Advisory Panel.
The Government is placing an increased focus on improving
the quality of regulation and reducing the regulatory
compliance burden on businesses. As a consequence, we are
ensuring that the operation of the GTPP and the regulatory
impact assessment framework are integrated into our
processes. We are doing additional documenting work to meet
Cabinet’s regulatory requirements for the scanning, planning,
and costing of regulatory initiatives.
Rt. Hon. John Key, Prime Minister’s Statement to Parliament, 8 February 2011,
available from parliament.nz
3
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New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
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The Christchurch earthquake
Support through other agencies and providers
The February 2011 Christchurch earthquake is expected to
have a significant impact on New Zealand’s economy. The
Canterbury region accounts for about 15% of GDP and the
income losses and disruption to customers’ normal activities
will be reflected in lost revenue, or delays in tax collection and
the distribution of payments.
We have worked with other government agencies and private
providers, such as tax agents, in responding to the earthquake.
Tax agents have first-hand knowledge of their clients’ tax affairs
and are playing an important role in the business recovery
process.
Supporting our people
Our first concern after the earthquake was for our people.
Using lessons learned from the September 2010 Canterbury
earthquake, we set up systems to keep in contact with our
people (eg, using social media sites and running drop-in centres).
As our Christchurch office is in the inner city cordon, we:
""
transferred the work normally carried out in Christchurch to
other locations, and
""
will continue to operate out of temporary accommodation
until we have access to the Christchurch office.
Supporting our customers
Recognising the immediate impacts of the earthquake on
many of our customers, we took action to respond to the
disruption to their business and personal lives. We put on hold
letters requesting payments from people in Christchurch. The
Government announced policy-related measures to assist the
recovery process and to help reduce the longer-term impacts
of the earthquake. The measures include:
""
providing an exemption so businesses do not have to pay
tax or gift duty on donated trading stock
""
making certain welfare contributions provided by employers
tax free
""
extending the redundancy tax credit to 30 September 2011
""
giving the Commissioner the discretion to extend statutory
tax dates on a case or class-of-cases basis
""
exempting certain payments made to families who
receive Working for Families Tax Credits as a result of the
earthquake from counting these payments as income
""
changes to depreciation rules around rollover relief, timing
of deemed sales of destroyed insured assets and losses on
buildings.
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Inland Revenue people who have not yet been relocated to
temporary office accommodation are working in recovery
assistance centres and at Ministry of Social Development
service centres and mobile vans. Other staff have assisted the
Red Cross, Civil Defence and the New Zealand Police.
The economy and compliance
The subdued economic outlook has its origin in the global
financial crisis and recession of 2008. The recovery period
following the crisis has seen declining tax revenue. The impact
of the February 2011 Christchurch earthquake will also have a
slowdown effect on economic growth and tax revenue.
The economic climate experienced by businesses since 2008 has
increased the need to support those having difficulty meeting
their obligations. This has also had an impact on debt levels.
In addition to the increased pressure on the level of debt, there
is also a continuing threat to revenue from tax evasion. The
evidence from our early work to tackle the hidden economy
indicates a high level of acceptance of under-reporting of
income in sectors with a large cash transaction base. Future
work will focus on these risk areas. We aim to influence the
social norms that lead to people not complying with their
obligations.
PART TWO What we aim to achieve
13
Globalisation of business
Changing customer base
The open nature of New Zealand’s economy and the increasing
mobility of people and capital over national boundaries has
brought many economic benefits, but it has also magnified the
risks to the revenue base. Because it is becoming increasingly
difficult to identify the location and jurisdiction that applies to
international transactions, we need to increase our ability to
determine tax liabilities quickly and to follow up non-compliance.
Growth and changes in the composition of New Zealand’s
population influence the demand for our services and the way
we need to plan for future service delivery.
We are addressing the threat to revenue through tax avoidance
and evasion by working closely with other tax authorities, such
as those in Australia, Canada and the UK, to align tax policies
and to make sure that information exchange systems are
effective. We are active in international organisations, such as
the Organisation for Economic Cooperation and Development
(OECD) to improve transparency and information exchange
processes that raise the difficulty of hiding income or assets
in tax havens. Since 2009, rapid progress has been made
toward full and effective exchange of information because tax
transparency has become a key feature of the G-20 Summits.
We recognise the long-term importance of assisting Pacific
countries to strengthen their tax administrations. We are
assisting Samoa and the Solomon Islands with technical
assistance programmes, which help develop their tax
administrations and protection of revenue bases in the Pacific.
Changing service preferences
As we progressively move our services to more cost-effective
electronic channels, we are taking account of our customers’
preferences. Our priority is making it easy for customers to
comply with their tax obligations and self-manage their tax
affairs.
New Zealand’s population is expected to exceed 5 million by
the late 2020s. The population will continue to age, with the
65-plus age group making up over 20% by then, compared to
13% in 2009. Ethnic diversity is projected to increase, with
the population of “European and other” ethnicities declining
from 77% to 70% between now and the late 2020s. The Māori
population is expected to increase from 15% to 16%, the Asian
population from 10% to 16%, and the Pacific population from
7% to 10% over the same period. The population is becoming
concentrated in the top half of the North Island, with half of
all New Zealanders living in the Auckland–Hamilton–Tauranga
triangle.
Recognising the changes in our demographic profile is
particularly important to deliver social policy services
effectively. In the future, we will need to be more flexible in
how we design and deliver services to achieve this.
New Zealand has one of the largest overseas communities
in the developed world—about one-fifth of New Zealanders
are overseas at any one time. This has consequences for the
collection of student loans and child support. We are working
with these customer groups to improve our services and
compliance.
Customers who use online services expect to be offered greater
levels of personalisation, interactivity and customisation
than they get now. They also expect services to be available
continuously and not be device specific.
Inland Revenue will still support non-electronic service
channels for customers who do not use e-services. However,
we will proactively encourage “channel shifts” as we expand
our electronic services and encourage customers to use them
to interact with us. Increasing internet use poses continuing
issues with information security, privacy and identity
authentication. We are working on effective ways to mitigate
these risks, while enabling appropriate methods of information
exchange.
14
New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
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Our strategic direction
Inland Revenue has two outcomes that contribute to the
economic and social wellbeing of New Zealand by collecting
and distributing money. The two outcomes are:
""
Revenue is available to fund government programmes
through people meeting payment obligations of their own
accord.
""
People receive payments they are entitled to, enabling them
to participate in society.
In April 2011, we launched our new strategic document IR for
the future. It sets out our vision, and highlights our priorities
and the culture we will need to move us towards our future.
Our strategic priorities
Our strategic priorities will help us focus our planning and
ensure all our activities contribute to making the changes
necessary for the future.
The priorities focus on building our information and
intelligence capability, improving our systems, aligning our
resources and investing in the future skills required to enable a
culture of service and excellence. They are:
""
We retain, develop and attract high-calibre people with the
skills required in the future—enabling a culture of service
and excellence.
""
We proactively influence voluntary compliance and address
the causes of compliance risk and threats through a range of
interventions.
""
We move customers to cost-effective channels while
creating an environment to make it easy for customers to
self-manage.
""
We improve the efficiency and effectiveness of government
through working with other agencies and private providers.
""
We use our information to make timely decisions and build
an intelligence-led organisation.
""
Our systems meet current and future needs.
We are developing specific measures and targets to help us
assess our progress against our priorities. When these are
finalised, we will include them in the 2011 Annual Report and
report against them in subsequent annual reports.
Figure 3–
IR for the future
What we are here for
We contribute to the economic and social wellbeing of New
Zealand by collecting and distributing money
Our success is reflected in two outcomes:
>
Revenue is available to fund government programmes through
people meeting payment obligations of their own accord.
>
People receive payments they are entitled to, enabling them to
participate in society.
What we want to be
A world-class revenue organisation recognised for service
and excellence
We work with customers and other organisations to make compliance easy and to give
New Zealanders confidence that everyone pays and receives the right amount.
To be recognised for service and excellence we aim to achieve the performance goals
that define a world-class revenue organisation. These are:
>
Speed
>
Certainty
>
Compliance
>
Value
What’s important to us in how we work
Trust and integrity
Innovating to make a difference
Valuing people
Working together
These values support a culture based on good relationships, continuous improvement
and collaboration, so that we can achieve our performance goals.
Our challenges
We need to:
>
>
>
>
>
>
Reduce our cost of administration
Maintain government revenue in a challenging economic environment
Work more across government to improve services
Respond to the challenges of an increasingly digital world
Improve the quality of information we use to make business decisions
Improve the responsiveness and agility of systems that hold and process business information
Our transformation goals
The key features of our business in the future will be:
Efficient
self-management options for customers that provide speed and certainty
>
>
A
broader approach to compliance based on smarter use of information and a wider range
of interventions
A
range of different working relationships with other organisations, including strategic
>
partnerships to deliver some services
> Less transactional work and less direct contact with customers
in complex technical work
Excellence
>
More
automation and streamlined information flows
>
> Greater use of commercial IT products in our systems and services
> A healthy culture which our people value and thrive in
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PART TWO What we aim to achieve
15
OUR culture
IR for the future recognises that we need to develop a culture
that will enable us to achieve our outcomes and vision. Our
culture is shaped by our beliefs, values and behaviour. The
following statements describe the attributes and behaviour we
value most.
""
Trust and integrity—we act with integrity, honesty and
professionalism. This ensures that we continue to be one of
New Zealand’s most trusted organisations.
""
Valuing people—we treat each other and our customers
with respect.
""
Innovating to make a difference—we keep finding new ways
to lift our performance and make compliance easier.
""
Working together—we work together and with other
organisations to deliver better services and value.
We are also guided by our legislation, our code of conduct, our
charter and our responsibilities as a government department
under the Treaty of Waitangi.
We outline the work we are doing to deliver our strategic
priorities and our culture in Part 3.
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New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
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Performance measurement framework
In 2009–10, we developed an initial set of impacts of our
interventions for our performance measurement framework.
This was on the understanding that the impacts would be
refined over time.
During 2010–11, we refined the:
""
impact statements, which resulted in fewer impact
statements and greater clarification of the difference we are
aiming to make
""
impact indicators, which resulted in an improved set of
indicators. We also added baseline measurements.
An important part of the revised impacts layer is the
identification of the relationship between the impacts. The
left-hand impact shows how Inland Revenue can influence
voluntary compliance by enabling customers to self-manage,
which contributes to the key compliance elements. These
elements are represented by the three central impacts. The
right-hand impact addresses and corrects non-compliant
behaviour to move customers to a compliant state.
Figure 4–
Our performance measurement framework
Our
outcomes
The goals we
are aiming to
achieve
Revenue is available to fund government programmes through
people meeting payment obligations of their own accord
We improve compliance
by ensuring:
More customers are
able to self-manage
Maintaining and improving compliance
Our outputs
The activities
we do
We address non-compliance
so that:
Compliance includes when:
More customers
register and report
accurate information
when required
Services to inform the public
about entitlements and
meeting obligations
More customers
claim their correct
entitlements
Compliance
Services to process
obligations and entitlements
Value for
money
More customers pay
and file information
on time
The behaviour of
non-compliant
customers improves
Effectiveness
Our impacts
The difference
we want to
make
People receive payments they are entitled to, enabling
them to participate in society
Moving from non-compliance to compliance
Management of debt
and outstanding returns
Taxpayer audit
Policy advice
Efficiency
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Our people, assets and other resources
Economy
Our inputs
The way
we use our
resources
PART TWO What we aim to achieve
17
Our outcome indicators
In our annual report we will report against the outcome
indicators in figure 5.
Figure 5–
Outcome indicators
Outcome indicator
Baseline
Revenue is available to fund government programmes through
people meeting payment obligations of their own accord
• Total revenue collected
• Total student loan repayments
2009–10: $46.0 billion
2009–10: $644 million
People receive payments they are entitled to, enabling them
to participate in society
• Total Working for Families Tax
Credits paid4
• Total KiwiSaver funds distributed
to providers for investment
• Total child support payments
distributed
• Total paid parental leave
distributed
2009–10: $2,787 million
2009–10: $2,648 million
2009–10: $392 million
2009–10: $154 million
Our impact indicators
Figure 6 explains the nature of our impacts, highlighting
what we want to achieve and the indicators we will use to
measure our success. We are developing targets for the impact
indicators. We will include the targets in the 2011 Annual
Report and report on them in future annual reports.
Figure 6–
Measuring our impacts
Impact indicators
Baseline
Impact: More customers are able to self-manage
How we will demonstrate success:
• % of customers who are aware of their obligations and entitlements increases
• % of customers who find it easy to comply increases
• customer compliance costs are minimised5
2009–10: 77%
2009–10: 71%
n/a
What we want to achieve:
• When customers are aware and certain of their obligations and entitlements and find it easy to comply, they are more likely
to voluntarily comply. Maximising voluntary compliance is key to our approach to achieving our outcomes.
This includes Working for Families Tax Credits paid by Inland Revenue and
the Ministry of Social Development.
5
We will report on this indicator to provide additional contextual information.
4
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New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
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Figure 6 (continued)
Impact indicators
Baseline
More customers are compliant
Impact: More customers register and report accurate information when required
How we will demonstrate success:
• % of returns filed with incomplete or inaccurate information decreases
• % of applications submitted with incomplete or inaccurate information decreases6
• ratio of registrations to population size and growth follows an appropriate trend7
• GST assessed to customer spending follows an appropriate trend8
2007–08: 18%
2008–09: 17%
2009–10: 14%
n/a
n/a
n/a
Impact: More customers claim their correct entitlements
How we will demonstrate success:
• % of Working for Families overpayments and underpayments decreases9
• % of customers confident that Inland Revenue takes appropriate action to ensure people
receive their entitlements increases
2006: 35%
2007: 35%
2008: 33%
2009: 32%
2009–10: 71%
Impact: More customers pay and file information on time
How we will demonstrate success:
• % of returns filed on time10 increases
• % of payments made by customers on time increases
2006: 82%
2007: 81%
2008: 80%
2009: 82%
2006: 88%
2007: 87%
2008: 87%
2009: 86%
What we want to achieve (for the three impacts above):
• Customers need to comply with their obligations for Inland Revenue to achieve its outcomes. The five aspects of compliance are:
– customers register with us when they are supposed to
– customers report accurate information
– customers claim their correct entitlements
– customers file returns or other information required on time
– customers pay due amounts on time.
8
9
We will include results for this indicator in the 2012–15 Statement of Intent.
We will report on this indicator to provide additional contextual information.
We will report on this indicator to provide additional contextual information.
Underpayments or overpayments more than $1,000.
10
On time refers to returns filed (or payments made) within seven days of the due date.
6
7
ird.govt.nz
PART TWO What we aim to achieve
19
Figure 6 (continued)
Impact indicators
Baseline
Impact: The behaviour of non-compliant customers improves
How we will demonstrate success:
• The compliance behaviour of customers who received an intervention improves11
• % of customers confident Inland Revenue takes appropriate action against those who don’t
comply increases
• % of collectable debt to total debt increases
2007–08: 78%
2008–09: 79%
2009–10: 74%
2009–10: 75%
2006–07: 64%
2007–08: 69%
2008–09: 71%
2009–10: 67%
2006–07: 6.1%
2007–08: 6.7%
2008–09: 7.0%
2009–10: 6.8%
June 2007: 5.1%
June 2008: 6.2%
June 2009: 6.8%
June 2010: 7.6%
• % of cash collected to collectable debt increases
• % of collectable debt to revenue assessed decreases
What we want to achieve:
• To maintain high levels of voluntary compliance and community confidence in the integrity of the tax and social policy
systems, customers must have confidence in our ability to effectively deal with non-compliance. Improving the behaviour of
non-compliant customers contributes to achieving Inland Revenue’s outcomes.
Our output performance standards
Our output performance standards measure how well we
deliver the range of tax and social policy services we provide
to our customers (see page 10). They measure timeliness,
quality, quantity and cost, which give a balanced picture of our
performance. We also have a range of activity forecasts, which
estimate customer demand for our services.
For 2011–12 we improved the quality and focus of our output
performance standards. The main changes are:
""
reducing the number of performance standards to focus on
the most important ones
""
explaining how our performance standards contribute to
achieving our impacts
""
changing our debt and return measures to align with our
goals of reducing the levels of outstanding returns and
addressing new debt early, while still recognising the need to
manage ageing debt and returns
""
including targets for the cost measures we introduced in
2010–11
""
removing the 5% tolerance we applied in previous years to
determine whether targets have been achieved
""
focusing litigation management reporting on the results of
our work.
Our 2011–12 performance standards are included in the
Information Supporting the Estimates of Appropriations
2011–12, available from treasury.govt.nz
The percentage of customers who demonstrated improved compliance in
the compliance risk areas identified and addressed in a previous audit.
11
20
New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
ird.govt.nz
Linking our outputs to impacts and
outcomes
Figure 7 shows how our outputs, impacts and outcomes are
linked.
Figure 7–
Links between outputs and outcomes
Outputs
Impacts
Output class 1
Policy advice
• Policy advice in relation to
tax and social policy
More customers are able to
self-manage
• Output class 1
• Output class 2
Output class 2
Services to inform the public
about entitlements and
meeting obligations
• Information services
• Adjudication, public
items, taxpayer rulings
and escalations and
advising
Output class 3
Services to process
obligations and entitlements
• Registrations, applications
and assessments
• Child support
administrative review
• Payments, returns,
collections and
disbursements
Output class 4
Management of debt and
outstanding returns
• Outstanding returns
• Overdue debt
• Child support debt
management
Output class 5
Taxpayer audit
• Taxpayer audit
• Litigation management
ird.govt.nz
Outcomes
More customers register and
report accurate information
when required
• Output class 1
• Output class 2
• Output class 3
The
interventions
delivered
by our
outputs are
designed to
achieve these
impacts.
More customers claim their
correct entitlements
• Output class 1
• Output class 2
• Output class 3
More customers pay and file
information on time
• Output class 1
• Output class 2
• Output class 3
• Output class 4
• Output class 5
Customers
comply
with their
obligations
and receive
their
entitlements.
•
Revenue is available
to fund government
programmes through
people meeting
payment obligations
of their own accord.
•
People receive
payments they are
entitled to, enabling
them to participate
in society.
The behaviour of non-compliant
customers improves
• Output class 1
• Output class 4
• Output class 5
PART TWO What we aim to achieve
21
Inland Revenue has always looked for ways to provide smarter
services that deliver value for money and improved efficiency.
The current fiscal environment has made it even more important
to deliver value for money to government and customers.
Our approach to delivering value for money has three
components:
""
economy—getting and using our resources as economically
as possible
""
efficiency—producing more for the same or less
""
effectiveness—operating in a way that achieves our outcomes.
Economy
We regularly review our input costs to improve internal
processes and reduce costs. We have ongoing initiatives to
reduce our use of resources, including:
""
reducing printing, stationery and postage costs through
increased use of online services and changes to internal
processes
""
using our leased accommodation space more efficiently
and looking for opportunities to co-locate with other
government agencies
""
improving our procurement processes by recognising best
practice principles and approaches
""
minimising travel and accommodation costs and increasing
use of video conferencing and other technology tools.
One way we achieve savings is through our ongoing Lean Six
Sigma (LSS) continuous improvement programme, which
is improving efficiency in core processes. Our LSS focus will
include work on customer contacts and income equalisation
processes.
Efficiency
We have focused on introducing online services that have
allowed us to deliver services efficiently and effectively. The
uptake of these services is having a small but positive impact
on our service delivery.
Figure 8–
Efficiency indicators
Organisational efficiency indicators
• Cost of collecting $100 of revenue decreases over time
• Cost per service channel, product and customer group
decreases over time
• Revenue per administration dollar spent increases over time
• Revenue assessed, per taxation Inland Revenue employee,
increases over time
Output efficiency indicators
• Average cost of a customer-initiated contact (output class 2)
• Average cost of processing income tax returns, GST returns
and employer monthly schedules (output class 3)
• Average cost of finalising an outstanding return (output
class 4)
• Debt cash collected for every dollar spent (output class 4)
• Audit activity assessed for every audit output dollar spent
(output class 5)
Other approaches to demonstrate our efficiency
Inland Revenue participates in regular comparative studies
of tax administration conducted by the OECD12. The studies
provide key indicators that reflect the way the tax system is
performing and allows some comparisons between agencies.
Among the indicators collected by the OECD is the cost of
collecting 100 units of revenue. This is a general indicator of
the relative efficiency of the agency if other factors are kept
constant.
Figure 9–
Cost of collecting 100 units of revenue
1.00
0.90
Cost
Delivering value for money
22
New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
0.70
0.60
0.50
20012002 20032004200520062007 200820092010
Our strategic priorities also drive this focus by helping us to
introduce more cost-effective services, make better use of
existing resources, invest in new technology and streamline
existing processes. The main initiatives that will help to
improve efficiency are covered in Part 3.
We measure our efficiency using a range of indicators (see
figure 8). We will report on them in our annual reports.
0.80
Year
OECD, (2011), Tax Administration in OECD and Selected Non-OECD
countries: Comparative Information Series (2010).
12
ird.govt.nz
Analysis of the trend in collection cost over time should
be treated with caution and understood in the light of
background factors that influence the parameter. These factors
include changes in tax rates, macroeconomic conditions,
abnormal expenditure of the revenue authority and changes
in the scope of work that the organisation performs. New
Zealand has seen changes in most of these factors over the
time period shown in figure 9 and these should be taken into
account in interpreting the trend.
Inland Revenue continues to participate in the Government’s
Better Administrative and Support Services programme,
which includes establishing benchmarking information for our
administration and support services. We will keep using this
information to improve our efficiency across the range of areas
covered by the review.
Inland Revenue takes part in other international tax
benchmarking work. We will include the results of this work in
our 2011 Annual Report.
Effectiveness
We measure our effectiveness through:
""
the impact indicators which help us to measure the
effectiveness of our interventions (figure 6)
""
evaluations of the long-term effectiveness of work
programmes.
""
Student loans—we are assessing the effectiveness of
new approaches to recovering overdue repayments from
overseas-based borrowers. These approaches are being
trialled with student loan borrowers living in Australia. We
will report on this evaluation during 2011.
""
KiwiSaver—the KiwiSaver evaluation, due to be completed
in 2013, is entering the final phase. The focus of the work
now is determining the impact of KiwiSaver on saving, net
worth and incomes in retirement, specifically investigating
whether KiwiSaver has increased household saving and
achieved its legislative purpose to ensure that individuals
are adequately prepared for retirement. KiwiSaver research
reports are published annually.
""
Disputes resolution—we will evaluate whether the new
processes implemented in April 2010 have delivered a more
timely and less onerous process for customers resolving
disputes.
""
Proactive compliance management—we are evaluating
the effectiveness of proactive compliance management in
helping customers who want to comply, eg, how effective are
our actions in correcting student loan tax codes in improving
compliance and reducing the number of customers with
debt? The evaluation is due to report in 2011.
Over the next few years, the focus of our evaluations will be on
measuring the effectiveness of our compliance management.
For example, as part of Budget 2010 funding we will evaluate
our debt management and hidden economy programmes.
""
Debt management—this evaluation will assess how well
we are achieving our debt management goals of maximising
overdue debt collected, and improving customer
compliance through people meeting their filing and paying
obligations on time. The evaluation will examine which mix
of interventions is best. We will complete an initial report
during 2011.
""
Hidden economy—this four-year programme will
evaluate the effectiveness of the new interventions aimed
at addressing the hidden economy. The evaluation will
include a nationwide survey of attitudes and behaviour in
the hidden economy and an evaluation of Inland Revenue’s
Citizenship and Tax education in schools initiative.
ird.govt.nz
PART TWO What we aim to achieve
23
Part three
Transforming
the way we work
ird.govt.nz
PART THREE Transforming the way we work
25
Transforming the way we work
Our new strategic document, IR for the future, will direct the
transformation of Inland Revenue’s business over the next few
years. Transforming the way we work will ensure we deliver
better, smarter services that provide value for money to
Government and our customers.
Our business transformation is a long-term programme
that will make compliance faster, easier and less costly for
customers, provide innovative online services, help us respond
faster to future changes and maintain the integrity of the tax
system. Our transformation goals set out the key features of
our business in the future.
""
Efficient self-management options for customers that
provide speed and certainty
""
A broader approach to compliance based on smarter use
of information and a wider range of interventions
Developing our people
Our first priority is we retain, develop, and attract highcalibre people with the skills required in the future—
enabling a culture of service and excellence.
A culture of service and excellence
To build a culture of service and excellence, we need to have
people who have the right skills and competencies required for
the future. Building this culture means that our people need
to know what is expected of them, have the right tools to do
the job, be managed by skilled, empowered leaders, and have
opportunities to develop, learn and grow.
We recognise that strong leadership is critical to our ability to
deliver our strategic priorities. In the short-term, our leaders will:
""
be more visible and accessible
A range of different working relationships with other
organisations, including strategic partnerships to deliver
some services
""
manage staff performance and development
""
manage organisational transformation efforts.
""
Less transactional work and less direct contact with
customers
""
Excellence in complex technical work
""
More automation and streamlined information flows
""
Greater use of commercial IT products in our systems and
services
This will help our leaders to provide clarity, strong direction,
change leadership and set clear expectations for our people. If
we achieve this, we will see improved staff engagement and we
will move towards our goal of reaching the 75th percentile in the
Gallup public administration database over time.
""
A healthy culture which our people value and thrive in.
""
Our transformation work will be advanced through several key
projects and a range of service-focused initiatives across the
organisation.
We have identified six strategic priorities (see page 15) that we
will need to deliver to achieve our transformation goals. These
priorities show the areas we will focus our efforts and resources
on to achieve our desired future.
Planning for our future workforce
In the future, we will be more customer focused, proactive,
smaller and agile. We have identified the effects of the various
change programmes, which we will regularly update and use as
a tool to inform decision-making.
To ensure we have the skills required for our transformation
to be successful, we will focus on developing strengths in
a number of key areas, including the co-design of services,
external stakeholder management and product knowledge
for new technology solutions being introduced. An initiative
to identify immediate skill gaps, including the key skills areas
above, will be completed during 2011.
We are continuing to plan for our future workforce
requirements using a strategic workforce planning approach.
We are focused on identifying and addressing future capability
requirements, eg, our work on the Future Direction of Service
Delivery project.
26
New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
ird.govt.nz
EEO/Diversity
During 2011–12, we plan to introduce a diversity scorecard
that will measure how we are tracking against our diversity
framework. This will measure our progress using a range
of information, including organisational composition,
appointments, cessations, management profile, and engagement
survey results, with a focus on ethnicity, age and gender.
We will continue to integrate our pay and employment equity
response plan into the diversity scorecard. Our ongoing
monitoring process will ensure we consider pay and employment
equity issues when we analyse business information and
employee survey results, eg, Gallup engagement survey.
Figure 10–
EEO statistics
2006–07
Percentage of female staff
Percentage of female team leaders
Percentage of female managers14
Baseline results
2007–08
2008–09
66%
66%
42%
67%
65%
42%
Public sector comparison
2009–10
66%
63%
44%
66%
65%
46%
Baseline results
2007–08
2008–09
2009–10
2010 public sector average: 59%13
n/a
n/a
Measuring our capability
We have a set of workforce indicators to measure our
organisation’s capability, which show performance over time
and how we compare to other public sector organisations. We
will report on the workforce indicators in our annual reports.
Figure 11–
Workforce indicators
2006–07
Staff FTEs
Staff turnover
Staff engagement (mean)
5,552
11.9%
3.75/5
5,976
12.0%
3.83/5
6,038
8.0%
3.90/5
Public sector comparison
5,511
7.6%
3.77/5
Establishment cap: 6,310
2010 public sector average: 9.2%15
2010 Gallup engagement survey
database for New Zealand State
Sector:
• 50th percentile 3.73
• 75th percentile 3.99
State Services Commission, (2010), Human Resource Capability (HRC)
Survey of Public Sector Departments (as at June 2010).
14
Includes managers down to the fourth tier of management.
15
State Services Commission, (2010), Human Resource Capability (HRC)
Survey of Public Sector Departments (as at June 2010).
13
ird.govt.nz
PART THREE Transforming the way we work
27
Providing better, smarter services
Student loan redesign
We provide better, smarter services to Government and our
customers by moving customers to more cost-effective channels,
creating an environment that makes it easy for them to selfmanage and working with other agencies and private providers.
We are continuing to work on improving the IT systems that
support the way we administer student loans. This will provide
better and more effective services to borrowers by making
it easier for them to self-manage their loan. The improved
systems will give borrowers more timely and complete
information and deliver a consolidated view of loan balances
through the fast transfer of loan account information from
StudyLink to Inland Revenue.
Moving customers to cost-effective channels
One of our priorities is we move customers to cost-effective
service channels while creating an environment to make it
easy for customers to self-manage. Moving customers to costeffective service channels such as e-services will provide better
value for money because services will be more efficient, use
fewer staff and reduce our input costs.
Further developing our e-services will make it easier for our
customers to self-manage their obligations and entitlements
and give them greater certainty. As part of this, we are
continuing to strengthen our e-services to provide a fast,
consistent and integrated customer service through our
website and portal capability.
By increasing the promotion of our e-services, we will
encourage customers to interact with us through automated,
more cost-effective, self-service channels. For example, we
are developing an authenticated eGST return and registration
process which will remove the need for paper returns and will
streamline the registration and return process. This is one of
our online service improvements that will reduce printing,
stationery and postage costs over time.
From 2011–12 we will report customers’ satisfaction with
our e-services. This information will be used to improve our
e-services.
Focusing on certainty
To enable our customers to self-manage their obligations, we
must give them the certainty that they are doing the right
thing. We are working towards this by:
28
""
improving the accuracy of information customers provide.
We will assess risk and confirm assessments in near to real
time. This will give certainty to customers that they have filed
returns correctly and reduce the need for further contact.
""
providing certainty through faster rulings and improved
rulings processes.
""
improving our disputes process by conducting a simplified,
more effective, and less costly disputes process.
""
confirming information received electronically. This
provides our customers with certainty that the information
sent electronically has been received.
New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
Future Direction of Service Delivery
We looked at how we deliver our services to see if we could
be more flexible, efficient and effective. As a result, we will
be making some changes to the way we plan and deliver our
services to customers. These changes include:
""
grouping work that is not face-to-face in the four main
metropolitan centres (Auckland, Hamilton, Wellington and
Christchurch)
""
tailoring advice and education to meet the needs and
compliance behaviour of regional customers
""
keeping local counters for customers and looking for more
co-location opportunities with other agencies.
We will be implementing these changes over the next few years.
Making tax easier
We are continuing to work on our Making Tax Easier initiatives,
which seek to provide better services to customers and reduce
costs. We are exploring options including:
""
a new reporting service for employers which will modernise
our online filing system.
""
better support for business software developers, to ensure
they are able to produce products that meet both their
customers’ needs and Inland Revenue’s requirements.
Working with other agencies and providers
Another of our priorities is we improve the efficiency and
effectiveness of government through working with other
agencies and private providers. Doing this will provide better
services to our customers and improve efficiency.
Key partners are the Ministry of Social Development, the
Department of Internal Affairs and software developers, as
mentioned earlier.
ird.govt.nz
The aim of this work is to move service delivery improvements
towards a whole-of-government approach designed around
customer needs. We are exploring options to:
""
remove boundaries between agencies for customers and
enable quick, convenient “one-door” access to integrated
services
""
provide simplified access to a range of compliance and
entitlement services through e-services, joint contact
centres and shared “shop fronts”
""
reduce costs to deliver Government outcomes
""
enable us to pool expertise and resources with other agencies
""
enable us to give customers better services at lower cost.
In doing this work, we will need to retain appropriate privacy
protections, so we can achieve government cross-agency
aims while ensuring our customers have confidence that their
personal information remains confidential and secure.
Proactive compliance management
Early intervention and increasing our use of proactive actions
(eg, reminder letters, outbound calling campaigns) will help
to influence voluntary compliance. These actions assist
customers who want to meet their obligations and address
areas of compliance concern before problems occur. While we
will also continue our traditional compliance activities such as
audits, in many cases, early intervention and proactive actions
are more effective in improving compliance.
Part of our approach relies on people being aware of the
compliance issues that we focus on. Our approach, which
helps us to influence compliance behaviour, includes:
""
publishing Inland Revenue’s Compliance Focus 2011–12,
which details our intentions and concerns about
compliance, our compliance priorities and the actions we
will take to address them
""
engaging with community and business organisations
to educate customers about their obligations and help
promote compliance
""
continuing to publicise our successful prosecution and
litigation actions, where appropriate.
Improving compliance
One of our priorities is we proactively influence voluntary
compliance and address the causes of compliance risk and
threats through a range of interventions. To effectively
manage the tax system we rely on voluntary compliance
being the norm and most people being willing to meet their
obligations of their own accord. Our approach to managing
compliance is based on the compliance model.
FIGURE 12 –
COMPLIANCE MODEL
HIGH
Have decidedUse full force
not to comply
of the law
nce
plia
Try to, but don’tAssist to
always succeed comply
t
cos
BusinessIndustry
Don’t want Deter by
to comply detection
com
Customer
f
el o
Lev
EconomicSociological
s
Psychological
Willing to do theMake it
right thing
easy
Factors that influence customer
decisions and behaviour
ird.govt.nz
Create pressure down
LOW
Attitude to compliance Compliance strategy
PART THREE Transforming the way we work
29
Managing overdue debt
Addressing non-compliance
Our focus on proactive compliance management is reflected in
our efforts to transform the way we manage overdue debt. We
are guided by the PARE model which has four interconnected
phases of debt management:
Our customers need to have confidence in our ability and
willingness to address non-compliance to maintain community
confidence in the integrity of the tax system.
""
prevent—emphasising early intervention, especially with
those most at risk
""
assist—supporting customers in their efforts to manage
their obligations
""
recover—quick intervention to get payment
""
enforce–where customers do not respond to the earlier
steps, we act to advise them of the consequences and use
the full force of the law.
Our focus on early intervention and proactive actions provides
better value for money because they are more effective, reduce
debt growth and use fewer resources than more intensive
compliance actions. We can also focus our enforcement
actions on the risk areas that offer the highest returns.
In Budget 2010, we were given extra funding for managing
overdue debt. We used the funding to implement a campaign
management system that used multiple outbound contact
channels and to recruit extra staff for outbound calling and
other campaign work.
Campaign management is a key part of our debt management
approach. We use a variety of interventions in these
campaigns, including reminder letters, outbound calling to
customers with overdue payments, text messages and offering
instalment arrangements to customers already in debt.
We are continuing to plan for our future debt collection system.
This will:
30
""
make it easy for customers to self-manage their compliance
obligations
""
implement proactive, preventative, tailored and timely
interventions based on customer information
""
implement automated systems which increase flexibility,
efficiency and cost-effectiveness
""
increase management control through data accuracy,
transparency and reporting.
New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
To build this confidence we will continue to identify and
audit customers with a significant risk of non-compliance.
We will do this using evidence-based intelligence to identify
our compliance priorities and allocating our audit resources
to those areas. We will also take enforcement action against
customers who persistently avoid paying overdue debt. In
serious cases of fraud and tax evasion we will identify and
prosecute those concerned.
Deliberate non-compliance also takes the form of schemes
designed to avoid or significantly reduce tax liability. We will
continue to take legal action against these schemes. In the
coming period we will be advancing cases involving schemes
that use optional convertible notes, as well as the appeal in the
Penny and Hooper case. This is an important case concerning
income-splitting arrangements between taxpayers and is being
appealed in the Supreme Court.
In the next few years we will also specifically target noncompliance in the hidden economy and property compliance
areas, which were also funded in Budget 2010.
Property compliance
This initiative is a continuation of our earlier three-year
programme (funded in Budget 2007) that targeted noncompliance by property traders and speculators. We will
continue to gather intelligence on property transactions and
develop appropriate compliance responses, based on risk.
These responses include education, mailing campaigns, audits
and prosecutions where serious non-compliance is evident.
We will focus on intensive property trading and speculation
and misuse of GST refunds.
ird.govt.nz
Hidden economy
Our systems meet our needs
This work targets economic activity that is kept outside the
tax system by under-reporting income, and concealing cash
jobs or barter transactions. We are developing approaches
to influence social norms about the acceptability of noncompliance and also work closely with industry groups.
Our sixth strategic priority is our systems meet current and
future needs. Ensuring that our systems meet future needs is
critical to achieving the transformation of our business.
An important part of the development of our programme
is introducing industry standards to identify businesses or
individuals falling outside acceptable ranges for income and
costs. When we identify taxpayers who file returns outside
these ranges for income and costs, we will ascertain their
position and take appropriate action.
We are working with the hospitality industry and the scrap
metal trade. As we develop our understanding of the drivers of
non-compliance in other industries in the hidden economy, we
will be able to develop the most cost-efficient, long-term ways
of making cash operators comply and establishing norms that
exist elsewhere in the community.
Building an intelligence-led organisation
Another of our priorities is we use our information to make
timely decisions and build an intelligence-led organisation.
We use the information we gather to understand our
customers’ service preferences, which helps us to design the
appropriate response for customers at risk of non-compliance.
We have used this approach in other compliance programmes
(eg, in the hidden economy and property areas) with success
and will continue to use it to drive our compliance focus.
Our focus on providing better services and improving our
efficiency has increased our reliance on our IT capability and
e-services. To deliver these services well, our people need the
right tools and appropriate processes and IT infrastructure.
Our capability to implement new government tax or social
policy initiatives has been affected by our ageing FIRST
system. Our options for modernising our current IT systems
include enhancing the existing FIRST systems and deploying
commercial off-the-shelf components where it makes sense to
do so. The improvements we make to our IT systems will be
integrated through an architecture that is based directly on our
business needs. We believe that this approach will:
""
enable future operation and change at a lower total cost of
ownership over time
""
mean that changes to one process or service will not require
testing of the whole system
""
build the new system based directly on Inland Revenue’s
business processes, and allow for simpler reconfiguration as
these processes evolve
""
enable participation in government shared services.
As part of our IT enhancement work, we are deploying a new
enterprise desktop environment during 2011–12. This will
centralise and streamline our ageing distributed computing
infrastructure.
In the future, we will need to improve the quality of our
information by:
""
centrally coordinating data collection and storage to
manage our information as a corporate asset
""
collecting a wider range of information from more sources,
improving data quality, integrity and timeliness.
ird.govt.nz
PART THREE Transforming the way we work
31
Part four
Organisational capability
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PART FOUR Organisational capability
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Governance and Risk Management
Progressing to our future depends on identifying risks and
developing approaches to mitigate their effects. We achieve
this through our governance and risk management frameworks.
Strategic risks
Governance
Revenue
The Commissioner chairs the Executive Board which examines
longer term strategy, ethics, integrity, strategic risks and
progress towards our desired future and outcomes. In addition,
the senior management team meets weekly.
There are constant threats to the revenue base from global
and national developments and customer behaviour. The
recession’s ongoing impacts continue to influence our revenue
collection and increase the level of customer debt.
The following governance groups support the Executive Board:
We are continuing to undertake various measures to reduce
the recession’s impact on the Crown accounts. We are
running a project to improve debt management and we have a
programme to manage compliance risks.
""
Portfolio Governance and Investment Committee—
oversees the approval, initiation and implementation of
significant programmes/projects.
""
Business Transformation Programme Board—provides
assurance that Inland Revenue business transformation
initiatives will meet the strategic needs of the organisation.
""
Technical Governance Committee—facilitates and ensures
the coordination and consistency of departmental work on
key technical matters.
In addition to the Executive Board and the supporting
committees above, the Risk and Assurance Committee
provides independent advice to the Commissioner on
carrying out his statutory responsibilities and accountabilities.
This Committee has an independent chair and includes
independent members.
Inland Revenue has a project management framework
based on international industry standards. Projects
apply this framework’s components ensuring that risks to
successful implementation are identified and mitigated.
We have established processes for managing risks relating
to programmes and portfolios of work and these will be
strengthened this year.
Risk Management
Our risk management framework is based on the ISO Risk
Management Standard (ISO31000:2009) and sets out the
principles for managing risk. The framework:
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""
requires business owners to adopt risk management practices
""
has a strong assurance focus that supports governance bodies
""
applies to strategic, operational, project, programme and
portfolio risk.
New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
The following section outlines the key strategic risks to
Inland Revenue.
Reputation and community confidence
If we do not understand increasing customers’ requirements
or meet our Minister’s or our customers’ expectations, our
reputation could be negatively affected leading to a loss of
confidence by the government and customers. This could
undermine voluntary compliance and funding which are
critical for an effective tax administration.
We are improving our understanding of customers as well
as taking steps to deliver the right customer services. This
includes analysing customer survey responses, developing new
customer programmes, strengthening customer relationships
and improving contact channels.
People capability
If we do not attract, develop or retain skilled, capable people
to meet the current and future needs of our customers, we
will reduce our ability to prepare and respond to policy and
administrative challenges.
This risk is reflected as a key strategic priority. We will focus on
developing our people capability by identifying and addressing
capability gaps and developing strengths in key skill areas.
Information technology
There are risks associated with some of the information
technology systems we operate, which puts pressure on our
ability to make system changes quickly and effectively.
This risk is reflected as a key strategic priority. Our
transformation programme is working to modernise our
infrastructure and systems so we can make quick and effective
system changes. This is reflected as a key investment priority
in our future capital intentions (see Capital and Asset
Management Intentions for more information).
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Information management
If Inland Revenue has poor information management processes,
we may not have the business information to support
planning, monitoring, analysis and reporting, compliancebased management or correct and accessible customer
information. This could lead to poor decision-making
capability, impacting on our ability to achieve our outcomes.
We have approved an information management framework
and principles, and we are confirming the strategies that will be
implemented from 2011 to manage this risk.
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PART FOUR Organisational capability
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Capital and asset management intentions
Inland Revenue manages assets of over $711 million, which
have a net book value of over $216 million. Most of these
assets are technology related. They cover our infrastructure
(eg, PCs, laptops, storage and servers), core tax systems (eg,
FIRST, duties) and non-tax systems (eg, KiwiSaver, student
loans, Working for Families Tax Credits, child support and call
management technology).
Inland Revenue is categorised as a capital-intensive agency
for capital asset management purposes because these core
systems are strategically important to the Crown.
We have made investment trade-offs as we focused on policy
implementation ahead of upgrading key infrastructure assets.
A health assessment of our asset base shows that a number
of critical assets require significant investment to maintain
existing capability and enable business transformation.
Our planning methodology incorporates ways of identifying
and aligning future capital intentions with our need to invest in
tools and infrastructure.
The key components of our future capital intentions are:
""
Maintaining, strengthening, enhancing and renewing our
current asset base
We will continue to reinvest in our asset base. This includes
replacements, upgrades and enhancements to our IT
systems and infrastructure, software licences, computers,
motor vehicles, furniture and equipment. It also includes
enhancements to existing systems that are required to
deliver policy or meet customer demands—ahead of any
investment in new systems.
""
Investing for the future
As part of our strategic planning processes we are
using a portfolio approach to develop future capital
investment strategies. We recognise the need to improve
core systems that were designed for tax collection and
have been progressively adapted over the years to cope
with the addition of various social policy programmes.
Improvements are necessary to ensure that Inland Revenue
remains an agile and efficient organisation, able to respond
to the needs of our customers.
Over the next five to seven years our key focus area for
capital investment will be our transformation programme,
enabling our future business, e-services (electronic
solutions) and modernising our core infrastructure and
systems. Our future transformation programme includes:
– exploring ways that major government agencies can
fundamentally change the way they deliver services
to people. This is being done in conjunction with the
Ministry of Social Development and the Department of
Internal Affairs.
– implementing policy and system changes that support
the Making Tax Easier proposals.
– implementing student loan policy and system changes.
The Executive Board makes strategic decisions on capital
management. Medium-term and operational decisions on
capital management are governed by the Portfolio Governance
and Investment Committee, supported by the Enterprise
Portfolio Management Office. Our Business Transformation
Programme Board oversees significant transformation projects.
Inland Revenue does not own land or buildings. We do,
however, fit out leased office accommodation.
Maintaining our current asset base from our limited capital
reserves is an ongoing challenge.
""
Delivering government initiatives
Inland Revenue advises the government on all tax
and related social policy issues, and manages the
implementation of new policy. Policy initiatives are
normally funded by a combination of Crown funding and
reprioritisation of our cash reserves.
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New Zealand Inland Revenue STATEMENT OF INTENT 2011–14
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Figure 13–
Historical capital expenditure
$000
Property,
plant and
equipment16
Intangibles17
Total
2005–06 2006–07 2007–08 2008–09 2009–10
Actual Actual Actual Actual Actual
16,433
15,237
27,085
19,266
21,542
32,394
48,827
58,713 82,789
73,950 109,874
42,453
61,719
38,122
59,664
Figure 14 sets out our forecast capital expenditure based
on available cash reserves and funding decisions agreed by
Cabinet. The forecast excludes capital intentions that require
future Cabinet approval for additional funding. Any additional
funding requests will be subject to Gateway and Business Case
processes.
Figure 14–
Forecast capital expenditure programme
$000
Property,
plant and
equipment16
Intangibles17
Total
2010–11 2011–12 2012–13 2013–14 2014–15 2015–16
Estimated Forecast Forecast Forecast Forecast Forecast
Actual
19,000
22,000
14,000
9,000
30,500
49,500
57,500
79,500
42,000
56,000
55,500
64,500
10,000
35,000
44,500 31,500
54,500 66,500
Property, plant and equipment includes leasehold improvements and
IT hardware.
17
Intangibles includes software licences, and systems development and
configuration.
16
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PART FOUR Organisational capability
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