Statement of intent B-23 SOI (2011)

Transcription

1 Statement of intent B-23 SOI (2011)

2 Crown Copyright 2011 This work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. In essence, you are free to copy, distribute and adapt the work, as long as you attribute the work to the Crown and abide by the other licence terms. To view a copy of this licence, visit creativecommons.org Please note that no departmental or governmental emblem, logo or Coat of Arms may be used in any way that infringes any provision of the Flags, Emblems, and Names Protection Act legislation.govt.nz Attribution to the Crown should be in written form and not by reproduction of any such emblem, logo or Coat of Arms. ISSN (Print) ISSN (Online) Presented to the House of Representatives pursuant to section 39 of the Public Finance Act 1989.

3 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 3

4 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. 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. 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. 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 Completion of our international tax rules review remains a priority. 4 New ZEAland Inland Revenue Statement of intent

5 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 It is also consistent with the proposed appropriations set out in the Appropriation ( 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 5

6 Part one introduction PART ONE INTRODUCTION 7

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 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 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. 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. 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 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 , including particular focus areas on the hidden economy, property compliance and proactive debt management, which we received extra funding for in Budget 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. 8 New ZEAland Inland Revenue Statement of intent

8 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 PART one introduction 9

9 NatuRE ANd SCOPE of our functions Inland Revenue collects government revenue and makes payments for social policy programmes. We employ 5,619 1 people and have offices in 17 locations throughout New Zealand. 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. 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 $billion $billion $billion $billion $billion Direct tax Indirect tax Total tax Administering SOCIAl POlICy PROgRAMMES We usually work with other government agencies to deliver social policy programmes. 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. We develop policy and manage service delivery for child support, as an intermediary between paying parents and custodial parents. We are the central administrator of KiwiSaver, collecting payments and sending them to scheme providers for investment. We collect student loan repayments from borrowers. The programme is jointly administered with the Ministries of Education and Social Development. 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. FiguRE 2 SOCIAl POlicy PROgRAMME customers Student loan borrowers Child support (paying) Working for Families Tax Credits 2 Paid parental leave KiwiSaver members (000) (000) (000) (000) (000) Providing POlicy advice n/a n/a 717 1,101 1,460 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 Estate and Gift Duties Act 1968 Gaming Duties Act 1971 Goods and Services Tax Act 1985 Income Tax Act 2007 Stamp and Cheque Duties Act 1971 Student Loan Scheme Act 1992 Tax Administration Act 1994 Taxation Review Authorities Act 1994 Unclaimed Money Act 1971 Parts of the KiwiSaver Act 2006 Parts of the Parental Leave and Employment Protection (Paid Parental Leave) Act As at 31 March Families receiving monthly or fortnightly payments. 10 New ZEAland Inland Revenue Statement of intent

10 Part two What we aim to achieve PART TWO What we AIm TO AChieve 11

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. Government PRIORITIES The Government s priorities 3 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. 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 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. 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. 3 Rt. Hon. John Key, Prime Minister s Statement to Parliament, 8 February 2011, available from parliament.nz 12 New ZEAland Inland Revenue Statement of intent

12 The Christchurch EARThquake 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. 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. Support through other agencies and providers 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. 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 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

13 GlobalISATION of business 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. 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. Changing customer base 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. 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 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

14 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 > Excellence in complex technical work > 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 > PART TWO What we aim to achieve 15

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 New ZEAland Inland Revenue Statement of intent

16 Performance MEASuREMENT framework In , 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 , 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 People receive payments they are entitled to, enabling them to participate in society Value for money We improve compliance by ensuring: Compliance includes when: We address non-compliance so that: Our impacts The difference we want to make More customers are able to self-manage More customers register and report accurate information when required More customers claim their correct entitlements More customers pay and file information on time The behaviour of non-compliant customers improves Effectiveness Maintaining and improving compliance Compliance Moving from non-compliance to compliance Our outputs The activities we do Services to inform the public about entitlements and meeting obligations Services to process obligations and entitlements Management of debt and outstanding returns Taxpayer audit Policy advice Our inputs The way we use our resources Our people, assets and other resources Economy Efficiency PART TWO What we aim to achieve 17

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 : $46.0 billion Total student loan repayments : $644 million People receive payments they are entitled to, enabling them to participate in society Total Working for Families Tax : $2,787 million Credits paid 4 Total KiwiSaver funds distributed : $2,648 million to providers for investment Total child support payments : $392 million distributed Total paid parental leave : $154 million distributed 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 : 77% % of customers who find it easy to comply increases : 71% customer compliance costs are minimised 5 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. 4 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. 18 New ZEAland Inland Revenue Statement of intent

18 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 : 18% : 17% : 14% % of applications submitted with incomplete or inaccurate information decreases 6 n/a ratio of registrations to population size and growth follows an appropriate trend 7 n/a GST assessed to customer spending follows an appropriate trend 8 n/a Impact: More customers claim their correct entitlements How we will demonstrate success: % of Working for Families overpayments and underpayments decreases : 35% 2007: 35% 2008: 33% 2009: 32% % of customers confident that Inland Revenue takes appropriate action to ensure people : 71% receive their entitlements increases Impact: More customers pay and file information on time How we will demonstrate success: % of returns filed on time 10 increases 2006: 82% 2007: 81% 2008: 80% 2009: 82% % of payments made by customers on time increases 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. 6 We will include results for this indicator in the Statement of Intent. 7 We will report on this indicator to provide additional contextual information. 8 We will report on this indicator to provide additional contextual information. 9 Underpayments or overpayments more than $1, On time refers to returns filed (or payments made) within seven days of the due date. PART TWO What we aim to achieve 19

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 improves : 78% : 79% : 74% % of customers confident Inland Revenue takes appropriate action against those who don t : 75% comply increases % of collectable debt to total debt increases : 64% : 69% : 71% : 67% % of cash collected to collectable debt increases : 6.1% : 6.7% : 7.0% : 6.8% % of collectable debt to revenue assessed decreases June 2007: 5.1% June 2008: 6.2% June 2009: 6.8% June 2010: 7.6% 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 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 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 performance standards are included in the Information Supporting the Estimates of Appropriations , available from treasury.govt.nz 11 The percentage of customers who demonstrated improved compliance in the compliance risk areas identified and addressed in a previous audit. 20 New ZEAland Inland Revenue Statement of intent

20 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 Outcomes 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 The interventions delivered by our outputs are designed to achieve these impacts. More customers register and report accurate information when required Output class 1 Output class 2 Output class 3 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 The behaviour of non-compliant customers improves Output class 1 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. PART TWO What we aim to achieve 21

21 Delivering value for MONEy 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. 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 oecd 12. 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 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. 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. Cost Year We measure our efficiency using a range of indicators (see figure 8). We will report on them in our annual reports. 12 OECD, (2011), Tax Administration in OECD and Selected Non-OECD countries: Comparative Information Series (2010). 22 New ZEAland Inland Revenue Statement of intent

22 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 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 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 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. PART TWO What we aim to achieve 23

23 Part three Transforming the way we work PART THREE TRANsforming the WAy we WORk 25

24 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 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 Excellence in complex technical work 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. 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. 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 manage staff performance and development manage organisational transformation efforts. 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 75 th percentile in the Gallup public administration database over time. 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 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

25 EEO/Diversity During , 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 Baseline results Public sector comparison Percentage of female staff 66% 67% 66% 66% 2010 public sector average: 59% 13 Percentage of female team leaders 66% 65% 63% 65% n/a Percentage of female managers 14 42% 42% 44% 46% 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 Baseline results Public sector comparison Staff ftes 5,552 5,976 6,038 5,511 Establishment cap: 6,310 Staff turnover 11.9% 12.0% 8.0% 7.6% 2010 public sector average: 9.2% 15 Staff engagement (mean) 3.75/5 3.83/5 3.90/5 3.77/ Gallup engagement survey database for New Zealand State Sector: 50 th percentile th percentile 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). PART THREE transforming the way we work 27