Contact officer: Debbie Davison
Telephone: (02) 9354 3432
Facsimile: (02) 9354 3983
Issue date: 1 September 2015
Mr Jeff Lapidos
Branch Secretary
Australian Services Union
Taxation Officers' Branch
Jeff.Lapidos@asutax.asn.au
Dear Jeff
I refer to your letter to the Commissioner of Taxation dated 25 August 2015 requesting
various bargaining information. I am responding on the Commissioner's behalf.
Set out below are the ATO’s responses to your specific requests for information under the
headings from your letter.
REQUEST FOR DETAILS OF PRODUCTIVITY IMPROVEMENTS AND COST SAVINGS
AGREED WITH THE APSC
The revised pay offer is supported by the same productivity savings as our February 2015
pay offer and several unquantifiable productivity savings which are new.
Previously advised productivity savings (quantifiable)
The quantum of savings for each quantifiable initiative were provided to all bargaining
representatives and employees on Tuesday, 11 August 2015 (Attachment 1) and 19 August
(Attachment 2).
The amounts of the productivity savings announced in February 2015 (Attachment 3) have
changed due to the increased pay rises and lower current and projected staffing levels.
However, the methodology for calculating each initiative is essentially the same as advised
in bargaining round 13 on 16-17 February 2015.
1. Increased working hours

9 minutes extra per productive working day

226.5 productive working days. This takes into account an average of 10 public
holidays3.5 days’ Christmas closedown and 20 days annual leave. Note - This initiative
was previously calculated based on 225.5 productive working days.

Employee numbers based on average staffing levels from the 2014-15 Portfolio Budget
Statements, discounted for a proportion of EL employees (50% for EL2 employees, 9%
for EL1 employees).

Non-ongoing and casual employees have not been included.

The total productivity gained over the life of the EA is $86.8 million.
2. Administration of the health and wellbeing allowance

It is assumed that the discussion to determine eligibility and applying for / approving the
allowance takes 10 minutes for both the employee and their manager.

For the purposes of these calculations, the manager for each eligible employee has been
assumed to be:
o
o
o
APS1 – APS5 employees and cadets report to APS6
APS6 employees report to EL1
EL1 employees report to EL2

Over the three year period between 2011/12 – 2013/14, an average of 91% of
employees applied for, and were paid the $300 allowance each financial year. Therefore,
the estimated productivity and affordability savings are based on 91% of the projected
headcount over the forward years.

The removal of the health and wellbeing allowance will result in a total productivity
saving of $859,317 over the three year term of the proposed EA.
3. Administration of common salary advancement date

It is assumed that the discussion to determine eligibility for salary advancement takes 30
minutes for the employee and their manager.

For the purposes of these calculations, the manager for each eligible employee has been
assumed to be:
o
o
o
APS1 – APS5 employees and cadets report to APS6
APS6 employees report to EL1
EL1 employees report to EL2

The total number of APS1 – EL1 employees who were eligible for a salary advancement
as at 31 March 2015 was 3,775. The majority of employees commencing in the ATO will
be eligible for a salary advancement over the duration of the new agreement, and the
majority of those exiting the organisation will be at the top of the range. Therefore, the
calculations over the life of the EA are based on the 31 March 2015.

In each year of the EA, it is expected that the total productivity savings from this measure
will be $184,143 resulting in a total saving of $552,429 over the three years of the
proposed EA.
New productivity savings (unquantifiable)
As discussed at the briefing on Tuesday 11 August and at the bargaining meeting on
Wednesday 19 August, the ATO is unable to identify savings which are directly attributable
to each of the four components of new productivity savings. As you are aware, section 3.1
of the Australian Government Public Sector Workplace Bargaining Policy states:
"Agencies can only negotiate remuneration increases which are affordable, consistent with
Australian Government policy, and offset by genuine productivity gains which satisfy the
Australian Public Service Commissioner."
In effect, what has happened is that the ATO has estimated to the satisfaction of the
Australian Public Service Commissioner that, in total, initiatives related to the following four
areas will provide productivity savings of $96m over the 3 year term of the proposed EA:

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

Reinventing the ATO
EL1 flexible hours
Unscheduled absence initiatives
Streamlining the agreement
This $96m amount is the additional productivity (i.e. on top of the previously identified
‘quantifiable’ savings) required to offset the proposed pay rises totalling 4.5%. Details for
each of these ‘unquantifiable’ initiatives are as follows:
1. Reinventing the ATO
The ATO is undertaking a major transformation program, Reinventing the ATO, to achieve
our vision of being a contemporary, service oriented organisation. At a practical level it will
result in a different culture, new products and services, strong connection to the community,
productivity improvements and an openness and willingness to change.
The Reinvention Blueprint released in March 2015 (Attachment 4) demonstrates a
fundamental change in the way that employees engage with clients and colleagues. Some
specific examples of productivity yielding changes to date include:
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Siebel taskforce
engaging the community through different modes of communication
removing detail and procedural content form phone scripts
location strategy
streamlining policies and procedures
alternative dispute resolution
2. EL1 working hours arrangements
While this is not a new proposal, it is now being counted as a productivity saving to support
the increased pay rise.
This could not be included previously as a productivity saving because we cannot quantify
how many additional hours EL1 employees will work.
The ATO does not currently specify working hours arrangements for EL2s and does not
intend to specify working hours arrangements for EL employees generally going forward.
We do know that EL1s (other than the approximately 9% who currently do not take hour for
hour as time off in lieu) will be working more hours.
3. Unscheduled absence
Note - These savings could not be included previously as they cannot be quantified.
The ATO has been actively seeking to reduce our level of unscheduled absence for many
years. There has been a particular focus under the current EA (Attachment G) in the form of
two productivity bonus payments that were dependent on having positive attendance
programs in place.
The ATO continues its strong commitment to reducing unscheduled absence and we’ve had
a downward trend over the past few years – as shown in the past three State of the Service
reports:
2011-12
2012-13
2013-14
15.5 days per full time employee
15.3 days per full time employee
15.1 days per full time employee
Including this as a productivity measure is an acknowledgement that the ATO’s current and
planned initiatives will result in a continuing decrease in the levels of unscheduled absence
and therefore an increase in workforce availability.
The ATO is not proposing anything new to support the inclusion of this initiative as a
productivity saving. Rather, we are recognising that various current and future initiatives will
lead to increased productivity.
We spoke to you about some relevant initiatives being undertaken outside the EA at the
bargaining meeting that Tracey Frey Assistant Commissioner, Resolution and Issues
Management, ATO People attended on 5 August 2014. We also detailed the current and
planned initiatives at the bargaining meeting on 19 August 2015.
Initiatives from within the EA include:

decrease the number of days of personal leave that can be taken without supporting
documentation from 8 days to 5 days per year

flexibility for the ATO in relation to who employees need to notify of unplanned leave
Initiatives outside the EA include:
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Reviewing, consolidating and updating online information, tools and resources
Reviewing leave and attendance policy
Reviewing and refreshing learning products
Strengthening manager capability
Specialised and targeted support strategies
Streamlining health management processes, procedures, resources and capability
Optimising rehabilitation management and return to work systems
Enhancing reporting analytics
Strengthening HR capability
4. Streamlining the EA
We are proposing to streamline the EA, in accordance with the Bargaining Policy, to make it
straightforward and user-friendly and to provide the maximum flexibility for the ATO to carry
out its business.
The proposed EA tabled on 19 August reduces from 154 clauses in the current EA to 85
clauses (133 pages to 71 pages).
An example of how this can contribute to productivity is in the clarification of the redundancy
provisions in relation to using orders of merit to determine which employees are excess.
The lack of clarity in the current EA meant clarification had to be sought through FWC which
caused a delay in the process and took up a lot of resources in the ATO, not least of which
was the uncertainty for all involved.
Sources of cash
Removal of allowances
The amounts of the cash savings from the removal of these allowances announced in
February 2015 (Attachment 3) have changed due to the increased pay rises and lower
current and projected staffing levels. However, the methodology for calculating the savings
from each allowance is essentially the same as advised in bargaining round 13 on 16-17
February 2015.
Health and wellbeing allowance

Rates of usage (as above): 91% of the projected headcount over the forward years

Allowance is $300 per year

The removal of the health and wellbeing allowance will result in a total cash saving of
$14.6 million over the three years of the proposed EA.
Remote locality provisions

Given the variable nature of the total amount payable for each employee (which depends
on location and number of dependents), the cashable savings for the forward years have
been estimated using the total amount paid during FY2013-14 as a base figure.

The amount paid in 2013-14 for district allowance, leave loading and remote localities
fares combined was $293,877.

From the 2013/14 figure, the ATO has estimated that up to 10% of eligible employees
will leave the organisation in each year of the proposed agreement.
Incidentals allowance for field work

The total amount of field work allowances paid in FY2013-14 was $69,614.

It is expected that savings from this proposal will be affected by a reduction in staffing
levels over the forward years.

Therefore, the total amount paid for field allowance in 2013-14 has been reduced
proportionally in the 2014-15, 2015-16, 2016-17 and 2017-18 financial years in line with
the projected FTE staff numbers determine the total projected savings in each year of
the Agreement.
Incidental component of travel allowance

In FY2012-13, the total amount paid to employees (excluding SES) for travel incidentals
was $1,054,960. In FY2013-14, the total payments made were $931,879.

It is expected that savings from this proposal will be affected by a reduction in staffing
levels over the forward years. Therefore, the total amount paid for travel incidentals in
2013/14 has been reduced proportionally in the 2014-15, 2015-16, 2016-17 and 2017-18
financial years in line with the projected FTE staff numbers to determine the total
projected savings in each year of the Agreement.
Part day travel allowance
 In FY2012-13, the total amount paid to employees (excluding SES) for part day travel
allowance was $307,128. In FY2013-14, the total payments made were $290,197.

It is expected that savings from this proposal will be affected by a reduction in staffing
levels over the forward years. Therefore, the total amount paid for part day travel in
2013/14 has been reduced proportionally in the 2014-15, 2015-16, 2016-17 and 2017-18
financial year in line with the projected FTE staff numbers to determine the total
projected savings in each year of the Agreement.
Rationalising accommodation

At the July 2015 meeting of the National Consultative Forum, the ATO provided union
representatives with details of the ATO’s property activities (Attachment 5).

The ATO has quantified savings in consideration of those arrangements where it is
reasonable to do so and we are able to direct $40.3m over the three years of the
proposed EA to fund pay rises.

We are unable to provide more specific costings on property initiatives as such details
are commercial in confidence.
Workforce restructure

As advised at the July 2015 meeting of the National Consultative Forum, the outcome of
workforce re-profiling activities is that there will be an oversupply of employees at the EL
classification and an undersupply of lower level employees.

The ATO has established the Organisational Realignment Program (ORP) to manage
this rebalancing exercise. This will result in 450 EL employees exiting the ATO in 201516.

The work from the EL1 and EL2 classifications will be re-profiled, resulting in a targeted
intake of 450 employees at the APS levels in 2015/16.
REQUEST FOR DETAILS OF EXPECTED PRODUCTIVITY IMPROVEMENTS AND
COST SAVINGS
The ATO has outlined those planned or expected initiatives that can reasonably be
estimated to provide the necessary productivity savings and/or affordability and that can be
directed to remuneration increases over the three years of the proposed EA.
As you are aware, and has always been the case, not all productivity improvements and cost
savings are available for the purposes of enhancing employee pay and conditions.
Broadly speaking, the ATO shares productivity gains across four areas:

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Improved taxpayer services for the community
Investing in the future of the ATO
Pay increases and improvements in conditions for staff; and
Returns to the government
As we set out above, the ATO’s remuneration proposal that has been approved by the
APSC factored-in various changes associated with the Reinvention Program and other
initiatives which are either planned or already underway. This was despite the fact that we
are unable to quantify such initiatives with precision due to their long-term and far-reaching
nature.
The March 2015 Reinvention Blueprint sets out our vision and plans for the future of the
agency, including what might be described as 'expected productivity improvements'. There
is no separate list matching your request. Compiling such a list would be a highly artificial
exercise. The information would be speculative and irrelevant. In any agency, it is not
possible to accurately predict all of the business exigencies that will arise that in the future.
RETURN OF FUNDING TO THE COMMONWEALTH FROM FY2014-15
Detail of amounts returned to the Commonwealth in previous years is not relevant for the
purposes of bargaining for the enterprise agreement.
Funds have been returned to consolidated revenue for allocation in accordance with the
policy priorities of the Government of the day and are not available for a pay rise for this
financial year or future years of the agreement.
As we explained in our letter to you dated 28 August 2015, the fact that money is returned to
the government from the general budget because it was not expended by the ATO in any
given budget cycle is a regular part of the ongoing budget process and is not exceptional.
NEXT STEPS
I trust that this satisfies your request for information, Jeff. But if we have overlooked
anything, please let us know and we will action as soon as practicable.
Since we started collating relevant information and preparing this response for you, the ASU
has applied to the FWC for bargaining orders.
It is disappointing that the ASU has resorted to further litigation. Our view remains that
bargaining has reached a point where we are entitled to put the EA to a vote.
Yours sincerely
Scott McWhirter
Acting Assistant Commissioner
Workplace Relations
ATO People