Friday, October 21, 2011

Tax Commissioner Michael D'Ascenzo has done such a good job...

He wants way more than half a million

Australia’s top tax official has come under sustained attack in a Senate hearing for lobbying to get himself a 58 per cent pay rise.

Tax Commissioner Michael D'Ascenzo is at present paid just over half a million dollars.

He has written to the Remuneration Tribunal asking for a package of around $800,000 to bring himself into line with other agency heads such as the head of the Securities and Investments Commission and the Competition and Consumer Commission.

Asked by Labor senator Doug Cameron how much extra he was planning to pay his own workers, he said the increase would be about 3 per cent.

Asked if to put a percentage figure on the pay rise he wants for himself he said he “hadn’t worked it out”...

An increase from $505,000 to $800,000 would amount to 58 per cent.

Mr D'Ascenzo defended the application saying it was a matter of comparative wage justice.

Labor Senator Mark Bishop who chairs the committee said comparative wage justice hadn’t been used as a basis for justifying wage increases since the 1970s and 1980s.

“I was part of the negotiations where we were told enterprising bargaining was the future, comparative advantage was dead, he told the Commissioner. “To my knowledge it hasn’t been revived.”

Asked how much the increase would cost the ATO budget after some of it was passed on to Second Commissioners Mr D'Ascenzo said he couldn't be certain but agreed the cost would exceed $1 million.

Told by Independent Senator Nick Xenophon that most most workers seeking wage increases needed to provide evidence of increased productivity the Commissioner said he had been more productive.

In the top tax job for six years Mr D'Ascenzo oversaw the introduction of the new Tax Office computer system delivered two years late and $300 million over budget. Last year it delayed millions of returns. This year it has been performing to specifications.

Published in today's Age

Here's the Transcript:

Senator Sherry: I think that is the only one. I cannot recall any others.

Senator CAMERON: Mr D'Ascenzo, I notice there was publicity in the press about your salary. Are you aware of that? A proposed salary increase.

Mr D'Ascenzo : Yes.

Senator CAMERON: I understand you put out an internal memo basically saying that you hoped that your office would be paid the same as other statutory body heads. Is that correct?

Mr D'Ascenzo : That is correct.

Senator CAMERON: Is your salary about $500,000 at the moment?

Mr D'Ascenzo : As a package.

Senator CAMERON: A $500,000 package. To bring that up level with others would be nearly a $300,000 per annum increase?

Mr D'Ascenzo : I am not sure what everyone else is earning.

Senator CAMERON: You are not sure?

Mr D'Ascenzo : No, I am not. My proposition is that it would be unfair for the ATO to be regarded as a second-class citizen in terms of statutory appointment, given the size and scope of our responsibilities.

Senator CAMERON: How long have you been in the position?

Mr D'Ascenzo : Six years.

Senator CAMERON: I suppose on a package of half a million nobody is starving at home?

Mr D'Ascenzo : No.

Senator CAMERON: You have offered your employees three per cent?

Mr D'Ascenzo : In accordance with the government's framework—

Senator CAMERON: I am just asking: did you offer the employees three per cent?

Mr D'Ascenzo : Nine per cent over three years.

Senator CAMERON: Three per cent per annum. If your salary went up to $800,000, which is the equivalent of that of other heads, how much of an increase would that be—about 29 or 30 per cent?

Mr D'Ascenzo : I have not done the calculations. The point that needs to be made is that the government's bargaining framework is about aligning comparable pay.

Senator CAMERON: If I want to ask you about the government's bargaining framework, I will do so. I am asking you about your salary. Let's stick to your salary at the moment.

Mr D'Ascenzo : You asked me to compare that with others—

Senator CAMERON: No, I am asking you about your salary.

Mr D'Ascenzo : You did ask me to compare it with others—

Senator CAMERON: So it is $800,000 a year.

Mr D'Ascenzo : At the moment it is not.

Senator CAMERON: Just tell me this—

Senator Sherry: Chair, I do think Mr D'Ascenzo should have a chance to complete his answer.

CHAIR: I agree with that.

Senator CORMANN: Thank you for that consistency, Minister!

Senator Sherry: I am always consistent. When I sat where you are and where I sit now—totally consistent.

CHAIR: Can we have the answer to the question, please.

Mr D'Ascenzo : Can you repeat the question?

Senator CAMERON: The question was about the percentage increase that that would provide.

Mr D'Ascenzo : I have not worked that out.

Senator CAMERON: So you do not even know what the salary would be?

Mr D'Ascenzo : At the end of the day, it is a question of an independent tribunal; I have no say in it.

Senator CAMERON: That is fine. You say it is a question of the independent tribunal. Why did you think it would be a good idea to say in the internal Taxation Office newsletter that you hoped that you would get a pay increase?

Mr D'Ascenzo : There was a newspaper report, and I thought I had better be clear with my people about the situation. What I said in that report was that there is an independent tribunal and it is outside my hands, but one thing that is important is that we get our pay aligned with pay in other statutory and government authorities.

Senator CAMERON: So you are a supporter of the principle of comparative wage justice?

Mr D'Ascenzo : I think that is important.

Senator CAMERON: Does comparative wage justice apply to workers in the ATO,? Can they make a claim for comparative wage justice?

Mr D'Ascenzo : I hope they do.

Senator CAMERON: You hope they do?

Mr D'Ascenzo : At the moment, the ATO—

Senator Cormann interjecting—

CHAIR: Order, Senator Cormann!

Mr D'Ascenzo : In the ATO, in every classification other than APS1, it is above the APS average. In the ATO at the moment, every classification above APS1 is above the APS average.

Senator CAMERON: But as a principle—

Mr D'Ascenzo : I agree with it.

Senator CAMERON: You agree with comparative wage justice.

Mr D'Ascenzo : In fact, not only that—we have been trying to make sure that ATO officers are recognised for the good and hard work that they do.

Senator CAMERON: I do not have an argument with that. As a former union official, I have had plenty of lectures about why comparative wage justice is not the way to go. In fact, you cannot run an argument—

Mr D'Ascenzo : I think—

Senator CAMERON: Just let me finish.

Mr D'Ascenzo : Sorry—my apologies.

Senator CAMERON: At the moment, as an ordinary worker you cannot run an argument on comparative wage justice but as the head of a public organisation you can.

Mr D'Ascenzo : The proposition is of course one of affordability within the government's bargaining framework. As far as my management of the ATO goes, in terms of the work that my people do, ATO people show great skills in an area of great complexity and great challenge and, over a period of time, they have achieved pay scales at classification levels which are generally above APS averages.

Senator CAMERON: In your 2009-10 report, you say that the executive level 2 agreements have to have an emphasis on organisational capability and agility. Do you agree with that?

Mr D'Ascenzo : I am sure that is right. It is still important.

Senator CAMERON: On productivity gains, you say:

Pay rises for employees covered by collective agreements are contingent upon achieving corporate outcomes based on productivity improvements.

Do you agree with that?

Mr d'Ascenzo : Yes.

Senator CAMERON: What productivity improvements will you be involved in for a $295,000 per annum increase?

Mr d'Ascenzo : I hope that we can continue to improve the service that the ATO provides to the community.

Senator CAMERON: So will there be any measure?

Mr d'Ascenzo : The ATO has many measures of which it is accountable—this forum, the annual report and other areas of governance.

Senator CAMERON: If you get this almost $300,000 pay increase—and, as you have indicated, whatever you get will be set by the tribunal—you set the conditions for second commissioners. Is that correct?

Mr d'Ascenzo : It is not as freewheeling as that. I think there are guidelines that the tribunal will set for me and it is within those guidelines that I have discretion.

Senator CAMERON: You describe it as 'a framework set by the tribunal'.

Mr d'Ascenzo : That is right.

Senator CAMERON: If the relativities between you and your second commissioners increased by $300 to your benefit, will you be arguing for your second commissioners to maintain their relativities to your wages now?

Mr d'Ascenzo : I have argued consistently that it is important that the ATO not be regarded as a second-class citizen relative to other agencies. I would like to ensure that the offices of commissioner and second commissioners maintain that relativity relative to other agencies.

Senator CAMERON: As a union official I used to have members who were qualified fitters in different workshops and they did not want to be considered second-class citizens, but it was an issue of capacity to bargain and capacity to pay. If they went to the boss and had an argument or an industrial dispute because workers elsewhere were getting $50 more a week than them that would be comparative wage justice and we would be told you cannot do that.

Mr d'Ascenzo : You are more experienced than I am in those matters. All I can say is that with the point of view I put to the independent tribunal was it is important that the ATO be given similar treatment and recognition to other agencies given the important work it does.

Senator CAMERON: So will you be arguing under these guidelines for maintenance of the second commissioners' comparative wage justice to you?

Mr d'Ascenzo : I would be arguing that, whatever the independent tribunal provides in terms of pay rises for similar senior officers as my second commissioners, my second commissioners do not get treated as second-class citizens.

Senator CAMERON: It is not about second-class citizens. I might have to ask you about this second-class citizen bit a bit later. What is the cost then to the ATO budget if you get a $300,000 rise and all of your second commissioners get a $300 rise? Are there any other knock-on effects that would apply to other senior executives in the ATO?

Mr d'Ascenzo : Again, whatever the independent tribunal adds together will add up as a matter of fact. If it is 300 then it is just for one commissioner and three second commissioners. We are very skinny in terms of the size of our senior executive relative to a lot of others in the APS.

Senator CAMERON: It might be skinny but it might mean $1 million.

Mr d'Ascenzo : If we had 10 it might mean even more than that.

Senator CAMERON: I am not saying you have got 10. You said you have got three or four.

Mr d'Ascenzo : I have three second commissioners.

Senator CAMERON: So you get $300,000. What wage increases would the three of them have to get to maintain their comparative wage justice?

Mr d'Ascenzo : That is a matter for the independent tribunal—

Senator CAMERON: What do you do in setting the wages?

Mr d'Ascenzo : The tribunal gives me a range. Let us say it is $200,000 to $300,000 total range. I have some discretion within that, but there are upper and lower limits.

Senator CAMERON: Can you understand why ordinary workers in the taxation department would go: 'This isn't fair. I've got to improve productivity, I've got to justify my wage increases, I've got to go through this tough bargaining process, but the Chief Executive Officer—the Commissioner— and the second commissioners can get $200,000 or $300,000 just because the tribunal says they get it'?

Mr D'Ascenzo : The fact is that there are other agencies that have got pay rises and are paid significantly more than senior people in the ATO. The independent tribunal sets that. It is very important to me that the office of Commissioner, the office of second commissioner and ATO officers generally do not have a situation where they are disadvantaged relative to comparable positions in the APS.

Senator CAMERON: When you applied to the job six years ago did you have relativity with those other agencies?

Mr D'Ascenzo : I think as a general rule there was relativity and it was lost over a period time.

Senator CAMERON: It was lost over the six years you have been there?

Mr D'Ascenzo : I am not sure it was exactly the same against everybody. But against quite a number of APS remuneration packages, because they are done separately, there has been a reduction over time.

Senator CAMERON: I suppose a lot of your workers would be going, 'What does it matter whether it's $500,000 or $800,000.' Five hundred grand is a pretty generous salary, isn't it?

Mr D'Ascenzo : We are making sure that ATO officers are paid at least at APS averages. Across every classification except APS1 they are being paid above APS averages. In terms of work value across the APS, the work value that is considered for their classification, they are being paid more than the average. In relation to the senior positions, relative to some we are being paid below the average.

Senator CAMERON: Have you made a submission to the independent tribunal in relation to your wages?

Mr D'Ascenzo : A year ago, yes.

Senator CAMERON: Is that a public document?

Mr D'Ascenzo : It is with the tribunal.

Senator CAMERON: I am asking whether that is a public document.

Mr D'Ascenzo : The submission is made to the tribunal. I do not know whether the tribunal makes these documents public. I doubt that they would.

Senator CAMERON: Would you have any objection to it being made public?

Mr D'Ascenzo : Could I speak to the tribunal first about whether or not that is—

Senator CAMERON: I am asking for your opinion. I am not asking the tribunal.

Ms Granger : I think we would need the advice of the tribunal in relation to that. Perhaps we could take that on notice.

Senator CAMERON: Okay. On a very rough calculation there could be $1 million—maybe a bit less, but not much—in salary increases for your senior executives. With other knock-ons, it might be even more. Could you give me an estimate of how much it would be in terms of cost?

Mr D'Ascenzo : Firstly, there is no pay rise being allocated to the senior executives of the ATO yet because the tribunal has not made a decision in relation to the ATO. You are assuming that to be the case. I have indicated to you that I think it is fair that the ATO be paid similarly to other APS agencies given the important work we do.

Senator CAMERON: Yes, you have made that point. But the point I want to make is that everybody in the public sector is struggling under constraints, none more so than ordinary workers.

Mr D'Ascenzo : I agree. And one of the roles of manager is to try to manage within those constraints across the whole range of things that have to be done.

Senator CAMERON: I do not think sending out a memo saying you deserve a $300,000 salary increase is one of your best managerial decisions. Be that as it may—

Mr D'Ascenzo : Again, it is not my decision. It is an independent tribunal.

Senator CAMERON: But you are out there advocating for it.

Mr D'Ascenzo : And you were a union official advocating for your members.

Senator CAMERON: But you are advocating for yourself. You said, 'It is a matter outside my control but I do hope that the pay and conditions of the office get aligned.'

Mr D'Ascenzo : Did you notice that I said the pay and conditions of 'the office'? That is very important. What we are saying is that we want to make sure ATO as an organisation is positioned in the APS to continue to provide the right level of service to the community.

Senator CAMERON: You have said that six times now. You have got that point across. I am going to finish on this—

Senator Sherry: To be fair, you did ask the question six times, so I think it is reasonable that he answer it six times.

Senator CORMANN: I am happy he is one of yours, Senator Sherry.

CHAIR: Senator Cameron, do you have a question?

Senator CAMERON: I am nearly finished. In terms of the cost, you have not, as the commissioner, given that you are publicly out there advocating for this pay increase, done any calculations as to the cost to the budget of the ATO?

Mr D'Ascenzo : It is all speculative at this point. So, no, I haven't.

Senator CAMERON: That does not hold water with me. Anyway, thank you.

CHAIR: Senator Cormann on the same point?

Senator CORMANN: Yes, related to exactly the same issue. I depersonalise it a bit. What is the current status of the ATO general employees agency agreement?

Mr D'Ascenzo : We have put a new proposal to the ATO employees and we are going through the process of going to a vote. Second Commissioner Granger can elaborate on that.

Senator CORMANN: Is there an agreement currently in place or has the last agreement expired?

Mr D'Ascenzo : The previous APS1 to EL1 agreement expired a year ago. We still have the EL2 agreement in course until the end of this financial year. Under the new proposal we are trying to put the two together into one package.

Senator CORMANN: What are the key reasons why an agreement has not been reached since the last agreement expired?

Ms Granger : We surveyed of our staff after the agreement. The major reason is, firstly, they felt a higher pay rise was affordable; secondly, they wanted a different distribution of the pay rise to what we had offered—so how it was broken up over the three years; then there was also a range of more specific issues—for example, there was a time in lieu issue for our senior executive officers and a few things around conditions. Fundamentally they were saying that the conditions package at the ATO was very good. It was really on the quantum of the pay rise. There has been a debate all through the bargaining about our explanation of the affordability of the pay rise and could we afford more.

Senator CORMANN: How long have the negotiations between management and staff been going?

Ms Granger : Since the last vote, which was at the end of June, we have been bargaining until this Tuesday. We concluded bargaining on Tuesday.

Senator CORMANN: Have you now reached agreement, when you say you have concluded?

Ms Granger : We have the support of one union. We have two unions in the tax office. The ASU is supporting the current proposal. The proposal has to go through a process of the Public Service Commission looking at it before we can formally put the proposal, just to make sure it conforms with all the appropriate processes. The CPSU is polling its members between now and Tuesday to see whether or not it will support the agreement.

Senator CORMANN: So you are getting to the pointy end of the process, it is fair to say?

Ms Granger : Yes, if the relevant approvals are signed off. There is a process we need to go through of notifying staff who are absent about voting et cetera, so that takes a little while. But we think towards late October or early November we will go to the vote. If we are successful and staff support it they will receive their first pay rise just before Christmas.

Senator CORMANN: I assume there has not been a pay rise since 1 July 2011. Is that right?

Ms Granger : Executive level 2 officers who had an existing agreement that continues to run did have a pay rise.

Senator CORMANN: Sorry, I should have qualified that. I assume that ATO staff employed under the ATO general employees agency agreement have not had a pay rise since 1 July 2011.

Ms Granger : Except for the ones who are under the existing executive level 2 agreement. They have had a—

Senator CORMANN: For those who haven't—

Ms Granger : Yes, they have not had a pay rise.

Senator CORMANN: is the pay rise going to be from the time the agreement is reached?

Ms Granger : Correct.

Senator CORMANN: It is not back paid to 1 July 2011?

Ms Granger : No. Just in broad terms, the current proposal changes the rate at which pay rises and when they happen, but it still comes to nine per cent and there are two productivity linked payments but only on achieving those productivity gains.

Senator CORMANN: And I assume that the negotiations the ATO is conducting are within a framework that is set by the government?

Ms Granger : It is within the framework. There is one proposal in ours that needs an exception approved, and that is in relation to a full-day close-down on Christmas Eve next year.

Senator CORMANN: Who is the minister responsible for setting the framework for the negotiations?

Ms Granger : The approval of exceptions needs to go to the Special Minister of State.

Senator CORMANN: So that is Minister Gray?

Ms Granger : Yes.

Senator CORMANN: So, if Senator Cameron has any issues, Minister Gray is the gentleman that he should be lobbying?

Ms Granger : That is for Senator Cameron!

Senator CORMANN: Thank you.

Senator CAMERON: I missed that.

CHAIR: If you have issues about the process, Senator Cormann advises you to take it up with Minister Gray!

Senator CAMERON: I do not take any advice from Senator Cormann. After his performance this morning, why would I?

CHAIR: That is fine. Senator Xenophon.

Senator XENOPHON: Mr D'Ascenzo, could I just follow up on some of the matters raised by Senator Cameron. It is government policy, though, that wage rises be determined by enterprise agreements, not by comparative wage justice; isn't that the government's policy?

Mr D'Ascenzo : Yes.

Senator XENOPHON: So isn't what you said about the ATO being treated as second-class citizens going into the comparative wage justice category?

Mr D'Ascenzo : I do not know these technical industrial relations terms, but all I am saying is that I did want to ensure that the ATO was aligned with comparable positions in comparable agencies. I think it is a relevant backdrop in context—

CHAIR: Let me just come in here. I have just got to get this right, and I am going to ask Minister Sherry. I have been around for 35 years in the labour movement. I went through this stuff in the seventies and the eighties, and I know where and how—because I was party to the decision—comparative wage justice was dumped in a rubbish bin forever. I was part of the negotiations. Now I am hearing you say that that is the basis of your wage rise. I do not believe that that is a policy of our government, but I want to hear from Minister Sherry: is comparative wage justice the way in which we move wages for workers in the Public Service?

Senator Sherry: I would make two points. Firstly, I would accept your contention: we do not have comparative wage justice. But, secondly, I would make the point that it is the commissioner's right to seek that the tribunal deal with the matter, and it is his right to make a submission—and the tribunal does deal with salary packages for this level of officer. That is his right.

CHAIR: I do accept that that is his right, and there is an independent tribunal and I do not quarrel with that. But, to my knowledge, we have not revived comparative wage justice for award workers or executives at any level.

Senator Sherry: I would agree with that. But, at the end of the day, we have an independent tribunal, as we know, and the tribunal will determine whatever the salaries may be of the senior service in the public sector—and some others I can think of!—based on criteria that it determines, and it will do that independently.

CHAIR: And will the reasons for those decisions be made public?

Senator Sherry: I do not know. I could take it on notice for Minister Gray.

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