Annual Report 2006: Part three - Key strategies

Gaining organisational efficiency

During 2005-06, we continued to seek ongoing efficiencies across our functions and service delivery activities. We have focused on developing smarter ways of working and organising ourselves to deliver services that are effective and efficient for our customers.

Overall, we have successfully coped with strong growth in customer numbers and interactions while having a baseline that has remained relatively constant.

Our approach to measuring organisational efficiency

The approach we have used to measure our organisational efficiency reflects the relationship between:

• the workload we have had to address over the years (exclusive of the workload associated with new responsibilities²⁴we have received in recent years)
• the effective baseline²⁵we have had to address that workload.

During this time we have also maintained the high level of our output delivery performance.

In taking this approach we recognise that there is still work to be completed on improving the measurement of the efficiency of our activities.

Workload versus our effective baseline

As our responsibilities have increased, we have also seen increases in the size of our customer base and the volume of interactions and transactions we have had to address.

Over the past five years (since 2001-02), we have seen growth across a range of areas, including:

• 9.5% growth in the number of customers filing returns²⁶
• 9.4% growth in the number of taxpayers registered for PAYE
• Debt collected increased to $1,774 million ($771 million in 2001-02)
• 1.7% growth in correspondence (with a 6.1% increase between 2004-05 and 2005-06)
• 7.1% more child support customers
• 30.6% increase in student loan borrowers.

Although our funding (since 2000-01) has included additional funding for new responsibilities, our effective baseline has remained relatively constant. In the six years since 1999-00, our effective baseline increased by a total of $49 million. This funding has been used to develop our people capability and infrastructure, but did not fully address workload increases. Figure 20 shows the trend in our effective baseline between 1992-93 and 2005-06.

Figure 20 -
Effective baseline (CPI adjusted)

[Larger version of image |Long description]

To address the increased workload in transaction processing, customer contacts and debt management, we have developed and implemented a number of improvements to more effectively and efficiently deal with an increasing workload. This has included:

• actively repriortising resources to enable the development of online self-service delivery options
• in negotiating service contracts, we have actively sought cost reductions and/or productivity gains
• using technology to deliver cost-effective services, such as the ability to file returns and send correspondence online (for example, electronic correspondence received has increased by 107% since 2001-02)
• making use of relationships with third-party intermediaries (such as tax agents and agencies representing various community groups) to help us reach greater numbers of customers.

Despite the growth in our workload, we have also consistently delivered our services in line with our performance expectations. We will continue to use a variety of methods (including lower cost electronic channels) to effectively and efficiently deliver our services and products.

Support for the Govt³ initiative

We are committed to implementing the Govt3 initiatives and its sustainability principles²⁷. A policy to integrate these principles into the governance and ongoing activities of Inland Revenue is being developed. This initiative is led by our people but also has representation and external support from experts at the Ministry for the Environment and Massey University.

Our immediate focus is on minimising waste and improving energy efficiency. Initial results from our recycling efforts in one of our offices showed a reduction of around 25% of the amount of waste we send to the landfill.

In future annual reports we will continue to report on our progress towards achieving environmentally sustainable practices.

^24. These include, for example: student loans, Working for Families, paid parental leave and KiwiSaver.
^25. Effective baseline is the level of funding we would have if we did not receive additional funding for new responsibilities, government-funded initiatives and one-off initiatives.
^26. These include income tax, employer schedules, GST and FBT returns only.
^27. The principles of the Govt3 programme relate to the "three pillars of sustainability", which are environmental, social, and economic.

Other pages in: Part three - Key strategies

• Promoting compliance
• Providing information and support
• Maintaining compliance with the law
• Tackling the harder end of compliance
• Reducing compliance costs
• Developing the capability of our people and providing the tools they need
• Becoming an employer of choice
• Excellent state servants
• Key people statistics
• Developing our tools

Date published: 06 Nov 2006

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