Statement of Intent 2007-10: Part two - Strategic context
Measuring the impact of what we do
We are measuring the impact of what we do by looking at high-level outcome indicators and by measuring organisational efficiency, effectiveness and cost-effectiveness.
High-level outcome indicators
In the 2006-09 Statement of Intent we identified four high-level outcome indicators that reflect our progress towards achieving our intermediate outcomes. We report on two measures for the revenue outcome in our annual reports, and will cover the measures for payment outcomes in future reports.
| Intermediate outcomes | Outcome indicators |
|---|---|
|
Revenue |
|
|
Payments |
|
Measuring efficiency, effectiveness and cost-effectiveness
It is essential that Inland Revenue uses its resources efficiently and effectively and that this is reflected in value-for-money measures of our operations. Figure 8 shows how these three measures are related and their component parts.
Although it is relatively straightforward to assess Inland Revenue's efficiency, measuring effectiveness and cost-effectiveness of our activities will takes place over a longer period of time and requires a greater level of analysis.
Since 2000-01, Inland Revenue's funding for core business (including remuneration updates) has grown at a compound annual rate[13] of about 2%. Over the same period the customer base has increased at a compound annual rate of about 3%[14]. Inland Revenue has managed core business growth within its funding constraints while continuing to deliver a high level of output performance each year.
Figure 8
Measuring efficiency, effectiveness and cost-effectiveness
Figure 9
Vote revenue budget (actual and CPI-adjusted)
Current funding is significantly less than the 1992-93 level, but we are still continuing to deliver an increased level of services at a lower cost. We have also sustained a high level of quality in our performance standards. This shows that we have managed to achieve ongoing improvements in efficiency over the last decade.
To measure the cost-effectiveness of our operations we use the cost of collecting $100 in revenue as a proxy indicator.
The cost of collection is used worldwide and can show a reduction in relative costs and/or improved tax compliance over time. However, this measure is indicative only. There are many factors that can influence the ratio, which are not related to changes in our efficiency or effectiveness (such as macroeconomic changes).[15]
Figure 10
Core business growth (2001 to 2006)
Figure 11
Cost of collecting $100 in revenue
The graph shows the cost of collecting $100 of revenue has reduced from $0.90 in 2001 to $0.71 in 2006. This downward trend is consistent with countries with tax systems similar to ours (including Australia, Ireland and the United Kingdom).[16]
We also use a number of practical indicators to reflect the effectiveness of our day-to-day operations, for example, the success of our:
- audit activity, which includes measurement of discrepancies identified, the success of litigation action, time taken and resource allocated
- outreach programmes, measured by community feedback
- agent account management, measured by feedback from tax agents.[17]
In our 2006-09 Statement of Intent, we described the phased approach that we are taking to develop effectiveness and efficiency indicators. These will help to:
- provide context for our output information
- inform our wider performance, including our progress towards achieving our intermediate outcomes.
We have started developing and testing a high-level methodology to measure compliance against our intermediate outcome for revenue. It uses compliance model thinking (see Part Three) and measures the impact of our assistance and assurance activities on compliance behaviour. We are identifying a filing and payment baseline for compliance by the end of 2007 for use against future measurements. In 2007-08 we will also develop an assessment methodology for Inland Revenue's intermediate outcome for payments.
The information and analysis from the methodologies will inform our future performance measurement.
13 Note: The growth excludes additional funding for delivering new government initiatives and is inflation-adjusted (Consumer Price Index).
14 There has also been a general increase in the number and complexity of customer interactions, including growth in filing obligations and longer times required to handle telephone enquiries.
15 OECD, Tax Administration in OECD and Selected Non-OECD Countries: Comparative Information Series (2006), February 2007, p.101.
16 Ibid. pp. 109-110
17 Information on these indicators are reported in our annual reports.
Date published: 20 Jun 2007
Back to top