Statement of Intent 2009-12: Part three - Strategic overview

Our outcomes framework

To achieve our outcomes we have a plan that identifies our desired results and how we will achieve them. Inland Revenue's business plan, Our Way Forward, sets out our strategic direction and a desired future. Our corporate strategies support this framework. Our strategic direction and our corporate strategies set out the objectives that will help us achieve our outcomes. Figure 3 outlines our outcomes framework, how it links to the Budget Policy Statement 2009 and the indicators we will use to measure our progress to achieving our outcomes.

Figure 3 -
Our outcomes framework

Budget Policy Statement focus for Budget 2009
Building a growing economy and providing security and opportunity for New Zealanders Getting better value from existing Government spending

Our primary outcome

Improving the economic and social wellbeing of New Zealanders

Our intermediate outcomes	Intermediate outcome indicators
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	The amount of revenue collected compared to forecast revenue The level of collectable debt (debt under instalment arrangement and debt where collection is under way or pending) The level of people's awareness of their social support entitlements The number of people who take up their entitlements (compared to forecast)

Supported by

Our Way Forward - Strategic Direction
Target and tailor our activities through understanding our customers Optimise organisational efficiency and reduce compliance costs over time Create an environment which promotes compliance Continually invest in our people and the tools to deliver our future outcomes
Our corporate strategies	Outputs
Our corporate strategies map how we will achieve our outcomes and our strategic direction The strategies focus on: Compliance, Service, Operations, Communications and Stakeholder, Finance and Planning, Information Technology and People Capability	See Figure 9 on page 29

Measuring our outcomes

We are continuing to develop indicators to measure our progress towards achieving our collections and disbursement intermediate outcomes.^[6]

To support the measurement of our collections intermediate outcome, we are developing an approach to measure customer compliance that reports on a balanced suite of compliance indicators. These measures will reflect some of the best practice compliance indicators identified by the Organisation for Economic Cooperation and Development (OECD) (see Figure 4) but the final measures may differ. We expect to have the measures developed by the end of the 2010-11 financial year.

Figure 4 -
Best practice compliance indicators ^[7]

Areas of focus	Indicators
Customers' attitudes and community confidence in our administration	Customer satisfaction, community perceptions and Kiwis Count survey results show increasing levels of satisfaction
Register with us when they're supposed to	Trend analysis indicates appropriate level of registration for tax and social policy entitlements
Report or provide complete and accurate information	May include trend analysis to indicate accuracy of information reported and used to support claims
File returns on time	The percentage of registered customers filing on time increases over time
Pay the correct amount on time	The percentage of customers paying on time increases over time The measure of outstanding debt shows improvement over time

We have focused on establishing a baseline using data for customers' filing and paying compliance behaviour from 2001 to 2005. The baseline results (reported in Inland Revenue's 2008 Annual Report) are from 2.7 million customers who had some choice about compliance. It excludes the 1.6 million customers who are employees and have tax deducted through PAYE. The results showed that:

• 78% of customers (about 97% of assessment value) complied with the majority of their filing and paying obligations
• 8% (2% of assessment value) had a moderate level of compliance issues
• 4% (1% of assessment value) demonstrated poor levels of compliance.

We are planning to update these initial results annually and will provide further information as it becomes available.

We are also exploring ways of enhancing measurement of our disbursements intermediate outcome, including a wider picture of community awareness of social support entitlements.

Value for money, efficiency and effectiveness

Inland Revenue is working to give better value for money from existing Government expenditure and deliver efficient services to our customers. Providing efficient services also helps reduce compliance costs for our customers. In meeting these objectives we remain conscious of our main tasks - collecting revenue, disbursing payments and maintaining the integrity of the tax system.

Much of our work on tracking compliance and efficiency indicators is supported by our participation in initiatives conducted by the OECD.

Value for money

In December 2008, The Treasury issued their Budget 2009 technical guidance, which required departments to identify savings for Budget 2009. During this process Inland Revenue:

• reviewed all operating cost items and identified opportunities to reduce usage
• identified opportunities to reduce costs from external service providers
• targeted productivity gains from streamlining business processes and increased staff productivity.

The technical guidance also required departments to look for areas for further value-for-money reviews. Inland Revenue is evaluating and reprioritising its work and available resources to deliver core services, as part of this process. This is consistent with the Government's focus and with what is happening in other countries. It will result in a shift of focus and resources to:

• delivering the frontline services our customers expect
• developing other services and tools that will help to better deliver our outcomes.

Indicators of our efficiency and organisational health

One of the indicators we use to measure our efficiency is the workload for our core business activities against the effective baseline over time.^[8] This indicator is reported in our Annual Report.

We also make use of OECD and World Bank benchmarks, which indicate how well New Zealand compares internationally across a range of areas.

The OECD provides a benchmark of the cost of collecting 100 units of revenue in countries with similar tax systems (Figure 5). This benchmark is an indicator of the relative efficiency of tax administrations. Presentation of the data over a long period and comparison to several other countries, reduces the effect of changes in macroeconomic conditions and tax rate changes not related to the efficiency of tax administration systems.

Figure 5 -
Cost of collection as a percentage of revenue for selected OECD countries^[9]

	Administrative cost/net revenue collection (cost per 100 units of revenue)							Long-term trend
	2001	2002	2003	2004	2005	2006	2007
Canada	1.08	1.20	1.33	1.17	1.31	1.35	1.22	Unclear
United Kingdom	1.06	1.11	1.04	0.97	1.10	1.12	1.10	Constant
Australia	1.06	1.07	1.05	1.05	1.03	0.99	0.93	Decreasing
New Zealand	0.90	0.87	0.83	0.81	0.76	0.71	0.75	Decreasing
United States	0.46	0.52	0.57	0.56	0.52	0.47	0.45	Decreasing

Recent World Bank research^[10] ranks New Zealand highly as a place to do business:

• first for ease of starting a business (followed by Canada and Australia)
• second for overall ease of doing business (after Singapore)
• twelfth for ease of paying tax. New Zealand scored second (after Ireland) among OECD countries in this category.

Our ongoing relationships with international organisations, such as the OECD and overseas revenue authorities, are important for monitoring baseline information and having dialogue on tax policy and administration issues. Cooperation with overseas organisations has helped us to improve the design and administration of the tax system and to share common concerns.

Evaluation programme

Our evaluation work programme assesses longer term impacts of policies and business projects. We test programme results against their objectives and our findings help us understand the underlying factors that contribute to the success of policies and interventions. They also give feedback for improving the way we run these programmes.

Major evaluation projects are usually run in phases over a number of years. We are working on:

• KiwiSaver - this project is in collaboration with the Ministry of Economic Development and Housing New Zealand Corporation. We have completed the initial evaluation of KiwiSaver implementation and delivery and reported on its operation over the first 18 months. In 2009-10 we will measure the outcomes for employers and individuals, including the impact on individuals' savings. We are also looking at the impact of KiwiSaver on the superannuation industry, and we will start work on the evaluation of KiwiSaver's home ownership features.
• Working for families tax credits - this project, started in 2005, is being carried out jointly with the Ministry of Social Development. In 2009-10 we are focusing on the impacts the working for families programme has had on the adequacy of family incomes and on employment since the in-work payment was introduced in 2006. The employment outcomes focus is particularly related to two-parent families, whereas the 2008-09 analysis was related to sole parent families. This year, we will produce a final evaluation report of the effectiveness of the working for families programme.
• Outbound calling - we will test the effectiveness of Inland Revenue initiating calls to new employers to help them comply with their employer tax obligations.

You can view evaluation reports at www.ird.govt.nz

---

⁶ The collections intermediate outcome is "Revenue is available to fund government programmes through people meeting payment obligations of their own accord". The disbursements intermediate outcome is "People receive payments they are entitled to, enabling them to participate in society". Refer to Figure 3.

⁷ The areas of focus and the indicators are consistent with the thinking contained in the OECD’s 2008 report: Maintaining Taxpayers’ Compliance: A Practical Guide Based on Revenue Body Experience.

⁸ The calculation of the effective baseline is CPI-adjusted and excludes funding for new responsibilities, government-funded initiatives and one-off initiatives.

⁹ OECD, Tax Administration in OECD and Selected Non-OECD Countries: Comparative Information Series (2008), OECD: Paris, January 2009, table 11. The report is available at www.oecd.org.

¹⁰ World Bank, Doing Business 2009 database, available at: www.doingbusiness.org. The Doing Business indicators show the cost of doing business by identifying specific regulations that enhance or constrain business investment, productivity and growth. The rankings cover the period April 2007 to June 2008.

 

 

 

Date published: 20 Jun 2009

Back to top