Six tips on transparency from the tax office

By Stephen Easton

Friday November 8, 2019

How we used to get information. Getty Images

Having a media-handling strategy is dangerous, according to Jeremy Hirschhorn, the second commissioner for client engagement at the Australian Taxation Office.

He said strategic media management was risky because it encouraged “spin” and suggested companies instead adopt a strategy for “doing the the right thing transparently”, in a speech at Thursday’s CFO Live conference.

Jeremy Hirschhorn

Earlier in the year, experienced investigative journalist Adele Ferguson argued the ATO itself drew on the “corporate scandal playbook” in its response to her reporting on allegations about the agency’s debt-collection practices. “The playbook tends to go like this: diminish the revelations by relegating them to a few isolated cases, sheet the incidents to the past, disparage the sources, and draw on statistics to make the scandal seem inconsequential,” she wrote in a follow-up.

Hirschhorn’s speech mainly focused on transparency in tax affairs and the work of governments in Australia and elsewhere to break down “the concept that tax privacy is absolute” in response to repeated examples of tax avoidance and minimisation through opaque company structures.

“For many of us in the room who remember the world before the internet, information was rare and expensive to obtain — this was the natural order of things,” he said. “For those who have grown up with the internet, information is readily available and usually free — the absence of information is deeply suspicious.”

Hirschhorn also touched on the importance of transparency within organisations, noting that sometimes the ATO has been approached by board members wondering why they seem to have a “bad relationship” with the revenue collectors, only to find the board has also been kept in the dark about the company’s tax arrangements.

He ended the speech with six tips on the importance of organisational transparency in general, based on his observations of companies and his work as a leader in the ATO.

Here they are from the written version of the speech:

  • Firstly, transparency is hard, and by providing additional information, it is of course possible that others will deliberately or accidentally misuse that information.
  • However, with current views as to access to information, a lack of transparency will also be used against you: in my view, the risk of saying something is less than the risk of saying nothing.
  • If you are concerned about making your (tax) actions transparent, you do not have a transparency problem: you have an action problem.
  • It is dangerous to have a ‘media’ strategy, as this encourages ‘nuancing’ (spin?). One should aim for a ‘doing the right thing transparently’ strategy.
  • Being transparent publicly provides strong signalling and discipline across an organisation: it shows your people that you mean what you say.
  • Transparency benefits those doing the right thing: it makes it harder for others to hide in the shadows, and focuses the attention of scrutineers.

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