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McClay: Leadership of IR transformation programme

Hon Todd McClay

Minister of Revenue

21 August 2013

Leadership of IR transformation programme


Remember, if you can, our world in 1995.

Jim Bolger was Prime Minister and Don McKinnon the deputy.

We mourned the loss of Bruno Lawrence, John Britten and former Prime Minister Bill Rowling.

An Ansett plane crashed at Palmerston North, claiming the lives of four people.

The Auckland Warriors entered Australia’s Rugby League competition for the first time.

And the Springboks defeated the All Blacks in the Rugby World Cup final in Johannesburg.

These were big events in our lives.

But, behind these events, something else was happening quietly and very quickly.

The digital age

The Internet was just taking off and the digital age was dawning.

What we didn’t know then was how big the changes would be.

We didn’t know how the Internet would affect business and government.

We didn’t know how much it would change society.

And we didn’t know how much it would change our expectations and behaviours.

Today, we take it for granted that we can do nearly anything online, anytime we want.

We buy our groceries. We pay our bills. We plan our holidays. And we record our precious memories – all online.

Having got used to this digital convenience; the public now expect the same of Government.

The question is: how are we responding to that expectation?

In a word – carefully.

Responding to expectations

There are many good reasons to tread carefully into the digital space, but I won’t traverse those here.

What I will say is that we’re moving with care towards building the online capability that New Zealanders expect. This entails a new mind-set, a new culture, new processes, new skills and capabilities and, of course, new technology.

This also applies to the revenue system – a fundamental service of any modern, well-functioning economy.

A modern, efficient and fit-for-purpose revenue collection service is necessary to a healthy and growing economy, where the Government maintains a strong balance sheet, with a robust revenue base.

In simple terms, we’ve got to collect the revenue needed to invest in the infrastructure and services that people want – health care, education, social services, environmental protection and recreation.

Our revenue collection system pays for all of these.

It is, therefore, an essential part of the social fabric of our society.

Transformation of Inland Revenue

And that brings me to the transformation of our revenue collection system.

I call it a transformation deliberately because we’re talking about changes that are wide-reaching and long-term. However, we are also talking about changes that will make it more user-friendly.

The vision is to deliver a modern, fit-for-purpose tax system that enables people to easily and reliably deal with Government.

Importantly, the changes will reduce compliance costs for businesses, while securing the tax collection system and enabling it to handle new policy and legislative changes.

The transformation is the largest in the history of tax administration in New Zealand and includes changes to processes, IT, and skills and capabilities.

Current state and case for change

Most of your already know that Inland Revenue’s current business processes and technology systems are under strain.

Back in 1995, we built a system to administer nine tax products.

Today, that same system is dealing with 42 different tax products. These stem from policies such as KiwiSaver, student loans, child support and Working for Families.

In short, the system is stretched and struggling to meet the demands placed upon it.

And, more importantly, it needs upgrading to meet the expectations of 21st century New Zealanders.


So, what’s new in all this?

Firstly, the Cabinet fully supports the transformation project and process, which is based on a robust business case.

Secondly, as the new Minister, I wish to make it clear that I will personally oversee Inland Revenue’s transformation.

I will provide political leadership of the programme, while the department leads operational matters.

Thirdly, we have a clear process for the transformation, which I will turn to now.

Next steps

Today, I’m pleased to present this Transformation Market Brief.

This document sets out Inland Revenue’s vision for the future and the next steps in the process to find the experts we need to help deliver the transformation.

In the coming weeks, Inland Revenue will be holding meetings in Christchurch, Wellington and Auckland to engage with people from the IT and tax sectors to explain the scale and complexity of the transformation.

It is important to note, this is the next step in a long journey which began back in May 2008.

As I said before, we’re moving with care towards building the online capability that New Zealanders expect. And this means big changes that require smart thinking and a wide range of expertise.

Inland Revenue will work with New Zealand businesses and the public throughout the transformation, seeking their advice and ideas on what sort of organisation they want for the future, and where suitable, partnering with New Zealand businesses to build the new processes and systems.


A lot has changed in the past 20 years, and a lot will change in the next 20.

The Government is prepared to invest sensibly to respond to, and anticipate, these changes.

As a result of our planned investment over the next decade, the result will be a modern, fit-for-purpose tax system that lets people simply and efficiently manage their interactions through online services.

It will reduce compliance costs and time spent on tax.

It will allow government to maintain crown revenue, reduce debt, and initiate new policies.

It will allow sharing information across government departments.

And it will give New Zealanders confidence that their private information will be secure and respected.

We will work closely with New Zealand businesses and the public throughout our transformation.

On a final note, let me reassure you that we’ll be making these changes with care.

This means keeping the balance between protecting New Zealanders’ privacy and the security of their information while at the same time enhancing government’s ability to share information so we can provide a smooth and efficient service to people.

This transformation can and will succeed.

New Zealanders depend on it.


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