Shouldn’t the Small Business Ombudsman front the Royal Commission?

Ross Greenwood speaks to Small Business and Family Enterprise Ombudsman, Kate Carnell, about why she’s disappointed she hasn’t been called to give evidence at the Banking Royal Commission.

Introduction: Shouldn’t the Small Business Ombudsman front the Royal Commission?

Ross Greenwood:  Yesterday we told you about the Senate estimates were a Chris Jordan, who is the tax commissioner, Front of Senate estimates in Canberra. At that time, a lot was raised about not only the way in which the tax office treats small businesses when they’re in dispute but then also the investigation that was undertaken by Fairfax Media and the four corners program on the ABC. Now it will be fair to say that Chris Jordan was angry and upset about that report on the ABC. He claimed it was isolated cases. Here’s just a little of what he said in response to that Senate estimates hearing.

Chris Jordan:  I mean seriously, how appropriate is it to have the title of the four corners program among a whole bunch of bastards? It is highly offensive and inaccurate. Just think of this for a moment, how will the staff of the ABC feel if news limited splashed across its front pages? The ABC was simply a mango bunch of bustards.

Ross Greenwood: Now you may be aware that one of the whistleblowers to that four corners program was a man called Ken Phillips, who is the executive director of the independent contractors of Australia who has been a critic of the tax office on our program last night, Ken Phillips called for a Royal Commission into the Australian tax office. He also suggested that the Australian tax office and its functions should be split in two so effectively the if you like the whole issue of trying to collect the policing, if you like of our taxes should be in a separate part of the business or the operation as compared with the whole compliance issue. It’s going to be interesting to see now what somebody who has dealt with a number of small businesses who have been a dispute with the tax office but not only that also talk about the royal commission into misconduct in banking life insurance and also superannuation. That is a small business and family enterprise ombudsman Kate Cornell, who’s online right now, many thanks for your time, Kate.

Interview with: Kate Carnell, Small Business and Family Enterprise Ombudsman

Kate Cornell: It’s a pleasure, Ross.

Ross Greenwood:  Okay, so I want to first go to the tax office and the disputes. You’ve seen small business in dispute with the tax office. Do you believe ultimately that the portrayal of the tax commissioner Chris Jordan last night was fear in regards to the way in which deals with us compliance?

Kate Cornell: Look, I think unfortunately it falls somewhere in between, I think the tax offices improved a huge amount over the last few years. The small business area is now really quite small business friendly, they’ll even, if you’ve got something you want to talk to them about, they’ll even ring you back at night. They’ll make an appointment to renew at 9:00 if that’s when you close your small business. They now are more than willing to give small businesses payment schedules or payment options and so on. They really have improved where the problem lies though is it any really big organizations that make mistakes and the ICO makes mistakes. The problem that it seems to have happened is when they make mistakes they could pass it to fix them quickly at times is open the question really is as good as it could be.

Ross Greenwood:  It is really interesting Kate because I’ve had a personal example of this happening in the past few days. Where somebody came to me and it was actually about a super payment that was coming from a bank to the tax office. Now the payment had clearly been made but the bank and the tax office could not agree as to where the money was and because of this and it was actually an administrative era inside the tax office. Now I didn’t publicize this and I won’t now go into the details of it except the side that it was a tax office problem but I had to ring the tax office myself to say, “look I don’t want to give you too much publicity about this but this is an issue.”

It’s causing some elderly people who run a business a fundamental problem and I think from a decency point of view I’ve got to get this fixed quick snap. The absolute credit that was straight onto it, they fixed it, they apologized. They said there were issues in moving systems from one place to the other so I kind of get it but as you pull out like our banks, it’s okay when things are going well but if things go a little bit awry and that big organization brings all of its mechanism and it’s illegal for us to try and deny or to cover up or whatever it might be rather than doing the right thing they end up doing the legal thing and that often is the wrong thing to do.

Kate Cornell: Ross, that’s absolutely true. When the ABC program on air and Kelly O’dwyer said there should be a look at this that she asked that treasury and asked inspector general to look at it. We went out to small businesses said, “look tells us your stories, we need to know where you’re coming from or what your issues are. We got 150 people in just over a week or week and a half. This didn’t go out usually broadly, went out in media terms zone that’s more issues than we’re ever raised around banking and we got lots of them as well in a really short period of time and when we actually look at those cases fundamentally it was where there was a mistake was made and it took a long time to fix. The great problem the small businesses as you know is the thing that fixed really quickly. It can cause them real problems for their businesses.

Ross Greenwood:  The problem is if you’re denied a month’s cash flow, two cash flow, three cash flow, you’re out of business and I think that the problem is if a bank or a bank or a tax office doesn’t appreciate and acknowledge that they haven’t got months or years to fix a problem as it might be capable of doing with very large business with small business. You’re at the door and lost your house.

Kate Cornell: That’s exactly right and it’s fascinating. It is very similar between some of the cases we’ve heard in the banking Royal Commission and we investigated last year and the ATO. The problem comes as a mistake is made, they might say, “look we now disallowed your RND deductions that you’ve been making for the last three years. Could you please give us $60,000?” And that small business has got a lazy $60,000, they might not a lot of money but I tell you what it is for lots of small businesses. If that thing starts to escalate to all sorts of things go wrong and heaven help us. If the small business then end up with the bank accounts garnish shade, that small businesses likely to go to the wall so the issue for the ATO and they’ve made some good announcements in the last week is to have mechanisms to quickly investigate and solve problems. Identify where they’ve made a mistake and fix it. Not in three months, not in six months, not in two years but to fix it immediately and that’s the bit that’s been missing.

Ross Greenwood:  I think like you, Kate I’ve always been always will been a supporter of the tax office, always will be and the reason for that is because you need to have a robust tax office. You need to have a robust tech system but you also need to have people that have faith in the tax office and the text system that people are treated fairly and treated swiftly because that’s where people will lose their trust and that’s why people might sleep to avoid taxation if they don’t have that faith and trust and which is where the tax office has got to an every avenue got a pines to make certain that people are treated fairly and treated swiftly.

Kate Cornell: That’s really true and some of the cases that we heard were people’s IBM’s were taken away because it was deemed somehow they weren’t trading when they actually were. The moment you lose your IBN and you’re a contractor, you might be a really little one just doing little bits of work but you can’t work anymore if that happens. If you can’t get that fixed, literally with a phone call then your business is gone and that’s what happened. There were situations like that that required huge amounts of bureaucracy to fix problems that should be able to be fixed really quickly. That was really good that Chris Jordan announced that they were extending their independent review process for a long time, Ross big businesses could ask for an independent review of a particular decision that the taxation that the ATO had made that was available for big business but it wasn’t available for small business.

Chris Jordan, the head of the ATO has announced that that will now they extended to small businesses with turnovers of less than 10 million which is a really good step in the right direction.

Ross Greenwood:  It is about treating tax payers equally and that’s what all about. Just a simple one for you Kate, I did notice in all of the witnesses that paid before the Royal Commission, you’re not one of them, why not?

Kate Cornell: I didn’t ask and I really wanted them to. We did give them a lot of information I’d have to say from our banking inquiry. They requested a range of the information that we had, I told them we were really happy. I was really happy to get evidence and I think the thing that my office could have given to the Royal Commission is we had a period of time longer than they’ve had to really look at a range of cases and determine what the issues were more sort of across the board and so to give them a better understanding of what some of the almost generic but the issues that continued the crop up in case after case after case. I’m disappointed we didn’t get a chance to or we haven’t had a chance at this point anyway to share that intelligence at least that you now understand the Royal Commission but there’s still a way to go. Again I would have hoped that we could share that because obviously whenever possible listen to the proceedings and I keep thinking, “ask this question,” because at times I’m missing some of the most important issues we were talking before that time frames one of the most important issues for small businesses is that if the bank says well we’re not going to renew your line and it falls during next week the week after a couple of weeks down the track there is no way a small business can get a new loan can return negotiate with a new financial institution if a bank doesn’t give them decent timelines and clear communication about what they’re doing.

Ross Greenwood:  Indeed as you’ve pointed out to me in the past if as a result of what’s taking place they deemed to have been in default in which case nobody else will touch them as well to what always. Great to have you in the program Kate canal is a small business on but it was a birthday yesterday. No wonder we had troubles finding around the place It was such a big day so much around the place Kate always appreciate you for the program here.

Kate Cornell: Thanks, Ross.

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