Governance Lessons from the Four Corners ATO GST investigation.

The Four Corners investigation into the Australian Taxation Office’s (ATO) “No Return” GST fraud story offers a timely lesson about the critical need for robust AI governance and the non-negotiable importance of human oversight in government technology use.

This investigation by ABC journalists Neil Chenoweth and Angus Griggry is a great case study for underscoring why public trust must be front and centre when government deploys automated, data-driven systems.

Automation Without Adequate Safeguards

Four Corners revealed that automation and massive job cuts at the ATO laid fertile ground for large GST fraud. Lax oversight and an overreliance on digital automation meant fake refunds and sham invoices sailed through the system with minimal intervention. The system that was meant to uphold financial integrity instead delivered a windfall for fraudsters, damaging public confidence and exposing serious vulnerabilities in government operations.

Much of the fraud’s success stemmed from the ATO’s shift away from human verification to cost-saving automation. About 1,000 jobs were cut—half the people dedicated to GST oversight. Former frontline controls, like basic desk audits, were abandoned in favor of algorithmic checks and queue-based triage. With staff gone, the institutional “muscle memory” for detecting rorts faded, and the automated system lacked scruitny and human oversight, failing to catch fraudulent activity until it was too late[2].

This outcome illustrates a fundamental truth for government AI deployments: without strong governance frameworks, automation can amplify risks rather than manage them.

Why Human Oversight and AI Regulation Matter

Robust AI governance, especially in government, is not just a technical need—it is a democratic imperative. Trust in government systems rests on the assurance that decisions are fair, explainable, and, when necessary, subject to human review. When failures occur, as in this GST examples, they are not just operational lapses—they erode faith in public institutions.

ATO Second Commissioner Jeremy Hirschhorn articulates this social contract:

“AI may be a helper. It can move things around, it can link, synthesise and analyse information, and it can do some things much faster and more consistently than we as humans can. But AI cannot determine what constitutes fairness and reasonableness, having considered unique taxpayer circumstances with compassion and empathy. …

… Actions or decisions should be explicable by a human to the affected person in a way that the affected person can understand (even if automated or performed by AI). If you do not know why your organisation is doing things (‘the computer said so’), you are breaching your responsibility to be accountable to both the individual taxpayer, but also the broader system.” ([Full speech: https://www.ato.gov.au/media-centre/speech-to-unsw-16th-atax-international-conference).

The Path Forward: Building Trust Through Responsible AI

The Four Corners story is a great example of why transparency, accountability, and clear lines of human responsibility aren’t optional—they are what separates public service from bare algorithmic processing. As governments increasingly adopt automation and AI, it’s critical to ensure that:

- Human oversight is embedded in every system where rights and livelihoods are at stake.

- AI-driven processes are transparent, explainable, and subject to regular review.

- Regulations require government agencies to maintain not just efficiency, but trustworthiness and accountability to citizens.

Regulated, responsible AI isn’t just good policy—it’s the only way to maintain public confidence and, ultimately, the integrity of our government decision makers.

Sources

FOUR CORNERS lifts the lid on ATO oversight failures in No Return ... https://tvblackbox.com.au/page/2025/07/28/four-corners-lifts-the-lid-on-ato-oversight-failures-in-no-return-expose/

Scammers, fraudsters and the tax office’s missing $50 billion | Four Corners Documentary https://www.youtube.com/watch?v=lCNsluZrbvU

Speech to UNSW 16th ATAX International Conference https://www.ato.gov.au/media-centre/speech-to-unsw-16th-atax-international-conference

Trust in the age of AI: Data stewardship inside the ATO https://www.businessthink.unsw.edu.au/articles/ato-ai-ethics-human-oversight-tax-data

How the ATO balances artificial intelligence with human oversight https://businessthink.unsw.edu.au/articles/ato-ai-ethics-human-oversight-tax-data

Australian Taxation Office's Management and Oversight of Fraud ... https://www.anao.gov.au/work/performance-audit/australian-taxation-offices-management-and-oversight-fraud-control-arrangements-for-the-gst

Scammers, fraudsters and the tax office's missing $50 billion https://www.youtube.com/live/lCNsluZrbvU

ATO investigated 150 staff members for involvement in GST scam ... https://www.counterfraud.gov.au/case-studies/ato-investigated-150-staff-members-involvement-gst-scam-sparked-operation-protego

How easy is it to trick the Australian Taxation Office? | ABC News Daily podcast https://www.youtube.com/watch?v=XqgHbKQGZVY

Governance of Artificial Intelligence at the Australian Taxation Office https://www.anao.gov.au/work/performance-audit/governance-of-artificial-intelligence-the-australian-taxation-office