IRD tells minister the bad news on FIRST - again

Modernising and partially replacing systems could cost up to $1.5 billion

Inland Revenue’s briefing for Minister of Revenue Peter Dunne, in preparation for the National government’s new term, continues to point to major problems with the replacement of IRD’s FIRST core computer system, now more than 20 years old.

Over the next 10 years, modernising and partially replacing FIRST could cost between $1 billion and $1.5 billion, says the briefing.

After a $21 million false start attempting to implement a totally new student loans system, based on Oracle’s Enterprise Tax Management (ETM) software, IRD resigned itself to handling student-loan changes by continuing to shore up FIRST. The Oracle student loan system was to have been the lead project for a wider implementation of ETM-based tax systems to progressively replace FIRST.

At the time of this decision, Computerworld sought further details under an Official Information Act request of the representations made by Oracle and the criteria applied by IRD in accepting ETM as a way forward. Our request was refused, citing IRD’s obligation to tax secrecy under its enabling legislation. Computerworld protested that the secrecy provision did not explicitly refer to the student loans side of IRD’s operations, but the Ombudsman disagreed with our interpretation and backed IRD’s refusal.

The latest briefing notes to Dunne make no mention of the Oracle ETM blind alley, but identify two basic problems with the FIRST system that that exercise pointed up; FIRST was designed as a core tax system, but since then IRD has had a number of other responsibilities grafted onto it, such as Kiwisaver and student loans. FIRST was designed to take money from people, not give it out, IRD staff close to the rescue exercise have lamented to Computerworld; and the briefing notes also make this point.

Secondly, the FIRST system was designed as an integrated whole, purpose-written for IRD. The trend nowadays is to use ready-made general software and to organise it in a modular fashion, so that changes to one part do not affect others. Accommodating FIRST to a more modular style of operation means “in effect separating the intertwined wires so that each can be worked upon individually,” the briefing notes say.

“Once that is achieved,” they continue, optimistically, “current constraints on implementing policy changes will be relaxed. We will then be able to use this modernised IT architecture to deliver better and more efficient services to the public.” However, “current requirements will consume much of our resources until 2014.

“There is a difficult balancing act here,” says IRD’s briefing; “we need to continue to develop within the FIRST system to ensure that current services can be delivered (for example, collection of student loans and child support), at the same time redeveloping FIRST to meet the challenges of a new environment. Until substantial progress is made on this programme Inland Revenue will be significantly constrained in its ability to deliver policy changes with complex system requirements or to capitalise on opportunities electronic communications offer to deliver efficiency savings to meet budgetary requirements.”

The briefing notes convey a sense of déjà vu. In June 2009, facing the new National government’s "line-by-line review" of public-sector expenditure, IRD was talking about the urgent need to replace “some or all of the current components of FIRST”, the difficulties presented by “the requirements of the various social policies it now has to cater for” and the need to “decouple components, simplify and align processes and create a new architecture.”

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