Aussie finance minister vows to speed ICT reform

Shake-up in government ICT aims for $443 million in savings

Lindsay Tanner, Australia's finance minister, has pledged to quickly deliver reforms under the biggest upheaval of government technology in more than a decade.

He says cabinet could decide which parts of a landmark review would be adopted within weeks.

(See also: Govt CIO points to value of Aussie ICT report)

The move comes amid mounting concern over a slowdown in Australian federal government technology spending during the past year, amplified by the meltdown in world financial markets.

The federal government this month took delivery of a wide-ranging review by UK cost-cutting expert Sir Peter Gershon, who has identified savings of about A$400 million (NZ$443 million) a year in recurrent expenditure from the A$6 billion computing bill.

Should cabinet approve the changes, it will likely mean most agencies covered by the Financial Management and Accountability Act will be required to buy much of their technology goods and services from the equivalent of a set menu unless they get a specific exemption.

"It will be moving pretty quickly," Tanner says.

The Gershon report slammed present public sector technology governance and management controls as lax, ineffective and inefficient, urging that more than 1,500 IT contracting positions be axed in favour of returning duties back to permanent bureaucrats.

Tanner defended the proposed 50% cull of contractors and said some agencies had been excessive in their reliance on external labour because they had not been subject to enough pressure to find permanent staff.

He denied the cuts — estimated to save A$100 million over two years — would spell bad news for employment at a time when the government was intervening to prop up jobs in other sectors.

The proposal to reduce contractor numbers is just one of Gershon's seven key recommendations, which essentially revolve around enforcing whole-of-government procurement co-ordination to reduce duplication and the proliferation of non-compatible systems.

Under the proposed regime, a ministerial committee would decide on how big-ticket technology projects or initiatives would proceed, a move that essentially shifts responsibility for decisions on wider technology strategy directly to politicians rather than bureaucrats.

This politicians' group would be backed by another committee of agency heads, who would also have some power over how projects were run and whether agencies could opt out of procurement mandates.

But it is unclear how popular any such move will be with cabinet and other ministries, which have traditionally loathed ceding control to portfolios outside the established cabinet process.

Tanner appears cool on how the idea for yet another ministerial committee would be greeted by peers, but acknowledges it was a key question posed by the review. "We will deal with that recommendation on its merits," he says.

The proposal was part of a wider set of recommendations on co-ordinating government use of technology to deliver better outcomes, he says.

"They will all be in the mix, there is no absolute guarantee [any specific recommendations] will be adopted."

Industry groups including the Australian Information Industry Association and the Australian Computer Society have greeted Gershon's findings with cautious optimism.

John Grant, AIIA chairman and managing director of listed technology services company Data#3, says Gershon had brought much needed independence in looking at how government and industry worked together, which had been sorely lacking in the past.

He says industry strongly supports the government's move to get better results from its technology purchasing because the technology industry was often blamed for poor results when projects did not go as planned.

"Business suffers when projects fail," Grant says.

Not all suppliers agree with such sentiment. Small-business technology suppliers warn the strong focus on co-ordinated procurement policies should not be allowed to translate into a renewed hegemony of large multinationals that rode off with the spoils at the expense of local players.

"Don't leave small businesses out to dry," says Brian Evans, the managing director of a Canberra hardware reseller and services company that employs about 30 staff and has a turnover of about A$50 million a year.

"We've made the commitment to building relationships with the government on the ground, and we'd like to see that coming back."

Evans says the government needs to take into account that most deals from big multinational suppliers work under transfer pricing, which means government spending went offshore and did not generate employment in Australia.

The government should re-explore the introduction of local participation quotas for overseas companies that won big-ticket deals similar to the schemes put in place under the Hawke and Keating governments, he says.

The Australian Computer Society welcomed Gershon's strong focus on governance, particularly the sheeting home of responsibility for government-wide strategy and co-ordination to ministers and heads of department.

Society president Kumar Parakala says he is glad the government wants to increase permanent headcount over hiring contractors because this will produce better project capabilities and skills retention.

Parakala also welcomes Sir Peter's recommendations to create a career path within the Australian Public Service for technology professionals from the ground up, but he says more needed to be done to address the skills shortfall.

"Make it somewhere people want to work," he says. "Government has to compete as an employer of choice. I don't see that coming."

— Australian Financial Review

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