Report assesses state's Y2K bill - is $120m enough?

The long-awaited select committee report on year 2000 issues has been tabled in parliament, but no one was there to read it. Parliament was in recess. The Government Administration Committee was formed in October 1996 to look at Y2K and its implications for government. The report makes several recommendations, placing the responsibility for Y2K compliance squarely with the minister of each department. One of the big issues is the cost involved with Y2K conversion.

The long-awaited select committee report on year 2000 issues has been tabled in parliament, but no one was there to read it. Parliament was in recess.

The Government Administration Committee was formed in October 1996 to look at Y2K and its implications for government. The committee, chaired by Clem Simich, includes such political luminaries as Act's Rodney Hide, Labour's IT spokeswoman Marian Hobbs and Trevor Mallard.

The report makes several recommendations, placing the responsibility for Y2K compliance squarely with the minister of each department. One of the big issues dealt with in the report is the cost involved with Y2K conversion.

"Government departments have to pay for any upgrades out of their existing budget. Our survey puts the cost of year 2000 at around $870,000 per department," says Simich, who points out that the figure is for government departments and doesn't include bodies such as SOEs, CHEs, CRIs, or local authorities. The report puts the total cost of Y2K for Government as a whole at around $120 million over the next two years.

But Ross Stewart, a director with the Wilson White Group that specialises in IT recruitment, believes that figure is far too low.

"Overall I thought the amounts of money they were talking about were very small. Amazingly low."

Perversely, the report itself seems to agree with Stewart. It compares New Zealand with Connecticut in the US, which has a similar population base. Connecticut officials estimate their Y2K bill will be around $NZ240 million but, as the report points out, "Connecticut is a state and its systems would not have the same level of complexity as would a nation's systems."

The report also highlights the lack of accountability displayed by many departments with regards to financing Y2K costs.

Marian Hobbs believes Y2K is too big an issue to let petty politics stand in its way.

"I'm not trying to score points off Government - it's too important an issue for that."

She supports government initiatives on the matter and hopes to see the report debated in Parliament as soon as possible. Hobbs believes educating the small and medium enterprise businesses is vitally important.

"We have to inform small business as much as big business. They don't know what they're facing yet."

Hobbs believes she has another, rather unusual, problem to contend with.

"I live in fear of us winning the 1999 election," she half jokes, pointing out that Britain's Tony Blair has described Y2K as the single most important issue he's ever faced.

Hobbs has adopted a two-pronged approach to the Year 2000.

"Firstly, I have to educate the Labour caucus so they can assess their own departments for compliance. Secondly, we have to start contingency planning right now." Currently government's departmental budgets are being reviewed and Hobbs wants the Labour caucus to be able to ask questions about Y2K action plans.

According to Wilson White's Stewart, "The report says only 12% of public organisations have identified costs to date. Why can't they account for money they've already spent?" The report points out that only 29% of public organisations could identify future costs when it came to Y2K.

United's Peter Dunne describes the report as "a good starting point" for government. His chief adviser, Mark Stonyer, hopes Prime Minister Jenny Shipley will adopt at least the first three recommendations the report makes.

"She was very well briefed and up to speed on the issue." Stonyer thinks the report will also prompt both Treasury and the Reserve Bank that they must act on Y2K.

"They don't appear to have done anything at all to assess the impact of Y2K." It is the third recommendation that Stonyer believes is the bare minimum for any company or government, contingency planning.

"If you haven't done anything at all the very least you have to do is have a contingency plan."

The Inland Revenue Department comes in for scrutiny as well. The report addresses IRD's draft ruling that, with regards to Y2K, businesses not be allowed to write off expenditure in the year they make it.

"We consider the approach taken by the IRD may act as a disincentive to companies". The report notes that Canada's national government has adopted "the opposite approach" encouraging businesses to claim deductions for Y2K expenses and even going so far as to defer some taxes to help companies out.

The New Zealand government has yet to decide whether to accept some or all of the report's findings. No date has been set for an implementation of the report's findings.

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