Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My question is directed to Senator Minchin, Minister for Finance and Administration. Can the minister confirm that the government has been responsible for the bungled management of IT projects worth hundreds of millions of dollars? Didn’t the Centrelink project titled the ‘Edge’ get quietly cancelled after $20 million had been spent on the failed project? Can the minister confirm that the cost of a Defence personnel IT project blew out from $25 million to over $75 million while failing to deliver the contracted capability? Didn’t the bungled Customs cargo management project end up costing an extra $175 million, with taxpayers potentially having to fork out millions more in compensation payments? Given these failures, and as the minister for finance, what is the minister doing to protect taxpayers’ interests in the $1 billion smartcard and other major IT projects currently on foot?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

IT acquisition and procurement is a major and difficult exercise for anyone in the corporate sector or the public sector. There are instances every day of the corporate sector facing the sorts of difficulties which both state and federal governments face in major and complex IT acquisition projects. I neither confirm nor deny the sorts of figures that Senator Forshaw is putting on the table; I do not have those figures in front of me. I am not denying that those are accurate reports of difficulties that have occurred in various IT projects.

As finance minister, I must confess that one of the headaches one has is in relation to various departmental acquisition projects with IT is that you know that, under our structure, acquisition of this kind is the responsibility of each department. The heads of these departments do have that authority. Obviously, they must seek cabinet approval for the acquisition, but the responsibility for the acquisition is then a matter for the agency head, and they should do that in accordance with their responsibility in terms of value for money for the management of their department’s resources.

The process is extensively and exhaustively overseen through ANAO audits, and many of the issues that arise are brought to light by the ANAO, so there is certainly the requisite degree of transparency. It must be said that we are always seeking ways to ensure that we improve the management of these projects. It comes down to the skill of the personnel involved in each department that is responsible for the management of the acquisition itself. I am as disturbed as anyone else when these projects blow out, do not meet their deadlines or prove to be more expensive than was originally thought.

But we are not unique in having that difficulty. We have, which I think we formally announced recently, the introduction of a major new review mechanism called the ‘gateway process’, which we took from Victoria—and I accept and appreciate that the Victorian government has been a leader in this process; we all have the same problems at the state and federal level. Victoria, I think, brought to bear this gateway process from its experience of studying what the UK Labour government was doing. We have introduced that new review mechanism. It is quite a sophisticated mechanism by which each stage of a major acquisition project is reviewed. The smartcard, to which Senator Forshaw referred, is subject to that gateway review process and indeed the first such step in that has occurred.

The smartcard is an outstandingly important project for the government to embark on, but it is a complex one. It is one that Minister Hockey is turning his attention to with great rigour, and he knows that he has an enormous responsibility to ensure its delivery. My department, in taking responsibility for ensuring that each department in an acquisition process uses the gateway process, is actively involved in implementing the gateway process to oversee smartcard. Smartcard is important but it must subject itself to that rigour and, of course, it will be subject to full ANAO audit.

I accept, Senator Forshaw, that there have been the sorts of difficulties to which you refer. I suspect they are impossible to eliminate; they are not unique to the federal government, but we are doing our utmost to ensure they are minimised. If you have any additional suggestions for additional procedures, we would be happy to hear them. (Time expired)

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Thank you, Minister, for a very frank answer, which I accept as a confirmation of the point made in the question. I could suggest that the issue be referred to the Senate Finance and Public Administration Committee. That might be a good idea. Is the minister aware that IT industry representatives are already warning that the final cost of the smartcard project is likely to be more than the $1 billion claimed? Wasn’t the decision to award IBM the $495 million project to update immigration’s IT systems described as a blank cheque for IBM? Why has the government allowed project after project after project to go off the rails with taxpayers having to foot the multi-million dollar bill that is involved?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I am not sure that I can add much to my answer. Of course, I am aware that there is commentary that the smartcard will cost more than is forecast, but we are putting as much rigour as we can possibly bring to bear on smartcard. It will be the most rigorous process that any government IT acquisition has ever been subjected to. Mr Hockey knows the responsibilities he has. Can I say that, for those that do blow out, there are many more that are delivered on time and on budget but that are unheralded. One should not be left with the impression that in this area it is all bad news. There are a lot of very good Australian public servants working very hard, as you would know, to make sure that Australian taxpayers do get value for money and do get delivery on time and on budget. But it is a difficult area. I accept what Senator Forshaw is saying. It is an appropriate role for the opposition to be applying its oversight to this. We will continue to do our utmost to deliver on time and on budget.

Mr President, I ask that further questions be placed on the Notice Paper.