Hon Dr Carmen Lawrence MP
Shadow Minister for Industry, Innovation and Technology
Senator Kate Lundy
Shadow Minister Assisting the Shadow Minister for Information Technology
SENATOR LUNDY: I just wanted to say a few words about the Government’s IT out-sourcing program, and the first issue is that Labor has decided to pursue a Senate References Inquiry into IT out-sourcing because we’re not convinced – in any way, shape or form – that John Fahey’s initiative with respect to a review will serve the purpose of bringing to light and bringing to the public’s scrutiny the issues and problems associated with the IT out-sourcing program.
DR LAWRENCE: I think its very clear, if you listen to answers in the House today, that Mr Fahey has no real commitment to making this a public process. It’s very clear, too, that there are a lot of people who, given the opportunity, would want to comment on the failure of this process – it’s great expense, it’s blow-out in time, it’s increase in cost for many of the departments, and, from an industry perspective, a very serious lost opportunity, for small to medium sized enterprises in Australia. We’re very worried about the fact that the Governmetn is going to have a quick and dirty inquiry internally, and that no one will be in the position to judge what is already a scandalous waste of money.
JOURNALIST: it true that there was going to be a half-way review of this program anyway and what kind of review are you going to get if it has to be done by Christmas time?
SENATOR LUNDY: Well, at this stage, with the Government’s review, we’re not convinced it’s going to be an effective one if it has to be done by Christmas time, at all, and that’s one of the reasons why we’re pursuing the Senate Inquiry. The other about the review is that the process Minister Fahey has initiated involves what we know to be the chief proponents of the IT out-sourcing program in Dr Boxall from the Department of Finance and Maxmore Wilton from PM & C , both who actively supported the out-sourcing program, in the original Cabinet submission to the Coalition back in 1997.
JOURNALIST: Do you think Mr Humprey is an appropriate chair of the Review?
SENATOR LUNDY: I haven’t made any comment, and don’t believe it’s relevant to comment on the appropriateness of the actual Chair of the review. My concern is that that Chair is required to report to Dr Boxall and Max Moore-Wilton and that the process is not going to be public.
DR LAWRENCE: They’ve already made up their mind, too. If you listen to Mr Fahey in Question Time today, he was busy defending the blow-out in cost that been identified in the Audit Office and disputing the figures that have been provided out of that independent assessment. So I’m not confident at all that they would listen to even some dissenting advice from internal sources, but given the people they’ve appointed to the task, it’s not likely that they will dissent. This is designed to placate what little public opinion there is about this, despite the fact that it’s a scandalous waste of money and also to have some sort of response to the Auditor General, rather than solving the problem, which is what they should be doing because if they proceed down this path with the remaining areas; the remaining clusters for out-sourcing, it will be, you know, a monumental disaster. We’re part way their now and they’ve already got the feed-back. If it hadn’t been for Kate’s work in this area, frankly, I doubt that it would ever have come to serious public attention.
SENATOR LUNDY: I think one of the issues that is of grave concern to me is the timing of this review. Very clearly there are two major contracts on the drawing board at the moment – being Centrelink and a group of departments called “Group Eleven” . The Government is saying they’re going to continue with those contracts despite this review anyway so we’re very keen to see those contracts being put on ice as well, not only this review is completed, but the Senate has the opportunity to scrutinise it. Another point I’d like to make is about the Audit Office Report. The Department of Finance responded on behalf of all of the Government agencies to that Audit Office report, and we believe that the other agencies and departments were gagged. We know that Industry is very reticent about lodging complaints about the program because they’re fearful of losing contracts in the long run. These are pretty serious attempts on behalf of Minister Fahey to suppress criticism about a fundamentally flawed program and we’re hopeful that a Senate Inquiry into this matter will expose all of these issues and allow, particularly Australian IT companies who’ve been disenfranchised to have a platform and lodge a complaint with impunity.
JOURNALIST: Would Labor cancel the whole initiative?
SENATOR LUNDY: Labor’s approach to IT out-sourcing is yet to be seen, because until we know what’s in the contracts – the five contracts that are already left we don’t know the pathway forward is. I’m gravely concerned that there are no exit clauses, or here’s limited capacity to renegotiate those contracts and they’re all part of the challenge that Labor will face if we’re elected next time ’round. I’m also concerned that in the meantime we don’t want to see any more of these massively clustered contracts left because that just means more implemental damage to information management in the public sector.
DR LAWRENCE: That’s right. It’s very it’s clear that there are enormous costs already. There are costs to industry, costs to the tax-payers. In some cases, with organisations such as CSIRO, there are bizarre propositions being made about how that should be out-sourced, so that’s a problem, too. There are privacy concerns that have been raised, which haven’t been dealt with by the Government. And as Kate said, the total picture is one that we will have to get. And if the Government’s not prepared to make it public then the Senate Inquiry’s the best way to go. Because you only need to talk to public servants who are trying to administer these programs for five minutes before they’ll draw you up a very long list of difficulties that they face, particularly in getting the new technology. Ironically, what’s happening is that they’re getting second-rate and run down opportunities rather than the cutting edge that there should be. And it’s costing them more. Every time they go to the helpdesk, every time they require some improvement, they’re having to pay for it out of these contracts. So we’d certainly be keen to cut the costs to the Government and to improve the performance of the public sector in information technology, but we’ll need to know the parameters of that before we can sensibly announce policy.
SENATOR LUNDY: One of the issues with the IT out-sourcing program has been the Government’s continued claim for one billion dollars worth of savings have been realised. What the Audit Office report shows is that they’ve only managed to find $70m and yet they’ve cut the departmental budgets by a far greater amount than the anticipation of savings.
I don’t believe the savings were there in the first place and there’s plenty of international evidence to show that those savings were never going to be achieved. So the premise of this IT out-sourcing program is false to start with and that’s one of the reasons why we think it should be stopped. There is no real justification. I don’t think the savings are there to be found so let’s, you know, we’re asking the Government to stop with the pretence – ditch the flawed program and let’s get back to basics and let’s start looking at effective, strategic ways to manage public information.
JOURNALIST: what about what Mr Fahey was saying in Parliament about how it can drive IT development to the private sector, they can get it out of Governmetn and try to get the whole private sector moving. Isn’t that a very good stimulus to turn that sort of funding into the private sector.
DR LAWRENCE: no it’s not because what has happened is that the work has gone to a few major, multi-national corporations. Very little of the work has gone to the small to medium enterprises in Australia and even when they’ve had commitments to give some of the work to local companies they haven’t met those commitments, according to the Auditor. So the real problem is that the benefits are not flowing to Australian companies, the technology is largely not new. The shape of the contracts hasn’t allowed smaller companies to get involved, and in any case the contacts are not being met. The big multi-nationals are not letting the work as they should, under the agreements and that’s a real problem.
SENATOR LUNDY: I think just to add a point to that about the relationship between these multi-national corporations who have got 70% of the work. Invariably the Australian compose that are involved with this, and there are quite a few,are relegated to the status of sub-contractor and are deprived of the opportunity of tendering as a prime contractor. And that’s one of the reasons why we think that there’s limited opportunity to actually grow some bigger businesses here in Australia with respect to IT. Under this program the Australian IT industry is kept small and it’s kept small because of the structure of this IT out-sourcing program. We believe that there is an opportunity to use Commonwealth procurement to grow local industry. Not by discriminating against foreign companies, but by creating a genuinely level playing field for opportunities to tender and contracts the size that out local companies can deal with, not lock them out by structuring these tenders so large that only the multi-nationals can fund the 1m or 1.5m bids to get this work.
85/00 Media Contacts: Patrick Bindon 0419 963 486 (Dr Lawrence)
Simon Tatz 0402 427 772 (Senator Lundy)
