In 1997, the Howard Government promised that IT Outsourcing of Commonwealth Departments and Agencies would achieve “substantial economies of scale resulting in improved efficiency, cost effectiveness and significant savings to the budget and to agencies”. The result was that few departments or agencies made savings.
False claims of savings
“The Government estimates it will save taxpayers approximately $1 billion over seven years of outsourcing”.
Minister John Fahey, Press Release 67/97, 7 November 1997.
The Howard Government subsequently admitted they would realise just 17% of the original estimated savings from its IT Outsourcing Program. Despite the Coalition’s original claim that IT Outsourcing would deliver $1 billion in savings, the Auditor General exposed the real savings figure as being less than $25 million.
Government agencies downgraded
Under the Howard Government’s mismanagement of the IT Outsourcing Program, Commonwealth Departments and Agencies were:
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Left with no IT assets – no computers and no software;
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Inadequately protecting the privacy of citizen’s personal information;
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Stripped of their core IT expertise;
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No longer training people to meet their information technology needs;
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Left in the red by budget cuts that were never offset by promised savings; and
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Experiencing lower service quality standards.
Vindicating Labor’s informed criticism, control of IT outsourcing was belatedly handed back to individual Departments and Agencies.
Small to Medium Enterprises (SMEs)
The Coalition arranged IT Outsourcing tenders into massive ‘clusters’, which effectively locked out Australian small to medium sized IT enterprises (SMEs). Only 30 % of IT contracts were awarded to SMEs, with 70 % of contracts awarded to US multinationals.
Labor’s longstanding claim that the IT Outsourcing Program favoured the ‘big end of town’ at the expense of local, innovative, small and medium-sized IT&T companies has been vindicated.
“The development of Australia’s information industries during the 1990′s is a tale of two periods. The first half of the decade was a period of rapid growth, but the second half was a period of relative stagnation and decline.”
Information Industry Update 2001,Report Highlights.
Consultants
OASITO outlaid almost $32 million on IT consultants and contractors up until 31 December 2000. The biggest beneficiaries of the Howard Government’s squandering of taxpayers’ money was a US law firm paid an incredible $19 million for advice that was widely criticised.
Regional IT Jobs
On 12 January 2001, both the Minister for Information Technology, Senator Alston, and the Minister for Finance, John Fahey, issued press releases alleging that their IT Outsourcing Program has created “nearly 400 jobs in regional Australia.”
This claim of nearly 400 new IT jobs in regional Australia has been exposed as a sham. The Senate Finance and Public Administration References Committee report into the Government’s IT Outsourcing Initiative – Re-booting the IT Agenda in the Australian Public Service – revealed that only 18 jobs were created in regional Australia.
Lack of Accountability
Throughout the IT Outsourcing Initiative, the Howard Government has prevented transparency of the contracting process by using ‘commercial in confidence’ claims to hide decision making processes. Parliamentary accountability for the expenditure of taxpayers’ dollars on this initiative was deliberately obstructed as a result.
MELBOURNE
Media Contact: Simon Tatz 02 6277 3334 or 0418 488 295
