Preview: Any IT dollars in a 'tough love' budget?

Australian Federal Treasurer Wayne Swan has referred to tonight's Federal Budget as the "tough love" budget.

He has told Australians to steel themselves for a yawn-fest - a Budget with few surprises - and none of the vote-candy usually set aside for an election year Budget.

As late as this afternoon, the only hints dropped was that there will be "big reforms to health" and "support for superannuation savings" - both of which the Government had foreshadowed in earlier announcements.

But what will tonight's budget mean for the IT industry? Today iTnews spoke to a few Canberra insiders to drill down into some potential areas of significance:

• Approved projects from Business as Usual (BaU) savings
• Investments for Human Services consolidation
• New IT requirements for the ATO
• Funding for eHealth projects
• Centralised HR System for public servants
• Fleshing out Defence ICT spending

BUSINESS AS USUAL SAVINGS

One of the centrepieces of the Rudd Government's claim to economic management is the programs it has introduced to reduce public sector spending.

The slow accumulation of 'Business As Usual' savings from government agencies' IT budgets was recommended by the Gershon report. These savings are now due for reinvestment into projects that satisfy Finance Minister Tanner's preference for "whole of Government" ICT projects.

Some $50 million is on the table for whole of Government projects this year, and over $100 million next year - so agencies might expect to see a few pilot projects approved on Budget night.

CONSOLIDATION AT THE DEPARTMENT OF HUMAN SERVICES

One agency highly likely to gain approval for a whole of Government project is the Department of Human Services (DHS).

The consolidation of the IT infrastructure of Centrelink, Medicare and other Human Services agencies is aimed at reducing spend in the long-term, but savings are unlikely to be realised without some spending first.

Human Services deputy secretary John Wadeson is in the throes of consolidating IT infrastructure across the portfolio, with a view to offering up spare capacity for other agencies.

As of tonight, enquiries made of Centrelink, Medicare or any other DHS agency will be funnelled through a single phone number and website - a sure sign that the Budget will be big on healthcare and welfare.

SYSTEMS AT THE AUSTRALIAN TAX OFFICE

The Federal Government's response to the Henry Review was far from the tax overhaul most commentators had expected.

One of Dr Henry's recommendations - that income tax returns be simplified, if not automated, for those Australians with relatively basic tax affairs - wasn't pursued in the Government's initial response.

The rationale behind the recommendation is that many Australians earning under $70,000 a year have uncomplicated tax beyond PAYG, workplace deductions and the interest paid on bank deposits. Workplace deductions could be standardised, and interest earnings below a certain threshold could be scrapped to move to a pre-populated tax return for these taxpayers.

Financial Services Minister Chris Bowen told Melbourne Talk Radio last Monday that "the simplification of the personal income tax system" was a policy that the Government remains "very attracted to".

But Bowen said there was still "some scoping" to do before such a policy would be announced.

The Budget announcement could be an opportunity to outline a more formal response to the proposal.

Depending on the Government's timetable, at some stage it will need to cost out the implications for an ATO (Australian Taxation Office) already struggling under the burden of a bungled systems revamp and recent delays in the processing of tax returns.

The ATO would be justified in calling on a few dollars to adjust its systems to meet any new requirement for pre-populated tax returns.

RMIT professor Sinclair Davidson told iTnews he would "be very surprised if there wasn't something in the budget tonight" on the matter, if not during the Government's campaign for re-election.

In a column written for the Australian National University's Agenda, Davidson said he expected massive cost implications for the ATO.

"It is a complex arrangement to move onto pre-populated tax returns," he told iTnews today. "If the Tax Office gets it wrong, it undermines tax morale - people's willingness to be compliant with the tax system."

He judges the ATO's technical ability to implement such a change "very, very poor."

"Given the Tax Office's existing problems, this would need to be very carefully planned," he said. "It will need a lot of money upfront."

E-HEALTH

All commentators agree that eHealth is absolutely guaranteed to feature in tonight's budget.

With Health Reform the only major initiative Rudd may be able to put his name to after his first term as Prime Minister, expect to see some more sweeteners to win over the industry.

The medical software industry is looking for some coin to fund eHealth systems at the various levels below the remit of NEHTA - with funding required at the level of the general practitioner and areas such as radiology, pathology and pharmacy (outside of public hospitals).

Deloitte partner Adam Powick, who oversaw meetings between the Government and the Medical Software Industry Association yesterday and has long called for boosts to eHealth funding - told The Australian today that he expected $200 million to $300 million of eHealth funding in a project that requires $1.6 billion.

A spokesman for the MSIA said that a proposal had been put forward to the Government to boost eHealth funding  - but the association was still in the dark as to whether the proposal would make the final cut.

Read on to Page Two for Defence ICT, HR systems and anything for Senator Conroy?