Gershon savings stripped to fund Gillard's election promises

By Brett Winterford on Aug 5, 2010 1:13 PM
Filed under Finance

Agency CIOs face uphill battle to win back funds.

The Gillard ALP Government has announced plans to spend a $447.5 million fund originally earmarked for ICT investment on other government projects.

The $$447.5 million was forecast to be drawn from over $1 billion of savings from ICT cost cutting projects at Federal Government agencies between 2010/11 and 2013/14.

These cost cutting projects are a continuing response to the Gershon review - under which agencies were required to cut between 7 and 15 percent of 'business as usual' ICT spending (such as cutting the use of ICT contractors) between 2009/10 and 2013/14 .

Agencies were originally promised that half of these "business as usual" savings would be made available as a 'reinvestment fund' for larger ICT projects that proved to be of value across multiple agencies.

Finance Minister Lindsay Tanner told iTnews last year that over $1 billion would saved over the four years - half of which would be spent on projects such as "legacy system replacement; improvements to telephony facilities; infrastructure to consolidate existing systems or for virtualisation; and data management."

Some $230 million in savings has already been invested back into ICT projects - including 41 projects announced in the 2010 budget.

A further $447.5 million of future savings (savings made between 2010/11 and 2013/14) had previously been 'quarantined' by the Federal Government for further reinvestment into IT projects.

But the Gillard Government has now announced that it will "remove funding currently quarantined under the Gershon reforms for Information and Communications Technology (ICT) spending across Government."

Not spending this money on IT projects, the government said in a statement, will "save" the Government $447.5 million over four years.

In other words, that $447.5 million earmarked for future IT projects goes into the wider budget pool, most likely to be spent elsewhere.

The chief information officers at government agencies will now have to compete dollar for dollar with other government spending priorities to win funding for projects.

The Government said it would continue to promote 'whole of Government" IT projects and "common service delivery platforms."

But "going forward," an ALP spokesman said, "departments will now have to bid in the budget process for additional resources to fund ICT spending to ensure it is properly scrutinised against other Government priorities."

Finance Minister Lindsay Tanner was unavailable for comment today - his press office confirming his key priority before quitting politics was assisting Cath Bowtell, the new ALP candidate to win his seat in Melbourne.

Gershon savings stripped to fund Gillard's election promises

6 comments in this discussion

"love to know which ICT shops are well funded, most of the ones I have spoken to have been doing more with less, now are forced to do less with less. Gershon's report created a surplus of ICT ..."

By peterhau

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Comments: 6

ITnovice Aug 5, 2010 3:36 PM	I cannot believe how stupid and short-sited some of the Government's decisions are sometimes! It shows how little they understand the value of ICT to the proper and efficient functioning of government for the provision of services to those who elected them.
umbria Aug 5, 2010 3:43 PM	This plus the $300 million "special dividend" she required of Medibank Private this week makes $747 million of "new money" Gillard-Swan are stealing to fund election promises. Compare and contrast with getting over-50s off the dole, and after collecting 6 months of PAYE tax, handing back $3250 to their employer. Two very different takes on fully-costed promises.
BrettWinterford Aug 6, 2010 12:46 AM	While it isn't existing Gershon savings being re-directed, I can't help but feel sorry for those that tightened their belts in the name of efficiency, only to watch election adverts and know where the money is really going...
Ezy2Confuze Aug 12, 2010 9:53 AM	Unfortunately this is the norm for Labour and Governments in general. They have no plans at all for saving money, so they strip out whatever they can from whatever does make money or has fnds available and then we get into more debt. It's one of the reasons I haven't voted for labour in over a decade, at least Abbot et al have said they are going to get Australia back out of debt, hence the reason they will spend only about $6 billion vs. $43 billion for the NBN. At least when we do get back in the black, we can look at a decent NBN or alternative. That's the view I am taking in this election anyway.
Psuedo Aug 20, 2010 4:05 PM	@Ezy2Confuze - In the long run it costs more to put in an interum measure and than look at an "alternative" down the track. We need the NBN to commence now, not start in 5-10 years time when Australia will be even further behind other countries. It is unfortunate that the money from costs savings efforts is redirected elsewhere, but hey, you can't run ICT in a silo. If they need to budget against other government funding and priorities than so be it. Most of these huge ICT shops are well funded, I am sure the CIOs can see the value in looking at options to reduce costs elsewhere to enable more effective funding for capital purchases, such as shared services and cloud computing.
peterhau Sep 2, 2010 5:24 PM	love to know which ICT shops are well funded, most of the ones I have spoken to have been doing more with less, now are forced to do less with less. Gershon's report created a surplus of ICT projects funds, but the departments have not been gifted the funding, they have been forced to reduce spend and, in a new, equally brilliant move, shed contractors. These are the people they will need for implementation later on, but they won't be paying the same that they were when the contractors were let go - they will be held to task by the contractors, who will now build in redundancy...