Gershon savings stripped to fund Gillard's election promises

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.