Cabinet approves $1bn Centrelink systems upgrade

The Australian Government has announced it will officially go ahead with a $1 billion project ro replace the 1980s mainframe-driven IT that processes national Centrelink payments.

The Centrelink IT conundrum has played out on the public stage for the past six months as a chorus of government ministers offered their support to the proposal.

Last October the Government commenced a large-scale review into the welfare system to decide whether to proceed with an estimated $1 billion to $1.5 billion replacement.

In the days following the release of the review's recommendations - which formally endorsed the overhaul - the Department of Human Services confirmed that a business case two years in the making had been submitted to government.

Since then a series of ministers have publicly acknowledged the inevitability of the expenditure, but did not go as far as to confirm the Government’s funding committment.

Social Services Minister Scott Morrison today announced federal cabinet had signed off on the project in time for the 2015 budget.

A spokesperson for Morrison said the Government had not yet made a specific dollar funding commitment to the project.

"This 30-year-old system consisting of 30 million lines of code and undertaking more than 50 million daily transactions is responsible for delivering around $100 billion in payments to 7.3 million people every year," Morrison said in a statement.

"Investing in a new system will boost efficiencies and help advance many welfare reforms - you can't fix the system if you can't change the engine which drives the system and makes it work. The efficiencies it creates will also mean the new system will pay for itself over time."

Human Services will "immediately" establish a project team with a view to going to market for a new platform early in the next financial year, department minister Marise Payne said.

Payne said welfare customers could expect to see initial benefits from the upgrade at the end of 2016.

"The 1980s technology propping up the current system was built for an era of paper records. It is costly to maintain and incapable of taking full advantage of the digital age," she said in a statement.

"Much of the complexity people associate with claiming government assistance is a result of the red tape created by the ageing system.

"The new system will be designed around the customer, ensuring people are directed to the appropriate services for their situation."

The new technology to underpin the welfare system will offer better data analytics, real-time data sharing between agencies, and faster, cheaper implementation of policy changes, Payne said.

"This means customers who fail to update their details with us will be less likely to have to repay large debts, and those who willfully act to defraud taxpayers will be caught much more quickly," Minister Payne said.

The Government will create an advisory group filled with individuals from the public and private sectors to oversee the initial stages as well as subsequent engagement with the IT partners chosen to work on the project.