Five ICT issues to watch in tonight's budget

All eyes will be on Treasurer Wayne Swan tonight as he delivers the 2009/10 Federal Budget.

In a blog post yesterday afternoon, Swan prepared the nation for a budget that won't be popular, saying he "won't shirk the tough decisions."

"Some of those decisions will be met with disappointment," he warns.

What will Swan's penny-pinching budget mean for Australia's ICT industry? This morning iTnews has spoken to several Government insiders and industry commentators to come up with five technology areas we should expect Swan to dive into.

IT BUDGET CUTS

Perhaps the most important feature of this year's budget will be determining the Government spending implications of Dr Peter Gershon's review of ICT spending in Australian Government, handed down late last year.

Among these recommendations is a 15 per cent reduction in IT spend over two years for agencies that outlay over $20 million on ICT a year and a seven per cent reduction in IT spend over two years for those agencies with annual ICT outlays of between $2 million and $20 million. 

The Federal Government has chosen to implement the recommendations of Gershon in full.

According to the report, the first and second phases of this cost cutting exercise (deciding on methodology and metrics and an initial review of agency spending) should now be complete.

This means that the Government by now should have identified the areas in which it expects savings. Tonight's budget may provide some detail as to where the Government has realised these savings, and where further savings are still being sought.

DATA CENTRE CONSOLIDATION

Dr Gershon's report also found that Federal Government agencies are running out of data centre floor space, and that over half of the data centres used by Government agencies are performing well below industry standards in terms of uptime. 

"With few exceptions Canberra's existing data centre facilities are ageing and experience difficulty meeting the requirements of current technology and availability demands," the report read.

Among Dr Gershon's recommendations is the "potential consolidation of the physical data centre infrastructure" among agencies -- more specifically "the buildings, heating, ventilation, air-conditioning and power supply arrangements."

Dr Gershon's report asked that no new data centres be built or refurbished until a whole-of-Government approach is agreed on. It recommended that the whole-of-Government data centre strategy be agreed upon by September 2009.

This leaves precious little time for scoping studies or ROI assessments to be completed - either by AGIMO (Australian Government Information Management Office) or contracted third parties - the details of which may be made available in the budget papers.

HUMAN SERVICES AND ATO

Unemployment may have fallen by 0.3 per cent in April, but even the Government believes the worst is ahead of us. 

"Unfortunately, we still anticipate the labour market will soften over the next 12 months, and the Budget forecasts will reflect that," Swan said in his pre-Budget note.

Should unemployment rise to US levels (currently 8.9 per cent, as opposed to Australia's 5.4 per cent), the IT shops at The Department of Human Services - and Centrelink in particular - are likely to feel the strain of more Australians seeking welfare payments and benefits.

Put simply, Human Services will require more funding.

There is a small likelihood such funding will come from the savings identified under the Gershon review. The $540 million of expected savings from these cost reduction strategies are expected to be spent on whole-of-Government initiatives. 

Sources close to the Government predict that 'online service delivery' projects may be announced; projects that might, for example, enable welfare payment seekers to use self-service technologies to cut down on Centrelink's administrative costs.

The Government has also flagged the potential for a new paid maternity leave scheme, which would again have an impact on systems within Human Services and the Australian Tax Office.

Further changes have been flagged with regards to means testing health insurance rebates and changes to superannuation - both of which are likely to impact ATO systems and potentially, delay and drive up the cost of ATO's Change Program even further.

Read on for Budget funding implications on smart grid and Defence projects.