Govt vetoes Centrelink payments system outsourcing

Canberra has ruled out the privatisation of Centrelink’s payments processing engine, vetoing one of the key IT recommendations of its National Commission of Audit.

On Friday Human Services Minister Marise Payne and Social Services Minister Scott Morrison announced that Cabinet had formally signed off on the replacement of Centrelink’s workhorse Income Support Integrated System (ISIS), which has processed Australian welfare payments since the 1980s.

Payne gave her “absolute assurance” that ownership of the system and management of its data would remain “within government control”.

Outsourcing the nuts and bolts that calculate and deliver roughly $100 billion in payments every year was put forward in the May final report of the National Commission of Audit.

The report panel recommended the Government investigate “options for outsourcing part or all of the Department of Human Services payments system”.

A spokesman for Payne confirmed that the Government had weighed up the outsourcing option and decided to keep management of the critical system in the hands of the department.

It will, however, begin sounding the market for partners to help it build the $1 billion to $1.5 billion replacement for ISIS as soon as July, when the budget green light formally takes effect.

Payne said from this date the department would “go into the market and start talking about the tender process” and invite suggestions and advice from the technology sector.

Morrison remained circumspect about what slice of the billion-dollar estimated budget for the ISIS replacement would be up for grabs in technology contracts.

“The cost here the Treasurer has already indicated is in the vicinity of around $1 billion, but that will be subject to final agreements that come together with the providers who will be part of this project, and we don’t want to pre-empt that because we are looking for the best value for money, for the best value outcome,” he said.

“So that will become clearer as we work through those processes.”

The full process is expected to take seven years, Morrison said, with the actual build of the new system and infrastructure due to consume the first three.

The Department of Human Services will then embark on an extremely tricky and complex transition process that will require it to introduce the new capabilities without affecting the delivery of payments.