Surplus obsession slows Canberra's IT spending

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Surplus obsession slows Canberra's IT spending

Labor Government pipped to prioritise surplus.

Analyst firm IDC has forecast a “cautious” year of government ICT spending as the Federal Government works to deliver a promised budget surplus of $1 billion by June 2013.

IDC head of vertical markets David So this week reported that agencies would spend a total of $6.48 billion on ICT in 2012, representing a 2.7 percent growth rate over the year.

New projects were expected to account for 30 percent of that ICT budget, slightly lower than a 33 percent average expansionary spend in previous years.

So said agencies were beginning to demand new cloud, mobility, social and big data technologies, but the Government was keeping a tight grip on spending to meet its surplus target.

He speculated that agencies might have spent up to 40 percent of a larger ICT budget on new projects in the absence of the surplus target, noting that cloud investments would yield long-term gains.

The Federal Government expected to avoid $1 billion of costs by implementing a 2010-2025 data centre strategy, which was developed in the wake of the 2008 Gershon Review.

“Having a budget surplus is quite unique,” So said. “Western governments tend to have a budget deficit.

“There’s a trade-off; [delivering a surplus] may affect productivity and cost savings in the long-term - but it’s a government priority at the moment.”

The Labor Government has been roundly criticised for its focus on the budgetary target. Deloitte Access Economics last month predicted a $4.2 billion deficit this year and a $5.1 billion deficit in 2013-14.

Deloitte’s 2012-13 forecast would still reflect a marked improvement on last year’s deficit of $44 billion. The firm predicted a return to surplus in 2015-16.

So described the Federal Government’s commitment to deliver a budget surplus and its desire to improve productivity as a struggle between “short term trade-offs and long-term goals”.

He expected the Government’s ICT spend to grow “relatively in-line with inflation”, to $7.05 billion in 2015.

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