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Wednesday, 8 November 2000
Page: 19412


Senator LUNDY (2:55 PM) —My question is to Senator Ellison, the Minister representing the Minister for Finance. I refer to yesterday's post-Melbourne Cup announcement of a review of the implementation risks associated with IT outsourcing. Can the minister confirm that so far the government's IT outsourcing initiative has achieved: (1) a blow-out in OASITO's budget for the initiative from $13 million to $33 million, with most of this money going to consultants; (2) a massive shortfall in the forecast $1 billion in savings, with agencies being forced to make up the shortfall; (3) widespread gaps in contracted service levels; and (4) discrimination against small and medium Australian firms, with only 30 per cent of the work ending up with these companies? In light of these disasters, how can the minister continue to claim that IT outsourcing has been a success?


Senator ELLISON (Special Minister of State) —What I can confirm is that there have been enormous benefits which have flowed from IT outsourcing. You just have to look at the figures. Here are some of them. There is around $90 million in new strategic investment. Senator Lundy mentioned small to medium enterprises. There is $400 million worth of work going to Australian small to medium enterprises. What part of that doesn't Senator Lundy like? Obviously the Labor opposition does not want to see Australian small and medium enterprises get this work. What about the creation of jobs? We have the creation of 400 jobs in regional Australia. This is just another spin-off from IT outsourcing. What about products and services in Australia? There are $900 million worth of products and services in Australia. That is what the people of Australia want to see, and that is what we are getting from IT outsourcing.

Senator Lundy also mentioned savings. Can I say that the results of the initiative indicate that the Commonwealth is well placed to meet the savings targets identified in 1997. In fact, these targets were based on the expectation of seven-year contract periods, so what you have to look at is the lifespan of the IT outsourcing. For cluster 3, group 5, the Australian Taxation Office, the health group and group 8 contracts, we have projected savings over the initial five-year term of around $268 million. This is a significant achievement for the government, particularly when you take the significant industry development commitments of the successful vendors into account. The review was announced yesterday. We are halfway through the initiative, and it is a timely point at which to have a review as to how we are going. That is what the Minister for Finance said.

Opposition senators interjecting


Senator Faulkner —It has been a debacle.


The PRESIDENT —Order! There are too many senators shouting.


Senator ELLISON —The opposition do not want to listen to this, because it is good news for Australia. They do not want to hear about the jobs for Australians, the products and services that are purchased in Australia and the small to medium enterprises that get work from IT outsourcing. You would think that they would support us because ALP policy purports to `ensure that the purchasing power of government is used to nurture and support our domestic industry'. That is just what I have described with IT outsourcing; that is just what we are doing with IT outsourcing. It goes on to say:

... the purchasing power of the Federal Government ... should be used to provide expanded opportunities for local industry and to achieve savings in the purchase of goods and services for the public sector.

That is just what we have done with our IT outsourcing. The fact that we are having a review is very sensible when one considers that we are halfway through this very big transition from the unwieldy system that Labor left us to this new innovative system which will mean more jobs, more purchasing of Australian products and services and more money for Australian small and medium enterprises. It is a big exercise. Of course we should have a review halfway through; it makes sense to do so.


Senator LUNDY —Madam President, I ask a supplementary question. How can the minister guarantee the independence of the review, given that the steering committee comprises the only three Commonwealth agencies who supported the IT outsourcing initiative—the Department of Finance and Administration, the Office of Asset Sales and IT Outsourcing and the Department of the Prime Minister and Cabinet? Will the minister undertake to table the findings of this review?


Senator Kemp —Why do you hate small business?


Senator Lundy —You hate Australian small business.


Senator Kemp —You hate small business.


The PRESIDENT —Order! The Senate will come to order. I call Senator Ellison.


Senator Kemp —We know you love unions, but—


The PRESIDENT —Senator Kemp, I have called Senator Ellison.


Senator ELLISON (Special Minister of State) —It is good to see that the opposition has dropped its attack on Mr Humphry, who is going to be heading this review, because he has absolutely no conflict of interest in that area and this is an independent review, which is appropriate, halfway through the initiative. The opposition has the hypocrisy to criticise this IT outsourcing initiative when it is achieving the very things that the opposition wants to achieve in its policy. The opposition is criticising a review which is timely and appropriate, having regard to the huge transition that we are undergoing. The opposition in government would be doing exactly the same as we are doing in IT outsourcing.