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Finance and Public Administration Legislation Committee
17/10/2016
Estimates
PRIME MINISTER AND CABINET PORTFOLIO
Digital Transformation Office

Digital Transformation Office

[22:45]

CHAIR: I welcome Mr Peter Alexander, the Chief Operating Officer of the Digital Transformation Office—I apologise in advance if I mispronounce this—and Mr Jose Del Rio, Head of Partnerships. Mr Alexander, do you wish to make an opening statement?

Mr Alexander : No, thank you.

Senator McALLISTER: Can I ask about the restructure that was announced on 13 October. When was that restructure first raised with you?

Mr Alexander : We heard about that restructure probably a few days before it was announced. I joined the DTO about three and a half weeks ago from Treasury. I had been there a week and a bit when I talked to the minister's office and they talked about the restructure and the start of some changes. But we were not involved in the detail of it and did not have any substance of it until really only a day before it was announced.

Dr Kennedy : I could provide some more background, if that helps.

Senator McALLISTER: Yes, okay, thanks.

Dr Kennedy : The matters that led to the restructure had been being discussed in government between PM&C and some other members of the DTO, including its current CEO, Paul Shetler, in general terms but not the precise restructure since the government was returned.

Senator McALLISTER: When you say the matters have been under discussion, do you mean that the prospect of the restructure has been under discussion or do you mean that other matters have been under discussion?

Dr Kennedy : I mean the nature of the issues that underpinned the restructure, such as the establishment of a program management office, the bringing together of ICT procurement policy with the Digital Transformation Office and general consideration of, if you like, stage 2 of the Digital Transformation Office. It is now to be renamed the Digital Transformation Agency. Those matters in general were all under discussion since the government was returned.

Senator McALLISTER: My question was: you have been discussing these matters with Mr Shetler, the former head of the Digital Transformation Office—was the prospect of a restructure canvassed with Mr Shetler as part of these discussions you are describing since the government was returned?

Dr Kennedy : Oh, yes, it was.

Senator McALLISTER: Right, but not with Mr Alexander until after his appointment. It must have been quite a surprise, Mr Alexander.

Mr Alexander : I think I was aware that there had been discussion around agencies that the Digital Transformation Office was going to change and there was an opportunity for it to do more and for it to integrate more with the Department of Finance. So it was not a total surprise. I was involved in various committees with the Digital Transformation Office for some time from Treasury, and so it was not a total surprise.

Senator McALLISTER: when does the Digital Transformation Agency come into being or has that happened already?

Dr Kennedy : I do not have the precise date in front of me. It has not come into being. The changes in the Administrative Arrangements Order are yet to go through the Governor-General. I understand that is to happen very shortly.

Senator McALLISTER: What are the problems that the restructure is seeking to address?

Dr Kennedy : The government has outlined that it wants the transformed agency to work on the current set of issues, plus a couple of additional issues. One in particular, through the establishment of the Program Management Office, is to have whole-of-government oversight of large ICT projects. Some of that oversight already exists in the Department of Finance through gateway processes and those types of processes that review large projects as they pass through the various funding allocation mechanisms. But what a whole-of-government program management office can do is focus very clearly on the benefits that are to be realised from large ICT projects and to give, given that a significant number of large ICT projects are underway, a central view of how those projects (a) might be better working together and, (b) identify any risks that it sees emerging in those projects as a check on the system from the projects themselves.

Of course, these projects—be they in DHS or the ATO or wherever they are being run—are still to be delivered by and are the responsibility of the relevant secretary of those agencies. But a program management office is a typical way to oversee all those projects operating across government.

Senator McALLISTER: My question to you was: what are the problems that have prompted this restructure? I just want to clarify that your answer is simply that it arises exclusively because of a desire to take advantage of this new Program Management Office?

Dr Kennedy : I have only mentioned one of the dimensions. The other dimension of the expanded operation of the agency is to bring together the digital transformation functions that are being undertaken with ICT procurement policy, which will move from the Department of Finance to the agency. This is to bring those features together.

The government would regard this change in digital transformation as really the next stage in the manner in which it is trying to transform services, to enable them to be delivered digitally across government. It is difficult to say that it addresses some issue that has arisen today or tomorrow. It is part of the general program of transforming the delivery of services, and digitally enabling the government.

Senator McALLISTER: You mentioned that it had been under discussion with officers from the DTO since the return of the government. Prior to the previous parliament being dissolved, had it been under discussion with others within government? When did these discussions start?

Dr Kennedy : I was not part of those discussions at that stage, so I am not aware of that. I would have to take that part on notice.

Senator McALLISTER: Is it your evidence that this whole thing commenced since the re-election of the government, or is it your understanding that there were some discussions about a change of this kind prior to the election?

Dr Kennedy : It is my evidence that I have been part of discussions around these issues since the government was returned—

Senator McALLISTER: But did your department not brief you?

Dr Kennedy : And prior to us going into the caretaker period, the DTO was going about its work. Through the caretaker period, of course, the public service prepared advice for the return of the government. When the government was returned we began discussions about what would be the subsequent phases of the Digital Transformation Office and these are the sorts of issues that came up in those discussions.

Senator McALLISTER: All right. I would like you to take that on notice, because I am interested to understand whether this restructure was initiated prior to or after the election.

Dr Kennedy : Yes, I am happy to do that.

Senator McALLISTER: You mentioned a change in the procurement arrangements?

Dr Kennedy : Yes.

Senator McALLISTER: I understand that there is a proposal for an incentive scheme where agencies which achieve savings through digital transformations may be able to keep some of those savings. Is that a correct understanding of the scheme?

Dr Kennedy : I am not sure what savings you refer to.

Senator WONG: Shared savings?

Mr Alexander : Minister Taylor did talk about that in his speech at the Press Club on Friday—

Senator McALLISTER: He is not here.

Mr Alexander : but we have no more detail than that.

Senator McALLISTER: That initiative has not been raised with the Digital Transformation Office?

Senator WONG: So the first time you were aware of the—is it a shared savings proposal; is that what it was described as?

Dr Kennedy : My apologies for not understanding the initial question. Minister Taylor has been talking with stakeholders about how to get right the incentives for—

Senator WONG: It is not a new proposition.

Dr Kennedy : Exactly.

Senator WONG: I just want to check: you were not aware of the proposal until you heard it at the Press Club. Is that right?

Mr Alexander : I wasn't, no.

Senator McALLISTER: Have you had any subsequent discussions with the assistant minister or any other member of the executive about how this incentive scheme will work?

Mr Alexander : No.

Dr Kennedy : The appropriate management of this has not yet been established. It has just been announced. This was all announced late last week. The development of this function, how such an incentive would operate, the transfer of functions from the Department of Finance are all yet to take place. They were just announced last week.

Senator McALLISTER: Has the Department of Prime Minister and Cabinet provided advice about an incentive scheme in support of the minister's announcement?

Dr Kennedy : I have had general discussions with the minister about, as Senator Wong was outlining, how such schemes operate, but I have not provided any formal advice—written advice if you prefer.

Senator WONG: I am a little confused. What is the status of what was said at the Press Club? Is it just a possibility? Is it policy?

Dr Kennedy : It is policy. Of course it has to be implemented.

Senator WONG: It is policy but PM&C were not aware the announcement was going to be made?

Dr Kennedy : PM&C were fully aware the announcement was going to be made.

Senator WONG: But not the DTO?

Dr Kennedy : Are you talking specifically about the shared incentive aspect?

Senator WONG: I was, yes.

Dr Kennedy : We are aware of the minister's interest in promoting that, if you like, shared incentive—

Senator WONG: Were you aware that that announcement would be made on Friday, before it was made.

Dr Kennedy : I wasn't aware, no.

Senator WONG: And nor was the DTO.

Mr Alexander : Yes.

Senator WONG: Has there been a policy decision taken by government in relation to shared savings. I am calling it that because that is what it used to be called. I don't know if it is called something else now.

Dr Kennedy : To be honest, I would prefer to take this on notice. I am somewhat at a disadvantage because I don't have the minister's speech in front of me, so I cannot refer exactly to what he said.

Senator Brandis: We will take the question on notice.

Senator WONG: Is it policy or not?

Senator Brandis: We will take the questions on notice.

Senator WONG: I am sure you will take that question on notice. Do you understand that to be government policy.

Dr Kennedy : I will take the question on notice, because I need to confirm exactly what the minister said in this regard.

Senator McALLISTER: Mr Alexander, on the status of the major deliverables for DTO, what are the timeframes when you expect to deliver the different phases of gov.au?

Mr Alexander : We have delivered an alpha—a demonstration version—of that site. It was delivered in March 2016. We have now released a beta version—an updated version—of that site on a new technology platform just in the last few days. We are now in consultation with agencies about adding new content, new sites, to the gov.au platform. We will take that forward over the coming months and build that site out from that first-stage beta into a larger beta and then make that a live site to replace its predecessor, australia.gov.au, which is running presently.

Senator McALLISTER: Do you have an end point yet for that project?

Mr Alexander : The end point for it is pretty substantial and the timing on adding sites is still being worked out. We have over a thousand agency sites and 44 million pages of content that we are going to add. We are progressively going to add it. It really depends on the size of the team we have dedicated to it and the work of agencies and our engagement with agencies.

Senator McALLISTER: With so many variables, it is indeterminate.

Mr Alexander : It is complicated. It will be years to add all that content and improve it.

Senator McALLISTER: I have more questions but I am conscious we have run out of time. Mr Alexander, I am going to be looking for an update on all of the major projects that the DTO is tasked with. I will seek an update from you via questions on notice. Thank you.

CHAIR: Thank you, Senator McAllister. I appreciate that. That ends the proceedings for today. The committee stands adjourned until 9.00 am tomorrow.

Committee adjourned at 23:00