Centrelink snares banker to spearhead overhaul

Upgrades at Centrelink are a heavy, long haul.


The Department of Human Services has tapped into Australia’s banking sector to recruit a head for its long awaited, massive core system overhaul at Centrelink, confirming that it has snapped-up the National Australia Bank’s transactions and deposits chief, John Murphy to head-up the project tipped by former Treasured Joe Hockey to cost at least $1 billion.

Human Services on Monday confirmed that Mr Murphy will take on the freshly created role of Deputy Secretary in charge of the Welfare Payments Infrastructure Transformation project, a job that is primarily charged with replacing the 30 year old ISIS (Income Security Integrated System) based on the Model 204 mainframe system.

Mr Murphy’s appointment sends the strongest signal so far that that after years of waiting, Human Services is about to properly commence the build of the giant replacement system that distributes the bulk of Australia’s $165.8 billion annual welfare payments to customers and providers.

Like Human Services’ present Chief Information Officer Gary Sterrenberg, Mr Murphy will report directly to DHS Secretary Kathryn Campbell.

Both Human Services and government policymakers remain acutely aware of the risks and public sensitivity surrounding the WPIT project, not least because of the potential for payments to be affected if things go wrong or do not go to plan, potentially affecting millions.

Few issues illuminate talkback radio switchboards or burn on online forums as fiercely as customer frustrations with the wider welfare system.

But much less clear is whether the Turnbull government has come to a final decision on what role retail banks or other transaction services players may or will play in the development of the new infrastructure as payments processing becomes an increasingly commoditised business.

The Department of Health, prior to the replacement of former Prime Minister Tony Abbott, had previously called for expressions of interest from potential outsourced service providers for around $30 billion Medicare claims and transaction processing – an approach to the market that appears to have been parked for the time being.

It is understood that despite a strong push by the jettisoned Abbott government to pursue the outsourcing welfare payments processing to the private sector following the Commission of Audit, many major banks remained at best tepid on the idea as processing increasingly becomes a high volume, low margin business.

Australia’s retail banks have been cooperating to put downward pressure on payments and transactional costs for decades, chiefly through the initial creation of the eftpos payments platform to deal with electronic card payments and later the BPAY platform to handle larger electronic bill payments.

The pursuit of lower transaction costs for government payments has been a long-term goal, with the Howard government piggybacking on the eftpos system to process Medicare refunds rather than having customers line up at Medicare offices to get cash refunds – for which the per transaction manual processing cost was sometimes as high as $10 for a refund below $50.

There have been other big challenges too.

Apart from being stuck with change resistant hard-coded legacy systems, a major obstacle for upgrading claims and payments engines across Human Services has been the increasingly convoluted morass of individual payments, entitlement rules and cross checks that the ISIS system is now forced to deal with.

The complexity of the payments structure came in for special mention in the landmark McClure report into the welfare system, as well as the need for a ground-up overhaul to better serve customers.

Importantly, the report observed that the hairball of entitlement and benefit rules developed over decades must also be simplified alongside any system replacement.

“The new system will be the most fundamental structural reform of the income support system since its inception. Redeveloping the income support IT system in conjunction with income support payment reform is necessary for Centrelink to provide simpler, easier to manage claims and support services,” the McClure report said.

“In addition to the redevelopment of the IT system, the ability to capture and integrate real time data, particularly income data from the Australian Taxation Office, would significantly reduce reporting requirements for people receiving income support and reduce the likelihood of debts being incurred.”

The fallout now faced by Centrelink because of the complexity of benefit rules, especially reporting obligations, was put into sharp relief by a stinging Australian National Audit Office (ANAO) report that revealed more than a quarter of the calls made to the agency’s ‘13’ and ‘1800’ numbers never even made it through to the switch and got a busy signal instead.

The ANAO report found that from 56.8 million calls made to dedicated Centrelink numbers in 2013-2014, “13.7 million calls were unable to enter the network, that is, the calls were blocked and the callers heard the ‘busy’ signal.”

Since then the Opposition has routinely attacked both the Abbott and Turnbull governments on the plight of Human Services customers trying to resolve issues.

On Monday Labor’s Shadow Human Services Minister renewed hostilities, saying that service standards were still continuing to fall.

“The evidence is damning and overwhelming – Centrelink service standards are dropping,” said Senator Cameron.

“We know that dealing with Centrelink and DHS is becoming more, not less, difficult day to day. The dread of having to try to get them on the phone when you have a problem is palpable.”

Senator Cameron said the number of calls answered by Centrelink had dropped by 3 million in one year, while the percentage of calls answered dropped by 11.1 per cent.

“Centrelink is now only answering 64.3 per cent of calls from customers, down from 75.43 per cent in 2013-14.

“And even if they improve on calls answered, that doesn’t mean people’s problems are resolved … forcing people online isn’t working either – 37 per cent of people using the Medicare mobile app have experienced problems using it [and] 40 per cent of calls to Centrelink arise because of difficulty using the apps or website,” Senator Cameron said.

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