Welfare and Tax primed by Hockey for core systems overhauls


Federal Treasurer Joe Hockey has strongly hinted that the federal government’s two biggest transactional computing systems – at the Australian Taxation Office and Centrelink – are set to be replaced as part of an urgent technology infrastructure renewal program worth “billions” that could be set down in the Budget in just a fortnight.

The likelihood of the big ticket replacements are understood to have been triggered by the ageing IBM-based mainframe systems effectively approaching the end of their useful life with the availability of skilled labour to maintain the so-called ‘big iron’ systems now dwindling to critical levels as experienced systems and software engineers and programmers retire from the workforce.

Centrelink is understood to be the front runner for an initial core system replacement for its 30 year old Model-204 transactional database that is the backbone of most welfare payments that hit recipients bank accounts, with the replacement cost ballparked at around $1 billion.

Mr Hockey has already hit the airwaves to front-run the need for the big ticket replacements to grass roots welfare recipients, telling Melbourne talkback radio personality Neil Mitchell last week that the systems had been run into the ground under labour.

“It is very expensive, Mr Hockey said of the need for a replacement for Model-204.

“The mainframe for Centrelink, which provides services to millions of Australians is aging, it is in bad shape, only Centrelink and the Pentagon in the United States are the only two customers in the world of this one company that maintains the Centrelink mainframe, which is extraordinary.

“But it is an indication that the infrastructure has been run down. The waiting time for a Centrelink phone call at the moment is 17.5 mins”

Asked directly how much systems fixes at Centrelink and the ATO would cost Mr Hockey said it would be “billions.”

“We have got no choice. The question is how we do it and how we try and ensure we have better service delivery into the future,” Mr Hockey said of the need for replacement.

The replacement of Centrelink’s core system has been a long sought after target by big name software and hardware vendors including SAP, Oracle and IBM that are all now having their traditional revenue streams challenged by the surge in cloud computing and virtualisation.

Sources have indicated to Government News SAP is regarded as a front-runner for the Centrelink replacement, in part because of the successful core systems overhaul at the Commonwealth Bank of Australia.

The CBA’s success with SAP contrasts strongly with the state wide misery caused by the botched deployment of the Queensland Health payroll system that had been undertaken by IBM.

Costing taxpayers more than $1 billion, Queensland’s debacle not only resulted in legal conflict IBM but the company being banned from doing further business in the state by Premier Campbell Newman.

Understandably, replacement of the core system for welfare that has functioned for three decades with minimal disruption is also regarded as a high risk and complex undertaking for any government because problems in payments would directly hit millions pensioners and payments in the pocket.

The ATO itself only recently completed a major overhaul of its main taxation software under the massive “Change Program” that took close to a decade because of the systemic complexity.

Following the release of the Henry Review into taxation, ATO officials conceded that in the event of major tax reforms the Change Program’s work could potentially be out of date before it was completed.

In the meantime, the Department of Finance is actively investigating ways to bring down Enterprise Resource Planning software costs across government, with work from that probe also anticipated to flow into the 2014 Federal Budget.

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8 thoughts on “Welfare and Tax primed by Hockey for core systems overhauls

  1. Could it be, Joe, that the waiting time for calls to be answered is because of staff shortages, not the computer’s fault? If the system is 30 years old, how is it that only Labour let it run down?
    more facts, less bull equals more creditability.

  2. Hey has anybody told Joe about MYKI? He could get a copy off Dennis Napthine , it sounds the ideal software and i’m sure the vicrail Security people could come as part of the deal to help with administration.

  3. What a good excuse not to pay Centrelink receptions and over charge companies their tax via the ATO when the new systems runs into flaws problems etc, it’s going to be a nightmare.
    These politicians are a disgrace to this country.

  4. privatise ato and politicians and give welfare recipient 3d printers to print money and goods at home which could be controlled by private eye to avoid oversuply.

  5. It is absolutely amazing that the previous Labor government deemed it a priority to have super fast broadband (NBN) and NDIS schemes ahead of an urgent upgrade of the mainframe at Centrelink. No doubt the NDIS will be managed by the Centrelink system so more demand on a system nearing it’s use by date. No doubt the NBN and NDIS had voter appeal !

  6. A heads up Mr Hockey, Centrelink has been employing contractors for the last year to create CustomerFirst using SAP. Any downtime over the last year has not been due to any ageing legacy/backend system, i.e. M204, IBM mainframe. The core problem suffered is a deceitful CIO that has lied to parliament and ministers in regard to the performance of the system he has implemented, i.e SAP.
    The business case money was used to hide the cost already accrued with SAP.
    M204 is as old as Windows is, but as with each other they provide a new version every few years.
    M024 provides a front end interface for all modern approaches, whether it be standard internet or mobile.
    If you want to spend money go ahead. If you want to keep one of the fastest databases, M204, and work on the front end interfaces even better, you will maintain extreme speed, low costs and incredible support.

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