Mid-year update spares thin government ICT budgets

By GovTechReview Staff
Tuesday, 23 October, 2012

Government technology executives can breathe a sigh of relief after the Gillard government’s Mid Year Economic and Fiscal Outlook (MYEFO) report, handed down today by treasurer Wayne Swan, largely spared government IT operations from having to tighten their belts any further.

Noting a “weaker global economy that has weighed heavily on tax receipts”, the MYEFO noted a $1.3b reduction in the balance but introduced $16.4 billion in “targeted and responsible” savings to keep the economy is on track to deliver the surplus promised in the recent Budget.

Areas of primary focus include the operation and integrity of the taxation and superannuation systems, reforms to private health insurance, and reforms to better target training funding. Specific policy changes include a shift towards monthly PAYG for businesses, funding of increased targeted enforcement by the ATO, increases to a range of visa application charges, and more.

Funding cuts for government bodies generally revolve around the suspension or prolonging of government support programs, with a $157m reduction in grant programs across numerous portfolios; slowing the rate of funding increases for Sustainable Research Excellence programs; and a reduction in funding for schools among the examples.

Some changes – for example, the $390m in funding to the ATO to pursue outstanding income tax lodgements – may even see a boost in ICT-related spending, since modern analytics capabilities are an integral element of such enforcement efforts.

The MYEFO could well have introduced painful budget cuts and deferral of technology spend programs but the government’s focus on broader policy programs made it a “steady as she goes” MYEFO, Kevin Noonan, public sector research director said in a statement.

“Last year, the government’s MYEFO statement was essentially a mini-budget, announcing substantial cuts to public sector running budgets and capital expenditure,” Noonan said. “With these cuts till washing through government agencies, further cuts would have created significant problems.” “This is particularly the case, given the announced further tightening of government in funding, in September….mainly related to contractors, travel and printing. With many government agencies now running on the smell of an oil rag, future savings will need to come through productivity and innovation, rather than old-fashioned cross board cost-cutting.” The 2012-13 MYEFO is available here.