What will Treasurer Wayne Swan's record $58 billion budget deficit mean for the local IT industry?
All eyes will be on Treasurer Wayne Swan tonight as he delivers the 2009/10 Federal Budget.
In a blog post yesterday afternoon, Swan prepared the nation for a budget that won't be popular, saying he "won't shirk the tough decisions."
"Some of those decisions will be met with disappointment," he warns.
What will Swan's penny-pinching budget mean for Australia's ICT industry? This morning iTnews has spoken to several Government insiders and industry commentators to come up with five technology areas we should expect Swan to dive into.
IT BUDGET CUTS
Perhaps the most important feature of this year's budget will be determining the Government spending implications of Dr Peter Gershon's review of ICT spendingin Australian Government, handed down late last year. Among these recommendations is a 15 per cent reduction in IT spend over two years for agencies that outlay over $20 million on ICT a year and a seven per cent reduction in IT spend over two years for those agencies with annual ICT outlays of between $2 million and $20 million.
The Federal Government has chosen to implement the recommendations of Gershon in full.
According to the report, the first and second phases of this cost cutting exercise (deciding on methodology and metrics and an initial review of agency spending) should now be complete.
This means that the Government by now should have identified the areas in which it expects savings. Tonight's budget may provide some detail as to where the Government has realised these savings, and where further savings are still being sought.
DATA CENTRE CONSOLIDATION
Dr Gershon's report also found that Federal Government agencies are running out of data centre floor space, and that over half of the data centres used by Government agencies are performing well below industry standards in terms of uptime.
"With few exceptions Canberra's existing data centre facilities are ageing and experience difficulty meeting the requirements of current technology and availability demands," the report read.
Among Dr Gershon's recommendations is the "potential consolidation of the physical data centre infrastructure" among agencies -- more specifically "the buildings, heating, ventilation, air-conditioning and power supply arrangements."
Dr Gershon's report asked that no new data centres be built or refurbished until a whole-of-Government approach is agreed on. It recommended that the whole-of-Government data centre strategy be agreed upon by September 2009.
This leaves precious little time for scoping studies or ROI assessments to be completed - either by AGIMO (Australian Government Information Management Office) or contracted third parties - the details of which may be made available in the budget papers.
HUMAN SERVICES AND ATO
Unemployment may have fallen by 0.3 per cent in April, but even the Government believes the worst is ahead of us.
"Unfortunately, we still anticipate the labour market will soften over the next 12 months, and the Budget forecasts will reflect that," Swan said in his pre-Budget note.
Should unemployment rise to US levels (currently 8.9 per cent, as opposed to Australia's 5.4 per cent), the IT shops at The Department of Human Services - and Centrelink in particular - are likely to feel the strain of more Australians seeking welfare payments and benefits.
Put simply, Human Services will require more funding.
There is a small likelihood such funding will come from the savings identified under the Gershon review. The $540 million of expected savings from these cost reduction strategies are expected to be spent on whole-of-Government initiatives.
Sources close to the Government predict that 'online service delivery' projects may be announced; projects that might, for example, enable welfare payment seekers to use self-service technologies to cut down on Centrelink's administrative costs.
The Government has also flagged the potential for a new paid maternity leave scheme, which would again have an impact on systems within Human Services and the Australian Tax Office.
Further changes have been flagged with regards to means testing health insurance rebates and changes to superannuation - both of which are likely to impact ATO systems and potentially, delay and drive up the cost of ATO's Change Program even further.
GREEN ISSUES AND SMART INFRASTRUCTURE
Industry pundits expect a raft of announcements around 'innovation' and 'green' packages to coincide with last month's announcement of a Government-led National Broadband Network (NBN) rollout.
Communications Minister Stephen Conroy will be spending the morning of the budget presenting a speech to the CeBIT conference that again trumps the development of smart infrastructure (smart grids and power meters, for example) as a key application for the NBN.
Government insiders have told telecommunications analyst Paul Budde to "watch the budget closely" for evidence of recommendations the members of his Digital Economy Industry Workgroup made to the Government around smart infrastructure.
DEFENCE AND NATIONAL SECURITY
Contractors to Defence and border security agencies are likely to be beneficiaries from Swan's budget. It will be very interesting to see if recommendations made in the recent Defence White Paper end up in the Budget papers.
Defence Minister Joel Fitzgibbon has already responded to many of the recommendations in the white paper in principle. Among those with ICT implications, he highlighted that Defence is looking to remediate the "ageing Department's Information and Communication Technology (ICT) infrastructure;" consolidate Defence's intelligence systems and "standardise and consolidate shared services" in several areas, including business information systems.
Fitzgibbon also said the Government is looking to improve Defence's computer systems to "deliver a more integrated payroll and personnel management capability". The white paper also described Defence's electronic warfare capability as "inadequate", recommending the build of a dedicated Cyber Security Operations Centre.
The budget may provide some forward estimations into the cost of acting on these measures.
Nick Ellsmore, ex-CEO of security contractor SIFT and now CTO of stratsec, believes the budget will at minimum lead to a clarification of roles in addressing cyber- and e-security issues.
"We're expecting some of the Government's strategy in terms of how IT security will be structured to be outlined in the budget," Ellsmore said. "If you look at how security is delivered or handled by the Government, the responsibility is spread across the Attorney-General's department, DBCDE, ACMA, AGIMO and DSD, as well as having groups like AusCERT which receive Government funding and have a role to play as well.
"I expect that coming out of the budget this will change. I certainly don't think we'll necessarily see a super centre established that is responsible for the whole thing - I don't think it will get to that point, but I see some scope for the clarification of responsibility if nothing else."
Defence is likely to share the budget spoils with those agencies involved in border protection.
With an increasing number of political refugees and other asylum seekers taking dangerous measures to reach Australian soil, the Government will also be under pressure to "be seen to be doing something" in relation to Border Protection.
Government insiders expect good news for those supplying systems to the Department of Immigration or the Australian Customs Service.
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By Brett Winterford on May 12, 2009 5:55 AM
Filed under Finance
