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Cabinet reshuffle and DTA move signal likely high ICT spending in 2021-22 Federal Budget

by Jeremy Blowes •
Free resource

The recent Federal Government ministerial and Machinery of Government (MoG) changes suggest that the government intends to stick to its formula that ‘ICT enabled government equals increased business productivity equals job creation’, pointing towards a continuation of last year’s record high ICT spending in the 2021-22 Budget. 

In a pre-budget speech on 29 April, Federal Treasurer Josh Frydenberg reinforced the fiscal plan put forward in the last budget. He said that the 2020-21 and 2021-22 budgets would be high spending (despite high incurred deficits and debt) to stabilise the economy, with a return to typical spending levels from 2022-23 and “budget repair” commencing once national unemployment was brought down to the levels recommended by Treasury (currently between 4.5 and 5 per cent). 

He also said that digital technology will be one of the areas of reform and investment in the next budget intended to boost the national economy through increased productivity – the others being skills, infrastructure, tax, energy and deregulation. 

His statement is consistent with the 2020-21 Budget’s record-high value of newly introduced ICT initiatives, which included a strong focus on making it easier to begin or run a business.  

It also helps explain why, after the Federal Cabinet reshuffle in March, the Minister responsible for Whole-of-Government (WofG) ICT is also responsible for bringing down the unemployment rate. 

The reshuffle placed new ministers at the head of three agencies that are among the biggest spenders on ICT and saw the return of the Digital Transformation Agency (DTA) to the Department of the Prime Minister and Cabinet (PM&C). The reshuffle has meant new responsibilities for some of the biggest names in federal politics (Peter Dutton) and those most involved in shaping WofG ICT policy making (Stuart Robert).  

Robert was responsible for the DTA, and therefore WofG ICT, in his position as Minister for Social Services and was highly influential in that role. When he was moved to the Employment portfolio it was initially assumed that his DTA responsibilities would be vested in the new Minister for Social Services, Linda Reynolds.  

However, administrative arrangements now reveal that both the DTA and the WofG ICT procurement function have been moved to the Department of Prime Minister and Cabinet (PM&C) with an addendum that hands Robert continued responsibility for the DTA despite his new Employment Minister role.  

Robert also remains chair of the Service Delivery and Coordination Committee.  

The fact that the DTA has been retained by Robert should be viewed in the context of his personal investment in the success of his digital transformation initiatives and means that the less tech-savvy Linda Reynolds does not have to go up a steep learning curve at a time of critical emphasis on digital enablement of the economy.  

On 28 April 2021 Robert announced in a speech to the Australian Financial Review Government Summit that the DTA has a revised mandate for WofG ICT governance, strategy and policy that would allow for a renewed focus on centralised ICT architecture and ICT-as-infrastructure.   

Intermedium believes this focus will have a profound impact on the nature of ICT procurement over coming years, accelerating the move to the cloud, and rationalising agency-based legacy systems and their requirements for software and hardware maintenance. 

He also announced the creation of pilot “cyber hub” services to allow more digitally mature agencies such as Defence, Home Affairs and Services Australia to provide cyber security expertise and assistance to smaller and less well-resourced agencies. 

Being returned to PM&C should strengthen the DTA’s mandate simply due to PM&C’s central policy clout.  The DTA has previously been described (in reviews of the Australian Public Sector, for example) as lacking the authority it needed to implement top-down reforms at the WofG level.  

As an Executive Agency within PM&C, the DTA also potentially gains more access to the Prime Minister, who has been strongly and consistently supportive of the move towards increased spending on pro-business ICT systems – particularly ‘RegTech’ initiatives such as those seen in the 2020-21 Budget.  The Prime Minister is on record as stating that he wishes to see a fully digital economy by 2030. 

Other jurisdictions, including South Australia and Victoria, have also incubated their WofG chief information and digital function in PM&C’s state-level equivalents – the various Departments of Premier and Cabinet.  

In contrast, NSW’s highly effective and successful WofG function sits within the Department of Customer Service, which is the model upon which Services Australia was established, and the reason the DTA was previously moved to Services Australia.  

The fact that the employment minister is now overseeing the DTA is less counter-intuitive than it might seem due to the government’s push over the past two years (and especially in the last budget) towards refocusing government ICT spending on measures intended to increase domestic employment.   

$796.5 million was allocated to the Digital Business Plan in the 2020-21 Budget, part of the government’s centrepiece JobMaker initiative.  

As part of the Plan, government systems and procedures will be transformed to make it easier to start or run a business, while also increasing the government’s ability to monitor the economy, protect government revenue, and keep an eye on foreign investments for sovereignty risks.  

The administrative orders also shift responsibility for small business policy and programs from the Industry to the Treasury portfolio, another indicator that the government intends to continue its spending focus on job creation through reducing the government procedural burden on businesses.  

Stuart Robert will be heavily involved in decision-making surrounding this funding as he has also been appointed to the powerful Expenditure Review Committee, responsible for shaping budget spending. 

Jurisdiction
  • Federal
Category
  • IT Services
  • Software
Sector
  • Finance & Services
  • PM / Premier & Cabinet
  • Treasury