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Final Costello report pushes for shared service reforms

by Paris Cowan and Pallavi Singhal •
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In the final report of his Commission of Audit, submitted to Cabinet yesterday, Peter Costello has advised the Queensland Government that it should be a purchaser of corporate services, not an owner and manager of them.

While the exact details of the 155 recommendations made by the Commission have not yet been made public, a 28 page executive summary sends strong signals that the privatisation or even dissolution of government-run corporate services units CITEC and Queensland Shared Services (QSS) is part of the answer to the State’s mounting debt problems.

“Many internal services such as corporate services and ICT are provided to captive clients by government-mandated monopolies (for example, CITEC and Queensland Shared Services). Ostensibly, they operate on a commercial basis, but in reality they are shielded from any competitive pressures to drive the efficiency of their operations.

“There is a contestable market for the delivery of corporate services, ICT and other back-office administrative support functions which should be utilised more extensively to minimise these costs.

“The Government should be a purchaser of such services. It should not be an owner and manager of the significant assets and systems required to deliver these services,” says the excerpt, released online on 1 March.

It is a move that Costello originally foreshadowed in his June interim findings, and it is understood that a reform of Queensland shared services provision has been effectively on hold in the State as it awaits the final verdict of the Commission.

The Government has made no secret of its intention to make radical changes to the way that shared services are delivered at present.

Under Peter Grant’s proposed strategy for remodelling the system, a Service Executive would be formed to analyse ICT procurement for Government agencies and recommend whether services should be sourced through bodies such as CITEC or outsourced to the private sector.

An overhaul of shared corporate services is currently underway, with the Department of Science, Information Technology, Innovation and the Arts' (DSITIA) former Minister Ros Bates announcing plans to outsource the Department’s payroll functions in September last year. A wider revision of shared mail, IT, payroll and human resources services on a whole-of-government level has also been announced.

Shared services have long been a contentious issue in the State, and similar plans to overhaul corporate services have been largely unsuccessful in the past. Following the Queensland Health payroll debacle corporate services for the Health and Education Departments were removed from the shared services arrangement with CorpTech and returned to their respective agencies. CorpTech has since been merged with the Shared Service Agency to form QSS.

QSS currently provides and manages shared corporate services including payroll and human resources functions for most of the State’s public sector, and has been heavily criticised alongside CITEC for underperforming and operating under sustained deficits. CITEC is Queensland’s lead agency for whole-of-government ICT shared services including data centre consolidation, infrastructure and network services.

CITEC’s $47.3 million Identity, Directory and Email Services (IDES) program is also mentioned in the Costello report. IDES was scrapped last year after poor implementation and dismal user levels, with the Government continuing to shift away from in-house ICT service provision and announcing its intentions to explore the potential for a cloud-based solution.

The report recommends a total reduction of $25-30 billion in State debt and states that efficiency measures alone would not be sufficient to achieve this debt reduction.

“This reduction in debt cannot be done by adjustments to the State operating statement. To illustrate, if the Government were to achieve a consistent fiscal surplus of 1% of revenue year after year, it would take 50 years to reduce debt by $25 billion”.

“If it is to substantially reduce debt, it will have to review its assets.”


Related Articles:

Costello Report considers privatisation of CITEC, Queensland Shared Services

Queensland's new IT Minister to have strategy done by June

Queensland IT Department to outsource its payroll

For more information, please contact the Editor (02) 9955 9896.

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