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Gershon style review for NSW?

by Staff Writers •
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With NSW public sector expenses forecast to be five per cent higher in 2009-10 than in 2008-09 (2009-10 NSW Budget ), the Government  is establishing a Better Services and Value Taskforce and launching a five point Better Services and Value Plan to ensure sustainable expenditure growth over the next four years.

One of the items announced is a review of whole-of-government expenditure, with ICT receiving a special mention.

It is widely recognised that all state governments closely monitored the Gershon Review.  Some of the wording in the NSW Budget suggest the NSW Government may be considering a similar (though likely much more modest) review of its ICT.  The approach taken to the review will be similar to Gershon, according to sources.  No detail on who will be appointed to conduct the review, or its commencement date has yet been announced.

Shortly after its election, the Rudd Government announced the most comprehensive review of IT management and use in the Federal Government in more than a decade.  However, the primary aim of the Gershon Review was not cost reduction.  While Gershon recommended significant cuts to ICT business as usual (BAU) spending, he also recommended 50% of these savings be reinvested in strategic investment projects, rather than returned to consolidated revenue.  The Federal Government accepted this recommendation and is in the process of considering ICT investment options for the coming financial year.

Given its context within a review of whole-of-government expenditure, the ICT review is expected to be driven by NSW Treasury, rather than the Government Chief Information Office (GCIO).  Under the super department restructure, the GCIO remains with the old Department of Commerce and therefore is now part of the new Department of Services, Technology and Administration.  It is not clear what if any role the GCIO may have in the proposed review.

One of the key questions about the scope of the proposed review in NSW will be whether the identified savings are withheld from agencies and whether any amount will be placed into a reinvestment pool, as with Gershon.  If this was to occur, it would be a radical departure from the way in which savings have been identified and utilised in NSW in the past.

Within the description of the Better Services and Value Plan, there is mention of improved service delivery, but the key driver seems to be making government services more efficient (read reducing costs).

This is a comprehensive and coordinated strategy to drive productivity and value-for-money by finding significant, ongoing cost savings to the budget.  These initiatives will contain expenses, cut waste and duplication, and streamline government agencies (Budget Paper 2, 4-5)

The first review conducted by the Taskforce will be of ICT funding and expenditure across all agencies.  Completed within three months (so nowhere near as comprehensive as Gershon), the aim of the review is to identify savings and establish binding targets for improving the efficiency and effectiveness of ICT expenditure.

The Government’s intention seems to be to reduce spending on ICT.  The Budget paper states that any savings identified in this review will be in addition to savings initiatives planned as part of the People First Strategy administered by the GCIO.

However, the statement indicates there will be some latitude where it is evident agencies are utilising ICT services to “improve frontline service delivery in response to the recommendations of recent Government inquiries”.  This statement is very much in line with how agencies have been able to utlise savings in the past.

Unlike Gershon, there is no mention that the Better Services and Taskforce will be consulting with industry.  The outline of the review team’s activities (Budget Paper 2, 4-6) suggests it will rely on internal reviews of agency expenditure, desk-top comparisons against “appropriate” benchmarks, and establishment of future cost-saving benchmarks.

The review team will then report to the Cabinet Standing Committee on Expenditure Review and the Budget Committee of Cabinet, and work with agencies to “establish reform options to achieve identified cost savings”.

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