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NSW Budget insight: savings measures equal opportunities for ICT industry

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Suppliers of ICT goods and services to the NSW Government should regard the O’Farrell Government’s first budget as a set of opportunities, rather than a set of challenges, Managing Director Judy Hurditch told delegates at Intermedium’sNSW Budget Briefing on 29 September.

In contrast to many of the other Budgets brought down around the country this year, she said, this was a positive offering for the ICT industry.

As well as being crucial to the daily operation of the public sector, ICT has the potential to be a key enabler of the $8billion savings program that the O’Farrell Government has included in its first budget. 

These savings are required return the budget to surplus by 2012-13, following the $718m deficit the government has allowed in its first budget to fund election undertakings.   

The previous Labor Government sought to eliminate back office duplication through the creation of the Super Departments (now more commonly referred to as Clusters), and their corresponding shared services arrangements, and these are also elements of the new government’s agenda.

In addition, it is looking to make savings by eliminating 1000 jobs across Health, Transport and NSW Prisons.

“Technology innovation reduces the number of back-office functions that need to be performed manually and is one of the main reasons these jobs can be identified as no longer required,” Hurditch said.  “In an environment where savings must be found, NSW agencies will continue to be interested in solutions that can reduce their staff costs, and do so in the shortest timeframe possible.” 

The 2011-12 NSW Budget – which includes a strong ICT Capital component – also indicates that despite the 1.5 per cent Efficiency Dividend, the total amount of Operational Expenditure has risen compared to the previous budget. 

“CPI and other mandatory rises must be accommodated into Agency Operational Expenditure, even when the dividend is applied.  The Efficiency Dividend has the effect of dampening down the rise in Operational Expenditure, rather than reducing it to a level below the previous year,” Hurditch explained.

On the basis of the ‘Other Operating Expense’ component of the Operational Expenditure figures, Ms Hurditch told the audience that the overall position for NSW ICT Operational Expenditure appeared sound.

The Budget Briefing, attended by more than 50 delegates from the ICT industry and the public sector, analysed the ICT implications of the change of government in March 2011.

While the budget contained significant savings measures, it also saw the government commit to a generous $62.6 billion investment into the state’s infrastructure (including ICT infrastructure) over the next four years.

Transport and Health were the major beneficiaries of the infrastructure allocation.  Transport received a $23.7 billion infrastructure allocation over 4 years, while Health saw its capital works budget for the next 4 years increase to $4.7 billion.

Hurditch outlined the key areas of planned ICT capital investment for the State saying there were 67 new ICT initiatives with a value of $660 million published in the 2011-12 budget, to complement the 95 existing ICT initiatives.

Guest speaker Scott Farlow, Associate Director at Hill and Knowlton, also spoke optimistically about the changes and ICT-related announcements made in the budget.

“We are not looking at a government which is building up a war chest. We are looking at a government that is trying to run a balanced budget,” he said.  

The budget’s $8 billion savings program includes a $1 billion cut in agency procurement costs.  One of the ways this will be achieved by channelling at least 60 per cent of all government procurement through whole-of-government contracts, said Farlow.

“Agencies will be expected to utilise whole-of-government contracts unless local suppliers can offer them cheaper prices,” he said.

Another key aspect of the Budget’s $8 billion savings program is a voluntary redundancy scheme set to reduce back-office administration staff by 5,000 positions over the next four years, creating an expected $2 billion in employee savings.

However, this was balanced by the creation of 4,000 frontline jobs (teachers, nurses and police) over the next four years.  With significant ICT support involved in the delivery of many public sector functions, each newly created frontline position is expected to have a significant attendant ICT requirement.

“Every single public servant these days has ICT support,” said Hurditch. “Police cars a fitted out with technology, there are electronic whiteboards, laptops and data projectors for teachers, and tablets for nurses.  This is a very different situation from 5 and 10 years ago, such frontline staff had no such support.”

More detail on the specific ICT allocations in this budget is available in Intermedium’s budget IT NSW.


Related Articles:

NSW Budget 2011: Is ICT safe from an $8 billion savings drive?

NSW Health launches $49m phase of ICT Strategy

NSW Health Minister lays out $170 million for e-Health

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  • NSW
  • Treasury
  • Budget IT
  • efficiency dividend
  • Judy Hurditch
  • NSW Budget
  • Scott Farlow
  • Shared Services