The Queensland Government will abolish its centrally mandated shared services scheme, following its acceptance of the majority of the recommendations made by Peter Costello’s Commission of Audit, released yesterday.
“The adoption of the shared services model in Queensland has been of questionable value for money,” the report says. “The deadlines for full implementation of services and realisation of cost savings have been regularly extended, and have not yet been achieved, some 10 years after the original milestones”.
Corporate services in the State are currently delivered to most agencies by Queensland Shared Services (QSS), with CITEC fulfilling additional ICT infrastructure needs such as data centres. Since 2011, Queensland Health and the Queensland Department of Education, Training and Employment (DETE) have operated internal shared services units and a handful of small government provider agencies exist to service arts bodies and statutory authorities.
The use of shared services was originally intended to net the Queensland Government $100 million a year in savings. However a 2007 review of the scheme found that the arrangements were delivering well under half of this, or $39 million in 2006-07.
While actual expenditure by shared services providers has in fact been trending downwards since 2007-08, it remains well above the levels originally anticipated by Queensland policy-makers.
The State’s budget bottom-line would be better off if the private sector was allowed to compete for this market, the report argues.
“Many internal services such as corporate services and ICT are provided to captive clients by government-mandated monopolies,” it says. “Ostensibly they operate on a commercial basis, but in reality they are shielded from any competitive pressures to drive the efficiency of their operations.”
“As a result, taxpayers are funding unnecessarily high costs for government to transact business with itself,” it adds.
However, Costello’s recommendations stop short of calling for QSS and the other general shared services operators to be shut down altogether – although it has recommended the full divestment of CITEC within two years.
“If public providers...are efficient, they should be able to compete effectively to provide services to their public sector clients,” the report claims.
The nature of the recommendations leaves the door open for the implementation of Queensland Government CIO Peter Grant’s ‘Service Executive’ model as an alternative to the current rigid set-up. Under Grant’s proposal, first outlined at the Canberra Technology in Government Summit in August last year, the Service Executive would act as a selector and broker of corporate services solutions, deciding on the best value-for-money options offered by either the market or public sector providers like QSS.
Queensland’s next steps will be of interest to neighbour States who are also unhappy with their underperforming shared services set-ups. In NSW, Finance and Services Minister Greg Pearce has made his dissatisfaction clear and its six-cluster arrangement has been under review for a number of months.
In Victoria, the troubles facing ICT specialist provider CenITex don’t appear to be waning, and some sort of reform is almost certainly on the agenda.
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