Committee views and recommendations
Shortly before this report was tabled, the Minister Assisting the Prime
Minister for Digital Transformation announced the government's ambition that '[b]y
2025, Australia would be one of the top three digital governments in the
It would be tremendous if Australia were able to achieve this.
Throughout this inquiry, however, it has become clear to the committee that
digital transformation is a policy area beset by soaring rhetoric and vague
aspirations by government, largely unconnected to the actual policy activities
This is a shame. Digital transformation represents one of the best opportunities
to deliver more to those who pay for government, those who work for government,
and those who government works for.
The promise of digital
When considering what digital transformation means, it is tempting to
draw parallels with businesses that Australians interact with in their everyday
lives—businesses like streaming services, banks, or utilities.
Government does face many of the same challenges as business in
undertaking digital transformation, particularly large, service-oriented
businesses. The unique mission of government, however, means that digital
transformation takes on special significance and takes place under different
Government interacts with more people in more ways than any single
business. The services provided by government are often relied on by people in
vulnerable situations. As was seen during "Robo-debt", mistakes made by
government in how it delivers services can have devastating effects on
individuals and their families.
Government is also much more than a mere service delivery vehicle for 'citizen-consumers'.
It has policy and constitutional functions that have broad, society wide
The promise of digital transformation is not just that existing
information and services can be delivered through websites or apps. As observed
by Mr Paul Waller in his submission to this committee, '[b]efore the internet
we wouldn't have set out to transform public administration by redesigning the
forms and guidance leaflets'.
The promise of digital transformation is that technology will open up
new policy possibilities and allow government to make a real impact in people’s
lives more effectively, efficiently, and frictionlessly.
This requires more than just investment in technology. As the AIIA
The efficiency of moving a service online is only realised
when the business process that supports the service is re-engineered...this has
still not been addressed by a range of government agencies that deliver
outward-facing services to customers - while the technology is new, the
underlying processes remain antiquated.
It also applies to government activities beyond transactions. Mr Waller's
submission provides a very helpful taxonomy of government functions.
Table 1.1: Taxonomy of
At its best, digital transformation would involve considering the value
technology can bring to each of these domains.
Government is capable of achieving this, it does a disservice to the
public if it cedes the field of digital innovation, although the role government
plays places some constraints on how this can occur.
People expect stability and predictability from government. It cannot
meet those expectations by operating like a start-up. However, the Australian
Public Service has remained relevant for over a century through innovation and
responsiveness to the changing demands of government and the public. There is
no reason for it to stop.
Finding the balance between these competing demands in order to realise
the promise of digital transformation requires concerted leadership at a
ministerial and public service level. This leadership has been lacking.
Failure of leadership
Transformation of any kind is challenging. It requires internal
champions to overcome organisational inertia.
The committee recognises that there are many senior public servants
across the service who have sought to drive digital transformation within their
departments. They have been let down in their efforts by the lack of a champion
within government as a whole.
Commenting elsewhere, former DTO CEO Mr Paul Shetler observed the
extremely difficult to get an incredibly bureaucratised, incredibly balkanised
bureaucracy to decide it wants to transform itself. That's an awful lot of inertia
in the systems built in...It's obviously possible to do that but you need to have
strong support along the way from the ministers and the top.
think that there has to be the ambition to [digitally transform government] and
extremely importantly I think there has to be the political will to do so.
The committee considers that the government has not demonstrated that it
has the political will to drive digital transformation. This much is evidenced
by the role it has given the DTA.
At the time, the reorganisation of the DTO into the DTA was presented as
representing an expansion of the agency's powers. In reality, although the
agency's scope of operations did increase (for instance through the acquisition
of responsibility for procurement), it was less empowered to take action.
Now, two years later, the DTA performs a useful role in providing governance
standards and guidance. Its contribution is muted because its role is confined
to the level of assistance with discrete projects at the operational level.
Even there, its involvement is limited. At the time of its creation, it
was intended to operate as a 'powerful new program management office' that
would track ICT and digital projects across the whole of government, stepping
in to remediate where things are not working.
In reality, it had only a minor role in the case studies examined by
The DTA is supposed to maintain a watchlist of at risk projects. However
the Biometric Identification Services that was suspended this month was not on
the list despite being a large project which was already significantly overtime
and over budget.
The DTA has been sidelined in the new digital initiatives undertaken by
the government. The committee heard that:
- Cyber policy will reside at the Department of Home Affairs.
- Data policy will reside at the Department of the Prime Minister
- The newly created Office of the Information Commissioner is
organisationally separate from the DTA. No one in the DTA monitors whether the
reported notifications by that office relates to Australian Public Service
entities—agency performance in relation to security is not in its brief.
- The soon to be created Data Commissioner will be organisationally
separate from the DTA.
Cumulatively, the evidence heard by this committee revealed an
organisation that was not at the centre of government thinking about digital
transformation, or responsible for the creation and enactment of a broader
vision of what that transformation would look like.
Troublingly, no other organisation is.
There is a clear need for a whole-of-government vision and strategic
plan for the digital transformation of government administration. The evidence
is of departments and agencies in silos looking internally and focussing on
their own approach to the digital delivery of their particular government
service, where in many respects all are facing the same challenges.
In the absence of any central vision, individual departments (and
ministers) may end up pursuing projects that run counter to the aims of digital
transformation. In particular, there may be a temptation to view ICT investment
solely as a way to realise efficiencies and cut costs, rather than as a
mechanism for transforming government service.
The committee believes that it is a mistake to take such a narrow view.
The consequences of adopting this approach can be seen in the
"Robo-debt" case study. The committee found it galling that DHS
officers could claim that despite the hardships it caused, the program went
'very well' because it saved the government money. For the department the
impact of the program on vulnerable people seemed to be an irrelevant in its
design; irrelevant in its evaluation.
The committee was told by Dr Seebeck of the DTA that:
of the key elements of digital transformation as it was envisaged—and you can
track this through the DTO to the DTA—is that focus on user centredness, which
is traditionally not the way government has tended to operate. Making sure that
the user is absolutely dead centre in terms of any work of any government
department, of any proposal that comes forward, is part of that process.
It is difficult, if not impossible, to reconcile a program like "Robo-debt"
with the principles of user-centredness that the DTA is supposedly responsible
for engendering throughout government.
This inconsistency is a direct product of the absence of a central
vision for digital transformation. A cohesive and shared view, driven by a
properly resourced and empowered department or agency, would serve to guide
policy development and decision making by the bureaucracy and ministers alike.
All departments and agencies would derive significant benefit from a
whole-of-government strategic plan to achieve the digital transformation of
government. Ultimate responsibility for this plan should rest with a central
agency that is properly invested with powers and responsibility.
With the increasing demands for government to improve the digital
delivery of services and functions, the committee recommends that the
government undertake a review of the digital, cyber and data policy functions
performed across government—and then establish key digital performance measures
shared and reported across departments and agencies.
The committee recommends that the success of government digital
transformation should prioritise measurement of user experience—as this is
likely to also drive process improvements beyond simply the application of
The committee recommends that the government deliver an annual
Ministerial Statement on Digital Transformation that reports on cross-portfolio
progress to improve digital transformation, identifying leading performance in
departments and agencies and also publicly explaining steps to lift performance
on projects failing to meet budget or delivery expectations.
The reality of 'digital transformation' so far
True digital transformation is a higher aspiration. The government to
date has been unable to meet even the lower objective of being able to replace
aging infrastructure without major mishap.
Digital projects—rightly or not—have a reputation in the public and
private sectors alike for running overtime and over-budget. Over the past five
years, however, the government has overseen a litany of failures, largely
unprecedented in scale and degree.
In November 2013, the newly elected Coalition Government initiated an
audit of government ICT spending. Although there was some room for improvement,
the review was largely positive about the value for money achieved for
taxpayers and the nature of risk taken on by departments.
The same could not be said today. Since the last election we have seen:
- The failure of the online delivery of the 2016 Census;
- Repeated crashes of the ATO website;
- Overrun and delay in the upgrades to the Child Support Agency
- Abandoning the GOV.AU redesign proposal;
- Halting the start of online NAPLAN testing; and
- Abandoning the AAMS apprenticeship platform.
Shortly before this report was tabled, the already overtime and budget
Biometric Identification Services project was suspended by the Australian
Criminal Intelligence Commission, with contractors escorted off the premises.
Each individual instance of failure, delay, and cost overrun can be
explained by specific factors at the project level. However issues have arisen
at every stage of the project lifecycle, in large and small undertakings, and
across departments and agencies. The pattern of faults points to broader
There seems to be serious deficiencies in the way that departments
contract with the private sector. Although some ICT projects are delivered on
time and on budget, too often government agencies appear to have assumed a risk
that is inconsistent with both the contract price and community expectations.
There are some examples of improvement. In its contractual arrangements
for the WPIT project, for instance, DHS seems more willing to put its partners
on risk for failure to deliver than it had been with previous projects in years
This is heartening. It is not sufficient or satisfactory, however, to
have a learning curve that is half a decade long and billions in taxpayer
dollars deep. Nor should each department have to go on its own voyage of
An independent audit of completed and ongoing major ICT projects would
allow lessons to be drawn from the contracting (and subcontracting)
arrangements entered into by departments. It would be able to identify common
sources of problems, and compare the allocation and pricing of risk across
projects and with best practice.
1.48 The Committee recommends that the government establish a regular timetable to independently audit ICT contracting and subcontracting arrangements to identify whether government is taking on a level of risk that is consistent with the contract price and community expectations - and to help identify or improve contracting standards or set better principles based approaches to future contracting.
The cost of consultants and contractors
It has been difficult for this committee to assess the cost of ICT
consultants to the government, both in relation to major projects and for
business as usual (BAU) spending.
Over a number of budget estimates, members of this committee have asked
for information about the whole-of-government spend on consultants. The
response has been that the government does not consider it good value for money
to track this spend. During this inquiry, members of this committee have asked for the spend on
consultants to be identified in relation to specific projects, to varying
degrees of success.
The committee considers it an essential component of oversight to be
able to examine whether the money spent by a department represents good value
for money. Contractors are usually substantially more expensive than APS staff.
They may be contracted for good reasons, or not. They may be used judiciously,
or not. Without details of how much is spent it is difficult to know whether
contractors are serving a valuable purpose in providing otherwise unobtainable
skills and expertise, or are being used by senior public servants to outsource
responsibility for outcomes.
The committee notes the ongoing inquiry being undertaken by the Joint
Standing Committee on Public Accounts and Audits into the use of contractors in
the APS. In light of this inquiry, the committee has refrained from making any
formal recommendations about reporting requirements for government expenditure,
but endorses the principle of further transparency in this regard.
The Committee recommends that departments examine project budgets to identify and eliminate unnecessary spend on contractors, consultants and external vendors. Further, it should consider developing a longer term strategy to build internal public service capability to help drive the development or in house build of digital activities regularly contracted out by government.
Building digital capability in the APS
The cost of consultants extends beyond their budgetary impact. The
governments' policy of outsourcing much of its ICT capability to external
vendors and contractors has led to a loss of internal capability by the APS.
In 2015, then Communications Minister, Hon Malcolm Turnbull MP, was
reported as commenting on the role of outsourcing in the APS during the Australian
Financial Review's National Infrastructure Summit in Sydney:
There has been a practice for government to outsource what
should be the legitimate work of the public service to consultants.
...So the public service departments just become, you know,
mail boxes for sending out tenders and then receiving the reports and paying
...What we have to do in government
in my view is stop panning public servants and do more to ensure that they do
their job better. And one of the ways to do that is to make sure they do the
work that is their core responsibility, as opposed to outsourcing everything. 
The committee thinks this sentiment is commendable, and calls upon the
Prime Minister to put it into practice.
Digital work should be considered part of the "core
responsibility" of the public service. It is no longer possible—if it ever
was—to think of ICT and digital as adjacent or subsidiary to the proper work of
government. Digital delivery and applications are an increasingly significant
part both of departments' internal processes, and their interactions with the
general public and end users.
The committee is concerned that the APS is unable to do much of this
work. On its current trajectory, the APS risks becoming exclusively a cadre of
generalist managers who no longer have the requisite policy and technical
skills to conduct the business of government.
The committee recognises that ICT is a specialised area. It is not
always possible or prudent for every department to house every required skill
on a full time, ongoing basis. However, it is also not possible or prudent to
view ICT expertise as the exclusive and proper preserve of the private sector.
At a minimum, a level of ICT expertise is required to be able to
understand a project's digital needs and properly shape the department's
exposure to risk and reliance on contractors. The committee is not convinced,
for instance, that either the ATO or the ABS were fully cognisant of the risks
they were taking on in the contractual arrangements that led to the ATO outages
and the online census failure respectively.
The evidence to this committee, however, was that there are significant
efficiencies in departments having more than just this minimum level of in-house
expertise. The testimony of the Department of Human Service's acting Chief
Information Officer is instructive in this regard. When discussing changes in
the department's approach to large ICT projects, Mr McHardie explained:
Mr McHardie: I think a lot of it is the experience we have
now within the department of doing custom development work on the core SAP
platform. We have just under 500 public servants within the department that are
now qualified, now certified, as SAP professionals, whether they're enterprise
architects or developers or testers.
CHAIR: And that's different to where you were at, say, in
Mr McHardie: Correct. Remember we talked about the outsourced
Mr McHardie: We now have a lot more control of our destiny,
particularly when we need to do work on core products such as SAP.
CHAIR: It sounds like it's been more effective. You said that
you have more control of your own destiny. What about the cost impacts of
moving to an in-house solution?
Mr McHardie: The overall cost profile of the program hasn't
changed for us. John, you may want to talk about—
CHAIR: Mr McHardie, it's not so much about the program. If
you were to compare the input costs for projects back in 2013, when you were
more reliant on external providers to deliver these interactions with these big
platforms, and where you are now, where you've got 500 people who are
accredited and on staff, does that produce a different set of cost drivers when
you're scoping up a project for the future?
Mr McHardie: I think it does in the initial costings that are
put together for projects, particularly when there are government directed
activities, where government is looking at a range of solutions that it could
roll out to meet legislative change or new legislative policy, or when
replacing large elderly legacy systems. We understand these products so much
better now, and with us doing the in-house build we're able to cost up those
bodies of work much more effectively.
CHAIR: So you're a more informed buyer when you do go
externally, but you're also able to deploy internal labour to drive down cost?
Mr McHardie: Correct.
The committee commends this change, however there is further to go in both
deepening the extent of expertise within DHS, and replicating this approach
across other departments.
The government should invest in the development of a workforce that is
capable of delivering digital outcomes. As noted by the former head of the DTO,
Mr Paul Shetler, in his evidence to this committee:
In my time at DTO, I saw
dedicated public servants doing their best to help Australians, but often failing because of a shortage
of digital skills. Instead of providing digital training to public servants,
too often we've outsourced IT to large international technology vendors and
A decade ago, the Gershon review recommended the creation of a whole of
government ICT career structure. This recommendation is even more pertinent
The committee recommends that the Australian Public Service
Commissioner be tasked with developing a whole-of-government Australian Public
Sector Information and Communications Technology career stream with mandated
competencies and skill-sets for Information and Communications Technology
professionals, government procurement officers, and Information and
Communications Technology project managers.
The committee recommends that the government routinely report on
how it intends to lift the number of digital apprentices and trainees that it
is currently recruiting into the public service.
Digital expertise should not be siloed in a particular career stream.
Submitters such as the CPSU have suggested programs to ensure that the APS as a
whole (including senior decisions makers) is able to engage with the digital
work of government.
These suggestions include:
- Creating an expert-in-residence programme to engage private
sector exports on secondment.
- Establishing a Digital Academy, modelled on the United Kingdom's
Academy, to offer intensive in-person training for SES officers and online
learning modules for all APS staff.
- Creating an internal accreditation system, so that digital skills
can be recognised across the APS.
Providing the necessary commercial training in negotiation
skills, contract design and management including re-negotiation of contracts as
required, so that the APS takes over the role of the integrator—from waterfall
This is a necessary and appropriate continuation of the process of innovation
that has enabled the APS to remain relevant and effective for over a century.
The committee recommends that the DTA be tasked with developing
education and training initiatives to enhance the digital competency of all APS
employees, including SES officers.
The following chapters explain the background to the inquiry, and
summarise the evidence received by the committee.
The remainder of the report is structured as follows:
- Chapter 2 outlines context and administrative details of the
- Chapter 3 explores perspectives on what constitutes ‘digital
- Chapter 4 considers the challenges endemic to undertaking digital
- Chapter 5 considers whole-of-government policy issues.
- Chapter 6 examines four separate case studies that illustrate the
challenges agencies face in transitioning to the digital delivery of government