We are a small group of public servants and former public servants who work in the IT area.
We are deeply concerned with what is going on in the IT area within the Victorian public service.
We believe this article sets out the truth of the matter.
There certainly are some very peculiar things happening in the state government’s information technology areas.
Despite the fact that at least three other state governments and the federal governments have been down the shared services/outsourcing path with varying degrees of failure from minor to monumental (once you strip away the spin doctoring) the Brumby government seems hell bent on pushing all of its departments into a single shared service arrangement, ultimately ending with outsourcing.
There is further irony when one considers that it was the Bracks government which put a stop to a number of IT outsourcing processes which were underway when it came to power. Several of the outsourcing arrangements which remain from the Kennett era have cost the Victorian taxpayer tens of millions of dollars in extra and higher costs over the years. The most recent example is the Victorian Police which after years of outsourcing finds itself described as a “basket case”.
The shared services arrangement is built on the premise that a better service will be provided at a lower cost. It is an enticing prospect but one which any senior IT manager in the state will privately concede is rubbish.
So how is it that this clear folly is about to occur. The crux of the matter lies with the desire of the multinational IT companies to get their hands on every IT dollar in government and in this case the Victorian State government. This is not a bad thing but an intelligent business decision on their part. Put bluntly, getting their hands on the IT dollar would be an incredible windfall for them.
The game starts with the hiring of consultants who may well be from the multinationals but who will definitely have strong links with the multinationals.
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They will be charged with carrying out a “feasibility” study to find ways of lowing costs and improving services. It is not unknown for consultancies to be based on the ‘tell me the answer you want and will provide the appropriate report which comes to your conclusion’ method and there is a distinct possibility that this may be have occurred in this instance.
Not surprisingly the conclusion reached was that a shared service was the way to go. One might wonder how the multinationals would get hold of the IT dollar under a shared services arrangement. The answer is that they would not. But they are patient and they realize that when the shared service arrangement fails to deliver cheaper and better service, as it must if the current IT areas are providing a good service (which it appears that they do), they will be able to move in and make an offer to privatize the shared service agreement so that the benefits are realized. The government is left with little choice but to outsource and the IT dollar is with the multinationals. There is more than one senior public servant who is privately predicting that the shared service arrangements will be outsourced in under two years.
The government has decided to implement the IT shared services arrangement via the creation o a new quango known as Cenitex. Cenitex has certainly wasted no time in hiring some very expensive staff including one contactor for more than $500,000 per annum and one in excess of $400,000 p.a. These decisions make it difficult to see how a cheaper service will be provided. There is also some evidence that several promising IT staff have departed Cenitex due to intimidation by some Cenitex mangers.
It is also understood that cabinet has recently approved a bid for more than $100 million of public money to implement the shared service arrangement. This must surely destroy any theory that it is an exercise to save money. You would have to say that with the global financial crisis, the threat of recession and the Myriad of worthy projects desperate for funding, the decisions to basically waste $100 million is extraordinary. Surely this money could be better spent on hospitals, schools or trains and surely this is what the public would want.
Most of the current IT staff in the public service has been briefed on what is occurring and have been assured that there will be no job losses. However, what is know is that the only possible way that Cenitex could provide cheaper service is to make massive staff cuts. Fortunately, the CEO of Cenitix is an old Kennett slash and burn man, so he will have no trouble in shredding the staff. Cenitex have internal plans to sack 30 to 50% of the staff which come to them from other Departments. Is this the right time to be pushing scores of public servants into the ever growing unemployment pool?
One thing which remains a mystery is that despite the senior IT managers clearly knowing that this approach will lead to lower quality and more expensive services, their silence is deafening. Curiously, several of the IT managers who have recently retired have quickly been taken in as contractors by Cenitex. There are several more IT managers who will retire in the near future. Maybe a lucrative Cenitex career awaits? This might explain the silence.
Curiously the public servant who was the mastermind behind the Cenitex/ outsourcing approach has now left the public service to take up a role as Vie President of a multinational IT company. You would expect this company to be a significant player when the privatization of Cenitex occurs.
The secretaries of the larger departments will be placed in an interesting position. They will know that the shared service arrangement will cost more. They will need to decide whether to divert funds from hospitals and schools to cover the extra cost or whether to refuse to take part. Courage will be required.
There are several interesting things which will occur if there is a common network as part of the shared services arrangement. It will mean that school children and prisoners will be on the same network. Would the public support this? It will also mean that police, judges and politicians will be on the same network. Does this fly in the face of the Westminster system of Government?
What is clear from behavior like this is how clearly the third Brumby government mirrors the third term of the Kennett government. Perhaps like Jeff Kennett the first time John Brumby realizes he is in trouble will be when he loses the unlosable election.