The federal government is a $13 billion per annum ICT market that major multi-nationals through to small-to medium-enterprises participate in with great success once they have understood the drivers, frameworks and policies.

However, with a new government comes new policies, and new rules. The reorganisation of functions, resources and staff can mean changes to existing ICT structures, as well as opportunities for new investments. There’s a lot to consider, and things can get confusing.

To help with the process, we’ve compiled the top 10 things you need to know about selling to the new Albanese Government. Let’s dive in:

 

1. The revised 2022-23 I Budget and its impact on ICT spending

The government will deliver a revised 2022-23 Budget on 25 October:

• It is unlikely to include any new, notable ICT funding.
• Some existing projects may be trimmed or cut.
• ICT is also unlikely to be a focus of December’s Mid-Year Economic and Fiscal Outlook (MYEFO).

Implications

Most inflight ICT projects or business-as-usual ICT work will continue, but announcements of big new projects (and therefore opportunities) aren’t likely until the 2023-24 Budget (which will be brought down in May or June 2023).

 

2. Large scale in-flight projects

Major ICT projects in the largest departments are driving the greater part of the government’s ICT spend and are likely to experience at least some changes of direction from Labor. These projects include:

• Home Affairs’ transformational-level Permissions Platform, the first release of which, the Digital Passenger Declaration (DPD) has been shelved.
• Services Australia’s Welfare Payments Infrastructure Transformation (WPIT) is six years into a seven year program and inevitably will have scrutiny from the new government before any additional phases commence.
• The ATO’s Modernising Business Registers’ (MBR) program has had several deliverables delayed by four years but reform in this area must continue if the new government shares the Coalition’s ambition to reduce the compliance burden on businesses.
• The Australian Signals Directorate’s Redspice cybersecurity package may be delayed by skills shortages and security vetting.
• A variety of smaller agencies are also embarked on once-in-a decade major ICT modernisation.

Implications

Any changes to the size or scope of existing federal government ICT projects will ultimately have an impact on the incumbent suppliers supporting these projects. Changes to the project’s funding, scope or timelines could open up new opportunities for challengers.

 

3. New Minister’s views on ICT

Katy Gallagher, Minister for Finance, Minister for Women and Minister for the Public Service has a strong voice in the new Cabinet. She also has a key role in monitoring and approving ICT spending. The Minister:

• Will have major oversight of the implementation of the recommendations of the Independent Review of the Australian Public Service (APS), chaired by David Thodey and universally referred to as the Thodey Review.

• Is a vocal critic of the previous government’s dealing of contractors and Commonwealth Procurement Rules.
• Is responsible for the Digital Transformation Agency (DTA), the key whole-of-government (WofG) ICT policy and strategy agency.

Implications

Minister Gallagher is likely to have strong interest in ICT procurement directions and spending and the future of digital skilling in the APS. In addition, the Thodey Review recommendations have many implications for ICT investment. As Minister Gallagher has not yet expressed her views on the digital transformation of services to citizens, a question mark remains over how far and how fast the new government will go on digital transformation.

 

4. Small to Medium Enterprise focus

With its “Buy Australia Plan”, Labor has pledged to:

• Help local industry take advantage of government buying opportunities.
• Change the way tens of billions of taxpayers’ dollars are spent in government purchases each year.

Implications

As with the previous Coalition government, the new Labor government is serious about ensuring SMEs get a greater share of its ICT pie. Large multinationals participating in the market are bringing SME partners under their wing in innovative ways to evidence to government that they understand this new driver. Finding partners for federal government opportunities is key for all players, big and small.

 

5. Procurement Reform

In line with its Buy Australia Plan, the government has:

• Made changes to the Commonwealth Procurement Rules to reflect its commitment to source from small and medium enterprises (SMEs).
• Simplified processes to give SMEs more opportunities to do work with the public sector.

Implications

Expect further and favourable changes to procurement rules and frameworks as the new Labor government beefs up its ICT procurement policies to support its Buys Australian Plan. There is plenty of room to move as the federal government’s procurement policies are not yet as strong or ambitious as some other digitally advanced jurisdictions.

 

6. Defence ICT spending

Not including its spend on military/warfare technology, Defence ICT contracting account for over half of the federal government’s annual spend across all ICT goods and services categories, according to Intermedium’s data. Upcoming drivers of this spend include:

• $1.2 billion for the creation of an Advanced Strategic Research Agency promised by Labor prior to the May 2022 election This makes up the greater part of Labor’s $1.45 billion in Defence ICT funding
• Defence Science and Technology Group launched a recruitment campaign to deliver supercomputer skills to a new Adelaide Defence facility in June 2022.
• The majority of the $10 billion Redspice program sits within Defence. 

Implications

Even if other Federal government departments suffer funding cuts due to the budgetary deficit, Defence will not. It will remain the major player in procuring ICT goods and services from the market.

 

7. The use of IT Labour Hire

Labor has long been concerned over the previous government’s large ICT labour hire spend:

• Since forming government, it has vowed to reduce public sector outsourcing.
• It has stated it wants all departments to cut unnecessary contractor, consultant, and external vendor spending.

Implications

Reducing the reliance on contractors cannot happen overnight and previous attempts to do so resulted in very little reduction in ICT labour hire spend. Labor hire will therefore remain a lucrative area of activity for suppliers for the first term of this government.

 

8. Resilience and emergency management

Environmentally speaking, resilience and emergency management are traditionally state level responsibilities. However:

• The federal government has increasingly been called in to assist the states in responding to natural disasters and the COVID 19 pandemic.
• All major new programs within Australia since federation have been introduced at the federal level

Implications

The Labor Government is expected to increase focus in resiliency and emergency management. The provision of Defence personnel to assist in such times of need is viewed as a stop gap measure. In the longer-term other forms of support will be required and much of this will be ICT reliant. Artificial intelligence together with IoT and drone technologies are expected to be future areas of focus and investment.

 

9. Cyber security spending

Cyber resilience is an ongoing priority for the government:

• Before being elected, the Prime Minister spoke of the need for a dedicated cyber security portfolio.
• The new cyber security Minister has ordered an overhaul of the national cyber security strategy.
• The new multi-agency Cyber and Critical Technology Intelligence Centre (CCTIC) falls in the cyber resilience realm.

Implications

This review of the national cyber security strategy may lead to further funding and support for the sector, especially following the 23 September 2022 breach of Optus’ client database.

 

10. Digital transformation of government services

Six months into its term, the new government has not yet clarified its commitment to the ongoing digital transformation of government services. However:

• It’s likely the previous government’s focus on implementing digital solutions to improve citizen experiences and access to support payments will continue as it has not yet cancelled any major aspect of the digitisation projects currently underway.
• The Digital Transformation Agency (DTA) has thus far retained its responsibilities and policies, including important WofG strategic architecture and other frameworks.
• On 16 September 2022, the new government announced a major review of MyGov.
• Automation of manual processes will play a role in meeting the commitment to reduce public sector costs.

Implications

Citizen expectations of digital services are such that the previous government’s ambitious goal to have all possible federal government services on line by 2025 cannot be completely ignored by the new government. The October 2022 Budget revision may provide some clues as to the government’s intended direction, but it is much more likely that the new government’s approach to digital transformation will not become clear until the 2023-24 Budget in May or June of 2023.

So, there you have it — the most important things you need to know about selling your ICT solutions to the new government. Time will ultimately reveal the government’s overall position on ICT procurement, and the ongoing digital transformation of agencies and services. Watch this space.

 

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