Budget 2005 - winners and losers

In what is likely to be his last Budget between the Prime Minister's office or the back bench, Treasurer Peter Costello has bet the farm on a series of across-the-board tax cuts, backed by an ambitious series of welfare reforms where big picture IT simply does not figure - at least not for this year. IT Minister Helen Coonan's portfolio is marginally poorer, while security agencies including the Department of Immigration and Attorney have walked away with significant funding boosts for biometrics, identity management and data-drilling.

Meanwhile, the much-vaunted prospect of the new Department of Human Services becoming a super-department to rule Australia's two largest transactional shops, Centrelink (welfare benefits) and the Health Insurance Commission (Medicare and the Pharmaceutical Benefits Scheme) has been put on hold for another year - along with the prospect of a unified Human Services smartcard to interoperate between the agencies.

While Human Services collected some $1.4 billion in appropriations, these are almost entirely derived from moving funding from its agencies into the department's coffers: a sure sign the government expects any integration costs to be met from savings from within the agencies.

In a move that smacks of a last-minute budgetary sacrifice, Human Services did not even issue its own ministerial media pack on its intended future. Rather, the task of integrating Australia's two largest government IT shops will take at least another year to scope and be paid for solely by savings rather than any new funding.

Similarly, Costello's ambitious welfare reform program is also likely to have prompted caution for any IT consolidation at a time when the government can least afford to experiment with the performance of its bedded down cheque-cutting hardware.

But as with any budget, there are always winners and losers.

Loser: Super of the Future Fund eats Telstra whole

Treasurer Peter Costello's tenth Federal Budget has locked in the government's vision of the future as one where IT costs continue to fall for the duration of the current term, with the entire proceeds of Telstra's sale now being unequivocally sunk into paying out unfunded commonwealth superannuation liability.

After returning a massive $21 billion worth of personal income tax cuts, Costello has also pledged to sink the entire projected $36 billion dollars to be raised from the sale of Telstra into a new untouchable "future fund".

The fund is designed to partially deflate the ballooning spectre of the government's own unfunded superannuation liability, accumulated by successive regimes after they repeatedly pushed its superannuation bills under the rug. Treasury does not have an exact figure for the bill, but it is rapidly approaching hundreds of billions of dollars as Australia's workforce ages and retires.

Telstra proceeds will now be invested in a "locked away" investment fund intended to appreciate to pay off government liabilities.

"The object [of the Telstra sale] will be to have the full proceeds go into the future fund. If you sell off Telstra, and you spend the money, you have no asset and you have sold the family silver," Costello explained.

He added the future fund will prevented from being used "to be directly engaged in projects" such as funding infrastructure.

Loser: Coonan and IT research left empty-handed

Having been charged with selling-off Telstra and placating National Party senators with itchy feet, Senator Helen Coonan's portfolio, Department of Communications IT and the Arts (DCITA) could have been forgiven for expecting a few crumbs from this year's budget. However, Coonan has walked away almost completely empty-handed, if not slightly cut on the ICT front.

While no major cuts stand out or have been highlighted in DCITA budget statements, there is no new money, with a $50 million for Metropolitan Broadband Blackspots Program being funded out of last year's Budget.

Meanwhile, DCITA policy outputs in the form of research and development projects, administered by the Department of Employment Science and Training, have taken visible hits: BITS (Building information Technology Strengths) Incubator program takes $2 million dollar haircut from $12.6 million to $10.6 million this year while BITS Advanced Networks funding reduces from $8 million to $7 million for the same period.

Other funding decreases included the Information Technology Online (ITOL) scheme down $1.1 million from $3 million last year. The good news is orchestras get a marginal funding increase.

Winner: Biometrics bandwagon reaps $182 million

If last year's budget went all out to bolster the IT budgets of Australia's security and intelligence agencies, this year's funding has gone hell for leather on biometrics, backed by a massive commitment to data-drilling that will leave no government mainframe or database unturned.

Major biometrics projects such as the Department of Foreign Affairs and Trade's (DFAT) biometric ePassport rollout and Customs' troubled facial recognition border clearance system SmartGate will progress full steam ahead.

The full-scale rollout of biometric passports has received $67.53 million over four years, while the less scalable SmartGate facial recognition kiosks get $74 .6 million to enable Customs to "automate border processing using ePassports" through the gradual phasing-in of "self-processing" and "automated processing" at major airports.

Meanwhile, the Department of Immigration Multicultural and Indigenous Affairs (DIMIA) will get $42.87 million to implement "biometric technology for border security and identity verification". However, the funding increases do not specify what systems DIMIA will spend the money on, suggesting the department is in for a substantial IT and processing systems overhaul.

The Office of the Privacy Commissioner will also receive a modest $740,000 over four years to "conduct privacy audits and to assist the three agencies in addressing privacy issues" that arise from their biometrics.

This puts this Budget's total spend on biometrics at $182 million - an almost identical figure for the cost of Customs' massive Integrated Cargo System after it went into cash-burn.

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Julian Bajkowski

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