Funding for the Australian Tax Office’s (ATO) embattled Change Program was conspicuously absent from the Federal Government’s Budget handed down last night.
The wide-ranging IT reform program which aims to migrate the agency away from more than 180 legacy and paper-based systems to a single, integrated core IT system, has resulted in a budget blow out of double the original figure, hitting close to $750 million, since it started in 2004.
The absence of any additional funding in this year’s budget is a likely indicator the ATO will wrap up the project soon and removes a political hot potato for the government in an election year.
“The ATO is now looking at bringing the change program to a close and I don’t think we will see additional initiatives with the Change Program tag on it,” Ovum research director and former ATO employee, Kevin Noonan, said. “It is almost going back to traditional budgets at the ATO and Centrelink as well, where you see a lot of compliance work and legislative change.”
One month ago, the Federal Government called on the Inspector-General of Taxation to review the ATO’s income tax IT system upgrade in the wake of public complaints over processing delays.
The ATO had defended itself on the state of stockpiled tax returns arguing its upgraded systems are working well and millions of tax returns have not been delayed.
The upgrade had previously been described by the ATO as the biggest in the agency's history. It decommissioned the National Taxpayer System (NTS), which had been in use since the early 1970s.
In its place, a new income tax processing system is supposed to extend the ATO's "integrated core processing (ICP) system to income tax and higher education loan accounts (HELA)".
Since its inception the Change Program has been hit by delays and budget blowouts, forcing the agency
The ATO's annual report, submitted in October last year, revealed the Change Program is high risk and mostly responsible for the office’s budget overspend last financial year. The ATO publicly acknowledged it was under “extraordinary pressure”.
In October last year the ATO also accepted the recommendations from the Australian National Audit Office (ANAO) after the latter conducted a performance audit of the Change Program.
The Change Program problems have also led many observers to question the performance of key ATO partner, global consultancy firm Accenture.