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When Government gets involved, IT costs skyrocket

Three Waters IT costs ballooning

NZ Treasury has forecast $659 million needed to build and operate a brand new computer system for the four Water Service Entities of the Three Waters reforms, while noting “additional funding may be required”.

It is worth considering how well recent government run IT implementations have fared. 

Ports of Auckland IT efforts end in failure

There may be parallels with the recent boondoggle around automating the Ports of Auckland’s massive straddle carriers. A series of deaths from human error and a desire to maximise capacity had encouraged Auckland City Council to engage in an expensive six-year automation process of the Fergusson Container Terminal. The effort ended in failure, costing about $65 million for automation software.

The write off resulted in a net loss of $10.3 million for 2022 and put the Ports behind other global ports that are fully automated like Brisbane and Sydney. According to former Ports CEO Tony Gibson, the loss was made worse by the lack of business acumen on the part of then mayor Phil Goff and the Council. A drastic drop in profitability occurred once authority of the port was shifted over from Auckland Council Investment Ltd to the Council’s direct control. Gibson is awaiting trial on charges relating to the death of a worker killed on the job in 2020.

The drop in profitability is partly what prompted recently elected mayor Wayne Brown to publicly say he’d lost confidence in the Ports’ Board and expected more profitability from operations there.

Immigration NZ software causing problems

Expensive mishaps involving high priced IT services have also been evident at Immigration New Zealand. The new “advanced digital employer-led processing and targeting” software cost taxpayers more than $62 million in addition to a $22 million depreciation expense for the old system’s early retirement. 

The bug-filled system has produced countless processing errors and has fed into a backlog of tens of thousands of applications. A document leaked from Immigration says they’ll be looking at how they can reassess risk factors of visitors applying for visas in order to alleviate the backlog. National said the move will put NZ’s borders at risk. 

Inland Revenue IT project cost 1.5 billion, but doing great

Inland Revenue’s recently completed implementation of a new computer system came with a hefty price tag of $1.5 billion and seems to be operating just fine. In what could be called a ‘good news’ story, the nation’s tax collector boasts increased efficiency and savings for tax payers and businesses. IRD has even reduced its full time staff by almost 30% while increasing collections nearly 50% since the rollout of the new system.

However, in an interview with Stuff, IRD chief executive Naomi Ferguson isn’t ready to say there’ll be an end to the occasional long waits people endure when on hold with IRD call centres.

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