Government pledges $255m to kick-start Digital Transformation Agenda

Key takeaways

• Budget reveals government’s strong support for digitisation programme.
• $255 million allocated to implement digital agency and services; $60 million to upgrade welfare system’s digital services.
• GST for foreign downloads and services to come into effect from 2017.

The Federal Budget has allocated a significant round of first funding towards establishing the government’s digitisation plans.

The pledge of almost $255 million signifies the first major move towards establishing digital services on a national scale. It is a clear indication that there is support at a federal level for the digital strategy that has been strongly heralded by Communications Minister Malcolm Turnbull for some months.

Out of $254.7 million allocated to digital services, $95.3 million has been earmarked to establish Turnbull’s Digital Transformation Office (DTO), which is set to become a standalone agency from 1 July. A further $159.3 million is to be spent on phase one of the Digital Transformation Agenda.

The government’s intention to roll out digital services is an important move towards customer-centric service delivery.  On a state level this has already been championed by the likes of Service NSW, a ‘one-stop shop’ for service delivery in New South Wales that condensed the presence of 400 local government shopfronts, over 100 call centres with 8,000 phone numbers, and around 1,000 websites into one online portal.

Government to set the example

The investment in the DTO’s agenda is much welcomed and reflective of the importance of digital transformation within government – which itself admits in the Budget papers that it must be “at the forefront of moving its services to digital channels”.

The strategy of the DTO, which is in the process of recruiting its CEO, has been somewhat nascent until now.  However with confirmation of four-year funding finally in place, the agency is now setting itself for action.

In response to the Budget announcement, the DTO’s acting CEO David Hazlehurst said on its blog: “Collaboration is very important to the DTO so over the coming weeks you will see us ramp up our engagement with individuals and businesses, and state and territory and local governments as work on the agenda moves into full gear.”

Key areas of focus for phase one of the Digital Transformation Agenda include:

• Streamlined portals for grants administration, which takes up $107 million of the allocated funding.
• The Digital Service Standard, a framework within which digital government services must be tested and designed.
• A digital identity capability.
• Improving the quality of government interaction for both users and business, including a Tell Us Once service (similar to a scheme the UK has in place), and voice identification technology.

Outside of the Digital Tranformation Agenda, further government investment will go to the Department of Human Services, where $60 million will be invested to offer “easier and smarter” online services for the welfare system.

Two-year deadline for GST to align

Another major Budget announcement affecting the tech sector is the introduction of what is being called the ‘Netflix tax’. It will apply 10% GST to digital products and services supplied from foreign businesses, bringing them in line with Australian providers.

The legislation, which will not apply to business-to-business transactions, covers products such as streamed or downloaded movies, music, apps, games and e-books, as well as digital consultancy and professional services. It is expected to bring in $350 million in government revenue over four years.

The GST will apply to supplies made on or after 1 July 2017, with a consultation period on the draft legislation open until 7 July 2015.

The delayed start date is likely to be welcomed by industry, but having witnessed the introduction of similar laws in the EU, a longer time frame may be required to properly implement system changes, argues PwC’s Budget analysis report, which also calls into question the length of the consultation period.

To read Prepare for Repair, PwC’s analysis of the 2015-2016 Australian Federal Budget, click here.

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