Microsoft software deal to offset carbon tax's premature end

A renegotiation of the Australian government's volume-sourcing arrangement with Microsoft will help offset some of the cost of the government's decision to scrap the carbon tax one year earlier than planned.

The Australian government, under former Prime Minister Julia Gillard, introduced a carbon tax in 2012, aimed at reducing the carbon emissions produced by 370 of Australia's biggest polluters. The government set a fixed price for the tax for three years from 2012, after which it would be replaced with a market-based emissions trading scheme with a floating price.

The tax was a major cause of controversy for the government led by Gillard, and returned Prime Minister Kevin Rudd has long been expected to scrap the tax. Today, he announced that the carbon tax will be replaced by an emissions trading scheme, with a floating carbon price from July 2014.

The move will cost the budget around AU$3.8 billion over the next four years through lost revenue, with the floating price expected to be substantially lower than the current tax, which sits at AU$24.15 per tonne, and is scheduled to go up to AU$25.40 in 2014. The government has estimated that it will be around AU$6 per tonne.

In order to offset the impact on the budget, Rudd announced a number of savings. Among the savings, he highlighted that the government would look to save around AU$248 million through an overhaul of the Australian Public Service, with an aim of reducing the number of executives and senior executives in the public service by up to 800, and through more efficient procurement of agency software.

ZDNet was told by the Department of Finance and Deregulation today that the Australian government had just signed a three-year deal last month with Microsoft for software licences, services, and maintenance that had "significantly greater discounts, resulting in closer alignment with the benchmark pricing paid in the United States".

"The government has put considerable effort into improving whole-of-government procurement processes and around AU$100 million in savings will be found through more effective procurement of Microsoft software licences," the department spokeswoman said.

The Federal Government has had a volume-sourcing arrangement in place with Microsoft since 2009 to cover some 250,000 users and 290,000 devices. This was expected to save the government AU$60 million over four years, but the government has already managed to save AU$82 million since it began.

The Department of Finance and Deregulation told ZDNet that it will not be able to reveal how much it was expecting to spend before the new deal or how much it will now spend until July 2014.

According to former government CIO Ann Steward, the Microsoft volume-sourcing agreement was believed to be costing the Australian government more than it should, as the software came from Australian reseller Data #3 rather than directly from Microsoft.