Mid-year Budget update projects ATO's data analytics upgrade to raise AU$222m

The federal government has revealed that it will raise additional revenue of AU$222 million over the forward estimates period to help the Australian Taxation Office (ATO) push forward plans to upgrade its data and analytics infrastructure.

In the mid-year 2015-16 Budget review [PDF] released by Treasurer Scott Morrison and Finance Minister Mathias Cormann, the government said it will commit AU$61.9 million over four years, including capital of AU$12.2 million, to the ATO to upgrade its data analytics capability.

The government believes the upgrade will help taxpayers pre-populate additional information when they are submitting their tax returns, as well as help the ATO better detect and deter non-compliance.

The upgrade is part of the government's commitment to reduce red tape for taxpayers when dealing with the agency. Last month, the ATO called for feedback from taxpayers on its Digital by default consultation paper, as part of proposed changes to improve the public's digital experience with the agency.

Alongside improving the ATO's data and analytics infrastructure, the government said it would create a digital by default service for provision of information and making payments, and enhance streamlined income tax returns through the myTax system for taxpayers with more complex tax affairs.

In August, ATO chief information officer Jane King boasted that it continued to work on converting paper tax lodgings to electronic formats. At the time, the agency had managed to remove 20 million unwanted items from its paper warehouses, and 3,000 unused or out of date content.

Earlier this year, the agency also launched its myTax return lodgement system as a replacement for its e-tax application, which King said at the time is hoping to see 2 million users by the end of this year.

However, during the launch of the myTax portal last year, the ATO suffered through several difficulties in the first few days. The ATO at the time pointed the finger to "intermittent errors with the authentication process" and reassured less than 1 percent of users were affected.

The delivery of the ATO initiative forms part of the federal government's wider digital transformation agenda, which is being led by the Digital Transformation Office (DTO) that was formally established in July 2015.

According to the Budget update, the Department of Social Services is also expected to achieve savings of AU$7.8 million over the four years from the introduction of a new electronic document management system designed to increase staff productivity, and reduce storage and handling costs for paper files that will be digitised.

As part of the Budget review, the government also revealed the Department of Immigration and Border Protection will save AU$8.9 million in 2015-16 by not proceeding with the design and scoping work for information communications technology platforms to manage travellers' biometric data.

Meanwhile, the government noted the immigration department will undertake further analysis of the current biometric platform and explore opportunities for future solution designs.

In September, the federal government announced it would be spending AU$18.5 million to establish the National Facial Biometric Matching Capability to allow law-enforcement and government agencies from mid next year the ability to use the new system to share facial images among themselves. The system is expected to initially provide one-to-one matching functionality to help establish the identity of unknown persons against photographs contained in government records.

The Attorney-General's Department has previously said the capability would replace the existing manual, ad hoc facial image sharing arrangements between agencies.

On a broader scope, the Budget update indicated the government will undertake a review into data sharing restrictions across federal agencies, and relevant state and territory agencies. It is expected to ensure current arrangements are fit-for-purpose, and able to evolve with technological developments and changing community expectations. At the same time, the government said the review could improve individuals' interaction with the government.

Funding for this review initiative will be met using existing resources, the government said.

The government is expected to make additional savings from the unspent funding for the Australia Federal Police's Project Spectrum.

The government expects to see savings of AU$35.8 million over four years. The Spectrum Program was originally funded for AU$82.4 million from 2008-12; however in April 2012, the deadline for expenditure of AU$29.9 million was extended to 2013-14 due to slower than expected progress of the project rollout.

Project Spectrum was designed to modernise the agency's core operational systems including its business process, policy and information technology systems; and replace the case management system, the Police Real-time Online Management Information System (PROMIS).

In addition, the government will provide an additional AU$18.8 million over five years to the DTO for the establishment of an online marketplace that will allow suppliers and buyers to connect through a centralised website.

More specifically, the government said the platform will provide suppliers with easier and greater access to government information on technology spending; encourage the public service to select SMEs where appropriate; and provide support to government services transformation for departments and agencies through exposure to private sector innovation

This initiative is part of the government's National Innovation and Science Agenda announced last week, a AU$1.1 billion plan to boost innovation and entrepreneurship, reward risk taking, and promote science, maths, and computing subjects in schools.

The economy is expected to struggle along for a while yet with growth forecasts downgraded in the government's mid-year budget update on Tuesday.

Economic growth is expected to come in at 2.5 percent in 2015/16, remaining below trend at 2.75 percent in 2016/17 -- a significant deterioration from the 3.25 percent forecast in the May budget.

As economists widely predicted, the mid-year economic and fiscal outlook also shows a blowout in the budget deficit.

The deficit is now expected to come in at $37.4 billion this year, compared with the budget forecast of $35.1 billion, remaining at $14.2 billion by 2018/19.

The return to surplus has been pushed out another year, to 2020/21 -- but CommSec economist Savanth Sebastian said even that's "probably unlikely".

"If anything, we've disappointed over the past few years in terms of growth and activity," he said.

And next year is likely to deliver more disappointment, with further slides in commodity prices expected.

HSBC chief economist Paul Bloxham said Tuesday's update repeated the "pattern of continued budget disappointment".

With AAP