ATO lands AU$151 million in MYEFO for storage and cyber resilience

Canberra finds money for the Australian Taxation Office, DTA digital identity program, and Department of Home Affairs visa processing systems.

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The federal government on Monday handed down its 2019-20 Mid-Year Economic and Fiscal Outlook (MYEFO), detailing how the Australian Taxation Office (ATO) will be given AU$150.8 million over three years to improve its data storage and its security system, two areas that have previously plagued the agency with grief. 

It comes as the ATO renewed its IT service management contract with Leidos Australia for another 29 months in November, in a deal worth AU$87 million.

Last year in March, Leidos escaped being penalised after the ATO faced a series of issues that had plagued the taxation office since late 2016, including "one-of-a-kind" SAN outages, and although the ATO said the issues were rectified, further service disruptions ensued, resulting in the ATO website being pulled offline

The government department had to turn its mainframe off and switch it back on again in July 2017 when a disruption occurred five days into the new financial year. 

Following that, the department responded with promises of "smooth operating" IT, as well as the assurance of a more "connected and bulletproof" system than ever before. 

In addressing the Finance and Public Administration References Committee, ATO's CIO Ramez Katf and CDO John Dardo confirmed the agency imposed penalties on DXC Technology -- which owns Hewlett-Packard Enterprise, the company that was contracted as the storage solution provider for the ATO -- for allowing the SAN outage to occur in the data centre.

More recently, in July, the ATO's services, including its portals and myGov online functions, were down once again. Shadow Treasurer Jim Chalmers labelled the outage as a "monumental stuff up", saying the Australian government needed to fix the outage so that people could lodge their tax returns.

Also read: Australian Taxation Office happy to go it alone with cybersecurity

The MYEFO also detailed how much the government plans to spend on some of its recent policy announcements, from the Australia Public Service (APS) reform agenda to refinements of its research and development tax incentive (R&DTI).

Minister for Finance Mathias Cormann and Treasurer Josh Frydenberg vowed that the government is "continuing to invest record funding in the essential services Australians rely on".

Under the APS reform agenda, which was announced last week, the Department of the Prime Minister and Cabinet and the APS Commission will receive just over AU$15 million over two years from 2019-20 to support the commencement of the reform agenda as part of the MYEFO.

It comes after Prime Minister Scott Morrison agreed with "a majority" of the 40 recommendations that were handed down by an independent panel following the review of the APS.

"This funding represents an investment in the capacity of the APS to respond to challenges and opportunities and deliver better services for the Australian people," the MYEFO papers said.

The federal government said it has also set aside AU$235 million in fiscal balance terms of the forward estimate period to refine the R&DTI, including deferring the start date by 12 months, applying it to income years starting on or after 1 July 2019, and introducing a simplified R&D premium companies with total annual turnover of AU$20 million or more.

It follows Frydenberg's decision to reintroduce the legislation into Parliament to reform the R&DTI earlier this month. He said the reforms would "ensure that the tax incentive remains an effective and sustainable part of Australia's overall support for R&D". 

"In better targeting and improving the integrity and sustainability of the research and development tax incentive, the reforms in this bill will ensure that the incentive remains an important part of the government's overall support for research and development in Australia," he said. 

See also: National Archives 'ineffective' in overseeing government-wide digital record policy 

MYEFO noted another AU$25 million over two years will be stumped up for whole-of-government digital initiatives. This will in addition to the AU$67.1 million in funding that was already allocated under the 2019-20 Budget.

Of that new amount, AU$19.1 million will be spent on the development of the protected utility platform and the implementation of a hosting strategy, while the remaining AU$5.9 million will be used to continue the development of the Digital Identity program, which will allow Australian citizens to verify their identity when accessing Government services online.

At the same time, under the government's deregulation agenda, just over AU$156 million over four years will be spent to reduce the cost of doing business with government and reduce regulatory compliance processes through targeted technology investment.

Some of the specifics include putting AU$60.6 million of the funds towards creating a single source of business data by introducing Director Identification Numbers and transferring existing business registers on to a modernised platform operated by the Australian Business Register.

Other aspects of the program will include completing the delivery of a digital export certification management system and introducing a trade information service to provide businesses with a single source of online information on how to export, including regulatory and border compliance requirements.

The government said it will also commit an additional AU$36.3 million in 2019-20, of which includes AU$12.8 million in capital funding, to ensure it can own and operate the ICT systems that run Medicare, the Pharmaceutical Benefits Scheme, Aged Care,  and "related payments into the future".

Meanwhile, the Department of Home Affairs will receive AU$31.2 million over three years to make continued improvement to the IT system that underpins the visa and citizenship processing capabilities.

"The measure will improve the Department of Home Affairs' ability to verify the identity of individuals arriving in Australia. The measure will also allow continued engagement with the market for a strategic technology solution to ensure Australia's visa systems remain competitive, relevant and safeguard national security," the MYEFO papers outlined.

In addition, in a move to crack down on the black economy, the government plans to introduce a third-party sharing economy reporting regime to enable identification and income information reporting regarding participating sellers to the Australian Taxation Office for data matching purposes. The federal government estimates it will cost AU$5.1 million in fiscal balance terms of the forward estimates period.

Meanwhile, an additional AU$2.7 million over 10 years from 2019-20 will be used to support the publication of a national data report on girls' and women's participating in science, technology, engineering, and mathematics (STEM) fields, building on the AU$3.4 million the federal government had committed during Budget to boost female participation in STEM careers.

Must read: Robo-debt: ATO relied on DHS data when garnishing tax returns

The government is also looking to expand its Entrepreneurs' Programme by assisting first generation migrants and refugees to establish start-up businesses with an additional AU$5 million over four years.

This is on top of the AU$182 million that was stumped up in September to build network of delivery partners that can provide consistent expert business advisory and facilitation services to eligible businesses Australia wide under the Entrepreneurs' Programme.

The MYEFO also revealed some of the financial risks that have arisen since the release of the 2019-20 Budget.

One of those was the recent court case surrounding the controversial automated debt recovery process known as robo-debt. It saw the federal government concede in a test case brought by Victoria Legal Aid and Deanna Amato that elements of robo-debt are unlawful.

Since then, the government has halted the robo-debt income automation, in a move that Minister for Government Services Stuart Robert described at time would ensure fairness and consistency for income compliance.

"Current and former income support recipients who have had an income compliance review (or part of a review), where a debt has been determined and this is based solely on averaging of ATO income data, are being identified," the MYEFO paper stated.

"A subset of debts which have been raised to date under the Programme are in-scope for reassessment. The effect on the identified debt, total value and return or recovery will not be quantifiable until reassessments are completed."

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