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ATO spent AU$333m on employment outsourcing during year of outages

The Australian Taxation Office told Senate Estimates it coughed up a 'peak' of AU$333 million during 2016-17 on labour hire, outsourcing, and specialist contractors, with many charged with rectifying the work backlog caused by IT outages.

The 2016-17 financial year was a tumultuous one for the Australian Taxation Office (ATO) where IT infrastructure was concerned, having suffered a handful of outages during the period from "one-of-a-kind" SAN outages to mainframe reboots.

The department responded with promises of "smooth operating" IT, as well as the assurance of a more "connected and bulletproof" system than ever before, but during Senate Estimates on Wednesday, it was revealed that the ATO had coughed up millions on labour hire, outsourcing, and specialist contractors to get things back on track.

According to ATO chief operating officer Jacqui Curtis, the 2015-16 employment outsourcing total was AU$188.6 million, and then increased, at its peak, to AU$333 million during 2016-17 across three areas of employment: Labour hire, outsourcing, and specialist contractors.

"We are anticipating this will come down again this financial year -- there will be a slight reduction -- and at present, we're currently sitting on AU$116.3 million," Curtis explained.

"The outages caused a lot of work to be done manually during that period -- we put on additional resources to that to catch up -- we increased our contractors in that period because we needed specialist contractors to come in, in order to make sure we had a smooth tax time."

Curtis, however, said the ATO is expecting that to "trend down" this year across the employment categories, taking on-notice the specific breakdown of spend, but revealing she expects the figure to peak at AU$280 million for 2017-18.

"We've actually now overcome a lot of the backload ... but as we actually move forward, we've sort of got over the hump," she added, saying it should revert back to where it was before that period.

Further clarifying the increase, ATO chief service delivery officer Melinda Smith said the office has engaged in outsourcing activities for over nine years.

"The 16-17 year was the year we experienced outages in our systems and we absolutely did use outsource to assist us very effectively catch-up work," Smith said. "But 70-80 percent of inbound telephony work has been outsourced for a number of years -- our lower-level tier 1 calls we found far more efficient to engage an outsource company.

"There's a little bit in debt and a little bit in processing, but the rest is done by ATO staff."

Commissioner of Taxation Chris Jordan took the opportunity to tell Estimates where his office was in regards to IT.

"It's not just a big black box and people say why can't you just get it right? There's a lot of moving parts and a lot of changes to be made," Jordan said.

"We have over 100 applications that manage our services to the community; over 2,000 computer servers that deliver those applications and services; and we store around 2 petabytes ... And in a calendar year, we manage over 6,500 system changes through our production environment."

In addition to visiting 500 tax agents since September 2017 to see how they use its systems, Jordan said the ATO has also launched a new beta site to test new online services that will become available later this year.

"We've refreshed and de-cluttered ato.gov, removing approximately 5.3 million words that were just a bit redundant -- about 45 percent of the content -- and we've successfully moved it to the cloud giving it greater availability and reliability," the commissioner added.

The Australian National Audit Office (ANAO) last week published its report into the outages experienced by the ATO since December 2016, calling the office out for lacking on the service commitment front, particularly where cloud is concerned.

In assessing whether the ATO had effectively responded to the recent unscheduled IT system outages, ANAO revealed the ATO began to set up cloud computing contracts in 2016, now boasting three separate agreements with Macquarie Telecom for its MacGov cloud since May 2016, Microsoft's Azure, and Amazon Web Services (AWS) since December 2016 -- days after the first outage brought the ATO's online services down.

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