Qld govt may sue IBM over payroll bungle

In secret cabinet documents tabled by the Queensland Opposition yesterday, it was revealed that the government had a strong legal case against IBM for the failed payroll system, but opted to settle instead.
Written by AAP , Contributor and  Josh Taylor, Contributor

Queensland's solicitor general will trawl through reams of secret cabinet documents released over the botched Queensland Health payroll system to decide if the state government should sue.

The Queensland government brought IBM on board in 2007 to replace its legacy payroll system for the Department of Health, which was to roll out in 2010. When it was introduced in early March that year, it resulted in a large number of Queensland Health staff receiving little or no pay, or were overpaid. The SAP platform served around 78,000 of the department's staff every fortnight, with the total payroll amount being AU$210 million.

The Queensland Government had considered suing IBM at the time, but ultimately opted to settle the case after the system was said to have been "stablised."

After months of political pressure from the new Campbell Newman Liberal government, Opposition Leader Annastacia Palaszczuk yesterday released 18 Cabinet documents relating to the government's decision to settle the case.

The documents said that the former Bligh Labor government had a strong legal case to sue IBM for installing the failed system, but preferred to negotiate a settlement amid concerns about whether the government's own processes would withstand scrutiny.

According to the Secret Cabinet Budget Review Committee Decision document from July 2010 (PDF), a negotiated settlement with IBM would allow "the best opportunity to put in place alternate support arrangements to ensure that the Queensland Health rostering and payroll solution is not exposed to unnecessary risk."

But while the document said that IBM would likely have "vigorously" mounted legal defence if the government took the tech giant to court, the option still remained for the government to seek damages from IBM if the system was "ultimately found to be unworkable."

The report warned that IBM would have likely alleged that the state government's contract requirements were inadequate and IBM may have also sued for unlawful termination.

The documents have opened the door for the new government to pursue IBM.

Health Minister Lawrence Springborg said yesterday that the state's solicitor general will examine the documents to advise the new government on what action to take, including whether an inquiry is needed.

"It is the start of the public campaign to properly understand what happened and the fight, however late, for redress will continue," Springborg told parliament.

"Our goal is to recover any worthwhile part of those lost funds."

Springborg called on Palaszczuk to apologise for the fiasco.

The current Liberal National Party government has said that the ultimate cost to taxpayers will be about AU$1.2 billion by 2017 and could climb higher than that. The government has blamed the debacle for the need of the Department of Health to cut 1,500 workers.

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