Government devastates contractors, vendors and recruiters with Gershon approval

Stan Beer
Monday, 24 November 2008 11:55

IT Policy - Government Tech Policy

The IT contracting and recruitment industries, as well IT vendors,already reeling from the economic downturn, have been dealt a devastating body blow by the Federal Government's decision to implement in full the recommendations of the recent Gershon Review. Contractor numbers will shrink by half and Government ICT spending will be slashed by more than half a billion over the next three years.

The review of Government ICT spending by Sir Peter Gershon, a former Chief Executive of the UK Treasury’s Office of Government Commerce, was released in mid-October to a highly nervous reception from the contracting and recruitment industries.

Two of the central tenets of the review was a drastic cut in IT spending and dramatic rationalisation of human resources within a very short period. Implementation of the recommendations will result in a cut of ICT contractor numbers in Canberra by half and slashing of $540 million of the Federal Giovernment ICT budget over the next three years.

The Rudd Government will argue that its razor gang approach will see leaner, more efficient Government agencies, with higher numbers of permanent skilled ICT staff and considerable savings for the taxpayer.

In practice, however, recruiters believe the Government will have a difficult time finding the necessary numbers of skilled ICT permanents to live and work in Canberra. Meanwhile ICT suppliers of products and services to the Government sector, already feeling the pinch, will see Federal agency budgets almost immediately slashed by 15%.

The result is likely to be a marked slowdown and with a good chance of a contraction in the Australian ICT industry over the next two years.
 
In a chilling message that will provide no comfort for Australian ICT industry players, Lindsay Tanner, Minister for Finance and Deregulation, said:
 
“The goal is to return efficiencies to the Budget and to reduce expenditure on ICT business-as-usual while freeing up money for service delivery capability.”

CONTINUED Page 2