Revenue Minister lays out plans to avoid a Novopay on IRD project

Published on the 16/06/2014 | Written by Vendor

Simplification and industry consultation will be key to updating the IRD’s ancient computer system says Minister Todd McClay…

At a breakfast last week focusing on the IRD Business Transformation (BT) project, Revenue Minister Todd McClay said that Inland Revenue genuinely wants to engage with taxpayers and relevant industry bodies to ensure the 10-year programme of work is successful. He said the BT, which at up to $1.7 billion worth of work is the largest computer project ever in New Zealand, is not just a computer system change but a process overhaul in which the IRD will look at all functions, processes and policies to see how they can be simplified and modernised.

At $80 million a year to run the current system, it is almost costing more to maintain than it will to replace the old system which is becoming increasingly restrictive and expensive to modify.

“We need to drag the Inland Revenue by the scruff of the neck, and the taxation system, and bring them into the 21st century so our engagement with you [taxpayers] is real-time,” said Minister McClay.

As the engine that underpins our $55 billion economy, this is a big, complex project with inherent risk. The current system is approaching 30 years old since its initial conception, has 40 million lines of COBOL code and an architecture of the ‘80s.

When asked by iStart how he planned to avoid another Novopay-like fiasco, Minister McClay said the IRD has had the opportunity to study the Novopay reports and one thing that stood out was that Novopay was trying to accommodate every permutation of the unbelievably complex manner in which we pay the education profession.

“One of the things we are doing at the forefront of BT is around simplification first. What concerns me most at the moment is getting that right for the tax system because if we don’t we’re going to have to come back and fix it.”

When it comes to putting the IT component around the policies, Minister McClay said: “We’re not rushing. It doesn’t mean we are going to drag our feet, but part of the reason is we are going to get the world’s best, which includes from New Zealand, and we are going to spend lots of time talking to people so they can give us their views.” Much of the budget will also go into running two parallel systems to ensure that everything is working as it should before the old system is switched off.

Deputy commissioner of change at Inland Revenue, Greg James who was also present at the breakfast, hosted by the Institute of IT Professionals (IITP) agreed, saying that the key was transforming and simplifying first and the IRD would “use the policy lever to avoid getting into a Novopay situation”. He said IRD is lucky that it has a new commissioner and a new minister who are investing in getting the best advice and “unlike some of the other failures”, IRD is listening and learning.

Both James and Minister McClay reached out to the ICT industry members present to help them to establish an ICT Reference Group to provide expert advice to the project and requested that input initially be fed back through the IITP CEO Paul Matthews.

One continuing concern of the ICT industry is the sheer size of the project. James promised, “We are certainly chunking down the implementation steps so we will be taking them in as small a bites as we can. It has to be broken up. It is broken down into stages, it will be modular and it will be very very flexible.”

“At some point there is a heavy lifting component to the core and that’s the bit that we are really spending time on now in terms of how we derisk that, how we provide the Government with the right sort of investment and risk profiles that allow us to deliever this thing with as small a risk as we possibly can.”

At the end of the day the buck stops with Minister McClay and his deputy commissioner of change James.

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