Service Victoria Bill 2017

Debate resumed from 21 November 2017; motion of Ms PULFORD (Minister for Agriculture).

Mr RICH-PHILLIPS (South Eastern Metropolitan) (12:55:46) — I am pleased to rise this afternoon to speak on the second reading of the Service Victoria Bill 2017, which has been a long time coming in this place. I think the bill — like so much of the government's legislative program — was scheduled to be dealt with in December of last year and, through the government's own decisions, has stalled basically until the middle of this year, but we now have an opportunity this afternoon to consider what is being proposed in this bill and for the house to pass its judgement on the direction the government is going with service delivery in this state.

This of course is a very broad area of administration. As we know, state and territory governments are fundamentally about service delivery, so when you have a piece of legislation come into the house focused on service delivery it is something which should be of interest to all members of this house, as I think it is of interest to the Victorian community. The interaction that takes place between government and citizen is something that is incredibly important at a state level because it is a service delivery level of government, and improving that interaction between government and citizen, between customer and provider, should be more of a key focus of what we do as members of Parliament than what is done by the government more generally.

President, there is no doubt that in the last decade the community's expectations around service delivery have changed dramatically. The advent of smart devices — pocket computers that are virtually ubiquitous in the community now — has completely altered the way in which the community undertakes transactions, the way in which the community gathers information and the way in which the community communicates with other members of the community. Within this place you see members using smart devices to communicate with other members across the chamber and you see members communicating from within the chamber to outside the chamber. You see the same devices used to communicate across the world.

It is worth reflecting, President, that the smart devices as we know them typically — and we have seen the proliferation of Apple devices, iPads, iPhones — have only come about in the last decade. Prior to about 2007 what we know currently as a smart device was not in common use. The ability to do what we can now do with a smartphone or with a tablet did not exist a decade ago, so there has been an incredible change in the way in which society, the community, can use technology to communicate, to access services and to access information, and the development of that technology, with the ability for people to communicate with a smart device in their pocket — to communicate, as I said, within the chamber, for example — has changed the community's expectations.

What members of the community now expect from government and from service providers in the private sector has changed inexorably. The fact that app developers and the fact that service providers in the private sector — be they banks, be they health insurance companies, be they retailers — have recognised the potential for smart devices and have responded accordingly with the development of applications, with the development of online platforms which allow citizens to access services 24 hours a day instantly from their smart device, has changed the expectations of the community. It has understandably led to the community expecting to have instant service delivery. To be able to use a smart device to purchase something — and of course even our major bricks-and-mortar retailers now provide online service delivery through smartphone apps and tablet apps to order groceries and the likes which can be delivered, as well of course as the earlier iterations of online retailing through things such as eBay — to do online banking and to have access to news via news site applications has created the expectation of instant service delivery through a pocket device, and one of the big gaps in that availability of online services has been government.

Some of the early efforts to put government services online in an internet sense and then of course online through mobile applications has been at best clunky. Look at some of the developments at the commonwealth level. The myGov platform I think was perhaps one of the clunkier examples we have seen. Certainly its original iteration was one of the clunkier examples of the development of a platform for government online service delivery. Subsequently the commonwealth has modified that platform, but the initial iteration, the initial rollout, really did not meet in any respect the expectations of the community in being able to access, in that case, commonwealth government services online.

It may well have met the expectations of the department that developed it and it may well have met a whole lot of back-of-house needs for the departments that use the platform, but it did not meet in its initial iteration the expectations of the community. It did not provide the flexibility that the community expects in service delivery, and as a consequence it was not broadly embraced by the community. We have seen since that first iteration of myGov some substantial improvements to that platform and it is now more widely accepted in the community as a way to access commonwealth government services.

What we have seen in the last decade is new technology creating new ways to deliver services and with that a rapid change in the expectation of the community as to how services will be delivered to them, and that includes government services. So it is appropriate that we as a Parliament and as a government do look at the way in which services are delivered into the community and look at the opportunities which have been created through technology to improve service delivery.

The bill before the house today implements a legislative framework for what the Victorian government has called Service Victoria. I will come to what Service Victoria actually is in a little while, but the purpose of this bill is to prescribe Service Victoria as a service delivery agency for government and to provide a regulatory framework for identity verification activities by Service Victoria.

The main provisions of the bill are to prescribe Service Victoria as a service delivery agency for government services. It provides that departments and agencies may transfer service delivery functions to Service Victoria and establishes a mechanism by which, with the mutual agreement of the Service Victoria minister and the minister responsible for an individual agency, service functions may be transferred back to line agencies — so a mechanism to transfer them into Service Victoria and by agreement a mechanism to transfer them back. The bill also establishes a regulatory structure for Service Victoria to undertake an identity verification function to provide a single whole-of-government record for each customer, including standard settings, and it provides a regulatory framework by which service delivery standards may be established.

It is an interesting piece of legislation because often with the development of online platforms service, delivery models and applications there is a need and a desire to be flexible. There is a need and a desire to recognise that what is an effective service delivery model today may not be an effective service delivery model tomorrow, and what we have seen — and I used the commonwealth myGov example earlier — is platforms changing and approaches changing as technology develops and as the expectations of the community change. One of the key things, if we are to have effective online service delivery, is the need for those platforms to be flexible, for the provider of those platforms to be flexible and for governments to have the capacity to change the way in which services are delivered online, be it through changing vendors or be it through changing structures and models, and not to be locked into a rigid framework. In this sense the creation of a legislative framework for Service Victoria is a very unusual way for the government to go in setting up Service Victoria.

I would like to take a step back and look at the way in which ICT projects in Victoria have developed and the way in which Service Victoria has been developed, leading to this stage with the government now seeking a legislative framework for it. In the early period of the previous government the then Ombudsman and the then Auditor-General released a review of ICT projects within government. These two statutory office-holders had undertaken an extensive audit of ICT projects across government. They looked at things such as the Myki ticketing rollout, the HealthSMART system, the education record system — the name of which currently escapes me — which had been implemented in the department of education and a number of other small projects which had been commissioned by the Bracks and Brumby governments, in some cases over a number of years and in some cases in a relatively short period of time, to assess the way in which those projects were designed, the way in which they were scoped and the way in which they were executed.

Looking at that sample of 10 projects, the Ombudsman and the Auditor-General, in a joint report, identified a range of common systemic problems in the execution of those ICT projects. The upshot of that report was that the two statutory agencies identified in essence that budgets had run 100 per cent over and that projects were well behind schedule and were failing to meet the objectives that have been set for them. So there was a consistent pattern across the 10 sample projects of projects being over budget, projects being behind schedule and projects failing to meet the expectations that had been placed on their creation. This is something that on coming to government in 2010 the coalition government — this report came down soon after, in 2011 — recognised in a number of other projects.

I hasten to say that this is not a problem unique to the Bracks and Brumby governments, unique to Labor governments or unique to governments full stop; it is a problem which has been repeated in the private sector. There have been any number of studies which have looked at the execution of ICT projects over recent decades, and invariably those studies identify the same sorts of problems with budget overruns, with projects falling behind schedule and with projects failing to meet expectations whether they are a creation of the private sector or a creation of the public sector. That sends a signal that the way in which ICT projects are undertaken needs to change.

We cannot continue to undertake ICT projects that are scoped in isolation from the marketplace. In the case of government you have a group of bureaucrats sitting down in a room by themselves to design a better mouse trap, taking that out to the market and saying to the market, 'Irrespective of your capability and irrespective of what is in the market, this is what we want you to build, here is a dollar figure, go away and build it'. Halfway through they say, 'Oh, and by the way, we have changed our minds about what we want; we want some variations'. Of course they are now getting to the end of their budget so they need to scale back on what they expect et cetera. That is, and has been seen to be, a recipe for disaster time after time after time.

In government the coalition released a new ICT strategy that set out to take a new approach to how government procured ICT projects and executed ICT projects. There were a number of principles set down in that ICT strategy, and I would just like to refer to four of them that were relevant to most projects.

The first principle that we thought was incredibly important to the procurement of ICT in government was the principle that government should be buying off the shelf. Every unit in every agency thinks it is unique, thinks it needs a special solution, thinks that its business is different and needs its own ICT platform and thinks that it needs a bespoke system to fit the way it does business. The reality is that there is very little within government that is unique in terms of business processes and activities, and there is very little within government that needs customisation. The scope for government to be buying off-the-shelf platforms and software, and where necessary adapting business processes to the off-the-shelf software and platforms, is far greater and far lower risk than each government agency wanting to design its own software platform to meet its own unique way of operating.

There is very little that is unique about what government is doing that it cannot operate and adapt to off-the-shelf platforms. So one of the key principles of the coalition's ICT strategy was that government agencies should be buying off-the-shelf platforms before they sought customisation. They would need a strong case as to why they were different, why they were unique and why they needed to design and commission a bespoke ICT platform.

The second principle that we sought to roll out across the public sector in the commissioning of ICT projects was the need for projects to be scalable. Projects should be started and piloted on a relatively modest scale with the capacity for them to be scaled up if they are successful. To use an example, the idea of creating a whole-of-government payroll system to cover 250 000 public sector employees was an anathema to the direction that ICT projects should go.

In saying that projects should be scalable we took the view that if you were commissioning a Victorian government payroll system — and given the fact that there are dozens of such systems available off the shelf anyway the argument as to why the government would want to commission its own payroll system is one that would need to be tested first — it should be scalable. It should be something that is developed and tested in a small agency with the capacity then to expand it to other agencies rather than starting from a position of trying to build a system that will cover a quarter of a million people across a thousand different agencies. That is a recipe for disaster, and that is something that we have seen with some of the previous ICT projects in Victoria and of course elsewhere in the private and government sectors.

Another area where we sought to set a direction was in relation to the risk management around ICT — the recognition that you do not want all your eggs in one basket and the need, if dealing with ICT suppliers, to have multiple vendors who can ensure some competitive tension among themselves and also mitigate and spread risk. In relation to CenITex, this is where the coalition has a point of fundamental difference with the current government. I preface these comments by saying they reflect a situation that existed three or four years ago with the model the previous coalition government inherited where the whole of central government and general government sectors' ICT desktop services were provided by one provider, being CenITex, the government-owned entity.

A concern of the coalition at the time, and the reason we pursued the Project Atlas tender in 2014, was that the government's eggs were all in the one basket: all desktop services across the general government sector relied upon service delivery by CenITex through to data centres, and we saw that as a big risk. There is nothing unique about desktop service delivery; a standard desktop operating environment is something that dozens and dozens of companies provide in Australia and around the world. There was the opportunity for government to buy those services on a commodified basis from a number of providers, thereby mitigating the risk of having the government's eggs all in one basket with a single provider operating across the entire central government sector. That was, as I said, the rationale for our pursuit of the Project Atlas model in 2014.

Another key principle we articulated in our ICT strategy was the need to encourage innovation — to recognise that not all good ideas and not all the expertise exists within government in the development of projects and that it is important to have a collaborative exercise leading to the development of a project to allow industry innovation to come into play with better ideas.

One of the challenges for government procurement generally and ICT procurement in particular is that often government will specify what it wants in a box and it will develop that in isolation by itself rather than in collaboration with the marketplace. It will then go to tender and because a formal tender has been triggered it will say, 'Well, no, we can't talk to the industry because we are in the middle of a tender'. Industry looks at what government has said it wants in the tender and scratches its head as to how on earth government could have come up with such a project scope, and industry has to come up with the project because government has failed to consult and interact before it went to tender. But because the tender is on and probity walls are up and no-one can talk about it you have got industry bidding on something which is difficult, if not impossible, to deliver because it has been badly scoped from the start and the opportunity to innovate and work with industry in the development of the specification has been lost.

That was also something we saw as a particular weakness in procurement generally and, as I said, specifically in ICT projects where the state was losing the opportunity for a lot of innovation because of the nature of our general procurement framework. With the ICT strategy it was something that we saw as an opportunity to reform that engagement between the public sector and industry in the development of technology platforms so that before we go to market in a formal tender process we can have a much better understanding of what is available, what can be achieved and the innovative options available to deliver a particular ICT outcome.

It is against those principles that we seek to assess the Service Victoria framework and model that is being implemented by the current government. Our concern is that the model, as it is being presented by the government, in many respects is the reverse of what was articulated in our ICT strategy. It is not a model which is encouraging innovation at an agency level in the development of individual service delivery platforms. It is not a model which is spreading risk and it is not a model which is reflecting the opportunity for innovation and cost saving, which is always developing and changing, in the ICT sector. It is in fact a model which is centrally driven with a top-down focus from Service Victoria. We do not yet know what form the Service Victoria entity is going to take — the bill is open on that, and that is something we will explore in the committee stage. It is a model that is being driven by central government, being driven by the Department of Premier and Cabinet through the Service Victoria agency.

It is interesting to note that the feedback from some individual agencies — some who have been either involved with the pilot or will be involved in the Service Victoria model — is that the development of Service Victoria has led to them stopping their own innovation. They are not developing their platforms and their service delivery models because Service Victoria is coming. They are bound by Service Victoria and would like to wait and see what that model will mean for individual agency delivery.

One of the principles I spoke about before was devolved service delivery. What we have with Service Victoria is in fact the opposite. It is bringing everything together under a single platform with the vendors that have been contracted for the development of that platform. This is at odds with taking an off-the-shelf approach to putting a platform in place and is at odds with sharing risk between vendors and individual service delivery agencies, so rather than mitigating risk we are seeking to centralise risk through this model. With a legislative framework which allows for the transfer of service delivery responsibilities from agencies to the Service Victoria entity we are seeing that further concentrated beyond just the technology platform and to the actual service delivery activities of the individual agencies.

One of the other concerns we have with the model is the cost. The cost, as revealed in the budget to date, is approaching $100 million. We saw that Service Victoria was first announced by the government — by the Special Minister of State — in the 2015–16 budget, which was the first budget of the current government. The initiative was described as:

Service Victoria will create a new whole-of-government service capability to enhance the delivery of government transactions with citizens, enable the delivery of a more effective customer experience and create new distribution channels for simple, high-volume transactions.

Initial funding for that project was $15 million, which was allocated in the 2015–16 financial year, and there was a further allocation of $81 million in the 2016–17 financial year, so two financial years ago from the budget that is being introduced today. We saw last year through the public accounts process that some $58 million of that funding had been carried forward into the current 2017–18 financial year, which led to a fascinating discussion with the minister as to whether the project was delayed. Minister Jennings, in front of the estimates committee, was at pains to emphasise the project had not been delayed, it just had not progressed at the speed that had been planned — but it was not delayed. Nonetheless we saw that money carried forward into the current 2017–18 financial year, and obviously if the bill proceeds to committee, we will be looking to understand where the financial structure around Service Victoria has progressed to since the last update to the public accounts committee a year ago.

Another element beyond the cost that we are concerned about with the Service Victoria model is its opaque nature. This is a $100 million commitment by the government. It is a substantial financial commitment over two years, and of course we will be interested in the ongoing costs of the platform. But other than some minor references in the public accounts hearings in the last two years, the government has been opaque with respect to the development of the Service Victoria platform. The feedback from the ICT industry has been very interesting with respect to its understanding of what has been occurring with the development of Service Victoria as a whole-of-government entity — a government platform — as opposed to what could have been achieved with the same funding through industry-supported platforms.

Last year we saw an interesting exchange at a Public Accounts and Estimates Committee hearing between Ms Pennicuik, I think it may have been, and Tony Bates, deputy secretary of the Department of Premier and Cabinet, who gave evidence with respect to Service Victoria and the delivery of the project and whether it was tracking to budget and tracking to schedule. As members may be aware, the Department of Treasury and Finance, as part of its reporting to government, to the relevant budget committee of cabinet and ministers more generally, benchmarks each of the projects which are being undertaken by government, and it uses a pretty simple assessment — a traffic light assessment. A project that is assessed as green is operating as planned, is operating to budget, is operating to schedule and is expected to deliver what it was commissioned to deliver. When a project has an amber assessment, or elements of a project which are assessed as amber, it indicates there are some concerns as to how the project is proceeding. When a project is red flagged it indicates there are significant concerns. Either it has already gone over budget, is behind schedule or is not meeting expectations or these are likely to be imminent outcomes.

In the course of the hearing the government was asked about the progress of Service Victoria and specifically whether there were elements of the Service Victoria execution which had been red-flagged in the high-value, high-risk project assessment framework which exists within the Department of Treasury and Finance. Mr Bates essentially indicated that everything was on track — everything was okay — notwithstanding an amber assessment. He subsequently wrote to the Public Accounts and Estimates Committee a week after the hearing to indicate that a number of elements of the Service Victoria delivery were in fact red-flagged under the high-value, high-risk framework that was put in place to keep on top of the projects.

It is of concern that between the appearance at the Public Accounts and Estimates Committee hearing last year and the subsequent letter from Mr Bates there was an indication that the project was not green-lighted under the high-value, high-risk framework and that there are a number of areas where concerns exist within the Department of Treasury and Finance as to the delivery of Service Victoria. That just goes to highlight that it is a complex project, it is an expensive project and it is a high-risk project that the government has embarked on, and it is not at all clear as to why, in seeking to improve service delivery, the government chose to pursue this government-funded and run model when there were so many opportunities for the government to engage with the private sector for a private sector developed and supported model which would allow flexibility as technology changed.

What we have today is a bill which now recognises the existence of all the work that has gone into Service Victoria in some form, though the bill is agnostic as to the structure of Service Victoria and whether it is going to be a standalone entity or part of a department, presumably the Department of Premier and Cabinet. We will seek the minister's clarification around that if the bill gets to committee.

It now seeks to create a legislative framework around the way in which Service Victoria will interact with the agencies for which it is delivering services and around service delivery standards for the delivery of government services, as well as the additional aspect, which has certainly not been canvassed in any depth — I do not think it has been canvassed at all, frankly — in the government's material around the development of Service Victoria. That is the issue of a single record, a single identity, for Victorian citizens, which in summary would allow them to have a single login through the Service Victoria platform on which they have their data stored. That can then be used to access multiple government services on an ongoing basis rather than provide identity information at each individual login. This is something that has not had any public consultation or public disclosure and discussion in respect to the Service Victoria model — it is very much a separate aspect beyond the Service Victoria platform — but it is encompassed in the legislation and it is something that has given rise to concerns.

The coalition received correspondence from Liberty Victoria, which sets out a number of concerns with respect to the Service Victoria Bill 2017, particularly in relation to the way in which that individual ID record would be created under the Service Victoria model and the prospect of that becoming, to use Liberty Victoria's phrase, a honey pot of identity information which could be subsequently hacked by third parties. I will not read through Liberty Victoria's letter at this stage, but I may well put it on the record at the committee stage if we get to that. It runs through in some detail its concerns in particular around that single identity record and the implications of that for citizens who choose to set up that record. Liberty Victoria, as I said, are concerned about the lack of government engagement and consultation and the lack of understanding in the community about what is being proposed by the government in respect of that aspect of the legislation.

In many respects, and this is something the government and the minister will need to address, what is contemplated in the bill and what has not been the subject of discussion is a model not dissimilar to what was proposed by a previous federal government 30 years ago with the Australia Card, which was a single identity for Australian citizens which would be used and was required for commonwealth government service delivery across a number of channels. That was something which in 1987, 1988 or thereabouts was incredibly contentious in the Australian community. It was subject to enormous debate and enormous dissent, and was subsequently abandoned by the Hawke government, which had proposed it.

With respect to the identity verification function in this bill, we have not had that public debate, we have not had that public discussion and, other than the Liberty Victoria correspondence in relation to that aspect, this is very much flying below the radar. It is something that we believe is not appropriate without far greater public discussion and engagement than has been the case with the development of this legislation to date.

The coalition absolutely recognises that the expectations of the community are changing with respect to service delivery. They have changed with respect to service delivery from the private sector and they have changed with respect to service delivery from the public sector. The development of technology in the last decade has seen to that, and it is inevitable that we will see further technological changes in the next decade which will change the community's expectations for service delivery by government and which will mean that government will need to be flexible in the way in which it provides services to its citizenry. We are concerned that in creating a legislative framework for Service Victoria the government is doing the exact opposite. It is creating a framework which stifles innovation and which locks in one model for service delivery. Rather than leading to improved service delivery on an ongoing basis, it will in fact impede improvements to service delivery on an ongoing basis.

The reality is the services that are being delivered online today by government agencies in various forms and at various levels are being delivered without a legislative framework. VicRoads has not required a legislative framework to put some of its functions online, nor have any of the other Victorian government agencies. The idea that we now need to pass legislation to create a locked-in, black-letter law framework for the way in which those agencies which are participating in SV interact with SV in the delivery of a platform is not one we accept. Our view is that that will simply hinder further innovation and further change as platforms and technologies evolve in the next decade.

Recognising that a legislative framework is not currently in place and has not needed to be in place for existing online service delivery and recognising that the government is proposing a structure around the identity verification function — which we will discuss, no doubt, in some detail later — which has not gone to the Victorian community, is not understood or accepted in the Victorian community and, as I said, other than the limited feedback from Liberty Victoria, has not been the subject of public consultation, we believe this legislation should not go forward. Accordingly the coalition will be voting against this legislation at the second reading and subsequently. We believe that improvements in service delivery in Victoria and the optimisation of digital platforms can be delivered without legislation and should be delivered without legislation to ensure that there is flexibility as technology and platforms change into the future and that in the absence of public debate the case has not been made for the identity verification function. So when the bill gets to the second reading it will be opposed by the coalition. There are other ways to improve service delivery in Victoria, and the case has not been made for this legislative framework to be put in place.

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