Inland Revenue says it is not directly meeting the travel and accommodation costs of Capgemini consultants who are helping it plan a possible $1 billion-plus overhaul of its computer systems. But it will not reveal what they are being paid.

Xero founder Rod Drury confronted Internal Affairs Minister Chris Tremain when he met information technology industry leaders on Monday, saying the consultants, on high rates, were flying in from Sydney and staying in hotels to do the work.

Drury told BusinessDay yesterday that he believed they included young graduates, but he admitted he did not have first-hand knowledge of the arrangements.

IRD deputy commissioner Peter Mersi said the value of its Capgemini contract was "commercially confidential", and he would not disclose the consultants' individual pay rates. But, he said travel and accommodation costs were being met by the consulting firm.

The IRD had contracted the French firm so it could learn from international experience and adopt international best practice, he said, adding that Capgemini had partnered with two Wellington consultancies, Tenzing and Technology Consultants, on the project.

Drury said he believed no local firms could have won the main consulting contract because of the international experience sought by the IRD.

Although the IRD has considered buying a tax software suite from United States company Oracle, Drury hoped the job could be done by local firms. "We are world leaders in writing software cost-effectively," he said.

IRD's forecast – contained in a ministerial briefing in February – that the project could cost $1b to $1.5b has scandalised industry leaders facing the fallout from government belt-tightening.

Bennett Medary, chairman of industry body NZICT, said spending that much on the work would be insane. "It is a huge worry. It sounds like a ridiculous number for a New Zealand agency and how many times do we have to learn you never contract anything that large unless it is a straight piece of road?"

Mersi said the IRD would be unable to comment further on the project's costs, until it completed its "transformation plan".

- © Fairfax NZ News