Greens question millions paid to advisers by IRD

22:13, Sep 22 2012

Inland Revenue is spending $1 million a month on consultants as it pushes ahead with its $1.5 billion IT project.

The department has confirmed it has paid nearly $10.6m in the past 10 months to the Australian division of French-based global IT company Capgemini.

The figure was revealed in an Official Information Act response the Green Party provided to the Sunday Star-Times last week.

The payments come after it was confirmed Inland Revenue had paid more than $30m in redundancies as it prepares for the IT upgrade.

"It's a lot of money. This level of spending clearly needs to be scrutinised as to whether this is the right investment," Green Party co-leader Russel Norman said.

"It is a big project and IT projects are expensive, but the fact they went with a model that's biased against New Zealand software providers is part of the problem. The way Inland Revenue did it [create the contract], our companies didn't stand a chance, and I'm not convinced contracting out to a big international company is the way to get best value for money."


Norman said the Greens would be seeking a full briefing from Inland Revenue bosses at parliamentary select committee level. "We will keep the heat on them," he said.

Documents released by Inland Revenue after an OIA request reveal Capgemini was the recommended vendor for the project partly because of its "commitment and understanding of the NZ market".

But Norman questioned that, saying the company had previously quit New Zealand, and only relaunched its operations in a bid to secure the contract.

"The way the firm won the contract is ludicrous, what commitment and understanding of the New Zealand market? This is a firm that walked away in the 2000s . . . and only came back late last year to get this contract. How many jobs have been created by giving this to Capgemini . . . bugger all, none in New Zealand I'd have thought."

Inland Revenue business transformation acting deputy commissioner Ron Grindle said the department appointed Capgemini to assist it with the planning phase of the project because it had the necessary global experience in public sector change.

"They have partnered with a local company, Tenzing Management and Technology Consultants Limited, to complement the expertise they are providing."

In July the Star-Times revealed Inland Revenue had paid about $31m to 526 staff made redundant over three years, as it prepared for the upgrade. That figure was revealed in documents released by Parliament's finance and expenditure committee, and was made up of $18.3m in the 2009-10 financial year, $6.5m in 2010-11, and $6.1m last year.

An Inland Revenue spokesperson said at the time that the costs included voluntary redundancies offered in the 2009-10 year. "They also reflect changes made as we look at where and how we deliver services, to make doing business with us easier and more efficient for customers. We need to ensure they can deal with us effectively, and we are responding to the changing ways they want to do business, such as online."

Revenue Minister Peter Dunne won't say how much Capgemini's "commercially sensitive" consultancy contract is worth.

Sunday Star Times