The Albanese government is abandoning an attempt to modernise the way businesses record public information such as the identity of company directors, after a review found the Coalition-era project would run more than $2bn over budget.
The assistant treasurer, Stephen Jones, is now considering the review’s call to instead spend a further $515m returning registry functions to the Australian Securities and Investment Commission and investing to improve data integrity in other ways.
The program, launched in 2019 and slated to be complete in 2023-24, promised to transform company, business, professional and registry services at a cost of $480.5m.
The independent review said it aimed to improve a “poor digital experience” for 3 million companies and 6 million non-company Australian Business Number (ABN) holders, and to minimise fraud and business misconduct, including registration of fictitious characters as office-holders on the companies register.
But the program ran into trouble due to a “significant underestimation of program complexity”, the review said. Some elements were “non-compliant with legal requirements”, on the assumption the law would be changed before the program launched.
Other causes of the cost blowout included the significantly greater than planned use of contractors and the Coalition government’s decisions to expand the scope of the program before it was delivered.
According to the review, the program has so far failed to realise any of the benefits identified in its second pass business case, except for the creation of new director IDs. It would not begin to deliver improvements until March 2026 before completion in 2029.
“Based on the current scope and approach, the [program] would require additional investment between $1.8bn and $2.2bn, increasing the total cost (including funding to date) to approximately $2.8bn, or more than five times the original estimate,” the review said.
“The review concludes that the [program] should be stopped, as the economic benefits from the program do not justify the level of additional expenditure required.”
As at March, $430m has already been spent and the program is haemorrhaging $12m a month.
The review, conducted by the former chief executive officer of Service NSW Damon Rees, noted it would cost $410m to “wind-down the program, return registry functions to Asic and undertake an urgent and unavoidable technology refresh to address risks with aged infrastructure and ensure services can be sustained”.
For an “additional targeted investment of approximately $105m” the government could also improve data integrity, which it said was “by some distance the best” option because it could deliver “some of the key economic benefits”.
These include the integration of the new director ID scheme with the companies register and stronger identity assurance for transactions with the registry system through the integration of myGovID.
These are necessary to “[filter] out fictitious characters over time and allow regulators to better understand the various business roles and relationships that exist between individuals and different entities”, it said.
Jones said “a failure of planning and oversight by the previous government has left Australia’s business registries in limbo, and the taxpayer left to foot the bill”.
But Jones has not specified which of the review’s options the government will select, promising to now “consider how the broader lessons from the independent review could be applied to future IT projects, including future investment in the existing registry systems”.
Jones said the Albanese government wanted “responsible spending … to deliver products and services that have actual tangible benefits for Australians” that represented value for money.
“The previous government yet again over promised and under delivered.”
