A damning report by the West Australian Auditor General on the WA model of Shared Services centres had cast further doubt on the Rann Government’s claimed savings for a similar plan.
Liberal Member of the Legislative Council Rob Lucas said today that a centrepiece of the Rann Government’s budget forward estimates are claimed savings of $130 million over three years (increasing to $60 million per year) from centralising functions such as payroll, information technology and human resources into one or two Shared Services centres.
“During last year’s Estimates Committee (October 18), Treasurer Kevin Foley referred to the WA experience as a model and justification for his proposed reforms.”
“…I was talking to the West Australian Minister responsible for Shared Services and he said that West Australian has put a figure into its budget of $150 million, that it expects to get from Shared Services.”
Mr Lucas said the WA Auditor General in the last week has reported that the WA reforms were ‘under serious threat’ and that key components of the project had not been delivered.
“He also reported that implementation costs were significantly higher than expected and that after three years’ experience the WA Treasury Department was now preparing a new business case for Government which will include ‘a revised project budget and forecast return.’
“The report notes that WA was hoping to save $55 million per year (and not $150 million as claimed by Mr Foley) compared to the more ambitious $60 million per year claimed for South Australia,” Mr Lucas said.
In summary, the Auditor General concluded that:
“The Shared Services project is known to be in trouble. It is behind schedule and over budget.”
A senior source within Treasury in SA has advised the Opposition that the WA report confirms many of the concerns held by many Treasury officers about the claimed cost savings for the SA model. Some of those concerns include:
• Doubts that claimed savings of $60 million per year can be achieved;
• Implementation costs will be significantly higher than claimed and that agencies are concerned that increased costs of implementation might not have been properly factored into the budget;
• Agency doubts that claimed savings of 600 FTE staff can be achieved; and,
• The proposed project management arrangements with Minister Wright being given total responsibility for the project will not work.
“Obviously, if the claimed savings of $60 million per year are not achieved, there will be a ‘black hole’ in the Rann Government’s budget forward estimates.”