With the Australian Federal Budget only weeks away, public sector IT is in for a major shake-up as the Howard ministry prepares for some of the biggest structural changes in 20 years, backed by the mandate of a full senate majority.

For the first time since it was elected, the Howard government will be able to bring home many of its long-held ambitions to push structural, economic and social policy changes.

These include a desire to drastically reduce bureaucratic duplication, accelerate service delivery and make government agencies and departments work to a common purpose rather than competing against each other, as has often been the case.

All have profound impacts for government IT, not least because many agencies and their functions are likely to be consolidated, integrated and streamlined in the hope of increasing productivity while reducing costs.

In this context CIOs, charged with delivering the business of government back to the community rather than specific technological goals, will continue to drive public sector IT.

However, by far the biggest challenges the government will face are in confronting complexity in its own IT backyard, while making sure new policies and technologies do not have unforeseen disruptive impact and consequences.

Challenge 1: Harmonizing Human Services

Howard has outlined the priority of improving service delivery back to the community and created the Department of Human Services to fuse together Centrelink, Health Insurance Commission (HIC), Child Support Agency, Health Services Australia, the Commonwealth Rehabilitation Service, and Australian Hearing.

The merger is currently the biggest IT challenge facing the government because of its scope. All agencies in Human Services are public-facing. Most agencies interact with each other, albeit with difficulties caused by disparate transactional systems representing the toughest and most complex IT turf in the government.

Transactional volumes are huge and touch almost every Australian. Centrelink has 6.5 million customers while HIC covers the entire population by virtue of Medicare.

In dollar terms, HIC distributed $66 billion over 2001-2002, while Centrelink accounted for a $60.1 billion for 2003-04 through 4.4 billion mainframe online transactions. The two agencies account for almost 20 percent of Australia"s gross domestic product.

The prospect of all Human Services agencies sharing common infrastructure, standards and staff has obvious potential for billion-dollar savings. It also carries inherent risk in vastly underestimating the amount of work to be done and the impact it will have on the Australian population.

The most likely output from the 2005 Budget is a scoping study to outline savings and risks, and what low-hanging IT savings can be harvested quickly. A definite outcome will be reduction of government expenditure across numerous IT vendors, not least contracting and consulting services.

Another likelihood will be the introduction of open standards and retention of intellectual property through the creation of in-house applications rather than paying vendors for the privilege of self-customizing.

Challenge 2: Wrangling government IT procurement

If the government is likely to tread cautiously down the path of integrating IT for Human Services, rationalizing whole of government IT procurement practices will be pursued with vigor.

To this extent Howard has charged one of his most trusted and feared lieutenants, Senator Eric Abetz, with driving the new government"s IT procurement agenda, backed by the Australian Information Management Office (AGIMO).

Key challenges for AGIMO include the task of delivering cogent purchasing guidelines to all government agencies to restore value after outsourcing blowouts and breaking vendor cultivated lock-ins.

Abetz has already moved on this front with a comprehensive review of all government IT purchasing guidelines, to be completed by the end of 2005. While the current mantra of best practice, best value and best fit will continue, agencies will also be expected to share their IT experiences amongst each other and to learn from each other"s mistakes and triumphs.

Technology lock-ins will likely fall out of favor as various ministries demand faster and more flexible performance from their IT shops.

Key challenges for Abetz and AGIMO will be convincing vendors to get with the new program after more than a decade nuzzling at the public sector trough. Managing the expectations of competing interest groups will form another challenge.

Challenge 3: Making industrial relations work

A major grey area of government IT policy is how the changing industrial landscape will impact those working in IT.

With Workplace Relations Minister Kevin Andrews releasing a discussion paper on the future of independent contracting, a turf war between states and Canberra over employment practices looks inevitable.

The federal government supports the principle that employers of IT contractors should not be encumbered by permanent employee entitlements. Less certain is whether many companies will divest themselves of permanent IT employees in favor of making them contractors if given the opportunity.

While government itself is unlikely to purge permanent IT staff in favor of contractors, listed enterprises at the mercy of financial markets may have little choice.

There is also little in the way of policy to deal with offshoring government IT work, nor a strategy to deal with multinationals onshoring cheaper IT contractor labor from overseas.

Challenge 4: Regulating ICT security expectations

With the march towards VOIP and a completely privatized telecommunications landscape in full swing, keeping new-breed communications under control will surface as a major issue.

Agencies migrating to VOIP are already being forced to juggle cost savings, integration challenges and mission-critical reliability and security. Currently, the Defence Signals Directorate is charged with ensuring federal IT security, a task that will expand greatly with government VoIP roll-outs.

Similarly, the government will also be forced to look into security vulnerabilities of critical infrastructure IT assets held by private industry such as banks, telcos and utilities.

Current critical infrastructure security frameworks for private industry, as set out by the Attorney General"s Department, are voluntary and yet to be tested by a major crisis such as a denial of service attack crippling the likes of a bank or power generator.

Should an essential service fail in the event of an IT-related crisis, the government will be left little choice other than to compel minimum IT security standards into private industry, a move likely to prove difficult and encounter serious resistance.