



Tougher IT deal to help fill carbon tax's budget hole


Noel Towell


The federal government says it has shaved $100 million off its IT costs by taking a tougher line with US software giant Microsoft.

The savings were among a raft of measures announced on Tuesday by the Rudd government designed to save $4 billion and offset the budget impact of scrapping the carbon tax.

According to Finance Minister Penny Wong, her department has made big savings by securing prices closer to those enjoyed by US users of Microsoft products.

But one independent expert says a tougher line by governments with multinational IT giants is long overdue. The Australian government's average annual spending on Microsoft software licences in the past four years was $142 million.

Finance will keep the exact numbers of the new three-year deal signed with Microsoft in June under wraps for 12 months.

But the department is believed to have shaved more than $33 million-a-year from the federal government's bill for Microsoft software licences, services and maintenance.

''The government has put considerable effort into improving whole-of-government procurement processes and about $100 million in savings will be found through more effective procurement of Microsoft software licences,'' Ms Wong said on Tuesday.

''Last month, the government executed a three-year contract with Microsoft for software licences, services and maintenance.

''In this contract, the government secured significantly greater discounts resulting in closer alignment with the benchmark pricing paid in the United States.''

Lateral Economics managing director Nicholas Gruen, said taking a tougher line with Microsoft and other computer giants was long overdue.

The chairman of the Government 2.0 taskforce said more choice in the market meant governments and departments should be securing better value for money for taxpayers.

''There is more room for this sort of stuff because more and more places are getting more options about what to do,'' Mr Gruen said.

''They can go and get Google Apps or all sorts of different options and working in the Cloud should be a lot cheaper.

''So it sounds like a sensible thing to do, to talk Microsoft down on its pricing.''

Mr Gruen said the difference between prices charged in Australia and the US by large computer companies was ''profound''.

''There's been a parliamentary inquiry into this, and I'm surprised that it hasn't been a bigger story than it has been, because the country has basically been ripped off,'' he said.

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