Examination of Witnesses (Questions 220-239)
SIR NICHOLAS
MONTAGU KCB, MR
BARRY GLASSBERG
AND MR
TERRY HAWES
MONDAY 18 MARCH 2002
220. I have to ask my question. You then said
that what happened was you called in EzGov, as you have called
it, and they, as we see in the Report, begun to resolve some of
the problems, not all of them. It says on page 27, "Many
of the early teething problems have now been fixed." So we
have not yet got a system doing what you originally thought it
was intended to do. What was wrong with the performance objectives
you set in the original contract that you have not been able to
claim any penalty from those who were supposed to be supplying
you a working system?
(Sir Nicholas Montagu) They supplied us with a system—
221. Yes, but it does not work.
(Sir Nicholas Montagu) They supplied us with a system
which did work. As I have indicated, there was nothing wrong with
the fundamental system, there was nothing wrong with the forms,
it was a system which worked, it was a system within the contract
with EDS. The issue with EzGov was the need to get a rather different
lot of skills in for moving to wider internet use. We were delighted
when EDS partnered with them, we were delighted to have them reporting
on it, but I must emphasise that Sir John's Report has not found
a system which did not work. He has found a system which has,
"teething problems, which are to be expected". We were
breaking new ground in e-services between Government and the citizen.
I have readily conceded there was room for improvement. There
will always be room for improvement, and that is why build and
learn and the iterative process I have described is of such great
importance to providing a decent customised service. All you have
shown is that in the first year take-up was relatively low.
222. And in the second year.
(Sir Nicholas Montagu) In the second year it was up
by 94 per cent.
223. Only because those who had not been able
to get through the first time got through the second time.
(Sir Nicholas Montagu) Similarly, as Sir John's Report
shows, that was not out of line with the private or public sector;
look at the first year of the Australian Tax Office.
224. You have had a first year, you have had
a second year.
(Sir Nicholas Montagu) And up by 94 per cent in the
second year. I am well pleased with that.
225. Anyway, you and I are not going to agree
on that.
(Sir Nicholas Montagu) I fear we are not, Mr Williams,
it is a source of great sadness to me.
226. I will end the discussion there, while
we are still friends.
(Sir Nicholas Montagu) As always.
Chairman
227. I always enjoy the confrontations between
you and Mr Williams, so it is rather sad when they end.
(Sir Nicholas Montagu) I hope you did not say "confrontation",
Chairman. I hope you said "conversation".
228. Conversation. What month and what year
did you start your work on this project?
(Sir Nicholas Montagu) April 1999.
229. In other words, you had not done any work
at all before the March 1999 Budget?
(Sir Nicholas Montagu) Terry, would you answer that?
You were involved.
(Mr Hawes) Speaking from personal experience, the
answer to that is yes. In terms of preparing a project to deliver
this particular service, that started around April 1999, but I
had been working for at least six months or so before that establishing
an electronic business unit and doing various other preparation
work so we could go ahead straight away.
230. So you could go straight away. So for six
months before the March 1999 Budget were you intending to bring
out a system within a year or 18 months?
(Mr Hawes) At that time we were doing exploratory
work. It seems strange to say it now but the idea of government
on the internet, transactions services, was very new. We were
making sure we had in place the basic building blocks so we could
start to deliver internet services when ministers asked us to
do that.
231. What internet services?
(Mr Hawes) The internet services we have gone on to
deliver. There are basic foundations we have to lay, and that
would have been the same in many respects whether it was for self-assessment
tax returns or pay-as-you-earn, and that is the work we were doing.
232. Before April 1999, were you doing any specific
work in order to achieve self-assessment by the internet within
a year?
(Mr Hawes) No, not in project terms we were not.
233. Although Sir Nicholas quite rightly refused
to answer my question about whether the Chancellor's statement
took you by surprise in March 1999, one must assume that although
you will not and should not answer that question the answer is
yes?
(Sir Nicholas Montagu) As you say, Chairman. I think
what Terry portrays is a big public service department gearing
itself up in general terms to do business in a completely new
way. As he says, even three years on, one thinks of how e-business
has expanded.
Jon Trickett
234. Chairman, can I just come back on one particular
point which is this—thinking about my bypass and motorway
analogy a little bit further—we seem to have built a road,
an electronic highway with sufficient capacity for the whole population
in a fairly limited period of time to utilise simultaneously.
The fact is that we know that only a very small fraction of that
population are using it or are likely to use it in the near future.
Is it arguable that the cost of establishing all of this huge
capacity is larger than it need be had a more realistic estimate
been made of the number of users in the first instance? What we
have here is a wonderful machine capable of dealing with the whole
population and in fact handling less than 100,000.
(Sir Nicholas Montagu) At the moment, Mr Trickett,
this is one bit of our e-business. In January our website had
5½ million hits on it. As I was saying to Mr Williams, we
have seen a 94 per cent increase year on year. I do not want to
pursue your road analogy for the kind of reason that Sir John
was talking about; but yes, it is true that we have been busy
putting in place an infrastructure which we are confident can
deliver the Government's 2005 pledge which is for universal e-availability.
235. The question I was asking you was, you
now have very, very substantial over-capacity to handle, is it
arguable that your costs would have been less or the cash flow
could have been configured differently had you made a more realistic
estimate of the number of users?
(Sir Nicholas Montagu) I think not, Mr Trickett. I
do not think one builds a system for X thousand as opposed to
X million. We are putting in place, as I indicated, a long term
investment for universal use.
Mr Williams
236. That is interesting. Following on precisely
what has been said, you are saying with great satisfaction we
have achieved 90 odd, say 100 per cent—for ease—improvement
on last year but last year you started off with a figure of 129,000
who were wanting to use the system, only 39,000 managed to get
through so only a quarter got through.
(Sir Nicholas Montagu) Sorry, could you repeat again
how many got through?
237. 39,000, if I remember correctly.
(Sir Nicholas Montagu) Yes.
238. It was 129,000 indicated they wished to
do so.
(Sir Nicholas Montagu) Yes.
239. So 80,000 failed.
(Sir Nicholas Montagu) No, it is not a question of
failing, it is a question of opting.
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