CeBIT e-government conference
6 May 2015
Thank you Harvey for your introduction, and to everyone including the NSW Minister for Innovation, Victor Dominello, and the acting CEO of the Digital Transformation Office, David Hazelhurst, for being here this morning.
So here's the big picture.
Australians overall enjoy a relatively high standard of living. Our wages are among the highest in the world and consequently so are our costs.
But how do we maintain that high standard of living in a world being transformed by convergence and globalisation amplified by information technology?
By convergence I mean the way in which developing economies which had hitherto competed for low cost, low skill jobs are now competing for the most skilled, producing the most sophisticated and advanced products. Globalisation powered by the Internet means many businesses and jobs which used not to be trade exposed - think of retail, media, professional services - now are. The globalisation of supply chains means that at every stage of production there is more contestability than ever.
Convergence and globalisation offers much more competition, but it also offers much more opportunity. As more and more of our market becomes accessible to global competitors so does a larger and far wealthier global market become accessible to us.
At the same time in common with other developed economies, and some developing ones, we face the challenges of:
- an ageing population and the impact this will have on health spending and the number of working age people per retiree. According to the 2015 Intergenerational Report, the number of people aged 65 and over will double by 2055, and the working population - those aged under 64 - will shrink considerably. We need to encourage and support more older Australians to remain in the workforce, and invest in technologies that can detect age-related illnesses so they can be treated earlier and at less cost to the healthcare system;
- repairing the budget by reducing and better targeting expenditure and above all focussing on economic growth. We have a lot to fix. In the space of six years spending under Labor increased by $139bn but revenue increased by less than half to $68bn. So for every $1 in new revenue, Labor committed to $2 of new spending;
- recognising that labour is global and highly mobile, we need to equip students with the skills to find employment in the fastest growing occupations. 75 per cent require STEM skills but only half of Year 12 students are studying science, down from 94 per cent 25 years ago. Equipping kids with the skills to compete in a globalised, converged world - such as computational and design thinking, machine learning and coding - will help to improve Australia's competitiveness and go a long way to addressing youth unemployment of 14 per cent. Youth unemployment of 22 per cent in the EU should be a warning if we do not take action; and
- a lack of collaboration between business and the tertiary sector. Australian businesses that innovate are twice as likely to increase productivity, and yet Australia ranks 29th out of 30 OECD countries on the proportion of large businesses that collaborate with universities on innovation.
It is widely recognised, not least by the IMF, that Australia has a structural Budget deficit so clearly we need to get spending under control.
But this in itself will not secure our future prosperity. Sustained economic growth is needed to grow wages and lift our standard of living. So how do we realise this?
The key to our future prosperity is to be faster, leaner, more productive, more innovative and more collaborative. Above all to be more agile, to recognise that we are living in the most exciting, dynamic, disruptive time in human history, and that the volatility and unpredictability driven by technology and rapid change must be embraced not ignored.
We cannot proof ourselves against the future in the sense of building a wall or a dyke of some kind to hold back the future. We embrace the future, we make volatility our friend, not our enemy. We change our business culture so that it is more receptive to innovation, more receptive to different ways of doing things; no longer saying 'not invented here', no longer being so deferential, and above all, never saying 'we've always done it this way'.
Innovation is critical to our economic prosperity; the latest Australian Innovation System report showed that the 42 per cent of domestic businesses that innovate account for around 70 per cent of the economy's employment, capital expenditure and business income, and more than 80 per cent of total Internet income.
But our performance on innovation is slipping behind other developed nations. We rank second last of 17 OECD countries on new-to-the-world innovation. The proportion of researchers working for Australian businesses is lower than in comparable countries so they need to collaborate more with universities, where the bulk of researchers are employed.
Digital disruption and the role of government
While the Internet has been disrupting legacy business models for some time, the most significant change is the way mass connectivity has combined with mobility and modern processing power to disrupt non-traded sectors.
Take Airbnb. In less than three years it has added more than 10,000 rooms to Sydney's holiday rental market without a single brick being laid or planning permit being approved. In seven years Airbnb has added more than one million rooms globally, compared to the century old Hilton chain's 700,000 hotel rooms.
With more than 1.75bn smartphones in use globally, most people expect to be able to access services and information from almost any location, at any time of the day.
If you can order a pizza, taxi or pair of shoes through an app and monitor the status of these items through to delivery, or complete all of your banking through a smartphone, it's not unreasonable to expect government to make its services as widely available.
Government needs to embrace change and adapt in-line with the expectations of its customers.
While government isn't exposed to competition in the traditional sense - it has a monopoly on many of the services it delivers - if it seeks to remain relevant to people's everyday lives then it must be flexible and nimble, capable of embracing new technologies to disrupt the way it delivers public services. And of course governments, or at least their political masters, face the ultimate disruption every three to four years at the ballot box so it's in our interests to adapt and embrace change.
Remember the government sector is at least a third of the economy, so by delivering digital services that are easier to access and simpler to use, people will not only save time when dealing with government, the whole economy will be more efficient.
Digital Transformation Office
We should aim to become the world's leading digital economy.
This won't happen if the government continues writing strategies on the importance of the digital economy, but it can happen if we lead by example. Government needs to embrace new technologies, leverage data and innovate the way public services are delivered.
So we've established a Digital Transformation Office to deliver services that focus squarely on the customer. The DTO has not been established to chase savings - they will inevitably follow if services are so efficient and easy to use that customers seek them out ahead of less efficient delivery channels such as over the counter. The DTO will design services that are simpler and more straightforward. And they will be delivered digitally by default, meaning that anyone will be able to access services from start to finish online using their mobile device.
And all new and redesigned services will need to comply with the recently developed Digital Service Standard.
The DTO will incorporate a large number of projects. Immediate priorities include:
- establishing a trusted digital identity framework;
- improving the functionality of the myGov digital mailbox;
- developing a 'tell us once' functionality across all government agencies; and
- streamlining grants administration.
Check out the DTO blog atwww.dto.gov.au for more detail but let me touch on a few of these projects briefly.
Establishing a robust, economy wide digital identity is central to the government's digital agenda. The trusted digital identity framework will establish a set of principles and standards for the use of accredited government and third-party digital identities across government. It will also involve the use of a voiceprint to access services through telephony and mobile channels.
The 'tell us once' functionality will enable individuals and businesses to update their contact details with the government once and choose to share this information with other relevant agencies seamlessly through myGov.
And grants administration will be streamlined by developing a simpler grants administration system across government. The top 12 granting agencies in our government, which deliver over 90 per cent of grants funding by value, will transition to two IT systems - down from 15.
The siloed approach to IT investment and service delivery across the public service is letting taxpayers down. Many agencies are delivering good services, but they're delivering them in isolation or as though they're a standalone business.
The DTO will overcome these limitations by taking an across agency - or whole-of-government - approach to investing in common IT platforms that can be used by every agency.
I've already touched on the example of grants administration, but there are many others, including significant duplication in Enterprise Resource Planning systems - more than 200 systems, all performing similar functions, have been identified across the public service.
We will work with agencies to identify opportunities to rationalise duplicative and wasteful IT spending. We need to learn from past mistakes.
Governments across the world are at varying stages of their digital transformations so the DTO has an opportunity to collaborate with the world's leading digital economies. These include, but are by no means limited to the D5 - Estonia, Israel, New Zealand, South Korea and the UK, as well as state and local governments in Australia. I have spoken to Victor Dominello, the NSW Minister for Innovation, and we're on a unity ticket on the need to collaborate.
We will also make myGov available to all other state and local governments at no cost, other than those associated with the initial onboarding.
The DTO, and all other parts of government for that matter, should never be arrogant enough to believe that Canberra has all the answers.
The DTO will also collaborate with business and the research sector, and I will have more to announce on this topic as the year progresses.
Now let me touch on a couple of the next steps.
The DTO is working with the public and government agencies to identify a small number of exemplar services to disrupt, redesign and put in the hands of users to critique. We'll start with a handful of them - perhaps three or four. The idea is to start small but think big.
The emphasis will be on agile design and nimble development. Projects will be delivered over short, 90-day cycles. This means that the alpha and beta services won't be perfect, but it's a fundamental shift to the way government has done things in the past. This change should be seen as an opportunity, not a risk, and will require a fundamental shift in culture. The DTO needs to be more like a startup in its attitude, tossing aside the rules based, regrettably blame based, often, culture of the public service to one that embraces and rewards principles and values.
By releasing new services to the public sooner, we can test them in the real world and customers can provide feedback directly. Using advanced analytics, we can spot trends and glean insights that simply wouldn't be possible under the traditional approach.
We will soon release a consultation platform on the DTO website so I encourage everyone to be involved. We'll also develop a public facing dashboard, which will report on the progress of projects and investments. A prototype will be developed over the coming months.
The DTO may well be one of the most exciting projects the public service ever undertakes.
Its ambition is lofty and its scope is wide. But at its core is a commitment to delivering better outcomes for the people who access government services - which is all of us, at least once a year.
The DTO's mission is to improve the customer experience for citizens and businesses when dealing with government. We will achieve this by designing services that are simpler and easier to use.
The key is to focus with a laser like attention on the customer. That is the key – make that customer experience more engaging, more valuable, more interesting, easier to undertake. The savings will follow inevitably. Digital transactions are so much cheaper than over the phone transactions, postal transactions or over the counter transactions, if you make your digital platform as engaging as possible for the citizen, and you just think about the citizen, think about your customer, then you'll have a lot more happy customers and your savings will follow.
This is a very important change because very often as you know changes to IT in government have been focused on cost cutting, how can we save money, and it has been very inward looking, how can we make it easier for us, the government? How can we simplify what we do? The critical thing is to focus on the customer.
I believe we can achieve all of this through a stronger commitment to innovation and collaboration and I hope and I expect that you will join us on this exciting journey.
We are determined, and I know there is the same level of commitment at every level of government around the country, to transform government so that it serves the citizen in the most compelling and engaging manner possible.
[i] From the Iconic
[ii] From theABS (Feb 2014):
[iv]Australian Connected Consumer Report, (pp 49-50)