[ANALYSIS]

There’s a whirlwind of positive activity among Australia’s reinvigorated public servants, scientists and various technology sectors following the release of the National Innovation and Science Agenda (NISA).

After all, who wouldn’t be cheering after more than a decade of oscillating and often contradictory settings around so-called new economy industries.

So when the NISA finally dropped this week, the collective sigh of relief that Australia now has a vision for national industries beyond mining and heavy manufacturing was palpable. Not to mention a government willing to pursue and exploit new opportunities rather than try and mitigate them as a threat.

To paraphrase the Warumpi Band, you could say the nation’s collective inner nerd is “like a sheepdog off the chain tonight.”

There’s real excitement, even euphoria, that Australia’s narrative is changing to rewarding those who make improvements and generate wealth rather than dwelling on the persistent passion-killing talk of austerity.

Let’s hope it lasts past Christmas.

Positive sentiment is great, sometimes fleeting and should be immediately harnessed.

But it will also need to be backed by some very hard-headed thinking, several gutsy calls and the ability to absorb and work through criticisms and public anxiety. There will be casualties along the way and many of them will be in the public sector.

New contract, new conditions

When Turnbull talks about swapping out the restrictive notion of ‘Future Proofing’ for a ‘have a go’ culture that can iterate quickly, is resilient and accepts that some failure is an integral part of learning he is brokering a kind of social contract.

The core of the deal is that all the inevitable changes now coming down the line won’t just benefit specific sections of the economy – and the special interest groups that support them. They’ll benefit all.

If we collectively back the new kinds of policies that can deal with change, along with new business models that enable them, we can all share in the wealth created and it will be more evenly and meritoriously distributed. Or so the theory goes.

But it’s a smart call because traditional industries are declining, fiscal demands on government are rising and tax receipts (NSW property taxes excluded) are proportionally contracting.

And it works at the level of electoral gut feeling because Australians have a long and bitter collective memory of being persistently fleeced by powerful oligopolies that resist change, especially privatised former government corporations.

But to make Turnbull’s new deal work, there’s some essential heavy lifting on a few items that needs to happen to ensure that the underpinnings of a modernised, smart, sustainable, intelligent and agile economy are secure.

Those underpinnings aren’t in the cool, sexy, start-up buzzword du jour category; they’re in the shit boring, complicated and change resistant areas where vested interests simply will not want to let go.

Here’s the quick form guide to what’s missing

1)    Digital Identity

No government anywhere has nailed this yet, and let’s face it, the places where it will come together most easily probably won’t be Western style democracies.

What we do know is that as more and more transactions go online, they will have to be more secured. Equally, their user interfaces have to be at least as easy to use as existing alternatives.

So far, Australia has myGov, an online account credential for government services that was spawned out of Centrelink and can now, when it’s working, also open doors at other federal agencies.

If you think about state governments like New South Wales, it’s also digitising identities, be it through the Service NSW online interface or driver’s licences being ported to phone apps.

If you, the punter in the street, want to open a bank account or buy a mobile phone, you’ll have to front some sort of ID – with a photo if it’s over the counter – and often multiple bits of ID to cross check.

At the moment is costs about $1 a throw to check IDs through the government’s Document Verification Service, and that’s for the physical variety.

But when you hit digital transactions, it’s a whole different ball park because everyone does it a bit differently. You can’t just photocopy / scan the documents to tick the compliance box.

And with most physical ID checks really done by humans, there’s a natural fault tolerance you can’t get with PKI certificates refusing to shake hands to create a transaction failure.

The Digital Transformation Office, headed by Paul Shetler knows that Digital Identity is a big, hairy horrible first order issue – which is one of the reasons it’s taken over stewardship of myGov. Shetler is also acutely aware there will need to be discussion and debate on what any Digital Identity will look like and how it will work.

The topic is also sufficiently contentious to have been left off Turnbull’s big Innovation splash, a prudent move given its inherent capacity to polarise people. There will be a chief Digital Identity human appointed soon at the DTO and they will have their work cut out for them.

To Shetler’s advantage, he’s lived and breather electronic transactions during his time at SWIFT, the slightly obscure body that sets electronic interbank transaction standards. To this day, credit cards remain the main transactional instrument on the internet, not least because they are globally interoperable. Not perfect, but they work.

These are just some of the Digital Identity questions that need to be resolved:

•    Does Australia need a single digital identity credential, like an online ID card, or should identity be ‘federated’ by cross checking across multiple entities?
•    Who’s going to issue it and control it?
•    Will private industry have access to it, eg to secure bank transactions/accounts or to verify other higher value transactions?
•    Who’s going to set and control the standards?
•    Will it be opt-in or opt out?
•    What about states and councils … what will they use?
•    What are the privacy implications and should or will it be linked to Medicare / PCEHR?
•    Will legislation be required?
•    At what age do you get a Digital ID?
•    What happens if it gets stolen/hacked?

This isn’t to say that something along the lines of Digital ID shouldn’t happen, because it needs to happen.

But the risks are substantial.

Just look at the decade-long quagmire that’s eHealth. A decade ago Abbott said if eHealth wasn’t up and running in a year he would have failed as a minister. Today it’s Abbott who’s been iterated rather than the giant project.

2)    The Real Price and Value of Data and Privacy… and is the ASIC sell-off dead?

So let’s just park that self-inflating hype clusters called Big Data and the Internet of Things for a moment. Focus instead on the kind of data governments now hold, how it’s used and what it’s really worth (and to whom).

Data is gold for government agencies because it provides the evidence base for policy decisions that range from predicting population growth, to health, weather, climate and the functioning of the economy.

It’s also gold for business, especially if aggregated data is cleaned, sliced and diced.

When a government holds a monopoly on the collection and access to such data, it commands a premium. A number of government agencies and enterprises have been commercialising their data sets, most notably the Australian Securities and Investments Commission that, in its role as regulator sits on Australia’s vast corporate document registries for businesses large and small.

Under Abbott, via a recommendation through the Commission of Audit, ASIC’s registry business has been prepared for a sell-off on the basis that the money recouped from privatising a monopoly could be more gainfully deployed.

To be fair to Turnbull – an avid Open Data proponent – the PM always openly contested this thinking, arguing there’s far more economic value in letting people access data for free so they can then create new applications or insights along the lines of the TripView analogy. [That’s where the NSW Government forced RailCorp to allow developers to use its timetables for an app rather than insisting they were copyrighted]

So where’s the great ASIC data sell-off at right now?

It’s hard to say, but it doesn’t look promising. So far there is no official word from the PM on what the status of the proposed ASIC registry sale is, but investment banks keen on big fees from a divestment won’t be letting go for free or without a fight.

Resellers of the corporate registry, who are themselves challenged by broader commercial resistance to onerous and frequently compliance driven access charges, also won’t be happy if the deal is scuppered. It’s a very cosy set-up.

But there’s a bigger picture too, namely growing acknowledgement in government and business that the very way data is collected by the government needs to be radically modernised from antiquated manual methods that often rely on representative samples to sucking in transactional and activity data boiling down the actual numbers.

A case in point is the Australian Bureau of Statistics whose information sets inform central agencies. Technology advances at the ABS were until recently very badly constrained by years of under investment leading to a bailout of sorts in the last Budget.

Australia doesn’t even know how much software it exports, unless you count the shrink wrapped variety.

What Turnbull, his incoming head of PM&C and former Treasury chief Martin Parkinson and Chief of Staff and previous Department of Communications Secretary Drew Clarke all acutely appreciate is this: if they can access data sets directly from business and other stakeholders in the economy (banks, credit card companies) in hours and days and not months, a virtuous circle of improvement starts to occur. Business has been doing it for a decade.

Chief amongst the benefits are:

•    Better accuracy.
•    More timely data.
•    Process efficiency uplift.
•    Greater modelling and analytical capacity.
•    Cost reductions in collection and distribution.
•    The Treasurer doesn’t look like a mug.

But to get to this point, the government needs to convince businesses and stakeholders to play nicely, not least because of the level of trust   and back-end technical integration that also needs to happen. There must also be a degree of standardisation so that systems and data feeds line up.

Allowing businesses and other stakeholders (think tanks, modellers) better, cheaper, at cost or even free access to greatly improved government data sets can provide benefits compelling enough to spur voluntary take-up.

It could also detect far more nuanced economic movements and developments and a far richer set of indicators in the form of heat maps.

This would necessarily challenge some commercialised existing models, like ASIC.

Our betting is that any sale has likely been parked at a minimum until Parkinson takes the reins.

Frictionless Procurement … without borders … or tenders

The fourth pillar of the National Innovation and Science Agenda is somewhat boringly labelled ‘Government as an Exemplar.’ It’s title that (deliberately?) understates a major shift in thinking and culture now underway.

For decades government purchasing at all three tiers of Australian government (Federal, State, Local) has been bound by a compliance driven canon of how purchases can be made. The public tender process is at the core of market contestability, transparency and value for money, but that is changing fast

But tendering is a broken model.

Procurement officials can argue otherwise, but the view from the top (especially for technology) is that the long lead times, convoluted paperwork and the sheer expense of running tenders for even routine purchases are well past their prime and they inhibit efficiency and agility and increase costs.

True, Turnbull and the Digital Brigades are recidivist abusers of the buzzword ‘agile’ – a term pilfered by politicians and the managerial class from the software development community – but being able to quickly source new products, solutions and services with a minimum of process overhead is a real driver for systemic change.

For digital products and services, the most notable development is that the new Digital Transformation Office will now establish a Digital Marketplace, a move that essentially bypasses the lumbering public tendering system at the Department of Finance.

The official line is that the new digital shop for government is being created “to make it easier for innovative small and medium sized (SME) companies to do business with government.”

“The Digital Marketplace will be an online directory of digital and technology services for government agencies to procure information and communications technology (ICT) solutions provided by small to medium sized enterprises,” the NISA mission statement says.

Implicit within those statements is the recognition that government procurement processes as they stand, and have stood for years, are now grossly inadequate to bring the best solutions at the best price into government, with the procurement process and cost of doing business with the government acting as an exclusionary and inhibiting overhead.

Modelled on the British government’s reforms, elements of the new Digital Marketplace have already been applied to ICT procurement reforms in New South Wales with demonstrable success and have paid big dividends.

It’s worth noting that ‘Government as an Exemplar’ also represents a direct and proactive re-entry of the public sector into the technology marketplace to create and stimulate opportunities for businesses who were previously excluded, arguably to the detriment of government modernisation.

That’s a very different equation to the prosecution of wholesale outsourcing and divestment that occurred in the 1990s and came back to haunt the Howard government and its successors.

But there’s an even bigger dynamic at play in terms of procurement that spans across jurisdictions.

At present procurement rules, hubs and processes between councils, states and the Commonwealth largely operate as disparate and disconnected entities which seek to aggregate buying power on their own patches to extract (limited) value.

There’s some commonality around standards, but it’s a long way from a harmonised marketplace where any public sector buyer has access to the best price in the nation, whether that’s for a payroll system, toilet paper or airfares.

What needs to happen, both for public sector (and arguably not-for-profit) buyers and their suppliers, is a national interoperable purchasing framework and marketplace (call it a GovMart if you will) that demolishes self-serving siloes and demarcation disputes at the border.

There is no logical reason why a small Tasmanian council ought not be able to buy cloud services or software as a service for the same baseline price as a state Department of Health or the military.

At the same time, businesses that now have to apply to be accredited as suppliers to multifarious local government procurement arms, individual state government agencies and panels and then the Commonwealth should not have access to all public sector agencies as customers if they meet required benchmarks.

There are 565 local governments in Australia, possibly 50 less if Mike Baird gets his way.

Smaller commercial suppliers have long complained that the complexity and cost of bidding for government contracts, usually through individual tender processes, is often so high it frequently rules them out for competing for a lot of public sector work. They can’t afford it. The result is a lack of competitive tension and a concentration of established, complacent incumbent suppliers with deep pockets and little or no incentive to innovate or push improvements.

Local government is by no means the DTO’s main game, but CEO Paul Shetler has made it clear that his door is open to assist anyone in the public sector that aims to improve services by making them simpler, faster and easier to use.

Notably, the DTO is already involved in projects with both the Queensland and ACT governments, in addition to its federal work.

Local government associations have for years acted as procurement gatekeepers for suppliers to get access to councils – sometimes competing among themselves for business – would do well to join and back a more collaborative and collegiate effort.

It might mean fewer procurement officers overseeing the drafting of tenders, possibly fewer contract managers, but if that results in a wholesale uplift in public services and value for money in interests of the nation, so be it.

It might be a tough fight, but it will be worth it.