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The federal government wants to buy $900 million of tech from Australian startups

Picture: Getty Images

The federal assistant minister for digital transformation has declared he is targeting a spend of $900 million each year on entrepreneurial tech suppliers, to move away from traditional providers like IBM.

“The government can support innovative companies without resorting to handouts. If we want to transform the entrepreneurial or digital government sector in Australia, the most important thing we can do is be a better customer,” assistant minister Angus Taylor told media in the Blue Mountains, west of Sydney.

Technology work in the public sector, worth $9 billion a year, is traditionally dominated by big consulting firms or large companies such as IBM, as in the case of the census, and HP, as in the case of the Australian Taxation Office. Taylor said that the time has come now to give smaller tech providers a go and that the government aimed to spend 10% more of its tech budget on small-to-medium technology providers “as soon as reasonably achievable”.

He added that funneling 10% of a $9 billion tech budget to entrepreneurial tech companies would be “probably the biggest investment in innovation in this country’s history”.

The shift from large suppliers to smaller ones would be driven by having public agencies select tech providers from the new government digital marketplace, replacing the old method of referring to “panels” of preselected suppliers.

Assistant minister for cities and digital transformation Angus Taylor. (Source: NSW Liberal Party)

“Let’s face it — the panel process, which the digital marketplace is seeking to break down, are a big barrier to smaller, innovative companies getting access to government contracts,” he said, adding that the so-called “safe” choices that panels provide actually “prohibit innovation”.

The digital marketplace facilitates smaller tech projects in the public sector, said Taylor, and he and prime minister Malcolm Turnbull were personally directing the top bureaucrats to this new “agile” strategy.

“A necessary condition for getting SMEs involved is doing smaller projects,” he said. “We want to do smaller projects, because the risk is lower, they’re easier to manage, and if they get into trouble they’re easier to deal with.”

Taylor emphasised that the shift from massive years-long projects to smaller months-long agile projects would reduce the risk of catastrophic failures. But government agencies would need to develop skills to manage a portfolio of smaller suppliers.

Former Digital Transformation Office chief executive Paul Shetler made the same point last year after leaving the rebadged DTA in November.

“Government’s biggest challenge in the digital age is to completely upskill the public service so that it is well equipped to deliver the change that’s needed,” Shetler said on social media at the time.

“Over the last 40 years, as we’ve outsourced technology, there’s been a progressive deskilling of the public service. The reliance on consultants is remarkable and the amount spent on them is eye-watering.”

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