Billions on the line in Judith Collins’ digital government reboot

Saturday, 11 October 2025

There’s tension in the air at the “big end of town” in Wellington as the Government embarks on the biggest shake-up of technology procurement in decades.

The Government has a $13 billion pipeline of major IT work that it wants to complete over the next five years.

That includes large digital transformation projects at the Ministry of Social Development and Immigration NZ that will overhaul ageing systems and increase automation.

Most visible to the public may be a new Govt.nz app, that will provide a one-stop shop for accessing services such as driver licensing, car regos, tax and super payments.

But according to the Treasury, 59% of the Government’s core digital projects are behind schedule and 85% of those in the planning and delivery stages are rated as “high risk”.

With the squeeze going on public sector spending, ministers have decided it’s time for fresh thinking and more centralisation of decision-making.

Judith Collins, Minister for Digitising Government, has told her Cabinet colleagues that savings of between 15% and 30% are possible, and between $1.2b and $3.6b could be sliced off the $13b bill with “modern good practice”.

The announcement appears to have been met with an almost equal mix of optimism and scepticism from front-line IT workers and industry experts.

The Government has kicked the tyres and dipped its toes into different ways of procuring technology before and — as Collins noted — achieved some incremental improvements. But it has proved a tough nut to crack.

What’s different is this time she has followed through in a way that none of her predecessors were prepared to do.

Until now, technology investments have mostly been the responsibility of individual agencies and subject to the usual round of departmental Budget bids.

But a new approach will centralise most procurement decisions in the hands of the Government Chief Digital Officer (GCDO), based in the Department of Internal Affairs.

That’s a position now held by the department’s chief executive, Paul James.

Collins and Finance Minister Nicola Willis will get veto rights over investment proposals.

“Big bang, multi-year projects that can cost more than $1b”, will be eschewed in favour of “incremental, iterative delivery”.

The overarching goal — in the words of Collins’ Cabinet paper — is to encourage more coordination, cut duplication, change the status quo and rationalise “what has become an unaffordable pipeline projected to increase further year on year”.

The fears

One senior IT industry figure, who would only comment anonymously for fear of fall-out on his business, gave Collins’ Cabinet paper “both barrels”.

“From our experience, the Government’s IT spending direction is already creating major short-term pain, delivering deep revenue cuts for local firms and worsening recessionary conditions at a time when stimulus had really been needed,” he says.

One of his concerns is that the centralisation of procurement will give global players “more room to undercut local businesses”.

“We’ve already seen multinationals squeeze out smaller firms that can’t compete at that scale,” he says.

“It’s a tough environment, we're doing it tough. Sadly the situation with government contracts is so tenuous that businesses are too afraid to speak out about how poorly supported we feel and don’t want to risk losing what scraps we’re currently afforded.”

The hopes

Don Christie, co-founder of Catalyst IT, is much more upbeat.

Catalyst has a long pedigree helping public and private sector clients make the most of open source software. That is software based on source code that anyone can freely share, use and modify.

Christie says Treasury’s advice that 59% of core projects are behind schedule doesn’t surprise him.

“If you think about all the restructures and everything that's been going on through government, it's been very hard to maintain consistency and continuity with all the chopping and changing that’s been happening.”

He is more surprised 85% of projects are classified as high risk, but believes the move away from “big bang” IT projects couldn’t come soon enough.

“Every time I see the word ‘transformation’ in a government or corporate strategy and project, I think, ‘well, that's going to fail’.”

He excludes Inland Revenue’s huge Business Transformation project which was completed in 2022 and which is generally viewed as a qualified success and for which procurement was “done a little bit differently”.

“They actually procured, quite wisely. They didn't go for one of ‘the big five’,” Christie says.

Positive themes in Collins’ Cabinet paper include encouraging smaller, less risky digital projects and solutions that can be re-used, and attempting to emulate the digital successes of Singapore, Estonia, Australia and Denmark, he says.

That “yells the open-source approach and open standards from the rooftop”.

“I don't know if they realise that. Because too often in the past, the Government has quoted Estonia and Denmark, and then turned around and said ‘there's this shiny thing over here from this massive multinational; we'll just use that’.”

And if the Government was “really serious about saving taxpayers money, it wouldn't be using Microsoft 365”, he asserts.

If the Government did follow through on the mindset laid out in the Cabinet paper, Catalyst and other Kiwi firms specialising in open source development would help them save “much, much more” than 30%, he promises.

“We're here. If we fail it’s our neighbours we're letting down, not our shareholders. If you think about open source software and New Zealand companies in general, you have a product that's ready to go and infinitely configurable.

“You're not having to just do what the off-the-shelf ‘software as a service’ thing does. You can configure it to your needs, but you're not rebuilding from scratch either. I totally understand why it's so scary, because procurement in New Zealand has been dreadful; it fails to put any value on all these attributes.”

Christie believes it’s too soon to tell whether Collins has hit on a good way to implement the fresh approach.

“The tension will be between overly-bureaucratic centralisation and the need to allow organisations to achieve their purpose.”

The GCDO and two ministers might have the final say on projects but “if they can build a more inclusive, collaborative framework, they could be successful”, he says.

Views from the coal-face

Front-line tech workers spoken to by The Post were largely reserving their judgment.

Savings might be possible if agencies used their collective buying-power to negotiate cheaper government-wide software licences and services in the same way Pharmac uses it monopoly buying power to bid down the price of medicines, they largely agreed.

But some questioned how deeply involved the GCDO would be able to get into individual agencies’ purchasing decisions in practice, questioning whether Internal Affairs might end up essentially providing an oversight role of the kind that is to some extent already performed by the Treasury, through its system of Gateway project reviews.

One noted morale in the public service was not high, and that there was a risk the people the Government would need to bring along might view the initiative as just another criticism from the top of their past performance.

Change was easy to order, but not so easy to actually bring about, one warned; agencies were not starting from a clean slate in terms of the systems they already had and, partly because of that, didn’t tend to have to invest at the same time.

Internal Affairs spokesperson Jo Leavesley said some details still had to be worked through.

Those included the exact level of involvement the GDCO would have, which agencies might be left to run their own procurement processes, and whether there would be a contract value below which agencies would be left to their own devices.

“We expect there to be a combination/continuum of approaches across different categories of digital, from oversight and direction through to direct procurement,” she said.

“Economies of scale specifically relating to all-of-government contracts and licensing are expected to be a key input into overall savings.”

The voice of experience

There would be few people more qualified to assess the Government’s proposal than former Internal Affairs chief executive and government chief digital officer Colin MacDonald, now a director of ASB Bank.

The ideas in the Cabinet paper are “consistent with where the Government broadly has previously tried to head”, he says.

But it “talks much more clearly about a shift in ‘decision rights’, which previous governments — both National-led and Labour-led governments have been reluctant to do”, he adds.

He points to a reference in the Cabinet paper to possible changes to the Public Finance Act to “hard-wire shifts in decision rights”.

While Collins has been “muscular” in pulling control towards the centre, a lot will come down to whether everyone is clear about the problem they are trying to solve and the end state they are trying to get to, MacDonald says.

“What the new approach much more strongly alludes to is the need to look to build services around people and not just from an agency-by-agency perspective.

“If you've centralised and you’re being more consistent with how you provide services to people and you're not duplicating, you will be doing that at a cheaper cost.”

But MacDonald isn’t confident the Government can expect to save much money from more coordination in the short-term.

He describes the 15% to 30% savings target as “heroic” and suggests a need to spend now to save later, which may not be music to Willis’ ears.

“There will be a need for quite significant investment to move from where we are to where the Cabinet paper wants to get to.”

Cabinet’s instruction that the GCDO certifies to ministers that each ICT proposal “delivers requirements at the lowest cost consistent with digital government priorities” could prove backfire if interpreted too rigidly, he suggests.

“To take an example, if an agency needs to refresh their payments engine, what you might ask them to do is to refresh on behalf of others, so rather than have several payment engines, you might have two or three.

“And that means one agency is going to have to spend a bit more money to do something on behalf of everybody else.”

If being consistent with the Government’s digital priorities includes building infrastructure on behalf of others, then that’s okay, “but I think we need to be really careful about just putting ‘at the lowest cost’,” he says.

Importantly, MacDonald sees potential for agencies to undermine the initiative, if they feel alienated from it.

“There’s always information asymmetry. An individual agency is always going to know much more about its business than anybody else.

“So if you sit outside trying to dictate to them what they should be doing, they will be able to come up with ‘very good reasons’ why they shouldn't be part of it, or why ‘X, Y or Z’ plan won't work.

“But if you bring them into the process, so they've got some skin in the game and some ability to shape and support the direction of travel, that will get you much further.”

MacDonald says he can understand both the hopes and fears of the private sector.

“They're perfectly sensible, reasonable reactions to a proposal like this and either could be right or they could both be wrong.

“I think in the short to medium term, there need be no fear of work drying up when you think about the time and energy needed to pull things together and get things moving in a broadly similar direction.”

When it comes to the actual shape of technology solutions, pragmatism is likely to be the order of the day, he suggests.

“Is it big overseas players? Is it big local players? Is it open source? Or a mix of all of those things? My suspicion is it's going to be all of the above, but delivered in a more open and coordinated way.

“If you start talking about ‘open’ then you do get to open source and open standards quite quickly. But it can't be driven from a fervour or ‘religious’ perspective.”

The next step in the implementation plan set out by Collins is for the GCDO to report back by December on “a digital government target state, supported by a three-year programme of annual priorities, targets and milestones”.

MacDonald says what he’d be looking for is whether that target state is clear with a programme of work in place, whether agencies have signed up, and if it is clear who is going to do what.

In case that sounds like anticipating obstacles, he stresses the policy initiative is “a really positive move”.

“It's absolutely the right direction of travel. There's lots of work to do and it’s going to be tough, it’s going to be difficult — all the rest of it — but it’s the right thing to do.”