“Billions”: Hockey greenlights Centrelink core replacement


news Treasurer Joe Hockey has strongly hinted that the upcoming Federal Budget will include “billions” of dollars worth of funding for a core systems replacement at the Centrelink division of the Department of Human Services (DHS), in a move that represents one of the Federal Government’s most long-awaited and largest IT project approvals.

For the past several decades, the core system underpinning Centrelink’s transaction processing platform has been the Model 204 software developed by Computer Corporation of America and running on ageing mainframes technology. The platform supports Centrelink’s Income Support Integrated System (ISIS), which makes assessments and delivers transactions to more than seven million Australians.

The platform is best understood by comparing it to the core banking platforms run by most of Australia’s major banks. On top of Centrelink’s core sit many subsidiary platforms which are used by the organisation to hold information about Australians and disburse payments. On average, the system deposits over half a billion dollars into Australian bank accounts every working day, according to DHS’ most recent annual report.


Centrelink, merged in DHS several years ago with other government groups such as Medicare and the Child Support Agency, has been seeking to replace the Model 204 platform for some time.

“The technology upon which ISIS was developed is ageing. As the software has been modified over its life it has become increasingly complex and changes are becoming more difficult to implement,” DHS’ annual report last year states. “The current ISIS platform is limited in its ability to meet a 24/7, 365 days per year standard for online self-service.”

“The 2013 Budget included an investment of $16.2 million over two years for the department to develop a business case outlining options to replace or upgrade its major ICT system. The cost of this measure will be met from within the department. It is likely that any future upgrade or replacement of the system will take several years.”

In a radio interview with 3AW host Neil Mitchell last week, Hockey, who was Minister for Human Services in the Howard administration from October 2004 to January 2007, and Minister for Employment and Workplace Relations from that point until December 2007, said Centrelink’s upgrade need was the most surprising feature he had witnessed since the Coalition came into power in the September Federal Election last year.

“The deterioration in the infrastructure of Government has certainly made policy development much harder and there are huge challenges ahead for us in that regard,” he said.

Hockey said Centrelink’s mainframe was “in bad shape” and “run down”, with only Centrelink and the US Pentagon using the Model 204 platform. He linked poor waiting times for Australians needing to speak with Centrelink (the current average is 17.5 minutes) to the issue.

The Government had “no choice” but to fix the problem, the Treasurer said. “… the two most important computers arguably in the Government are the mainframe for the Australian Taxation Office and the mainframe for Centrelink … The question is how we do it and how we try and ensure we have better service delivery into the future.”

“My overwhelming concern is that it is inhibiting the capacity of the Government to some degree to roll out policy that properly addresses the problems in the economy and in the Budget.” Asked what the replacement project would cost, Hockey replied: “Billions”.

Approval of the replacement project will likely make it one of the Federal Government’s largest ever IT projects, alongside Immigration’s $450 million Systems for People project, the Australian Taxation Office’s Change Program, which ran to $814 million, and the similarly expensive Integrated Cargo System overhaul at Customs.

Major vendors such as IBM, CSC, Fujitsu, Accenture, HP, SAP and Oracle and many more would be likely to be interested in competing for chunks of the work. Historically, the Federal Government has typically appointed a prime contractor for this kind of initiative, overseeing several sub-contractors.

The news comes a year after the previous Labor Federal Government approved another major IT project at the Department of Human Services, which some commentators have seen as being an early stage preparation project for Centrelink’s core overhaul. It involves replacing the Child Support Agency’s key ERP system, previously known as ‘Cuba’.

I kind of predicted that this would happen a year ago when the Child Support Agency’s ERP replacement project got under way. At the time, I wrote:

“It’s not hard to guess that if the CSS overhaul goes well, then Centrelink’s much, much larger core IT infrastructure will be the next cab off the rank in terms of a massive upgrade. This would make sense. You don’t want to undertake these kinds of projects simultaneously; and the CSS upgrade is probably more urgent, given that Centrelink’s core IT infrastructure has been well-maintained over the years. The IT department at Centrelink, led for a long time by legendary public sector CIO John Wadeson, has a strong reputation as one of the best in the Federal Government, and words is also that Wadeson’s successor Gary Sterrenberg has kept things very much on track.

However, it’s also true that Centrelink’s IT department, which has formed the heart of the newly integrated IT department at the Department of Human Services, hasn’t faced a massive IT re-development project such as Systems for People or the Change Program for some time. It looks as if the CSS overhaul will be used as a step project to gain experience, with a much, much larger IT overhaul down the track. In this sense, the performance of DHS in conducting the CSS upgrade will be closely watched indeed, both internally and externally.”

And this statement also applies to the new project Hockey discussed last week:

“It’s been a while since Federal Government watchers had a major enterprise IT re-development project to keep tabs on. Let’s hope the Department of Human Services keeps its ‘Cuba’ overhaul on track. Because there is no doubt that if it doesn’t, the office of the Auditor-General will not be lagging very far behind.”

Image credit: Amanda Slater, Creative Commons, Office of Joe Hockey


  1. Yeah, cant see this ending well. The Lib’s baulked at the ATO’s need to upgrade last decade, and in the end they had to fund the $180m expense inhouse. Which ended up at over $500m…

    And once you go down that sort of upgrade path, you’re stuck with it for 20 years – you cant afford to do it every time Windows upgrades its OS… And that sort of lifespan in this day and age is going to be a nightmare.

  2. ¨it is inhibiting the capacity of the Government to some degree to roll out policy¨, so, is a new mainframe something they would need if they were going to implement their rumoured plan of replacing Centrelink offices with self serve terminals at Australia Post Shops?

    • I would absolutely bet yes, but also I am aware that any changes to Centrelink payments can be a bitch to implement with the existing system. The ATO used to face the same problem before it went through the Change Program — they would lag regulatory/policy decisions for quite a while.

  3. God I hope they don’t ask the Qld government for references after their Health Payroll system upgrade. Somebody clearly dropped the ball with that specification.

    Also – half a billion dollars a day?… WOW!! just wow.

  4. It is a misconception to think that it is the mainframe that is old. It is the programs (aka software) that are running on it that are old. You can bet that the hardware itself has been frequently updated, and it is unlikely that any part of it is even 10 years old, let alone 30. IBM sees a great future for mainframes, because they are still by far the most capable systems for handling really large transaction volumes, so they keep improving the hardware and use the most advanced technology available.

    As for SAP, it’s packaged software, possibly good for HR, Manufacturing and other applications that are basically similar across hundreds of thousands of businesses worldwide, and therefore susceptible to economies of scale that packaged software is good at. The Australian social welfare system, on the other hand, is a one off, unlikely to be similar even to that of other similar countries. It will always require a huge amount of unique programming, whether the core software technology is old or new.

    Let’s not forget that SAP is also more than 30 years old!

    • Mainframe doesnt refer to hardware, it refers to the databases of the relevant departments. Originally just a storage location, they werent designed for 40 years of change and modification, so ultimately the software each department uses gets in the way.

      So they consolidate so everyone is on the same platform. The ATO went through its Change program, now its Centrelink’s turn, and really its largely for a consistent user interface, so there is only 1 or 2 programs directly accessing those old databases, rather than several hundred.

      We’re lucky in that most of our public structure works at a federal level. Think how fun it would be to do this sort of thing in the US, which has a federal level, and a different process for each state…

  5. A very different story back in 2009 at Ce-Bit:

    ‘Speaking at the CeBit e-Government conference in Sydney, Wadeson was asked if the niche Model 204 software was holding it back from becoming more agile and the answer was an unequivocal “no”.

    “Wadeson said Model 204 “hasn’t been a problem” and the only time when Centrelink moves off it is when the government changes its policy and goes to a different welfare system model.”

    “Where would we go to? We could go to DB2 which IBM would love as we would need more mainframes or Oracle which is as old as Model 204.”’


      • My nose tells me there is more to this, why would any government spend that much money on a project that will deliver nothing obvious to voters in the next election cycle but will take money away from projects that provide ribbon cutting ceremonies. I simply don’t get the business case.

    • I’m wondering if its two separate issues.

      Picture it like this. You have a document, created in Excel 98. The table hasnt changed much over time, only had more entries added to the bottom. It still opens in Excel 98, which means it also opens in Excel 2013.

      Is the issue that the document was created on an archaic version, or is it that they are trying to run Office 2013 on a computer built in 1998?

      If its the first one, then its akin to the CeBit quote and theres no real issue, but if its the second one, then CeBit is still correct, and the drama is elsewhere.

      Poor analogy, but hopefully shows the point – it could be about the data simply being used in an old way, or that the accessing of the data is creating the issues that need correcting. Both are potentially independant of the other.

      I kid you not when I say that the ATO’s change program consolidated 400+ programs into 2. 400+ programs that all had their own independant programming (professional and amateur), that needed independant support. Nightmare for any network admin, especially when you’re wanting to check compatibility with even something as simple as a security update.

  6. Hockey said Centrelink’s mainframe was “in bad shape” and “run down”, <= This statement is not true.

    with only Centrelink and the US Pentagon using the Model 204 platform. <= This statement is probably true.

    He linked poor waiting times for Australians needing to speak with Centrelink (the current average is 17.5 minutes) to the issue. <= This statement is misleading; generally speaking, m/f response is VERY quick. There are many layers to negotiate before reaching the m/f (Many a slip 'twixt cup and lip)

    • I would have said the problem resides in sacking thousands of Centrelink staff.
      How are you supposed to shorten waiting times if there’s no one to answer the phone?

  7. Model 204 programmers aren’t just reitiring, they’re dieing. It is getting more and more difficult to support the system.

    The rules and regulations that are implemented it are very complex and some very old, with start and finish dates for business regulations. It will be a beast to replace.

  8. I Think they should start Implementing Oracle Exadata. What a shame they are still using an ancient hardware / software for their core what a disgrace and top it all off no wonder why Australia is years behind compared to other countries, think about it we are still on copper!

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