This is part one of a two part look at one aspect of the recent local government reforms in the Northern Territory.

What I want to do here is have a look at the development, implementation and consequences of the information technology (IT), accounting and related infrastructure for the newly formed Shire councils. That process involved the creation of three entities to respectively manage the hardware, implement the program and support the software.

In the semi-literate post-acronym orthography of modern bureaucracy they are called ShireBiz, ShireNet and CouncilBiz.

In this first part I will look at evidence given to the first of a series of public hearings of the Council of Territory Co-operation (the CTC) by Territory bureaucrats and Shire council staff.

In the second part I will look at the more comprehensive evidence given to the CTC by the person appointed to fix up the mess.

I last turned my attention to the administration of Local Government in the Northern Territory way back in July 2007 in this piece for Crikey.

Then my particular concern was with the involvement of the Commonwealth in the NT local government reforms that have left the larger municipal councils in place and amalgamated the fifty-seven small rural councils that together covered about 5% of the NT’s landmass into eight larger Shires that, in conjunction with the municipal councils, now cover 100% of the NTs land mass.

And, while there are several serious and outstanding issues of concern with that interaction, it appears that there are greater issues of concern arising from what seems to be local home-grown incompetence and poor planning.  The new Shires have been in place for 18 months and as I’ve travelled around the NT over the last six months or so I’ve heard a variety of concerns about many aspects of the implementation of the reform process and the administration of the local Shires.

Many of these are the usual minor gripes and whinges that inevitably accompany a major change in administration and policy at any level of politics, but there are several issues that appear to point to real problems with the design and implementation of local government reform – this will be discussed further in Part Two of this look at one particular aspect of the local government reform process..

Apologies for the length of this piece but I think that it is important to get these views and comments – particularly those of the NT politicians and the Shire staffers and elected members – on the record here rather than in the obscure transcripts of a NT parliament sub-committee. I also note that the views of two of the recently created Shires – West Arnhem and East Arnhem – have not been given to the CTC. I am aware from other sources that there are similar concerns held by both of those Shires in relation to the matters discussed her and will report on those views as they become available.

And I note that each of the transcripts – which are all available with some background on the Council at the Council for Territory Co-operation website – come with the qualifier that: “This is an uncorrected, unrevised proof copy of the transcript and is made available on that basis. NOTE: the unauthorised publication of any extracts from this transcript does not necessarily attract the protection of parliamentary privilege.”

The Council of Territory Co-operation

The CTC, while it is in reality no more that a Sessional Committee of the single-house Parliament of the NT seeks to, according to its Purposes as contained in its somewhat quaint and innovative Terms of Reference, be part house-of-review, part guardian-of-parliamentary democracy:

Purpose of the committee (2) That the committee facilitate: (a) greater levels of collaboration in the governance of the Northern Territory; (b) enhance parliamentary democracy by providing a strong role for members of the Legislative Assembly who are not members of the executive government, particularly on matters of common concern; (c) expand involvement in important Northern Territory initiatives and projects; (d) provide new avenues for Territorians to have input through the Legislative Assembly into the government of the Northern Territory; and (e) provide a road map for tackling some specific issues currently facing the Territory.

The CTC conducted its first hearings in November and has to date held public hearings in Darwin, Katherine, Tennant Creek and Alice Springs. From looking at the treanscripts of those hearings, the CTC appears to be doing a reasonable job at peeling back a few of the layers that coat the onion that is NT politics.

What I want to do here have a closer look at here is the CTC’s consideration of it’s second Duty:

Duties of the committee (4) That the committee inquire into, consider, make recommendations and report to the Assembly from time to time on the following matters of public importance…(b) local government reform;

David Ritchie, CEO of the NT Department of Local Government on ShireBiz, ShireNet and CouncilBiz

At the first of its meetings on 9 November 2009 the CTC heard from David Ritchie, the CEO of the NT Department of Local Government. Ritchie admits that there were problems with both the product and the process of implementation.

Mr CHAIRMAN:…I might ask a couple of questions in relation to local government. There have been a couple of issues, one is the IT program. CouncilBiz, there have been quite a number of complaints about it. Can you give us an update on where it is at? Is it working, and what was the reason Barkly [Shire] pulled out of the system?

Dr RITCHIE:…It was one of the parts of the design of the local government reform to have a consistent platform across the shires, so pretty much all the shires were using systems which talked to each other, and in particular, talked to government…[T]he idea was to obtain a good software system, and put in place a good hardware platform on which to run it…In practice, it did not work anywhere near as well as we had hoped. In part, because we were trying to do it simultaneously with the reforms, so while everybody was trying to get the nuts and bolts of getting their new shires established, they were also being asked to learn new business systems. In hindsight, it would have been much better if we had done it 12 months earlier…we found much of it was not all that useful for specific shires. There is work which has now been going on over the last six months has been to tailor that system specifically for the eight shires.

Mr CHAIRMAN: Any idea how much money has been spent on it so far?

Dr RITCHIE: I estimate over $1m.

Mr CHAIRMAN: And more to come?

Dr RITCHIE: Yes.

The MLA for Katherine, Willem Westra van Holthe, MLA cut to the chase:

Mr WESTRA van HOLTHE: Yes, thank you. Can you say, as of today, that all the shires can produce accurate financial reports from their computer systems without having to go in and change and doctor things around to accommodate the failings of the system?

Dr RITCHIE: I cannot. I understand that the system – that all modules work, but at each individual level, there may be glitches…we are committed to finding out what the problem is and fixing it until we get it right, and it is getting better.

Mr WESTRA van HOLTHE: And at what point do the shires reach the position where they will not be in breach of parts of the legislation as far as financial reporting goes?

Dr RITCHIE: Well, financial reports are due at the end of this month, so we will see. I think that, realistically, they will be a few weeks over that…

Barkly Shire – opts out of the NT government’s preferred IT model

The CTC held hearings in Tennant Creek on 19 November. There they spoke to Mr Phil West, Director of Works and Services and Mr Gary Cleary, Director of Corporate and Community Services at the Barkly Shire. Barkly Shire is roughly one and a half times the size of Victoria with a population of seven thousand five hundred, services eight major communities apart from Tennant Creek, and a series of smaller communities, the most remote of which is about five and a half driving hours away in good conditions.

In their evidence to the CTC Messrs. Cleary and West reveal that the Barkly Shire, at its considerable and ongoing cost, was the only Shire to ditch the NT government preferred IT system.

Mr CHAIRMAN:…how much of your IT infrastructure is used to do that? Are you funded for that component of your IT work in administration work?

Mr WEST: On the IT, the Department of Information, Communications and Technology, along with the Department of Local Government were responsible for the implementation of the new business systems once we started, that is for the whole eight shires.

The successful company approved for financial systems was TechOne, and three associations were set up to manage the hardware, implement, and support the software – ShireBiz, ShireNet and CouncilBiz. After struggling for over a year to try to establish fundamental accounting and financial systems, this council made the decision to abandon TechOne Financial System and entered into a contract with Civica for the supply and installation of a new financial system, one that meets our business needs. Civica’s authority software is operational and the staff have managed to achieve more in four months, with this particular one, than it did for 17 months with previous systems. Moreover, the overall cost of the new software, the hardware, the training and support that the council is using is substantially less than the council’s ongoing obligations to TechOne and the infrastructure and support services created by the department which the council is not using.

The NT government imposed business system, TechOne CouncilBiz help desk, have been and still are, we consider a white elephant that has taken its toll and inflicted considerable damage on the council’s operation, staffing and the public image. Rather than accept that there was a mistake and fund the shires to develop their own particular solutions, the NT government decided to invest more money to prop up the contractors and departmental structures that created the problem in the first place. Council understands that the software of supplier involved will be paid to fix the problems that were created through a failure to deliver a system that was unusable. The Barkly Shire is not part of that remediation project, which we understand is costing several million dollars.

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However, the shire is being penalised for this decision, through contracts and arrangements that were set in concrete two years ago…Barkly Shire is committed to almost $700 000 in residual costs for software, hardware and support we cannot and do not use. That is the residual cost to the shire from the contracts for TechOne, ShireBiz and CouncilBiz. This is almost twice as much as what we are paying Civica. It is a ludicrous situation and the council has asked the minister to be allowed to resign from CouncilBiz without financial penalty and your support would be greatly accepted in this.

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Mr CHAIRMAN: On the financial management, IT and communications. Financial management was $254,260 for last year, goes to $1.3m for the next three years, and also IT and communications, $29 000 for last year and goes up to $1.18m. That is up to about two thirds of your discretionary budget, just in IT and financial management.

Mr CLEARY: This all links back to the…obligations. They notified us of a bill of $720 000 for the next financial year, for membership of CouncilBiz, for a system we are no longer using. We are locked into that for another three and a half years and, without the minister’s approval to withdraw, that will continue. It is quite believable that the costs will go up even further. I have real concerns on whether – yes, we will be able to pay it, but it is just going to eat capital reserves.

Central Desert Shire and the most expensive laptops in the world?

The CTC next held hearings in Alice Springs in late November and there spoke to the recently appointed CEO of the Central Desert Shire, Roydon Robertson. The Central Desert Shire Council covers an area of 282,000 square kilometres. It has a population of about 4,600, covering nine shire service delivery centres.

Mr CHAIRMAN:…the question that has been around a fair amount is the IT. Do you have a figure of what it is costing you for IT and administration…?

Mr ROBERTSON:…But the figure for the IT, the business systems, for this year is $1.1m.

Mr CHAIRMAN: That is a little over two and a half times, or twice the amount of money you get from rates?

Mr ROBERTSON: Yes, it is a massive problem, of course.

Mr CHAIRMAN: Are you struggling like the other councils with this ShireBiz/CouncilBiz system?

Mr ROBERTSON: Certainly, yes.

Mr ELFERINK: Have you abandoned it yet?

Mr ROBERTSON: No, we have not. We are sticking with the ShireBiz remediation project. It is coming along quite nicely, and council has passed a motion where we can look at alternate systems…We have looked at a couple of others, including the one Barkly went to. Barkly is the only council that has pulled out and gone its own way, which has cost them more. No doubt they will tell you, or have told you, it is costing them much more, in this first year anyway. We have stuck with the remediation. The Technology One System has worked everywhere else.

It was configured wrongly for the Northern Territory and the remediation team is now fixing that. In fact, they were only at our council last week. We are reasonably pleased with the way it is going. They have people who are organising that now, who have enormous experience in IT, and we are quite upbeat about having our problems solved. We have a very positive outlook towards it.

Ms ANDERSON: So, what is the cost of IT on your shire?

Mr ROBERTSON: Well, it is $1.1m just for the …

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Mr ROBERTSON:…The actual shire’s nett part of it – that is another one, which is actually the IT as distinct from the business systems – it was an NT government contract that we were locked into. So, we are all locked into that. That contract expires 30 June next year. Obviously, the shires are very keen to get out of what they are locked into…we had to pay a lease fee for every laptop we have. It is between $4000 and $5000 a year, when you can buy them for hardly anything and throw them away if they break down. So, we have been locked into that contract which, of course, the government is as well. However, it is very expensive and I know the shires will be definitely looking at getting a far better deal as from 1 July 2010.

Victoria Daly Shire wouldn’t mind paying for CouncilBiz – if it worked!

The CTC next public hearing was in Katherine. Victoria Daly Shire Mayor Donald Wegener and CEO Sandra Cannon gave evidence. Victoria Daly Shire has an area of about 169,000 square kilometres with an annual budget of about $42m.

Mr WESTRA van HOLTHE:…how much will the remediation program on TechOne cost you?

Ms CANNON: The remediation part is probably going to – it is hard to cost because half the time you do not – the poor staff work many more hours than they should do. Even on some of the backfilling I actually still think – and sending people to Darwin – it is in the figure of at least $100,000. That is separate to how much did the implementation of CouncilBiz, that never happened, cost me.

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Mr CHAIRMAN: You own it. Do councils not own ShiresBiz?…CouncilBiz, yes.

Ms CANNON: We were forced to become directors of a subsidiary. I believe that is slightly different to owning something.

Ms SCRYMGOUR: So, each of the CEOs are directors of CouncilBiz? Are there any moves from the shires to look at …

Ms CANNON: The ShiresNet, which is the roll-out to the rest of the communities, does not come under CouncilBiz. ShiresNet is still with the department …

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Ms SCRYMGOUR: You would not mind paying that amount of money if …

Ms CANNON: If it worked!

Ms SCRYMGOUR: … it actually worked and provided the kind of information you needed.

Ms CANNON: I would not mind paying my $1.2m if it worked.

Mr WESTRA van HOLTHE:…So, you are still paying the same amount of money, but you are getting less than you were promised in the early days? Is that correct?

Ms CANNON: Oh, yes. It has not been a good process.

Roper Gulf Shire – nasty surprises, loudly ringing bells, making it up as you go along and the bill from the ATO

Next the CTC heard from the Deputy-Mayor of the Roper Gulf Shire, Clair O’Brien, and Catherine Proctor, Director Corporate and Community Services. The Roper Gulf Shire covers an area of about 185,000 square kilometres.

Mr ELFERINK:…I note earlier, you said: ‘I have not been able to get accurate financial reports’. Is that a reference to CouncilBiz?

Mr CHAIRMAN: We have a nice letter here somewhere.

Ms PROCTOR: Yes, the TechOne business system. It has been very difficult for us to get any reports out of the system. When we do get them out of the system, we do not trust their accuracy. It has been really difficult for the finance department compiling the audit for this year.

Mr ELFERINK: How are you getting around the problem of the budgeting and preparing for this year’s budget, when you do not even know the financial situation is now?

Ms PROCTOR: This year we simply based it on last year’s budget, which was not…Our methodology was not too sound, but we really did not have much choice.

Mr ELFERINK: This is…but this is almost budgetary management 101. We are making it up as we go along. Is not it?

Ms PROCTOR: Yes.

Ms O’BRIEN: My side of that is best guesstimate. Really, they are not even estimates because of what we have to base them on. From a council’s point of view – and the whole council – it is totally unacceptable to be put in that position and, hence, our letter that went through council and went to the Chief Minister with copies to the ministers on 11 November.

Mr CHAIRMAN: Have you had an answer, Clair, on that?

Ms O’BRIEN: From the Chief Minister’s Office, I believe we had a response just saying that it has been passed over to the minister. Then, the minister verbally at LGANT in Alice Springs got halfway there with it, I guess, with what we were asking for with the apology – the exoneration or wavering of things. We still want it in writing. So, we are still waiting.

Mr ELFERINK: To try not to put too fine a point on it, you could be in for a very nasty surprise at the end of the financial year when this is finally sorted out and (inaudible) press a print button and find red ink all over the place. There is no way you can really anticipate that happening, other than your best guesstimates.

Ms PROCTOR: We have been producing manual financial reports for our council, so they have had access to a monthly balance sheet, which is the closest we can get it. We have been paying – we have been cautious – our monthly BAS based on cash flow, incoming and outgoings, and that is the same cash flow statement we provide the council. There are no massive alarm bells ringing there, but …

Ms O’BRIEN: But the added burden …

Ms PROCTOR: There are alarm bells ringing but …

Mr ELFERINK: There are no massive alarm bells ringing but …

Ms PROCTOR: There are, but we are being sufficiently cautious and our program managers are aware of the contents of their budgets…

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Ms O’BRIEN: Council, I think, on our January or February meeting, right back then, flagged that we should be walking out of here if this was corporate world; that we had been put in here and asked to do this job by the government – and we are there and we want to make it work – but we put it on notice then that …

Mr ELFERINK: Can I ask you for your opinions? It is only an opinion. In your opinion, was this transfer from local government by communities, to local government by shire, rushed?

Ms O’BRIEN: Yes, yes. I was, as was said earlier, part of the transition committee. I believe all the alarm bells that were ringing and spoken about then were not adhered to. I do not know who was listening and whatever, but things that the transition committee were not satisfied with were still all just rolled over – and this is going to happen. I still really strongly feel, okay, it was rushed, yes, but also that interim period when there was no council. It was bad enough the shires starting when they did, but that was the shires without a council – without elected people. Then, that catch-up of that team building and whatever for the staff, for headquarters – all that was there going. Then, trying to close that gap of we and us has not been easy either.

Mr WESTRA van HOLTHE: The alarm bells that were so ringing at the transitional committee stage – was they conveyed to the department or to the minister?

Ms O’BRIEN: Yes, they were all involved.

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Mr WESTRA van HOLTHE: Very quickly. How many business activity statements were submitted late to the Australian Taxation Office?

Ms PROCTOR: Possibly six. I think we finally got it together in, probably, about January 2009.

Mr WESTRA van HOLTHE: And how many times was the shire fined by the ATO for late submission of BAS statements?

Ms PROCTOR: We have only received one letter with a fine of about $66 000, but we wrote a letter requesting some clemency and they waived it.

In the second part of this series I will look at the more comprehensive evidence given to the CTC by the person appointed to fix up the mess.