The Promise of Digital Government

Saturday, 16 April 2016

Picture: Renee Nowytarger

Angus Taylor MP

As a new member of parliament in 2013, I was immediately struck by the demands on my electorate office. I was expecting to deal with a long list of policy issues and political feedback. While that is an important part of my work, I found myself running a customer call centre for a range of government services from telecommunications to welfare, immigration, health, law and order, and education.

Constituents don’t want to be lectured about the three tiers of government, the separation of powers or even the separation between public and private sector. They just want solutions to their problems. When word gets around that the local member can solve problems, the flow of calls and emails increases even more.

While my interaction with constituents was welcome, it struck me that much of what governments did could be done a lot more efficiently and effectively. I began thinking about how much time and money federal government agencies such as Centrelink were wasting because of appallingly inefficient systems.

The embrace of digital technology by the private sector has changed much of our lives for the better, increasing choice, speed, productivity and consumer satisfaction. By comparison, governments appear clunky and unresponsive. It is little wonder that voters throughout the developed world are increasingly cynical about government.

Expectations are high but delivery is low, and containment of spending growth seems like a pipedream. Citizens are disengaged, cynical and fickle.

The shift to digital in the provision of private sector services has been rapid and customers like it. Seventy-five per cent of Australian bank transactions are conducted online or through mobile devices. Despite extensive branch closures and regular “bank bashing”, satisfaction levels with banks are the highest on record. Much of this is being aided by high levels of internet connectivity. Meanwhile, banks have reduced costs substantially, passing a large portion of the savings through to customers via low-interest margins on loans and deposits.

Similar patterns to the results in banking have emerged in travel, insurance, music, media and books. In the airline industry, for instance, more than 75 per cent of travellers coming to Australia plan their trips online and roughly half purchase online, according to Tourism Australia. Even for product sales, we are seeing rapid growth in digital interactions and transactions. Woolworths claims that 83 per cent of Australians are regularly using self-scanners in its supermarkets.

The equivalent performance in the public sector would mean high levels of satisfaction with government, lower taxes and better ser­vices. This has not been the case. Government already has a great deal of information about each of us, most of which is not used in any interaction. The private sector can only wish for this level of knowledge as a starting point.

This is all the more remarkable when we consider that government’s role is focused on services, information sharing and consultation rather than providing products. Payments are an important part of these interactions, but they extend much further to include permissions, information sharing, applications and registrations, complaints and resolution as well as digital services such as e-health. Examples include submitting tax returns, applying for a passport or licence, and claiming Medicare and welfare benefits.

Deloitte Access Economics has estimated that across Australian state and federal governments there are 811 million transactions each year, about 40 per cent of which are still completed using the traditional channels of telephone, post and face-to-face.

Most discussions of benefits from digitisation start and finish with customer service improvements and direct efficiencies in reduced customer service costs. Often forgotten are the bigger opportunities for compliance, risk management, payment integrity and program targeting, with savings far beyond direct efficiencies.

Integrity and compliance in government payments offer one of the greatest opportunities for efficiency and effectiveness of government spending. Even a small improvement in payments for health and welfare would yield benefits worth many billions each year. Identifying savings or revenue opportunities from better government practices or better targeted spending requires access to quality data. Through digitisation, governments can increase easy access to large databases for analysis. Identifying errors, abuse or defrauding of big-dollar government programs, especially health and welfare, has been a source of significant government savings around the world, but real-time access to quality datasets is a prerequisite to realising these opportunities.

Once these datasets are well established and accessible, they also will provide a much better fact base for better targeting of government programs and spending, beyond just compliance. The real impact of government programs on key outcomes such as employment or health is rarely measured well. In practice, it is inevitable that much of that money can be better spent. But until we can get access to integrated datasets on individuals’ health, welfare, education and access to programs, as well as the impact of these programs across time, refocusing spending will continue to be extremely difficult, powered by emotional political resistance.

Similarly, access to quality data for traffic movements would allow a shift towards better infrastructure funding models, with road user charges reflecting actual usage rather than using fuel usage as a proxy. Perhaps more important, it would enable better targeting of road funding payments to owners (including state and local governments) based on actual usage. This is possible only if the relevant data is captured and used.

Likewise, better data offers the potential for better use of assets such as roads and carparks. Whether through better signalling or real-time access to information about congestion, improved infrastructure use is typically much cheaper than new investment.

The direct benefits to governments and citizens of digitising government are also much larger and broader in scope than is typically realised, totalling more than $27 billion according to Deloitte Access. There are the obvious direct cost savings, but the benefits extend to earlier payment and significant reductions in storage and advertising spend.

Two very simple ideas are central to capturing the potential of digital government.

First, technology offers the potential for substantially reduced costs alongside improved and better targeted government services. Disruption in the delivery of an increasingly complex array of government services is possible in ways that previously were never anticipated. In defence, health, education, policing or food labelling, every aspect of government needs to be re-examined with an eye to what can and should be done differently to reduce costs and improve services.

Second, empowered con­sumers and citizens can drive reform in ways that traditional political processes can’t, particularly as we increase competition and contestability in the provision of services such as aged care and disability. If public sector unions want to block innovations that voters understand and want, voters can apply political pressure. When vested interests get in the way of sensible reforms, transparency will help to shed light on their undue influence. Not only can we disrupt traditional lacklustre public service delivery but we can redefine regulation and how citizens and customers regulate services for themselves.

These two powerful ideas put the citizen or the customer back at the centre of the work of the modern state, in line with fundamental liberal and conservative principles. Government has become a self-serving beast, and digital technology offers the potential to tame government and refocus it for the benefit of all.

Many conservatives and traditional small-government liberals have given up on the idea of smaller, more effective government that empowers citizens to realise their own aspirations. But all is not lost. Efficient government sharply focused on customers and citizens can make a major contribution to reasserting this ideal.

Digital technology offers the promise of containing growth in spending, vastly improved ser­vices and genuine reform. It is time for Australian governments to step up and embrace this extraordinary opportunity.

Angus Taylor is Assistant Minister to the Prime Minister for Cities and Digital Transformation.

This extract from Taylor's forthcoming RG Menzies Essay, The Promise of Digital Government, was published in The Weekend Australian on 16 April 2016







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