Computer systems at the Inland Revenue Department need a
$1.5 billion upgrade, and have been at risk since at least
Papers released today showed in 2011 IRD believed it faced a
40 per cent chance of a systems failure that would severely
impact its ability to collect and distribute money.
Documents also showed half of IRD's 1100 data entry staff
were engaged full-time on correcting data entries in the
The strategic assessment - case for change paper showed the
IRD deemed it too difficult to make changes in the current
Revenue Minister Peter Dunne today announced the Government's
biggest ever overhaul of a Government IT system - a $1.5b
upgrade of the department's "First mainframe" computer
Mr Dunne admitted the system was "fully stretched" and a
10-year project to upgrade the system was required.
He said he wanted to make sure a Novopay-like situation could
be prevented in the roll out.
"It's fair to say the revenue system is at capacity, and the
Government recognises the need for a substantive
transformation programme to shape Inland Revenue to best
serve New Zealand in the future."
A risk assessment briefing prepared for ministers last August
showed the department's "systems and processes were not able
to sustain or improve tax collection or social policy
The upgrade is scheduled to take 10 years, but could be
longer. An exact timeframe and precise cost are unclear,
according to the minister.
Mr Dunne said IRD's functions had changed since its computer
systems were launched in 1991.
IRD was set up to administer the tax system, now it managed
and administered a share of social policy programmes like
KiwiSaver, student loans, child support, working for
families, family tax credits and paid parental leave.
Another document showed "First has approximately 40 million
lines of highly intertwined software code, which means it is
expensive and time-consuming to adapt the system to new
customer requirements, such as smartphone access."
In February last year Prime Minister John Key signalled the
upgrade, saying it could cost $1b and some of the money could
come from asset sales.
Labour's former revenue spokesman David Clark believed the
Government had already spent millions on consultants for the
project, including appointing Capgemini in November 2011 to
work on a business transformation plan.
He said a privacy breach of 6300 New Zealanders' details last
year could have been prevented by a better computer system.
Over 14 months New Zealanders have faced privacy breaches at
the Accident Compensation Corporation, Work and Income,
Ministry of Education, Talent2, Immigration New Zealand and
the Earthquake Commission.
Previous issues with IRD's computer system
- When the GST rate rose from 12.5 per cent to 15 per cent in
2010 changes were required to a large number of systems and
documents, raising a significant risk of error and system
failure, the documents disclosed.
- 900 people enrolled in KiwiSaver had their accounts
accidentally frozen, due to glitch in the IRD computer
- Glitches with Novopay in 2012 and 2013 resulted in missed
income tax, working for families tax credits, child support,
student loans and KiwiSaver.