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Baillieu set to act on state's IT fiasco

The board of the Victorian government's troubled information technology agency is set to be removed after a review found the body suffered from poor governance.

The move is likely to be welcomed by thousands of state public servants still struggling with substandard IT despite the investment of hundreds of millions of dollars since 2008.

Victoria Premier Ted Baillieu set to act.
Victoria Premier Ted Baillieu set to act. Photo: Kate Geraghty

CenITex, which services the computing needs of 36,800 public servants, has been the subject of three inquiries this year, including an Ombudsman's investigation and a police probe by the fraud and extortion squad.

Fairfax Media understands the Baillieu government has acted on the findings of the State Services Authority review, which was expected to be released but has recently been suppressed and labelled cabinet-in-confidence by Assistant Treasurer Gordon Rich-Phillips.

Last month, an investigation by Fairfax revealed that 46 per cent of the $377 million worth of contracts CenITex signed since 2008 had gone to highly paid contractors - many on $1000 a day - while the bureaucracy noticed little improvement in its outdated IT.

CenITex's board is headed by chairman Warren Hodgson, a former secretary of the Department of Innovation, Industry and Regional Development.

Also on the board are Graeme Bowker, former Melbourne Water Corporation chairman Alan Clayton, senior public servant Randall Cohen, who is also a non-executive director of the Mt Baw Baw Alpine Resort, Christina (Chris) Gillies, a director of MS Australia and Jim Monaghan, a former managing director of the Queen Victoria Market.

Fairfax understands that the State Services Authority's draft report into the IT body was critical of Treasury's oversight of CenITex. But senior government and CenITex sources have told Fairfax the department successfully pressured the State Services Authority to soften its criticism in its final report.

Government spokeswoman Stephanie Ryan said the government was considering ''the best way'' for CenITex to deliver shared IT services across departments and agencies and enhance value for money for taxpayers. The government's move, she said, ''will bring CenITex closer to government and improve ongoing accountability''.

''CenITex will continue to operate as normal during this period,'' Ms Ryan said.

In the Victorian Government Gazette yesterday, CenITex was declared a ''reorganising body'' under the State Owned Enterprises Act 1992. This allows the government to effectively remove the board and appoint an administrator.

CenITex was supposed to amalgamate the government's network systems, internet providers, data centres and help-desk services for the public service.

Treasury officials had hoped the ''shared services'' model would save on the government's huge IT bill, which has been running at $1.65 billion a year, according to a 2008 cabinet-in-confidence business case obtained by Fairfax..

But some of those who established the agency told Fairfax these savings - to be diverted to ''frontline'' services for Victorians - may take years to materialise.

Problems with CenITex's service ranged from months of consistently poor internet access for the Department of Business and Innovation to severe service interruptions in the Wangaratta government office to the Department of Justice turning its back on CenITex to outsource the courts IT system to a private provider.

Former executives told Fairfax IT specialists brought into CenITex were paid on average $1000 a day. Leaked internal wages information showed senior manager Gordon Miles, who has been at CenITex since March 2009, was paid $1697 a day, making him one of Victoria's highest-paid public office holders.

CenITex spokesman Ross Gilmour would not comment on the board's removal, while the Ombudsman's office would not confirm or deny its investigation into CenITex.

The ongoing police investigation is into allegations, revealed by Fairfax last year, that CenITex managers awarded a contract to themselves.

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