Tech Sector On The Bludge

Peter Dunne has announced the IRD systems need a $1.5 billion upgrade.  We all know this means $3 billion+ needs to be spent because the IRD has become a centralised collection agent and the taxation system has become too complex for the old IT systems.  So we are told.  We also know that like Novopay, everyone sitting in front of a computer seems to be an expert on how to fix it.

Fresh to react to  a plunge in his stocks, Rod Drury was quick on the bludge and Clare Curran, quick to suck up to anyone with the slightest knowledge of IT parroted her support in opposing Dunne’s plans.

As usual, Cactus Kate brings some good old common sense to the debate and asks why we need to spend the money in the first place when the focus should be on simplifying taxation and with it all the credits and welfare the IRD now has to manage.  A good start would be eliminating Welfare for Families and creating a tax free threshold for single and married people and those with children.  Other countries do it and their tax returns take 10 minutes to complete, why can’t New Zealand?

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  • Michael

    The major problem with most companies/public sector parasites when it comes to IT projects, is that they don’t have a continual cycle of development/replacement/refresh. It’s always a “big bang” approach and as a result, it becomes too hard to complete correctly, spend too much time making one person happy (usually an underling that no one knows) and wildly over budget.

    If companies/public sector parasites were to have their systems maintained and refreshed in more frequent and smaller junks, then they wouldn’t need a 1.5+ billion dollar project.

    There is too much focus on “sweating assets” and “ROI” and “TCO” and not enough focus on better capital expenditure to ensure the health of the system.

    I can see the 1.5 being blown real quit. A place like IRD will be loaded with COBOL based mainframe apps. A sales driven vendor like… IBM or Oracle, will offer to re-write it all. Under estimate the work and cock it up. HP did this with the benefits payment system years ago. Cobol to Java

    • Andy

      I would agree with this having worked on several big bang train wrecks in the past

      • Bunswalla

        Maybe it’s you?

  • cows4me

    So how long will it take for this 1.5bn to pay for itself, Wait let me guess, fucking never. Why can’t these fuckers invest in plant like the private sector, when I buy a new tractor it’s serviced regularly and probably pays for itself after 10 years. By the time these tossers get a computer system up and running it’s fucking old hat. To much waste in this country by to many who don’t care or don’t even know where the money comes from. I guess a new system could be justified if it caught tax dodgers but that will never happen. Want to save the country 1.5bn and increase income dump the whole tax system, it’s a crock of shit run by political crooks and self serving parasites.

  • CJA

    Actually I’ve got a slightly different take on this since I deal with the IRD on a regular basis. Whenever you call them and perhaps try to make a transfer to any given year it is a “Computer says no” moment because their system cannot handle it for one or another given reason. I agree that $1.5 billion is a hell of a lot of money so therefore would hate to see that amount spent but based on my dealings with the IRD their system seems pretty archaic so rather than an overhaul it may be a case of a completely new system.

    • Sarrs

      I think, however much it needs to cost, just pay it.

      Classic example – attached correspondence to two tax returns asking for the refund in one to offset the terminal tax payment in the other and move the balance to 2014 provisional tax.

      IRD system doesn’t flag the correspondence. Refund cheque gets issued, penalties and interest are added on to late terminal tax and provisional tax. Statements are issued, client gets spooked and thinks we’ve stuffed up. Return cheque to IRD with letter explaining situation. Wait 4-6 weeks for letter to be actioned. Client still upset as statements are continually issued showing mounting penalties and interest. You can probably add another hour or two of billable time to the client’s bill for this – can’t charge the IRD even though it’s their fault. Yea, this would have to happen 5m times (assuming 2 billable hours at $150/hour) to equate to $1.5bn but considering the frequency with which we have these issues I would say, nationally, those 5m times (for this issue alone) would take 10 – 12 years occur. A new system may not save the government any money directly but it will save tax payers accounting fees.

      • Mr_Blobby

        Sounds more like human error more than computer error. You should be able to Bill IRD if it is there cock up in the first place, but then you have a culture of we are always right and you are always wrong.

        You are guilty until you prove yourself innocent. Imagine if our courts worked like that. You are automatically guilty until you can prove yourself innocent.

        A whole industry has sprung up around this convoluted TAX system the compliance costs, on business are just stupid.

        You sound like one of the bludgers. As you primarily represent the IRD not your so called client, you should be paid by IRD.

        • Sarrs

          Well…tell us how you really feel.

          The issue could be human error at the IRD end although correspondence attached to a tax return is in electronic form as is the return itself. Our computer system sends it to their computer system so unless they are purposefully ignoring the correspondence and not actioned requested therein (which I find incredibly hard to believe) I am confident it is a computer error and the attached correspondence isn’t being picked up by their computer.

          Our tax system is far from convoluted. It is one of the simplest in the world. In 2007 we were ranked 9th simplest out of 178 countries. I am really interested to hear your suggestions about how to simplify it. I suspect you might say something along the lines of ‘no welfare, therefore no need to pay tax’

          Hahaha…bludger. You’re cute Mr Blobby, real cute. Either an accountant or the IRD must have done a real number on you. Or maybe you are just pig ignorant about small business, accounting and tax in NZ. We DO NOT in any case represent the IRD. We advocate on behalf of our clients to the IRD in an attempt to minimise their tax bills. Bludger…you crack me up.

          • CJA


      • Mediaan

        You assume the system, whatever it costs, will work as promised. Some people above are explaining, history tells us it will not.

        I concur.

        Cap Gemini, or IBM, or whoever will promise the moon and deliver years of problems and cost overruns. It’s what they do. They spend a lot on sales talk, insufficient on computer skills.

        People, remember the police computer system Incis? Did we ever get it? No, because it never worked. They still don’t have a decent system. Was it astronomically expensive? Yes. Who got blamed? The client – us.

        They never work.

        Do not spend this money. It will not work. Will – not – work.

        Rewrite the tax system. Spend a quarter of $1.5bn on hiring local boys. Return to doing it manually. Abandon income tax completely.
        Any of these would be preferable.

        • Sarrs

          I just want a system that works. A system that works will make things so much smoother and will reduce accounting fees charged to SMEs. I don’t know how they’re going to make it work but at the moment a milo tin on a piece of string would be better than that they’ve got

  • ozbob68

    You need 4 things for a successful computer project – a precise and detailed requirement, a proven technology to implement it on, the proper governance to manage the implementation and the buy-in by all parties to the solution. From my IT experience with IRD and anecdotal evidence from friends who worked there, they will be lucky to get 1 of those 4. (And yes, I know there is no technical skills mentioned as a requirement, they are a commodity and can be sourced anywhere).

  • GregM

    News just in, the IRD computer system has just crashed. Fantastic.

  • Mr_Blobby

    Peter Dunne you are a complete fucking retard. Instead of sitting around thinking of new ways to screw us over. How about you do something sensible like simplify the TAX system so that we don’t need an army of overpriced accountants to fill in 30+ TAX returns a year. People would be shocked if they had any inkling just what percentage of there income is actually TAX.

    • Mr_Blobby

      Wait for the outrage from the vested interests.

    • Sarrs

      30+ tax returns a year? I’m not sure what you mean. I am personally responsible for over 400 income tax returns and my boss has nearly 800.

      If you’re talking about all the various different returns, lets count them out.
      12 x PAYE (filed monthly)
      6 x GST (filed 2 monthly although could be 6 monthly)
      4 x FBT (filed quarterly although could be annually)
      3 x Income Tax (1 for the company and assume 1 each for a husband and wife)
      1 x Imputation Credit Account (companies only)
      1 x IR10 (business only)
      2 x Donation Rebates (for husband and wife)

      That’s 29 and stretching it out too. Clients who have the nous do the GST and PAYE, less do the FBT and the accountant is usually responsible for the rest. Most people don’t even know they file an Imputation Credit Return and an IR10. They literally take 15 minutes to do when you are finalising the income tax return.

      You really talk some nonsense Blobby. Unless you have some sort of mental impairment which prevents you from understanding the worlds 9th most simplistic tax system.

      • Mr_Blobby

        Cue vested interest. I also consider ACC to be a TAX.Did I see a provisional TAX return in there anywhere.So I will accept 30.
        30 returns and you say we have a simple TAX system. What planet do you come from.

        No the system could be a hell of a lot simpler. It is just not as profitable for the Taxation industrial complex.

        Yous say you advocate for your clients but in reality you represent the IRD. It is a fine line indeed.

        • Sarrs

          There’s no such thing as a provisional tax return – that assessment is done automatically from your income tax return. ACC is also assessed on your income tax return. Neither of these require any additional work from an accountant. You really have no idea, do you?

          One thing you will never see me do is embarrassing myself by making false and misleading statements about something I know nothing about, even if it is just on a blog. Perhaps you should take the same advice. You’re just embarrassing yourself now Blobby.

  • peterwn

    IMO Rod Drury is worth listening to – to get his Xero company where it is now, he must have some brains and of the right sort. OK – he did ‘bludge’ $4M off the government, and if the money was available then why not? – it is a reflection on the Government, not Rod. Anyway, the benefit to the government and NZ now would probably be many time that $4M.

    Frankly the arguments in support of IRD’s plans do not resonate with me. The ‘First’ system code base is allegedly a rat’s nest – how did it get in that state – it presumably was fairly clean in 1991 when first written – is it as bad as it is made out to be. IRD says the system is approaching a stage where it is ‘at risk’. Some of this seems panic stuff to frighten Treasury – if we do not have our new system, your income stalls.

    When INCIS tanked, the Police fell back on smaller incremental IT solutions to meet their information needs and this seems to have been successful.

    This is exactly the approach that Rod Drury is advocating – incremental IT projects leveraging off the existing ‘First’ system. IMO part of that operation includes coming to grips with the ‘First’ system rather than walking away from it.

    Cactus Kate has a point, but simplifying the tax system is not going to wash in the current political climate – this adds weight to Rod’s idea of incremental development.

    Capitalistic methods have not been particularly successful in the IT area (INCIS, Novapay, etc, etc), one reason being that an IT tenderer/ contractor can far too easily game the system and in particular can put the client right over a barrel at critical project points.

    In the circumstances, a slightly left of centre semi in house Kiwi approach is well worth a try, and risk is minimised by breaking the project up into moderate sized chunks. Importantly, IRD must own the code, not have limited licence for code owned by others as seems to be the case for the Datacom and Novapay teachers pay systems.

    • Refn8tor

      Every IT project manager should read Joel Spolsky’s article “Things You Should Never Do, Part I” before they touch a line of code.

      Although the article was written 13-odd years ago, there are so many important ideas in it that are still relevant today. If the buffoons who signed off on Talent2’s payroll proposal had read this first, Novopay would never have been given a chance.

      And now it’s the turn of the IRD …

      • Bunswalla

        I love that blog, most of his articles still hold true today. Fogcreek is also very good.

        The first book they should read is that one the Dunedin academic wrote about why big software projects fail. When you look at Novopay project it ticks every box about what you shouldn’t do. The IRD project is only 15 times bigger than that, so it’s bound to be the cluster-fuck to end them all.

        Until the next one.

  • Andy

    Who was the guy from Dunedin who wrote about NZ IT government project failures?
    Can we get everyone involved in any potential project to sign their name in blood that they have read the book?

    • Anonymouse Coward

      Dangerous Enthusiasms

      Summary: E-Government, Computer Failure and Information System Development

      Robin Gauld and Shaun Goldfinch, Otago University Press

      • Andy

        Thanks for that.

  • Mr_Blobby

    One thing you can Guarantee is that it will be a train wreck. The bigger the bill the bigger the mess.

  • Hazards001

    ” A good start would be eliminating Welfare for Families and creating a
    tax free threshold for single and married people and those with
    children. Other countries do it and their tax returns take 10 minutes
    to complete, why can’t New Zealand?”

    Bullshit..a good start would be throwing WFF out the window. Why should there be a tax threshold differential between single and married or those with kids and those without?

    Note I have kids.

    If you want to get married? Fine…pay your taxes same as me!

    Want kids? Fine…pay your taxes same as me!

    Want more money or can’t afford kids? Tough shit..don’t fuck…same as me!

  • Mediaan

    Best tax system, the solution.

    Just have GST, customs and excise tax, plus a window tax. Abolish all other.

    A small regiment of trained measurers goes round the country inspecting your house or commercial space. They are measuring the square metres you have in windows, after which tax is calcuated by multiplying window area m2 by the latest tax rate.

    This was used successfully in Britain until a few centuries ago.

    Only reason it was replaced was some Toad invented accountants. They now advise the IRD on taxes.

    • seems to me

      Seems to me that somebody has been smoking some delirium causing substance. Window tax…. successful in Britain. Guess Mediaan has a great sense of humour. All the window tax did was generate a shit load of work for people to brickup windows……I do enjoy the ramblings of idiots in the evenings…

      • Mediaan

        No arguments possible. No accountants. No IR3 or IR6 to fill out. No 15% of all revenue going to pay for processing assessments.

        Which part don’t you like? All good.

        Bricking up windows, nothing wrong with that. Free choice.