Director, Australian Privacy Foundation
Opinion Piece, The Sydney Morning Herald, Tuesday April 29, 1997, p.19
This paper is at http://www.anu.edu.au/people/Roger.Clarke/DV/Outsourcing.html
The Government's decision to transfer processing of our personal information to the private sector represents one of the most serious threats to our privacy since the days of the proposed Australia Card. It is likely to see information on our incomes, personal finances, health, social security, education and immigration records fall into the hands of huge American data processing corporations.
We provide this information to governments on a confidential basis because we are required to by law. The government now plans to 'outsource' it - to hand it on to other corporations to cut costs. It is a reckless and high risk strategy.
The decision is a major threat to privacy. At the moment, we have rights that protect us from the misue of information held by the Commonwealth Government. But once the files go out to the corporate sector, you will lose these rights. The Government says that it will make sure that there are privacy safeguards in their contracts. But they won't let us see the contracts, because they are confidential. It seems that the government holds different beliefs about protecting its own privacy, and safeguarding ours.
In any case, these secret contractual terms give us little protection. Because each of us is not a party to the contract, we can't take action when our privacy is invaded. Instead, we have to rely on the government to take action on our behalf.
The Government says that its move will save around $100m a year. But that's true only if things work out as planned. A leaked Cabinet document shows that most of the affected government departments, including the Treasury, are not convinced. A recent overseas study of 61 outsourcing deals confirms Treasury's fears. The study, conducted by Leslie Wilcocks from Oxford University, concluded that in three quarters of the outsourcing deals the expected savings failed to materialise. In the three years since the British Government's outsource its Inland Revenue Service, costs have blown out by 60%.
It makes sense for governments to outsource non-core functions like cleaning, printing, recruiting staff and building roads. But outsourcing the processes of government, like running the tax, social welfare and immigration systems, is seriously short-sighted. These deals can quickly become a straitjacket on government policy. If the government decides to make policy changes which haven't already been laid out in the original contract, the contractor will demand renegotiation and an increased payment. At this stage the company can hold the government to ransom.
Other countries are now having second thoughts about outsourcing key government functions . Recently the Florida state government contracted EDS, one of the large American data processors, to run its social security system. The result was disastrous. In the first year of the contract, the system crashed, resulting in massive logjams of cases. It was claimed that EDS had paid out an estimated $130m more in benefits than it should have done. The government refused to pay EDS and the whole contract became mired in legal action. EDS argued simply that they delivered what the government had asked for - and it was the government's fault for changing its policies.
The Government says it can outsource almost all its computer work. The suggestion is extraordinary. No other national government in the western world has gone this far. All of it? Including customs, with all of its criminal intelligence? Will we send our immigration records offshore for processing in China? Will our personal files end up in the data factories of countries like China, India or Singapore where costs are much lower than in Australia?
We opposed the Australia Card because we didn't want the government to centralise all our records. In the long run it is likely that a single major contractor will pick up most of the government's outsourcing work, and will want to combine those files to increase its efficiency. Given their recent record on privacy protection, the government is unlikely to stand in its way.
The government is showing extraordinarily hostily to privacy. A year ago, the Howard Government was elected on a policy platform which included strengthening Australia's privacy legislation. Since then they've walked away from that commitment, leaving Australians with the weakest privacy safeguards in the western world. Now our private records are up for auction, it's never been more important for Australia to put in place effective privacy legislation.
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Created: 29 April 1997
Last Amended: 29 April 1997
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