NSW’s $2.2bn digital fund running on empty

The New South Wales government has all but exhausted its flagship digital fund, with less than $150 million remaining in the once cashed-up Digital Restart Fund for new projects over the next 18 months.

The figure is around $100 million less than what was available in the Digital Restart Fund (DRF) less than six months ago, meaning the fund will likely dry up this year without new funding in the 2023 Budget.

The DRF was established with an initial $100 million investment in the 2019 state Budget to deliver smaller, agile increments of funding to digital projects and reduce technical debt across government.

After a successful first 12 months, $1.6 billion in additional funding, including $1 billion in new funding, was allocated to the fund in response to the pandemic, followed by a further $500 million in 2021. The funding will expire at the end of the 2023-24 financial year.

But no new funding was contained in last year’s state Budget, despite the pleas of Customer Services and Digital Government minister Victor Dominello and $42 billion in new spending initiatives from government.

Concerns over labour market constraints were one of the principal reasons behind the decision, with Treasury arguing that a pause would allow the government to “catch up” with projects already funded.

The move left $242 million for the government to allocate in future funding rounds in August, a figure that has now fallen further following additional investment, as revealed in last week’s 2022-23 Half-Yearly Review.

The review shows a further $185.6 million, including $117.6 million in capital, will be dolled out across 35 projects, including the Education Wallet Program ($24.6 million) and a cybersecurity uplift at six agencies ($20.2 million), over the next two years.

A spokesperson from the Department of Customer Service told InnovationAus.com that “$147 million in funding remains” in the DRF as of last week, with almost 300 projects receiving funding in that time.

“The projects are forecast to deliver significant immediate and long-term benefits valued well in excess of the initial investment, improving government services and having a real impact on the lives of NSW residents,” the spokesperson added.

With less than $150 remaining for new projects, there is now likely to be a shortfall in funding for government digital projects over the short-term without additional funding in the state Budget that follows next month’s election.

According to the most recent DRF annual report, $509 million was allocated from the fund last financial year. A similar amount of funding was allocated in 2020-21, according to past Budget papers.

Earlier this the month, the panel of experts that audited myGov called for a fund modelled on the NSW Digital Restart Fund to be established for myGov, allowing for government services to be created and upgraded on a regular basis.

Do you know more? Contact James Riley via Email.

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