3 Mar 2015

Labour: Cost blow-out for Inland Revenue

6:53 pm on 3 March 2015

The Labour Party is demanding that the Revenue Minister explain what it says is a massive blow-out in IT costs for a new child support payment system.

Labour MP Clayton Cosgrove.

Labour MP Clayton Cosgrove. Photo: Supplied

Inland Revenue is changing the way child support payments are calculated next month, saying it's the first overhaul in 20 years.

However, today it was silent on the $130 million cost escalation: Radio New Zealand's repeated attempts to get an interview or a statement went unanswered.

Labour's revenue spokesperson Clayton Cosgrove wants Revenue Minister Todd McClay to front up.

"Ministers owe a duty of care and they have a responsibility to the taxpayer to explain how this happened and secondly to explain where their responsibilities lie.

"I'd like to see the paperwork to see what questions were asked, or weren't, and were they asleep at the wheel, as they seemed to be," Mr Cosgrove said.

A spokesperson for Mr McClay said he was just a bit too busy today to be interviewed.

In a statement, the Minister said the Government was developing a fairer child support system.

Even the former Minister in charge of the computer upgrade at IRD said he was surprised at how expensive it had become.

Peter Dunne

Peter Dunne Photo: RNZ / Diego Opatowski

Previous Revenue Minister Peter Dunne, the architect of the child support reforms, said the government was told a year after it had first been given the $30 million upgrade estimate in 2011, that the true cost would be far higher.

But he said he still could not understand just how high those costs have now gone.

"Well, I was in charge as Minister of Revenue up until June 2013. At the time that I left that role the estimated cost was $120 million over a 10 to 12 year period - that figure had been confirmed by the Cabinet in 2012.

"I don't know where the escalation to $163 million has come from."

Prime Minister John Key said part of the extra costs were due to changes stemming from select committee recommendations.

"When the select committee looked at the changes that had been recommended for parents to try and make the system more equitable they made a whole lot of changes.

"The Government in the end accepted those changes but it meant it was more expensive to change the computer systems," Mr Key said.

Mr Key said history showed just about every major computer system upgrade costed "a little bit more" than originally forecast.