11 Mar 2015

IRD accused of 'extraordinary' IT blow-out

6:41 pm on 11 March 2015

The Commissioner of Inland Revenue has taken the heat for what is being called an extraordinary blow-out in IT costs for its new child support payment system.

The Inland Revenue.

Inland Revenue (file photo) Photo: RNZ / Philippa Tolley

During an appearance before Parliament's Finance and Expenditure Committee today, Naomi Ferguson was also questioned about $750 million in overpaid tax, collected by the department.

Inland Revenue Commissioner Naomi Ferguson said collection costs always had to be weighed against revenue brought in.

Inland Revenue Commissioner Naomi Ferguson Photo: RNZ / Philippa Tolley

IRD is changing the way child support payments are calculated, saying it is the first overhaul in 20 years.

It has admitted its budget has steadily increased from $30 million, to $163 million, and finally to $210 million. That's a $180 million blow-out.

Labour's finance spokesperson Grant Robertson asked Ms Ferguson who was responsible.

"This all happens and what's the consequence within IRD? Is anyone being held to account? What is being done about this? It's an extraordinary blow-out."

Ms Ferguson told the committee she commissioned an independent review to learn from the mistakes made.

"The management of a project is, I think, the accountability of myself and my department - the recommendations were around the processes and the way that we set up that project."

Under questioning, she admitted IRD Minister Todd McClay was not impressed with the increased budget.

"The minister was not pleased. Of course, any minister would want a project delivered on budget and on time."

Labour's revenue spokesperson Clayton Cosgrove likened the budget blow-out to a super Novapay, in reference to the problem-plagued school payroll system.

"What I would like to know is what questions ministers asked each week. You know, are we on time? Are we on budget?

Labour MP Clayton Cosgrove.

Labour MP Clayton Cosgrove. Photo: Supplied

"If it is clicking over, are the meters running? Stop, let's go back. None of this occurred."

Mr Cosgrove said the people in charge had been asleep at the wheel.

"Money just keeps rolling, the cash registers keep clicking and the New Zealand public just keep scratching their head. If this was the private sector, somebody would be sacked."

Meanwhile, Labour's Stuart Nash wanted to know why Inland Revenue owed New Zealanders about $750 million in overpaid tax and what it intends to do about it.

"You are very proactive in chasing people with tax debt, and so you should be, but it would be good if you exercised the same level I suppose of enthusiasm when it comes to giving money back to people who have actually overpaid their tax."

In response, Ms Ferguson said the department used advertising campaigns to encourage people to check their personal tax summaries.

But she acknowledged IRD could do more and work to help taxpayers.

Revenue Minister Todd McClay downplayed the figure of $210 million and said it would be more like $163 million.

"We have legislation before Parliament that will bring that down.

"When Inland Revenue came to me and said that the cost would now be $210 million, I said that was unacceptable and they needed to find ways to reduce that cost."

Get the new RNZ app

for ad-free news and current affairs