Business register modernisation canned after $530m spent

The government has abandoned the troubled modernising business registers (MBR) program, after $530 million was sunk into it.

Deputy Treasurer Stephen Jones announced the decision this morning, citing the findings of the review established in February and led by former Services NSW CEO Damon Rees.

Jones said the project was discontinued due to a combination of factors, including underestimation of complexity, more use of contractors than planned, decisions to expand the project before it was delivered, the reassignment of the project from the Australian Securities and Investments Corporation (ASIC) to the Australian Taxation Office (ATO), and Covid-19’s impacts.

In his report [pdf], Rees warned that the project’s 500 staff were burning through money at the rate of $12 million a month, and that MBR would exhaust its funding by the end of this year at this rate.

Compared to “second pass business case” estimates of just over $480 million for the project, the report said that completing the MBR was estimated in June to need at least $2.7 billion.

The project can claim one win: its only delivered project, Director ID, came in under its original $69 million budget, at $55 million.

“Should the government agree to cease the MBR Program this decision should be taken quickly as possible to limit further expenditure on significant program overheads and expenses," Rees wrote.

He recommended that the business registers that were to be consolidated under MBR instead be brought under oversight of a new division of the Australian Securities and Investments Commission (ASIC).

The ATO took charge of Australian Business Registry Services in April 2021, becoming responsible for core business registers, something the Rees report said “complicated delivery" of the MBR program and "the underlying operating model”.

With that decision reversed, Rees recommends $515 million be spent on improving data integrity and making legacy systems stable, and Jones said the government will “consider options to uplift registries following further analysis”.

Had MBR been allowed to run its course, Rees said the project wouldn’t see service until 2029 and its cost could blow out beyond $2.8 billion.

Just delivering a new business register was estimated in the Rees report to cost almost eight times the original estimate, from $47 million to between $218 million and $367 million.

A new companies register could have cost as much as $1.1 billion, compared to an original estimate of $128 million.

Troubled history

Business register technology has long had a troubled history: in 2016, after the government abandoned a plan to privatise ASIC’s business registers, then finance minister Mathias Cormann said it could cost $100 million to upgrade the registries.

The MBR project was officially proposed in August 2017.

It received formal go-ahead in December 2017, when the ATO solicited supplier pitches for the core technology to support a single business register.

Troubles began to emerge in March 2019, when the ATO said it had been unable to find a suitable platform for the project, and called in Accenture to help it with “high-level design”.

Things worsened in 2022. First, in July then incoming financial services minister Jones said the former government had hidden a billion-dollar blowout in the project.

Then in August 2022, the government passed legislation to delay moving registry functions from ASIC to the ATO until 2026.

In October 2022, the project was allocated an extra $166 million in the federal budget.