Posts Tagged ‘Xero’

What was the point of this?


treading water


Two years ago, National awarded $7 million in grants to local businesses. As then-Science and Innovation Minister Wayne Mapp said,

… research science and technology was the way to create jobs, economic growth and a higher living standard for the country.

“To that end, it is vital that high-tech, exporting companies maintain their competitive edge in global markets.”

Of  a total figure of about $50 million, $7 million was awarded to high-tech companies;

Core Technology: $629,400

Open Cloud: $2,394,920

Xero: $4,040,000


$7m grants for Wellington tech businesses

Acknowledgment: Fairfax Media – $7m grants for Wellington tech businesses


So far, so good; National assisting small-medium businesses to build and hopefully hire more staff.  What could possibly go wrong, you ask?

Well, this is the National-led government we’re talking about here…

Fast forward to 2013, and on 1 May, Revenue Minister Peter Dunne announced

… the Government’s biggest ever overhaul of a Government IT system – a $1.5b upgrade of the department’s “First mainframe” computer system.

Mr Dunne admitted the system was “fully stretched” and a 10-year project to upgrade the system was required.

He said he wanted to make sure a Novopay-like situation could be prevented in the roll out.

“It’s fair to say the revenue system is at capacity, and the Government recognises the need for a substantive transformation programme to shape Inland Revenue to best serve New Zealand in the future”.

Acknowledgment: NZ Herald – $1.5b upgrade for IRD’s ‘fully stretched’ computer system

Aside from the extraordinary cost of such a project – $1.5 billion!?!? – which even rightwing blogger, David Farrar has questioned (see:  Drury on IRD computer system) – this would be a prime opportunity for local IT businesses to get stuck in and tender for the project.

Companies like,

Core Technology

Open Cloud


These companies, remember, have been given $7 million of our taxes to grow their businesses.  The IRD project would be ideal to fulfill those expectations of growth.

Except – and remember, this is National we’re talking about – the criteria for tendering excludes most (if not all) local IT companies,

The information technology industry is crying foul over the criteria set by Government departments to work on multi-million dollar contracts.

A lobby group, backed by the Green Party, says the Inland Revenue Department is making requirements too hard for local companies to meet so contracts are going offshore.


Local firms say the criteria meant they couldn’t bid for the job.

You have to have $400 million worth of assets for example, it makes it very very difficult for New Zealand ICT companies to get over those bars,” Green Party co-leader Russel Norman claims.

Acknowledgment: TVNZ – IRD under fire for hiring international firm

What New Zealand company holds $400 million worth of assets?

Not many, if any, to quote The Scribe.

Unsurprisingly, the criteria was written by  French multinational Capgemini – one of the world’s largest IT consultancy companies.  The same company,  Capgemini, has also been hired to  “advise” on the tender process which is worrying the  IT industry that it  will be cut out.

This, to put it mildly was met with disgust and derision by local New Zealand IT companies such as Xero CEO, Rod Dury, who wrote a scathing op-ed for the NBR on 2 May,

The New Zealand Government has recently agreed to spend $1.5 billion to redo the New Zealand tax system.

To anyone in IT this is an obscene amount of money to spend on any software project.

From the outside it seems like a slow moving train crash reminiscent of earlier Big Bang projects that always blow out if they are ever delivered.

It reeks of global consulting firms winning the business and then rapidly hiring a bunch of grads and putting them up in hotels for years.

It’s just not smart.”

Acknowledgment: NBR – Dear IRD: how to shave $1b from your $1.5b software spendup

Rod Dury points out,

“A $1.5 billion  injection into local service companies, that are world class, would grow an industry. Government spending of this magnitude should see numerous other benefits.

It’s easy to say nothing but the fact is government officials have no idea what’s reasonable. The companies with the budgets to win these projects are the people officials meet.

To a well meaning amateur $1.5 billion seems a massive amount of money for a relatively moderate volume transaction system.”

Acknowledgment: IBID

Far from being a nay-sayer, he then offers four positive, practical, constructive suggestions how the IRD (and National) should proceed on this issue.

This blogger concurs with Mr Dury.

We’ve  had previous disasters with INCIS (American IBM); Novopay (Australian); and problems with imported locomatives (Chinese) – projects  which could, and should,  have been built here in New Zealand, with money going to local workers and firms.

This is not left-wing fantasy, this is fairly obvious common sense. We can do it; we have the skills; the nous; and the determination.

Aside from generating local  jobs and business growth here in New Zealand,  Xero’s Rod Dury sez we can build a new system for IRD for far cheaper than the $1.5 billion mooted by Peter Dunne and others,

But rather than just criticise here’s some practical suggestions I’d offer to to see if we can save $500 million to $1 billion in spend.

Acknowledgment: IBID

Rod Dury did not mince his words,

This just flies in the face of best practice in the way New Zealand companies have been building world-class software really for the last five or 10 years.”

Acknowledgment: TVNZ – IRD upgrade another potential train wreck – expert

So why isn’t National giving local companies the opportunity to bid fairly for the contract?

Why give grants worth millions of tax-dollars to  local companies if this government is not prepared to subsequently support them with contracts?

What was the point of this?





When I contacted Rod Drury on this issue he responded via Twitter, he replied on 4 May;

Rod Drury ‏@roddrury 4 May

@fmacskasy @clarecurranmp the companies that should be doing it are Intergen, Datacom, Simpl, Optimation. Works class local services biz’s

He actually suggests other companies that could be involved – not his own.

This blogpost was first published on The Daily Blog on 4 May 2013.



= fs =

From “Nanny State” to “Daddy State”…

I don’t think there’s much question that  serious social problems in this country  are not being addressed in any meaningful way by this current government…

So is the Prime Minister, John Key, really  aware of what is actually going on in New Zealand right now?  Well, judge for yourself…

So what is National doing about soaring youth unemployment?

At their recent Conference, held in Wellington, they came up with this…

(Article abbreviated)

They’re going to clamp down on booze and cigarettes?!?!

That’s it?

Oh good lord! And people thought that Labour was “Nanny Statist”?!?!

I wonder who will be next to feel the iron fist of National’s Polit-buro state control? The retired? Civil Servants? Anyone using state hospitals???

Congratulations, my fellow New Zealanders: we have gone past Nanny State to Big Brother.

It might be worthwhile considering that,

  • Not all unemployed youth smoke
  • Not all unemployed youth drink
  • Even if they do,  Key says that they will still receive “a limited amount of money for young people to spend at their discretion“.  Like… on booze and ciggies?!
  • Even if they won’t have enough “discretionary pocket money” – what is to stop them stealing it? Or selling their Food Card for cash, and then buying ciggies and booze?

In the meantime, how many jobs will this piece of neo-Nanny Statism create?

The answer, I submit, is:

Even the NZ Herald was quick to acknowledge this simple fact in their August 16 editorial,

Yet there is also nothing in the Prime Minister’s announcement that creates jobs for young people. There, the Government still has work to do.”

Meanwhile, as National blames the young unemployed of this country for the world recession, and proposes to penalise them by tinkering with their only means of survival – the problem continues unabated,

The last time youth unemployment was this high was in 1992…


Wasn’t that the previous National government led by Jim Bolger, with Ruth Richardson as Minister of Finance? And didn’t she implement a slash and burn economic policy in her “Mother of All Budgets” that resulted in unemployment reaching over 10%?!?!

Why, yes. It was.

Are we starting to see a pattern develop here, folks?

It is abundantly clear that National has no clue how to address this problem. Attacking welfare benefits which keep people from starving to death, or more likely, breaking into our homes to find food, is not an answer. It is a cheap shot geared toward winning votes from uneducated voters who hold the illusion that living on a benefit is a cosy arrangement (it is not).

There are no policies being announced to create jobs, or to train young people into a trade or profession.

National should be throwing open the doors of our polytechs to train young people into tradespeople that the community desperately needs. With the re-building of Christchurch shortly to commence – where are the necessary tradespeople going to come from? (Most have buggered of to Australia.)

If this is the best that National can come up with, then, my fellow New Zealanders, we are in deep ka-ka.


Dr Mapp said the research science and technology was the way to create jobs, economic growth and a higher living standard for the country.

“To that end, it is vital that high-tech, exporting companies maintain their competitive edge in global markets.”

The grants range from $300,000 to $5.9m and run for three years.

They are valued at 20 per cent of the research and development spend in each business and provide a maximum $2.4m a year for three years.

Dr Mapp said they provide the businesses involved with more financial security over that period.

Businesses to get grants in the latest round were involved in  software development, biotechnology, manufacturing and electronics.

Wellington companies which received grants:

Core Technology: $629,400

Open Cloud: $2,394,920

Xero: $4,040,000

Xero was founded by Rod Drury in 2006,  who made $65 million in the same year after selling his email archiving system AfterMail. Xero purchased Australian online payroll company,  Paycycle, in July of this year for A$1.5 million.

Which begs the question as to why the government has given away $4 million of tax-payers money when the owner is ‘flush’ with $65 million and has enough capital to buy off-shore  companies elsewhere.

Is this a prudent use of tax-payers’ money,  especially when,

* government is cutting back on social services?

* government has cut back on youth training programmes?

* government is borrowing $380 million a week, and telling the rest of us to “tighten our belts”?

At a time when government is berrating unemployed 16 and 17 year olds for being on the dole and  “smoking ciggies”, instead of  providing meaningful training and/or employment, it seems that National is still “picking winners” in the field of commerce.

$4 million could go a long way in providing training, and a future, for many 16 year olds.

By contrast, how much do young people, living away from home, recieve from WINZ? It must be a grand sum, to earn the Prime Minister’s stern attention. The answer is:

It’s a shame they’re not “picking winners”  with our unemployed youth.