Scrapped: Business registry modernisation scheme halted after projected $2.3 billion blowout

It was meant to slash costs and complexity for Australian businesses. Instead, the federal government has scrapped the Modernising Business Registers program, owing to billion-dollar blowouts, crushing delays, and a significant underestimation of the task at hand.

Originally budgeted by the Coalition government at $480.5 million, the Modernising Business Registers (MBR) program was tasked with updating, securing, and consolidating dozens of registries operated by the Australian Securities and Investments Commission (ASIC) into one easy-to-use digital platform.

The Morrison government flagged the MBR Program as a way to “make interactions with government simpler and quicker” for businesses and companies, by streamlining the tangle of forms, paperwork, and compliance checks needed to operate.

It was also hailed as a cost-saving measure, by reducing the fees attached to the new-look registry framework compared to Australia’s aging systems.

But Assistant Treasurer and Minister for Financial Services Stephen Jones on Monday announced the federal government will not proceed any further after a scathing independent review found delivering the program as outlined may cost up to $2.8 billion.

Originally slated for completion in the 2023-2024 financial year, the MBR program in its current guise could take until 2029 to finish, the report said.

“While the review considered options to turn the program around, it ultimately concluded that the program should stop,” Jones said.

Stop now to avoid potential $2.8 billion price tag, review warns

The Albanese government commissioned former Chief Executive Officer of Service NSW Damon Rees to investigate the program in February this year, months after Jones reported the program would likely cost a billion dollars more than the Coalition’s original $480.5 million estimate.

Safeguarding Australia’s aging business registry systems is a “necessary and urgent” task, Rees said.

But the review concluded the MBR program should halt, “as the economic benefits from the program do not justify the level of additional expenditure required.

“It is recognised that it can be difficult to cease a program with significant sunk expenditure and limited useable outcomes to date.

“However, this Review concludes that this is the responsible and best available option for government.”

Some updates contained in the overall program, including the Director ID system, have gone live.

Still, the report found updates to core business registry services are yet to materialise.

“The MBR program has not implemented any changes to existing registry services or started to realise any of the benefits identified within the [second pass business case] beyond those associated with the Director ID.

“Overall, the MBR Program is still relatively early in its lifecycle with most of the delivery, cost and risk still lying ahead.”

Key problems included a “significant underestimation” of the complexity involved, both technically and legally, the report found.

The real scale of the task hampered the program’s design, making some efforts “not well aligned with benefits”.

The “program lacks a clear critical path for delivery”, the report added.

Significantly, plans to hire up to 500 full-time equivalent workers, at a projected cost of $12 million a month, “has contributed to the exhaustion of allocated funding and the continuation” of delays.

Government plans for what comes next

After considering the merits of proceeding as planned, or carrying on with a limited scope, the review found stopping entirely was the correct course of action.

Even so, reverting to the pre-MBR Program model will come with additional costs: ceasing the program, combined with the cost of uplifting data integrity and quality, will add an extra $515 million to its price tag.

“While the Review recognises that this approach will have its own challenges – particularly the need to support the rebuild of capability within ASIC – the prospect of delivering some of the key economic benefits of the MBR Program at substantially lower cost means that it is by some distance the best of the options for the program,” the report said.

The government will now consider its options surrounding the uplift of those registries.

“The overarching conclusion of the review is: bigger is not better,” the Assistant Treasurer added.

“The temptation to load programs up with greater scope than necessary reduces the likelihood of success.

“The Albanese Government will look to apply the lessons from the MBR review to other digital and IT projects, including future projects.”

CPA Australia rues decision, acknowledges ‘unacceptable’ costs

The decision to stop the MBR Program has been met with resignation and disappointment from CPA Australia, which has long called for digital registry system improvements and hoped for better outcomes at the outset.

“We’re disappointed it won’t proceed, but we acknowledge that the price tag has blown out unacceptably,” said Gavan Ord, senior manager of business and investment policy at CPA Australia.

As accountants and business advisers often work at the coalface of business registry systems, Ord said the setback should not rule out future overhaul attempts.

“Although the possibility of transformational change is now off the table, reform to Australia’s business registers remains essential,” he said.

“Business registers are a fundamental part of Australia’s economic infrastructure and unfortunately ours aren’t fit for purpose.”

Our view

The cessation of the MBR Program is a costly disappointment given the need for business registry reform, but its failure must not relegate digital transformation to the ‘too hard basket’.

Overhauling those systems could significantly benefit businesses through lower costs and greater transparency, making it easier for users to interact with the government, regulators, the courts, and each other.

It would be good for the government, too: increased market dynamism and boosting the number of business entries are focal points for the Albanese government, and the recent Intergenerational Report highlights the need for new, innovative businesses to enter the market.

Slashing the complexity inherent to Australia’s current registry systems would make it easier for entrepreneurs to get their businesses off the ground.

Consumers would benefit from simplified, expanded, and cut-price access to company records, too.

Not only would registry alignment make it easier for regulators to clamp down on phoenixing, fraud, and other forms of business misconduct, but greater transparency would make it easier for consumers to make better decisions about the companies, charities, and financial advisers they choose to work with.

Additional expenditure to maintain the stability of existing systems appears to be a painful necessity, and should not be seen as a fix to a “poor” digital experience generating “uncertainty, re-work and unnecessary cost for businesses and government”.

That hundreds of millions in existing expenditure so far has produced so little in terms of real-world benefits is a major let-down to the Australian small business ecosystem.