Enabling the next phase of digital government in Australia 

In September last year, I wrote about how updating the technology governments use in their operations can help improve service delivery, make room for new services which respond to changing community needs and increase resiliency.  

I called this “unlocking the productivity dividend of digital government,” and it was in response to work done with the economists at Mandala Partners, who’d developed a ‘state of the nation’ analysis of 10 years of digital transformation in the Federal sphere.  

Mandala was even able to put a figure on the pay-off: $1.4 billion a year for the next decade. That’s the benefit they found Australia could gain simply by replacing old, legacy technologies and shifting to modern cloud and AI-enabled platforms. They flagged at the time a big challenge to achieving these savings was that over the last few years, Australia had fallen in international rankings for technology use in the public sector.  

So, it was very good news to read recently that in the latest OECD Digital Government Index, released earlier this month, Australia is ranked second in the world. This is a tremendous result, the product of hard work by many and something worth celebrating.  

Of course, there’s more to this than our place on the OECD’s list. If governments are to leverage the benefits of technologies like artificial intelligence for the benefit of citizens like you and me, it stands to reason they need a foundation that’s fit for purpose on which to work.  

A New Volume Service Arrangement with the Federal Government  

I’m very pleased to say we have recently signed a new, five-year Volume Sourcing Arrangement (VSA) with the Federal Government to accelerate public sector digital transformation in Australia and grow responsible AI use.   

Led by the Digital Transformation Agency (DTA), the new arrangement is designed to support Commonwealth agencies with volume pricing, consistent contracts, simplified procurement and licensing and stronger security, privacy and compliance.   

It provides access to our core enterprise and cloud stack, including Microsoft Copilot, Microsoft 365 (Office, Teams, SharePoint, Exchange), Azure cloud services and Dynamics 365, as well as security and identity services.  

It lays the groundwork for agencies to confidently increase their use of responsible AI and cloud technologies, increase efficiency and improve the services they provide to Australians.  

This new arrangement includes several developments from its previous iteration:   

• Strategy: through an enhanced Governance Framework, we will work together on forward-looking technology strategies, innovation, skilling and procurement optimisation in support of the Commonwealth’s digital transformation agenda.    

• Security: Microsoft continues to raise the bar in the security of the Microsoft cloud (Azure, Microsoft 365 and Dynamics 365) and maintains ongoing compliance across the Australian Government policy landscape. We’re also recommitting to the Security of Critical Infrastructure legislation, Cloud Hosting Certification Framework, Protective Security Policy Framework and the Australian Signals Directorate’s Information Security Manual, all of which is underpinned by our commitment to the Independent Registered Assessors Program (IRAP).  

• Responsible and resilient AI: This deal aligns our industry-leading data protection and responsible AI commitments with Government data and security expectations, providing confidence for whole-of-government Copilot adoption, following the successful trial in 2024 in which participants saved around one hour per day.  

• Skilling: Microsoft is making available a $1.55 million training fund to develop a targeted program for the Australian Public Service to deliver tailored skills training, including for ethical AI use.  

Of course, Microsoft can’t do this alone. Among the beneficiaries of the new arrangement will be many members of our hundreds-strong Australian partner ecosystem, for whom the deal makes it easier to do business with the Federal Government. Many of these businesses are locally owned Australian companies that will be able to grow their operations by offering services to the Government.  

Bringing AI to Government Infrastructure  

While the potential for personal productivity gains is significant – as evidenced by Government’s 2024 Copilot trial – there are significant benefits to be realised in operational efficiencies through AI infusion into modern cloud infrastructure and operations to solve real world business and citizen issues. In the areas of online exploitation and citizen harm, we have seen how AI allow agencies to respond at machine speed.   

Of course, AI adoption in Government requires an enduring modernisation agenda to build a foundation of contemporary, modernised, secure by design cloud platforms that improve privacy protection and regulatory compliance at scale.  These cloud native platforms then allow AI use cases to be developed and deployed in line with government standards, transparency requirements and responsible AI principles.  

A Pivotal Time  

This arrangement also comes at a critical moment for the country’s digital transformation, following on from last year’s Economic Reform Roundtable, as well as the Whole-of-Government Cloud Computing Policy and National AI Plan, both of which were announced in December.  

Australia’s renewed momentum in digital government shows what’s possible. The next phase will be defined not just by what technology can do but by the values and trust frameworks that guide how it is used for the public good.