After the recent release of a review, the MBR program has been scrapped by the government due to cost blowouts.
The Modernising Business Registers (MBR) program was initiated by the previous government in 2019 with the aim of transforming the company, business and professional registry services provided by various regulatory bodies. To do this a new body, Australian Business Registry Services (ABRS) was established and managed by the ATO with the ultimate purpose of consolidating more than 30 ASIC registers, the Australian Business Register (ABR), director ID register, and other services.
The current government in July 2022 was informed of a likely cost blowout of the MBR program to the tune of an extra $1bn with the completion pushed out to 2027. Initially, the MBR program was projected to cost only $480.5m to be completed by the 2023-24 financial year. As a result of the likely cost blowout, the government announced an independent review of the program in early 2023. That review has now been completed, delivering even worse news for the future of the program.
The review found that while the director ID scheme component of the program had been delivered, the MBR is still relatively early in its lifecycle with most of the delivery, cost and risk still lying ahead. According to the review, the cost to complete the MBR program in its current form will be considerably higher than the July 2022 estimate, with an additional investment of between $1.8bn and $2.2bn required, increasing the total cost of the program to approximately $2.8bn.
The key drivers of increased costs include a significant underestimation of program complexity, poor program design choices and assumptions, various factors impacting delivery and implementation approach (eg ineffective governance, lack of clear critical path for delivery, inadequate workforce planning etc), and other external factors (ie COVID-19, decisions to expand MBR program, etc).
To enable the program to move forward, the review identified 5 options for the future of the MBR program:
- Cease MBR, stabilise and uplift ASIC’s aged registry systems where it is critical to do so;
- Continue to deliver the full scope of MBR as currently planned;
- Narrow the MBR program to deliver companies register only and the other registries will stay with ASIC;
- Stop the MBR program, reset and re-start in a new registry agency; and
- Cease the MBR program, return registry functions to ASIC, mitigate system risks and deliver targeted modernisations.
The review recommended that the MBR program should be stopped (option 1), as the economic benefits from the program do not justify the level of additional expenditure required.
It notes that a decision to cease the MBR would require an investment of approximately $410m to wind down the program, return registry functions to ASIC and undertake an urgent and unavoidable technology refresh to address risks with aged infrastructure and ensure services can be sustained.
This option would avoid further commitment of funding for the MBR program of between $700m and $1.8bn.
The preferred alternative to move forward with the MBR program is to revert to the pre-MBR program operating model for registry services (option 5) and undertake an additional targeted investment of approximately $105m in uplifting data integrity and quality on top of the costs of ceasing the program, with a total additional cost of approximately $515m.
Following the release of the review, the government agreed with the recommendation and announced it will stop the MBR program.
According to the government, it remains committed to making it easy for businesses to register their details and will prioritise the stabilisation of existing registers. It will consider options to uplift registries following further analysis. Businesses will be unaffected by this decision on a day-to-day basis; registry operations will continue under ASIC and the director ID regime will remain unaffected.
Nadine Rawlings – Garnet Business Services
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