Inland Revenue is planning to shed more IT staff following the nearly 90 who were made redundant in the 2020 financial year.
Inland Revenue reported to Parliament that its new operating and organising model for its "information technology and change" business group has taken effect.
"These changes recognise that digital capability is becoming central to how Inland Revenue operates, and that the information technology strategy must focus on customer outcomes and helping to drive business innovation," the agency said in response to Parliamentary questions.
Inland Revenue said it was creating a simpler IT landscape using self-service digital channels with high levels of automation, working collaboratively across the department, and delivering change through networked cross-functional teams.
That shift resulted in 89 redundancies in the 2020 financial year, ended 30 June 2020. A further unspecified reduction was forecast by 30 June 2021.
The latter group of people were remaining on a transitional basis to support the department's $1.8 billion transformation and the decommissioning of heritage systems.
Nine redundancies were made in the ICT business unit in 2019.
The department had previously flagged it was aiming to reduce headcount in its core IT function to around 90 from around 330 before the transformation.
The IT group appeared to have born the brunt of overall job losses during a year in which a total of 109 redundancies took effect at a cost of $10 million - up from $3 million in 2019 but down from a peak of $18.1 million in 2018.
An additional $5.5 million was spent on change management during 2020.
Inland Revenue's overall staff numbers have been declining steadily for the past five years, from 5640 in 2016 to 4159 in 2020 as it sought to realise the cost savings promised in the business transformation business case.
However, for the three years to the 2020 financial year spending on contractors and consultants for the transformation has exceeded $150 million a year, up from $71 million in 2016.
In 2020, the supplier of the tax department's new core tax platform, Fast Enterprises, billed $42.7 million for contractors and consultants, Accenture billed $35.6 million and Assurity Consulting $21 million.
During that year, Fast was awarded eight more contracts totaling $67.5 million, Accenture 11 totaling $32.6 million, Unisys four totaling $32.5 million (up from $14.7 million in 2019) and Assurity three totaling $20.9 million.
2020 was a hump year for the transformation, building to the implementation of release four of the programme on 16 April 2020.
This moved KiwiSaver, student loans and the end-to-end processing of PAYE to new systems and processes.
Enhancements were also made to digital services, income tax and Working for Families. Also, more frequent and detailed reporting of investment income information became mandatory from 1 April 2020.
As part of its transformation, Inland Revenue has moved from a predominantly insourced service model to as-a-service and cloud-based services.
This has increased operating spending and decreased capital spending for the purchase of software licences.
In 2018, software licenses cost $8.3 million in capital and $9 million in operating spend while the following year capital spending fell to less than $1 million while operating spend increased to $21.1 million.
Inland Revenue expects its business transformation to be completed in 2021/22.