Millennium bug fix could cost $32 billion

The country's Y2K bill has blown out to at least $20 billion and could top $32 billion, according to the Australian Bureau of Statistics.

Even the lower figure is a whopping four times larger than earlier estimates of Australian Y2K spending by market research companies such as Gartner Group.

It is based on an ABS survey in which businesses were asked to estimate their likely total Y2K spending.

The final figures to emerge from the survey depend on certain assumptions, said ABS director of technology statistics Bill Pattinson.

Most businesses were asked to select expenditure ranges rather than nominate specific numbers. Depending how the ABS interpreted those ranges, the total spend might be as low as $12 billion or as high as $32 billion, Pattinson said.

On the ABS preferred basis of a "smoothed value" approach, the best guesstimate for private sector expenditure is around $19 billion. Adding on government sector Y2K spending would produce a total closer to $21 billion.

In the ABS survey, 250 companies put their likely expenditures at $10 million to $50 million each. Six times as many, or about 1500 businesses, selected $1 million to $10 million as their Y2K spend. Nearly 400,000 organisations said they would spend less than $10,000 on the issue.

The largest component, more than $4 billion, was contributed by companies that said they would spend more than $50 million each on Y2K.

The huge gap between initial expectations and the latest ABS guesstimates may reflect a tendency by companies to lump necessary upgrades in with their Y2K effort.

According to Graeme Inchley, head of the federal government's Y2K industry taskforce, some corporate Y2K spending represents a double dip because it also delivers other improvements.

For tax purposes, a project might be predominantly labelled Y2K but, for senior management reporting, the same project is parcelled as improvements or upgrades, he said.

For example, replacing a tired accounting system with a Y2K-compliant system might be categorised as a Y2K expense. Equally, it would be an expense item which would have popped up even without Y2K.