Government IT Under Pressure: Where the pain is, and what’s actually working

A look at the structural pressures shaping Australian public sector technology delivery in 2026, and the operating disciplines responding to them. 

Public sector technology in Australia is being delivered under a particular kind of pressure right now. More threat. More spend. More scrutiny. Fewer hands. Faster pace. And the agencies feeling it most acutely are not the ones running optional services, they are the ones whose systems underpin the moments that matter most to citizens. 

We will look at five of the most consistent pressures government technology leaders are navigating, and the operating disciplines that, in our experience, actually respond to them. 

1. The cyber threat surface is wider than it has ever been 

The Australian Signals Directorate’s Annual Cyber Threat Report 2024–25 recorded more than 1,200 cyber security incidents, an 11% rise year on year, and ASD’s ACSC notified entities of potentially malicious cyber activity over 1,700 times, an 83% jump. Critical infrastructure now makes up 13% of all incidents, and state-sponsored actors are increasingly targeting government networks for strategic ends rather than financial ones. 

What’s working: identity-first thinking, layered assurance, and disciplined segmentation. Emergency services environments, where systems must function under load, scrutiny, and conditions that allow no margin for error - have, in many ways, been pioneers of this discipline. The lessons learned at that end of the risk spectrum travel well across every other government engagement. 

2. The digital workforce gap is structural, not cyclical 

The Australian Public Service is facing a shortfall of more than 61,000 digital professionals over the next five years, with 74% of government agencies reporting difficulty recruiting IT staff. Around 60 per cent of existing public sector ICT and digital workers are concentrated in the ACT a single, small talent pool feeding a national workload. 

What’s working: flexible resourcing models that match capability to need without permanent overhead. Models such as Team-as-a-Service (TaaS), where embedded squads, joint delivery teams, or single specialist resources are mobilised quickly into agency programs that have moved from “nice to have” to a structural part of how government delivers. The gap is too big to hire through. 

3. Project delivery is still the hardest variable 

The Australian National Audit Office’s performance audit outcomes for 2020–25 found that only 54% of audited entities were assessed as fully effective in delivering outcomes and complying with relevant frameworks. ICT-related projects, meanwhile, account for around 74% of all projects subject to Gateway reviews. The DTA’s Major Digital Projects Report 2025 is tracking 110 active programs with a combined budget of approximately $12.9 billion, half of it sitting in health, citizen safety, and environmental services. 

What’s working: assurance as a parallel discipline, not a stage gate. Independent testing, governance, and quality work that sits alongside delivery from day one is how the intention-to-outcome gap closes. Build is half the story. Assurance is the half that earns trust. 

4. Cloud, identity, and procurement complexity are converging at once 

The DTA’s Whole-of-Government Cloud Computing Policy takes effect on 1 July 2026, requiring agencies to plan, procure, and manage cloud environments with stronger resilience, scalability, and security at the centre  and to minimise vendor lock-in along the way. The 2026–2028 NSW Government Cyber Security Strategy is reinforcing a parallel shift toward identity resilience, critical infrastructure protection, and third-party supply chain control. All of this is happening inside procurement frameworks; Core & Agency Agreements, panels, RFTs - that have their own learning curve. 

What’s working: providers and partners that bring deep, lived knowledge of those frameworks alongside their technical capability. The agencies moving fastest are not necessarily the ones with the biggest budgets. They are the ones who don’t have to translate between architecture, security, and procurement. 

5. Mission-critical doesn’t allow for “good enough” 

Emergency services, ICON-connected environments, frontline and citizen-facing services,  these aren’t generic IT environments. Downtime is a consequence, not an inconvenience. Identity, security, and assurance aren’t features; they are operating requirements. The standards bar set by mission-critical work tends to raise the bar for everything else. 

What’s actually working across all? 

Read together, the pressures above point to a single conclusion: the agencies and partners doing this well share a small set of disciplines. They design for resilience first. They treat assurance as a parallel discipline, not a hand-off. They mobilise capability flexibly when in-house hiring can’t keep up. They speak fluent procurement, fluent identity, and fluent risk. And they bring the lessons of mission-critical environments into work that, on the surface, looks less demanding. 

None of this is solved with technology alone. It is solved with focus and a partnership model that matches the operating reality of the public sector. That is the bet The Services Company (TSC) has made for more than two decades, working exclusively with state and federal government, including the agencies whose systems carry the most weight. 

For more information about how TSC supports public sector agencies across Australia, visit theservicescompany.com. 

Sources 

Australian Signals Directorate, Annual Cyber Threat Report 2024–25 (cyber.gov.au); Digital Transformation Agency, Major Digital Projects Report 2025 and Whole-of-Government Cloud Computing Policy (dta.gov.au); Australian National Audit Office, 2024–25 Performance Audit Outcomes and Administration of the Gateway Review Process (anao.gov.au); Digital NSW, 2026–2028 NSW Government Cyber Security Strategy (digital.nsw.gov.au); ACS Information Age, “Australian government facing digital talent shortfall” (2025); Future Skills Organisation workforce projections.