Government Chief Information Officer Colin McDonald is to get more powers and a bigger budget as the Government seeks to keep a lid on IT debacles like Novopay and a string of privacy breaches.

Mr MacDonald who is also Department of Internal Affairs chief executive, will now be equally responsible with the relevant minister for the sign off and roll out of big government IT projects like the $1.5 billion upgrade of the Inland Revenue's computer system which will be the biggest ever public sector IT project.

Prime Minister John Key said if ICT projects failed in the same way Novopay had, the buck would now largely stop with the Government Chief Information Officer (GCIO) and his department as well as the relevant minister.

"As we can see with things like Novopay, if you get it wrong it can be a very painful experience."

Internal Affairs Minister Chris Tremain said the recent Ministerial Inquiry into Novopay and Mr MacDonald's own review of publicly accessible state sector IT systems highlighted the need for ICT systems to be better managed.

"It's made us take a step and consider that we need to lift the bar - but it hasn't stopped the demand for ICT projects."

He said Mr MacDonald's team will receive an additional $1.5 million a year for additional staff and resources.

That was on top of previously announced extra funding of $3 million in 2012/2013 and $4 million a year thereafter.

Mr Tremain said Mr MacDonald would give independent advice to ministers regarding major projects and would have sector-wide oversight of ICT plans, projects and risks.

He would also report to ministers on any security risks, and implement privacy and security standards and controls across the public sector.

The announcement was part of the wider Government ICT strategy and action plan, released yesterday which aims to save up to $100 million year by 2017.

The plan includes offering all new services online by 2017.

Mr Tremain said New Zealanders' information would be better managed.

"Sensitive information will be protected through clear security and privacy controls, while non-sensitive information will be shared between departments."

Prime Minister John Key said the public wanted assurance their tax dollars were being spent with care but they also wanted to know their sensitive information was being protected.

"That's a responsibility I take seriously because if we're serious about more New Zealanders doing more of their business with government online they'll need to have faith that the systems that they are using are safe and secure."

Labour's ICT spokeswoman Clare Curran said: "throwing $1.5 million at these issues sound good, but in reality this is the Government responding to growing public unease and anxiety about the safety of their data and their own privacy with stop gap measures".

Ms Curran said extra funding amounted to the Government "papering over the cracks and looking as if they are doing something to allay public concerns".