While IBM should be beyond ashamed of their role in this, much of the blame rests with the government. I appreciate that the whole exercise was likely quite challenging but the simple fact is that the government let it get like this.
It happened because it's not the government's money and, while government's can get voted out for truly disastrous implementations, they are more concerned with being seen to be doing things than actually doing them properly.
Governments in general are notoriously poor when it comes to projects - be it infrastructure, military purchasing or IT systems like this. While it doesn't necessarily make for great headlines, I have never seen a report of a major government project ever being delivered on time and on budget. Moreover, while overruns of both budget and time are pretty common in all projects, the scale of both when it comes to government projects is simply staggering.
In the end, IBM sold, built and implemented a system that they knew would never work as it should have and they did this because the government let them.
It reminds me of a story about a company getting their eCommerce website developed by an Indian team. As it turns out, the eCommerce system simply didn't work at all, rendering the site useless. When challenged, the Indian team were very defensive, claiming to have fulfilled the specifications exactly. Technically they had, but a good developer would have brought potential issues to the client before and during the process. This is what likely happened with this QLD Health system - IBM likely went to pains to fulfil the letter of the scope and contract without bothering about if the system would actually work.
When you ask a builder to complete some work, you expect them to assess the situation and let you know of any issues and make pertinent suggestions on how best to accomplish the RESULT you want, not focus solely of what you have asked them to DO. IBM as the head contractor here really should have analysed exactly what the requirements were and made sure that the system they were designing and selling was actually what was needed.
Maybe that's naive and sure IBM get a good chunk of money out of this but that kind of attitude doesn't win you more business. A good tradie who works with the customer to make sure the end result is the best possible will get more work than he/she can handle and most IT companies understand this. I'm sure IBM do too (somewhere) - they just don't care so long as they get paid and make their numbers in the short term.