The federal government has been accused of “fattening the pig for market day” with a $31.2m spend on the visa IT system just as it is preparing to sell it.

This week’s midyear economic fiscal outlook (Myefo) included new money earmarked for “continued improvements to visa service arrangements” over three years.

The Coalition government has been pushing ahead with the estimated $1bn privatisation of the visa processing system since well before the last election. It was supposed to announce its decision on proceeding – or not proceeding – with a preferred tender in October.

With costs partially met from existing resources, the Myefo papers revealed an additional $25.6m in 2019-20 had been committed “to improve the online service delivery and data management capabilities of the visa and citizenship processing [information and communications technology] system”.

“The measure will improve the Department of Home Affairs’ ability to verify the identity of individuals arriving in Australia,” the papers said.

“The measure will also allow continued engagement with the market for a strategic technology solution to ensure Australia’s visa systems remain competitive, relevant and safeguard national security.”

Guardian Australia sought further information from the home affairs department twice but received no response.

The opposition spokesman on immigration and citizenship, Andrew Giles, accused the prime minister, Scott Morrison, of “fattening the pig for market day”.

“He’s already spent $80m on the tendering process and now Morrison is spending more than $30m to upgrade the IT system in order to privatise it,” he said.

Labor has consistently opposed the process, which has drawn significant attention and concern over the national security and employment implications of privatising the government function, and because a member of one of the two publicly known bidding consortiums is run by Scott Briggs, who is closely linked to senior members of government.

Both Morrison and the home affairs minister, Peter Dutton, had recused themselves from consideration of the tender “due to conflicts of interest”.

On Tuesday Giles said Dutton had refused to talk about the privatisation scheme “because it can’t be justified”.

The government has previously said it would retain responsibility and accountability for “sovereign functions including immigration policy, visa decision making and security checks”.

“The government is not privatising the visa system or outsourcing responsibility for visa decision making,” the home affairs department spokesman said.

Guardian Australia has previously reported departmental briefings to industry which said the successful tenderer could offset the $1bn cost by raising revenue through “premium” services.

However, Abul Rizvi, a former department deputy secretary, warned that that could see a private provider create fast and slow lanes for processing, which he said had “frightening” long-term implications.

The Community and Public Sector Union said privatising visa processing threatened 3,000 jobs.

“[T]his increased funding shows that the government are pushing ahead no matter the consequences,” said the CPSU’s national secretary, Melissa Donnelly.

“The increased funding for privatisation today shows the government continues to ignore the international warnings from those that have gone down this path.

“Visas are already expensive in Australia, and costs have risen rapidly in the UK in just a few years since visa processing was privatised there. Short-term budget gain will end in long-term pain for the Australian community under this plan. Meyfo shows that nothing is safe from privatisation under the Morrison government.”