Connecting an Innovative Australia
ICT Policy Launch
Media Connect Conference
Hunter Valley
19 September 2004
Good afternoon and thank you for giving me the opportunity to speak today.
It has been a week of talk about IT with the ALP showing part of its hand on IT policy.
One commentator said that Labor"s IT policy was a couple of years in the making and has been through several re-writes.
After this long gestation I wonder whether it lives up to your expectations of a bold, alternative approach.
I welcome the scrutiny that this campaign brings because, on any view, the competing approach to ICT offers a clear choice.
A clear choice:
I noted an interesting comment from Australian Computer Society President Edward Mandla in The Australian on Thursday following the release of the ALP"s IT policy.
Mr Mandla said:
"The term ICT is three letters that describe the convergence of information and communications technologies".
A common sense comment perhaps, but it was a telling one when coupled with news that Labor would take the IT out of DCITA and move it to the Industry portfolio.
This move, touted by Labor as a simple shift in emphasis, increases the number of Labor Ministers one would have to approach-to get even some semblance of representation on ICT issues-to three.
It also throws ICT into a very large and crowded industry ring. One where an industry that is a big driver of Australia"s productivity growth and an area that requires a strategic focus and agile responses would lose the current status and priority it has with this Government.
That is, it would lose a dedicated IT Minister with a seat at the Cabinet table and its individual voice in the machinations of Government.
A Latham Labor Government would fragment responsibility for ICT across portfolios.
Based on the current line-up it would be Industry with Kim Carr, Communications with Lindsay Tanner and IT with Kate Lundy-watering down industry"s ability to have a coherent voice at the bargaining table.
With an election looming, the ICT industry must obviously consider whether this alternative approach gives industry the prominence it needs.
Already we have seen the ALP dress up a $16 million per year funding cut for both the Australian Government Information Management Office (AGIMO) and the Office for the Information Economy (OIE) as $69.3 million in new spending.
And they have tried to hide the true impact of removing the accelerated depreciation for software. Labor estimates that scrapping this incentive would hit the industry to the tune of $35 million.
Treasury tax expenditure figures show that the cost to industry would be substantially greater-$175 million this year alone and $365 million over three years.
The ramifications of this for both business take-up of software and the software industry itself are significant.
Labor is either deliberately misleading the IT industry or is just plain wrong.
Either way, the industry loses and Labor proves yet again they can"t be trusted with an $800 billion economy. This is just one more reason for Labor to submit its costings to Treasury for sign-off.
Taking a light touch:
With the world of ICT moving so quickly, the challenge for governments is to get the settings right, to regulate with a light touch and to support, rather than hinder, our ICT community.
This is an area where there is a clear ideological difference between the Government and the Opposition.
I have said before that ICT is not a field where a company or an economy succeeds by digging in and defending. You do not win competitive battles by throwing up barriers and setting arbitrary benchmarks or quotas.
In more ways that one Labor stands for a return to the past. Whether it is the risk of high interest rates or union dominated workplaces or the creation of artificial barriers around industries, this kind of protectionism spells doom for industry in a globalised marketplace.
Governments should enable, support and promote the IT industry, not try and pick winners in technologies or systems, dictate suppliers or tie the industry up in red tape.
For example-I believe that the glass can be half-full when it comes to outsourcing-that Australia stands to benefit from on-shoring rather than the scaremongers" predictions of off-shoring decimating Australia"s ICT industry.
I have said before, and will repeat it today, the potential for Australian IT jobs to move offshore is a significant matter that requires careful monitoring. But offshoring is not a one-way street.
I agree with recent ACS comments that the best way to fix off-shoring is to bring the work to Australia.
There are great opportunities for Australia to win jobs in the offshore outsourcing market, as shown by a recent KMPG 2004 Competitive Alternatives Study, which has ranked Australia as the best place out of 11 developed countries to base software development operations.
Over the past year alone at least 27 offshore companies have invested more than $580 million in ICT operations in Australia that are forecast to generate approximately 1750 jobs for Australian workers.
According to Gartner analysts, Indian services companies are developing long term strategies for using Australian expertise in the provision of their global services.
Trying to somehow freeze Australia in time, locking out the rest of the world will not promote Australia"s IT sector and it will not save Australian jobs.
Much of this investment being generated in the Australian industry has come through the work of Invest Australia, which since its creation in 1997, has helped a wide range of international companies, including ICT companies, invest in Australia.
Over the past two years, Invest Australia has attracted 105 new projects, valued at $14.8 billion, which are expected to create or safeguard around 9500 jobs and generate in excess of $1.2 billion in export earnings.
Invest Australia is currently working with companies on projects with potential investment in Australia of more than $84 billion.
But for all of its good work Labor has promised to abolish Invest Australia to save $11 million. This is both incomprehensible and indefensible.
The Government commends the use of best practice guides such as the ACS"s offshoring cost-benefit checklist which can give practical assistance to companies in making offshoring decisions.
We think it would be entirely appropriate if both businesses and government agencies have regard to the checklist when making outsourcing decisions.
However, in any view it is not in the best interests of the industry to constrain business decisions in the way Labor would.
As a fundamental point of difference with Labor I believe the Howard Government"s achievements for ICT demonstrate that the fundamental directions are sounds and enabling the industry to grow and compete.
Achievements:
Under the Howard Government Australia"s ICT sector has become a key driver in a highly successful economy.
The ICT sector is attracting investment, increasing exports and creating jobs in a competitive global environment. ICT is improving Australia"s productivity and competitiveness and underpinning the record levels of economic growth delivered by the Howard Government.
We have pursued a two-pronged approach to ICT. Firstly, we have sought to build on Australia"s capacity as a developer and producer of smart, value-added ICT products and services.
Secondly, we have worked to ensure that Australia is an early and widespread adopter of the ICT technologies that are transforming business and enhancing the nation"s overall competitiveness.
We have delivered the largest innovation package in Australian history-Backing Australia"s Ability and built on it with Backing Australia"s Ability II-a $5.3 billion long-term commitment to innovation and research.
We have established the ICT centre of excellence-NICTA-to attract and retain our best and brightest ICT research talent.
We have established ICT incubators which have assisted more than 340 ICT start-ups in every State and Territory and continued this program"s funding with $36 million until 2008.
And we have kick-started the venture capital sector through the $221 million Innovation Investment Fund.
A big achievement of my previous portfolio was the implementation of venture capital tax reforms to encourage overseas investors, such as pension funds, to fund the commercialisation of Australian ideas.
These two measures have seen Australia overtake India as the Asia-Pacific leader in attracting venture capital.
We have helped ICT SMEs grow by providing business opportunities though online procurement, reduced corporate tax rates, halved the Capital Gains Tax rate, focused on the needs of small businesses with a range of different programs including Small Business Answers, the Small Business Enterprise Culture Program and the Small Business Incubator Program and introduced mandatory SME participation levels for large Government ICT contracts.
But I believe we can do much better to position industry to meet the challenges and seize the opportunities of the global marketplace.
Our continuing commitment:
A continuing challenge is to ensure that as new technologies emerge, people are not left on the fringes.
In our policy rollout for the next term, a re-elected Coalition Government will build on our achievements.
- We will ensure Australia is connected;
- We will secure our critical ICT infrastructure,
- we will give Australians confidence on-line,
- we will better deliver services such as health and education on-line,
- we will drive innovation and R and D,
- we will help ICT SMEs to grow,
- we can win ICT work for Australia, build our ICT skills and deliver a plan for the ICT sector.
A Connected Australia:
The benefits of information technology in improving productivity and economic opportunities are well recognised.
But what has not received much attention thus far is the role technology can play in enhancing more flexible working arrangements.
1. Teleworking Taskforce
Call it what you will-teleworking, telecommuting or working from home-but it is an increasing possibility for the majority of knowledge workers in Australia.
Broadband connections, Voice Over IP and Virtual Private Networks mean a worker can be as connected to the office from home as they could be at their desk.
This cost of this technology is on the decrease and the systems themselves are getting simpler to install and run.
Tele-working can help mothers with young children to ease their way back into the workforce, older workers to start enjoying more flexible work arrangements and parents share the load of child rearing.
There are also benefits for employers-with increased flexibility leading to a more productive worker with increased motivation, less desire to move jobs and less reason to call in sick.
The barriers to working from home are no longer technological.
In fact a study by Sweeney Research found that half of Australian management wouldn"t trust their workers to work away from the office and 75 per cent of co-workers think that colleagues who work out of the office may not be doing work at all.
Subsequently Australia has one of the lowest rates of home-based work in the OECD.
To help effect a paradigm shift in how we think about work, the Coalition will establish a Teleworking Taskforce to look at how more Australians could work from home-even for part of their working week.
The Taskforce will report to me on what measures can be taken to overcome some of these workplace attitudes and technological impediments that are preventing Teleworking from flourishing.
The Taskforce will also look at measures to support entrepreneurs running small businesses from home.
Often feelings of isolation and a craving for greater social contact provided by a workplace are encountered by those working from home.Some innovative solutions to this issue are beginning to emerge-such as the Redland Shire Council in Queensland"s Virtual Incubator-supported by the Howard Government"s small business incubator program.
This wide-area wireless broadband network is enabling the many home-based or SOHO businesses in the Redland Shire to connect to business mentoring services and helps these businesses connect with others in similar situations.
These creative solutions are worthy of greater consideration by the Taskforce.
2. Driving broadband Uptake :
But innovative solutions to the work-life balance rely on Australians being connected.
More than one million Australians have now taken up high speed internet services and competitive pressures continue to deliver quarterly growth of around 20-25 per cent in broadband take-up.
This is why the Government is committed to providing improved access to affordable broadband services through the National Broadband Strategy and its $142.8 million contribution to the strategy"s action plan.
The Government will maintain the $107.8 million Higher Bandwidth Incentive Scheme (HiBIS), reviewing the scheme to make sure that the subsidies provided deliver consumers in regional Australia access to broadband services at prices comparable to those offered in metropolitan areas.
We are also aware of emerging broadband blackspots in metropolitan areas. Telstra has committed $28 million to solving many of these issues and wireless providers such as Unwired and Personal Broadband Australia are rolling out networks that will provide access to many who have previously missed out.
Despite this, there may still be some that miss out. We are committed to ensuring that all Australians have access to affordable broadband solutions no matter where they live and we will investigate ways of making that happen.
There will be more on broadband in our telecommunications policy.
But the next generation of communications networks is likely to be based upon the use of Internet protocol.
These increasingly high speed networks are able to deliver a wide range of services including voice services, audio-visual services and data services, all over the same network.
Decisions made by all levels of Government can affect the timing and viability of future network investments-like the eventual roll out of fibre-based networks.
The Coalition will work with the State and Territory Governments at a Ministerial level and local government representatives through the Online Council to find strategic approaches to coordinate and facilitate future network investment.
This will look to build on the approaches of groups like Whittlesea City Council and the Broadcom group in the Macedon area of Victoria-community-based initiatives that are coming up with some innovative solutions to the roll out of next generation services.
3. Connecting Australian Businesses:
The Government is committed to ensuring small businesses have access to capital, access to business opportunities and access to export opportunities.
We want to ensure that all small businesses can integrate into the information economy and, unlike Labor, we"re committed to continuing the work of the Office for the Information Economy under DCITA to drive small business uptake of technology.
And I"m pleased to say that our small business sector has been hungrily adopting new technology-for example 30 per cent of Australia"s 1 million broadband connections are in small businesses.
This proliferation of technology provides us with a real opportunity to better integrate our economy-to open up supply chains to greater numbers of suppliers, improving competition and pricing for large suppliers.
Through the $13 million Information Technology Online (ITOL) program-which the Coalition will continue to support - we have provided seed funding for projects which assist small businesses to embrace the Internet.
One of these projects is Bizdex. Bizdex is creating a framework to allow the systems of large companies to talk to those of small businesses-automating the often painful process of integration.
The model has been proven in a trial project with the Australian Wheat Board (AWB) and its suppliers.
The system enabled the AWB to automate the establishment of electronic trading relationship and the exchange of grain tickets with its suppliers.
We are convinced that BizDex will overcome some of the technical impediments facing small businesses looking to deal electronically with big business in large supply chains.
Securing Our Critical Infrastructure:
The Government understands that, if we are to ensure the ongoing operation of the Australian economy, we must protect the critical infrastructure that underpins it.
Our online infrastructure is critical and increasingly interlinked through all sectors of the Australian economy.
This is why the Government has committed $50 million for the Critical Infrastructure Protection Package.
We know that as new threats and vulnerabilities emerge that it may be impossible to gauge the level of the threat posed until it is tested in a real life situation.
So this is why $13 million will support vulnerability analysis or Red Teaming" exercises which will actively put our online critical infrastructure and mechanisms to the test.
Just as physical war games test our defence capabilities so Red Teaming exercises will test our virtual defences.
Instead of operations in the far north to protect our coastline-you could call this Operation Back-Room" where our crack IT security specialists will aim to repel the Coke-swilling hoards of hackers.
Delivering Health and Education Online:
The Howard Government has provided $23.7 million towards the Coordinated Communications Infrastructure Fund (CCIF) to fund the rollout of broadband infrastructure to benefit the health and education sectors.
Developing the necessary applications for education providers and healthcare professionals to best utilise broadband networks is also a key concern for the Coalition.
The Coalition will invest $35 million to provide general practices with access to broadband services and spend $128.3 million over the next four years to implement a national health information network-HealthConnect-as a major platform for health care delivery in Australia.
Driving Innovation and R and D:
1. E-Research
The Coalition is focused on improving collaboration in our research sector and has invested significantly in advanced research infrastructure to facilitate this.
High speed networks and high performance computing are the research tools of the future and these tools are fostering a new era of collaboration and access to excellence.
Becoming known as e-Research, this actually allows research equipment to be utilised by multiple researchers in multiple locations around the clock.
Already astronomers at CSIRO"s Australian Telescope National Facility are provided with access to a powerful radio telescope in Sweden. Not just to observe-but to control and analyse-over high speed networks.
There is enormous potential for this sort of research and our researchers to collaborate over this infrastructure at both international and national levels to help overcome the tyranny of distance and help usher in a new wave of innovation.
However, there is a danger this research is fragmented. A re-elected Coalition Government will establish an overarching coordinating committee involving government agencies, research bodies and Universities to establish strategy and policy and to coordinate support for e-Research in Australia.
The Australian Research Council will also identify and fund strategic centres of excellence for e-Research.
This will build on initiatives such as the $60 million Advanced Networks Program, the $69 million Australian Research and Education Network and the $50 million Australian Partnership for Advanced Computing.
With the Coalition"s $380 million commitment to NICTA and CSIRO"s commitment to a dedicated $50 million a year ICT Centre and a greater focus on collaboration between these two institutions, the Defence Science Technology Organisation and the ICT CRCs-ICT research in Australia is well positioned.
Helping ICT SMEs to Grow
1.Start-ups:
We want to translate our innovation into commercial success and ensure that small Australian start-ups have opportunities to develop into world-leading companies.
The Coalition Government has been generous in its support for ICT start-ups and this strategy is beginning to bear fruit.
At the end of June this year-our $86 million investment in the BITS Incubator program had supported around 340 companies and had attracted more than $160 million in additional private sector investments into the sector.
We recently provided a further $36 million to eight incubators and will maintain this valuable service and source of capital investment for ICT start-ups in the majority of states and territories until 2008.
This investment should support at least another 100 companies.
2. Angel Investment
While the incubators are an important source of business support and investment for small companies-there are other support mechanisms that are emerging.
Once a business has emerged from the friends, family and fools stage-they are often not only looking for additional sources of capital but some guidance and advice.
They may not be ready to approach venture capitalists and may be looking for what could only be termed as more "patient money".
Such capital and guidance can be found in the form of Angel Investors.
Business Angels are often entrepreneurs or professionals who have already been through the difficult process of starting up a successful company.
They have a little extra money to risk, for a variety of reasons, which may include a desire to mentor others, the thrill of the ride, or purely the base desire to make money.
The Government will scope the investment and operation of business angel networks in Australia to gauge how we can better facilitate a match of the money with an appropriate business.
These investment networks may also be linked with and support seed funding from Government sources such as the Incubators and the $100 million COMET program.
3. Government Procurement:
The Government is committed to policies that assist the growth of SMEs and development and I want to make their ability to win Government contracts easier.I will not have time to detail all of the Government initiatives to improve procurement.
A lot of work has been done over the last two years and I"d like to personally acknowledge the work of the Joint ICT SME/Government Working Party that has identified impediments and made inroads into overcoming them.
I think there is now a better information flow and better understanding within SMEs of Government business opportunities and vice versa-an improved appreciation of the capabilities of SMEs within Government agencies.
However, in my view this is a work in progress that will need careful monitoring to ensure that this framework gets the balance right.
Recent big Government contract wins by local companies like Exceed and Volante demonstrate that these policies are succeeding.
Winning ICT Work for Australia:
The future of Australia"s ICT industry will be determined by our ability to increase ICT exports and to attract foreign investment in this sector.
The Coalition will implement the Free Trade Agreement with the United States, which will open up a key market for Australian ICT exporters, including the $76 billion US Government procurement market and we will provide $20 million to help Australian exporters and hold an ICT specific export forum to help industry reap the rewards of free trade agreements with the US, Singapore and Thailand.
I"ve already spoken of our commitment to Invest Australia and our support of its good work in attracting investment to Australia.
We will also continue to engage with multi-nationals and encourage investment in the Australian information industry through the MultiPLIERS group, a high-level industry group which acts as a champion for investment in Australia"s ICT industry and we will continue the working group currently examining issues relating to software accreditation and its impact on our global competitiveness.
Building ICT Skills:
The ever changing nature of the ICT sector means that our ICT workers needs to continually upgrade their skills in response to changes in demand and global competition.
Labor has chosen to shut off the pipeline of skilled workers from overseas to plug skills shortages in the ICT industry in Australia.
The Coalition prefers not to shut off any alternatives for getting the most skilled professionals to contribute to our ICT industry while looking at how we can help our home-grown talent develop, including looking at new ways to lure workers to the ICT industry.
In my meetings with the industry as a new Minister I have wondered-where are the women?
According to the ABS-the ratio of men to women in the sector is close to 4:1. While the ratio of men to women has improved dramatically in other professions, in technology fields it remains at an unacceptable level.
The Government will convene a forum of leading female business leaders in IT, leading female researchers and academics in the field-as well as broader industry representatives to formulate ways to encourage more women into the industry.
This isn"t about affirmative action or Government imposing quotas-both of which would in the end create more negative perceptions and create more barriers for women-but it is about industry removing barriers to female participation.
I hope that the industry responds with enthusiasm to this initiative and I look forward to some creative suggestions about how to harness the talents of the whole workforce to drive our ICT industry.
A Productive and Innovative Government
The Government remains absolutely committed to maintaining a dedicated agency focused on productive use of IT by Government to ensure that Australia remains at the forefront of e-Government and online service delivery.
We have established the Australian Government Information Management Office (AGIMO) with the Australian Government CIO at its head for this express purpose.
And AGIMO"s achievements since it was formed with the restructure of the former National Office for the Information Economy have been extremely encouraging and welcomed by industry.
These include improvements to whole of government portals,
work to encourage agencies to investigate open source and improvements to whole of Government ICT sourcing strategy,
including the negotiation of a whole of government licensing deal with Adobe.
I"d like to touch on one launched just before we went into caretaker-a discussion paper on environmentally responsible use of ICT.
The Government is conscious of the need to minimise the impact on the environment from our use of technology.
We need to think not only of the effect of ICT products and materials on the environment, but also ways we can use new technology and services to actually improve environmental outcomes.
Playing to Our Strengths:
1. Setting goals
As the ICT market becomes increasingly globalised-beginning with hardware and software and now encompassing services-there is an increasing need to sell our value proposition to the world.
Few countries have the luxury of a local market the size of the US-which is the only country whose IT industry remains a true generalist.
India has clearly identified itself as the world leader in business process outsourcing, Iceland is the land of Bio-Informatics, Taiwan has clearly identified itself as the location for OEM and chip manufacturing and Singapore is positioning itself as a global logistics hub.
There are emerging strengths in the Australian industry - anecdotally Australia has emerging expertise in areas like games development, wireless networking, e-security and particularly e-health.
Australian industry needs to play to its strengths.
I believe that the time is ripe for Government to play a leadership role with industry in developing some longer term industry endorsed goals to make Australia a world leader in the provision of advanced IP services.
But ultimately this must be an industry-led initiative. The Coalition will establish an industry forum to formalise the process of priority setting and shaping the future together.
This priority setting will be conducted in consultation with industry, our researchers and federal and state and territory governments.
We will align these priorities with research priorities both at a national level and within organisations like NICTA and CSIRO.
Once identified, these goals will help guide Government support, skills development and education, investment attraction and export promotion of the very best Australia has to offer.
2. Recognising IT professionalism:
From my early discussions with IT representatives there are two things at the top of the industry"s mind that I want to address in the near future and they are unlimited liability and intellectual property management.
In the development of the new standard IT contract, otherwise known as the General Information Technology and Communications (GITC) contract framework we will address both issues.
Government Agencies should only require unlimited liability for the riskiest of contracts and liability should be capped at an acceptable level for all other contracts.
Evidence suggests that liability is capped in 90 percent of contracts-but we will ensure that this is made explicit in the next version of GITC to avoid confusion and protracted negotiations.
We will also ensure that purchasing officers in Government agencies are trained and better equipped to make appropriate risk assessments.
The amended GITC will also tackle the issue of intellectual property management.
This standard IT contract will be amended to better reflect the Government IT IP guidelines that are being drafted and will clearly set out the range of options on the ownership and management of IP.
We will ensure that the option of the supplier retaining or capitalising on IP generated by a Government project is given greater prominence.
3. Professional standards
I also know that professional indemnity is a broader issue for industry that needs to be addressed.
Plainly, the cost of appropriate cover even if available is prohibitive and a huge cost to business.
As the driver of sweeping national reforms in the insurance industry and reform of the legal system in my previous portfolio, I can see opportunities to extend these benefits to the IT sector.
In particular, creative solutions such as the development of professional standards legislation and proportionate liability could provide an incentive for ICT professionals to better manage risk, limit liability, to present a more attractive profile to insurers and to put downward pressure on premiums.
Developing professional standards schemes will have benefits not only for ICT professionals but also better protection for purchasers of ICT services.
Such schemes improve risk management strategies, enforce professional education and training, develop alternate dispute resolution and disciplinary mechanisms in return for compulsory cover and capped liability.
I have had initial discussions with the Australian Computer Society (ACS) and we will work together with the Society, with AIIA and with industry more broadly to improve professional standards and risk management with the aim of improving the cost and availability of professional indemnity insurance for the ICT industry.
I will also seek the involvement of the Insurance Council of Australia to assist with identifying the risk profile of the ICT industry to get a better outcome for the industry on professional indemnity.
Conclusion:
From what you have heard today you will know that the Coalition has a genuine commitment to the issues and challenges facing the ICT industry.
I am ambitious for the industry to grow, to identify its strengths and to become a world leader in advanced IP services.
To achieve this, industry and Government will need to work together-not in isolation.
The Coalition will maintain industry"s voice both within Cabinet and within the current Government agencies that have the expertise and agility to take on the future challenges facing the industry.
Thank you for your time today.