Senator the Hon Helen Coonan

Minister for Communications,

Information Technology

and the Arts

Creating Competitive Advantage From ICT—Address to the 2005 ICT Outlook Forum

Sydney

1 September 2005

Good morning everyone, it is a pleasure to be here today at one of the key events in Australia 's ICT calendar.

The Forum has developed a reputation for bringing together ICT researchers, businesses and users to focus on real issues.

I am pleased to see that the issues on the program this year are creating competitive advantage through ICT, strengthening the innovation chain, and identifying what business wants from ICT research and development.

These are all matters that I am keen to see on both the industry's agenda, and the Government's.

On its own, the industry traditionally defined as ICT continues to make a significant contribution to the Australian economy.

But what we consider as ‘the ICT sector' is rapidly evolving as it becomes an integral part of every aspect of economic activity.

Meeting national challenge such as a sustainable environment, healthcare and defending Australia are also dependent on ICT capabilities.

And of course ICT is integral to our capacity to undertake the research which underpins these goals.

This morning I would like to talk about a number of issues I believe are critical to the continued success of ICT in Australia .

ICT and productivity

The first of these is productivity.

Australia 's success in reaping productivity gains from ICT is well established, but I believe the extent of those gains has been underestimated.

If Australia is to again benefit from productivity growth of above four per cent that was experienced between 1998 and 2004, ICT needs to be front and centre in the economic debate.

Research in my own portfolio has revealed that, over the past two decades, up to 85 per cent of productivity growth in the manufacturing sector was due to technology, including ICT.

In the services sector over the same period, the technology contribution to productivity growth was up to 75 per cent.

Commenting on DCITA's research in the Australian Financial Review – Alan Mitchell stated that “the incorporation of ICT into economic activity is still at a relatively early stage”.

While the impact of ICT and technology more broady has been significant – we may not have realised its full impact as yet.

However, research commissioned by DCITA that I am releasing today provides further evidence that ICT is increasingly embedded in Australian business.

The first of this research is the Sensis Business Index Special Report, ICT production in Australian SMEs.

The most amazing finding of this research is that only 15 per cent of the ICT produced by Australian SMEs actually comes from traditional ICT industry firms.

The remaining 85 per cent is produced by firms outside the ICT industry for their own business operations, to sell directly or to embed in other products and services.

The second report called Digital Factories , looks at how Australian manufacturing firms such as Orica, Arnotts and Bluescope Steel have been using ICT and found that the strategic use of technology in their operations was critical to their international competitiveness.

Benefits identified by Australian manufacturers in the use of ICT included productivity improvements, increased capability of machinery and improved flexibility in production planning and scheduling.

So what can we take from this research?

It finally provides some hard evidence of the true impact of ICT on our economy.

It allows the Government to move past assumptions and generalisations and provides the facts so that innovation and ICT are given the necessary priority in public policy.

However this research also demonstrates that the productivity returns on ICT investment vary enormously between firms and between industries.

The challenge is to ensure that the benefit is shared more evenly across the economy.

Our ICT research especially, needs to focus on the real needs of users, including SMEs.

Competitive advantage

Australia has already produced some world-class innovations in ICT.

60 percent of the worlds mining companies use Australian software.

And through Computershare – Australia has a home-grown ICT company that dominates the global share registry market and passed $1 billion in revenues last year.

We clearly have the talent, resources and dedication to compete in the global arena.

However, if Australia is to develop the knowledge, products and services that the world will buy, we must keep developing our capacity to absorb and apply new technologies in key areas of the economy.

They are those areas where ICT has the greatest potential to contribute to public policy goals and economic growth.

Areas such as health, where the growing proportion of GDP spent by all countries is driving governments and health care providers to seek better and more cost-effective solutions through e-health.

And areas where we have an international edge in trade terms such as agriculture.

Nearly half of Australian farms now use the Internet in their business and the next generation of farm IT will assist in crop management and monitoring water usage.

I believe in the need to identify and develop priorities in ICT that draw on Australia 's competitive advantages to enhance the quality and impact of ICT research, to focus our industry development activities and enable Australia to sell a clear and simple message to the world.

I have established an ICT Advisory Board comprising a number of prominent experts who will provide ongoing guidance on a broad range of strategic ICT issues, starting with ICT priority setting exercise.

I also believe in the importance of a whole-of-government approach to ICT, not just because it means better policy, but because ICT now impacts on the entire economy.

For this reason, I will also be working with my state, territory and local government colleagues to strengthen the sector through the newly-named Online and Communications Council.

I met with my State and Territory colleagues last week and we have agreed to a more coordinated and strategic approach to ICT development including efforts to harmonise government procurement arrangements and a commitment to work together to better promote Australia's capabilities to the world.

ICT research

In order to maintain Australia 's competitive advantage, we need an ongoing ICT research and development base.

This is both research into ICT and the use of ICT to enable other research activities.

For ICT research, we have an excellent base in the major publicly funded research bodies: DSTO, CSIRO, NICTA, the universities and the cooperative research centres.

Large computing facilities and specialised broadband capacity are also transforming research across a range of scientific disciplines.

More than ever, now is a time for collaboration and cooperation.

But the reality is that public sector research bodies are differentiated by a huge number of factors.

Intellectual property arrangements, charters, scale, funding arrangements and time horizons are just some of the barriers to achieving collaboration.

I would also suggest that our innovation system is still too heavily geared towards recognising and encouraging individual achievement rather than fostering innovation through coordinated effort and teamwork.

That is why it is particularly pleasing that the publicly funded ICT research bodies have formed the National ICT Roundtable to actively promote collaboration and remove potential barriers between each organisation.

I applaud their energy and goodwill and strongly support their efforts to turn differences into opportunities for growth.

For its part, the Government will concentrate on removing impediments to collaboration.

ICT has a very important contribution to make to the National Collaborative Research Infrastructure Strategy, being developed by the Government under the guidance of my colleague the Minister for Education, Science and Training , Brendan Nelson.

Minister Nelson and I have also established an e-research coordinating committee to provide advice on the transformation of Australia 's research environment through high performance computing and high bandwidth networks.

ICT infrastructure

ICT infrastructure, particularly broadband, is obviously a key issue.

However, I think often the broadband debate is clouded by focusing on the capacity of the networks rather than the needs of end users.

We have to recognise that the broadband needs of the health and education sectors, the research community, the business sector and home users are all different.

The Government is addressing these different needs through a comprehensive National Broadband Strategy.

By now you will have undoubtedly heard of the Government's $1.1 billion Connect Australia initiative to address gaps in broadband and mobile services.

Connect Australia has four components and it is important to note that all funding will be delivered on a competitively and technologically neutral basis.

The $878 million Broadband Connect program will give all Australians access to affordable broadband and build on the success of the Higher Bandwidth Incentive Scheme.

The $113 million Clever Networks program will be strategically invested in new infrastructure to develop innovative ways of delivering essential services such as health and education in regional areas.

The $30 million Mobile Connect program will expand terrestrial mobile coverage and extend the satellite phone handset subsidies scheme.

Finally, the $90 million Backing Indigenous Ability program will deliver community phones, Internet and videoconferencing in remote indigenous communities and improved radio and television services.

Our geography and dispersed population presents unique challenges in trying to keep in touch and enable the provision of essential services.

These are challenges that Australia has risen to meet in previous years.

The school of the air and the Royal Flying Doctors Service turned last century's innovations in radio communications and flight into a practical service that has immeasurably improved the lives of Australia 's most remote residents.

Broadband too, offers the same opportunity to change the experiences for the next generation of Australians.

We have made a significant funding commitment to connect Australians to broadband and we know the demand for these services exists. Our commitment favours innovation and competition by not prescribing technologies nor any one service provider.

The challenge is therefore one for the industry to find the best way to connect all Australians. This will no doubt involve a range of infrastructure, including copper, fibre, wireless and satellite.

Intel's recent $37 million investment in Wi-Max through Unwired; the world's first rollout of Arraycomm's iBurst technology through Personal Broadband Australia; Telstra's EvDO network; and two separate UMTS or 3G mobile networks, means Australia already has one of the world's most innovative and competitive wireless broadband markets.

But getting connected is just the first step, the way we use these networks is what will ultimately deliver the greatest benefit.

The Government's $35 million Broadband for Health Initiative is a good example of this.

By increasing broadband connectivity between GPs and associated health care providers, there is the potential to streamline business processes and improve the quality of care for patients.

And finally, we recognise the need for very high bandwidth networks of the research sector.

The Australian Research and Education Network (AREN) program has provided around $80 million to extend and upgrade broadband connectivity for the higher education sector and wider research community, including regional universities.

Almost all Australian Universities are now connected to at least 1 Gigabit per second of bandwidth.

The $60 million Advanced Network Program has supported the establishment of very high capacity optic fibre backbone network from Perth to Brisbane which links research bodies and universities, and allows remote access of resources such as supercomputers and electron microscopes.

The Future of the Internet

The last decade has clearly demonstrated that the Internet has had a dramatic and rapid impact on our lives.

And while the Internet is now so integrated into our daily lives that few of us can fathom life without it – we must remember that it is still a very nascent technology that is going to continue to evolve.

Fortunately, Australian researchers are looking at the ways in which the Internet might develop and what the implications might be.

Today I am pleased to be able to launch the Smart Internet 2010 report from the Smart Internet CRC, which distils the opinions of ICT experts from around the world on the role of the Internet in our future.

It offers a rich set of insights and a basis for strategic thinking.

It has concluded that the Internet by 2010 is likely to emerge as a more user friendly, more accessible lifestyle communications tool.

It paints a picture of a more immersive and mobile environment with enhanced services; with a consumer who will increasingly desire greater connectivity to access these services when and where they desire.

However the report does also raise some challenges for public policy.

While applications and services will continue to become smarter, more accessible and richer, a safe and secure Internet is not something to take for granted.

Like countries around the globe, Australia must be vigilant when it comes to spam, cybercrime, e-security, consumer protection and privacy.

At the UN World Summit on the Information Society later this year, the Australian Government will argue that more attention should be given to these issues.

If we are to tackle online security in earnest, however, we will need to engage both industry and the wider community in the process.

I hope you will all join us in our efforts to boost confidence in the security of ICT infrastructure.

Potential impediments

This morning I have touched on both the strengths of the Australian ICT sector and on the challenges that lie ahead.

Before I conclude, I would like to emphasise the importance of maintaining and developing skills within the Australian ICT sector.

I have established an ICT Skills Foresighting Working Group, comprising representatives from government, industry and education, to consider this issue.

I expect the group's report later this year.

It has been identified that there is also a lack of women in ICT education and employment.

Women represent less than 25 per cent of students and less than 20 per cent of employees.

For this reason, I am looking forward to hosting the Women in ICT Summit on 22 September 2005 to explore the matter and develop some creative solutions.

Conclusion

ICT is integral to Australia 's ability to research and develop new innovations.

And with innovation comes the ability to make a real difference to our national goals.

Among many things, progress on ICT can help us achieve a sustainable environment, ensure advances in healthcare, better manage our water, and further improve national security.

It is up to you, and to your colleagues working in ICT around the country, to demonstrate to all Australians why ICT has to remain in focus and that its issues require serious attention.

It will also take your combined efforts to ensure that Australia benefits from a second and third wave of economic development through the application of technology.

But rest assured that you are not alone on this.

The Government's long term vision is for a nation with the capability to apply ICT across the economy to foster innovation and social wellbeing.

I am committed to working with you to achieve this goal.

Thank you.

 

Alan Mitchell, There's life in productivity yet , pg 45 The Australian Financial Review 27 August 2005.