Address to the Digital Economy Forum, Melbourne

Wednesday, 10 September 2008

Thank you for being here today for what I hope will be a major step forward to Australia becoming a more vibrant and competitive digital economy.

I would especially like to thank those of you who participated in the workshops last month.

Clearly, there is strong desire by industry to link with Government to drive the digital economy.

The Rudd Government is focused on creating a platform for economic growth and is committed to leading and growing our digital economy.

This includes investing in infrastructure, skills and innovation to ensure that Australians have the connectivity and the digital literacy skills to participate fully in this emerging world.

We know that the digital economy must underpin Australia's future economic progress.

Like industrialisation, the digital economy is providing benefits across society.

The Government has recognised this by investing in crucial infrastructure to drive the transformation.

This includes:

• up to $4.7 billion for the National Broadband Network;
• an additional $270.7 million for an enhanced Australian Broadband Guarantee program; and
• $1.2 billion for the Digital Education Revolution.

Australian businesses are demonstrating their use of technology to drive productivity improvements.

Eighty-one per cent of Australian businesses are using the internet and they are doing so as much in regional as in metropolitan areas.

They are mainly conducting financial transactions and lodging information with government organisations.

Around one third of firms are using online ordering tools, enabling their employees to work from home or are using the internet to research business improvements.

These figures are encouraging, but more needs to be done to increase the contribution the internet makes to economic growth.

For example, total business income derived from activity on the internet, while growing rapidly, is still only three per cent.

This will be accelerated by the National Broadband Network and the Digital Education Revolution, however, it is important that we work to further develop an environment where this activity can truly thrive.

Many people also see the growth in services as the next major evolution in the world economy.

It follows, therefore, that the ongoing success of Australia's services sector will have a growing effect on the nation's overall success.

We are witnessing a massive shift in the way the world does business.

For example, Bernard Charles, President and CEO of one of France's major manufacturers recently said:

'In the future, all manufactured goods in the world will be digitally defined, engineered, simulated, produced and managed throughout their lifecycle.'

How we meet the challenges and opportunities of this new business paradigm will influence our future position in the world market and our ability to deliver effective, state-of-the-art domestic services.

An overarching Government objective is to increase effective use of the internet by consumers and businesses to drive higher productivity growth and community participation in the digital economy.

A number of existing Government activities currently support, directly or indirectly, the growth of the digital economy.

These include infrastructure, content and consumer assistance initiatives.

We understand that the digital economy can help to address some specific long run national challenges, such as:

• social and citizen-oriented services including e-government, education and health;
• integration of metropolitan and regional economies, and Australia's standing with other economies around the world; and
• long term productivity growth.

But we need to better understand how we can accelerate digital adoption across the economy.

I say that, because at present, there are some gaps in our knowledge base.

For example:

• We need to know more about how the Australian economy is integrating with the global digital economy;
• We also need to know more about how Australia is performing compared to our international competitors on an industry sector-by-sector basis;
• And we need to know more about the factors that are driving or holding back take-up of the internet and e-business.

For example, according to OECD figures, high levels of internet access and broadband penetration do not always translate into high levels of internet commerce.

This is the case for countries such as:

• Finland 99% internet access, with 15% of businesses selling online and 19% purchasing online;
• Korea 97% internet access, with just 7% of businesses selling online; and
• Canada 95% internet access, with only 13% of businesses selling over the internet.

Australia by comparison, with 27% of businesses selling online, is not doing too badly but we can do much better and importantly we cannot currently describe ourselves as a global leader.

The purpose of today's forum is to collaborate on exactly how we can do better.

This requires that we continue the process of setting future directions for the digital economy in Australia a process that began last month with the staging of the workshops.

The three workshops in Sydney, Brisbane and Melbourne brought together business, state governments and others on digital economy 'capabilities', 'confidence' and 'content'.

The workshops were a valuable opportunity for Government to hear from a range of stakeholders on the future directions of the digital economy.

So what emerged?

One of the reassuring aspects was that most stakeholders agreed about the importance of Government investments in the digital economy in particular the National Broadband Network and the Digital Education Revolution.

Participants also agreed that there is a key role to be played by the private sector by collaborating within industry and with the Government.

Many participants argued that 'industry development issues' are critical.

The shortage of professional ICT skills was also a recurrent theme in all three workshops.

Ladies and gentlemen and this is something I've been emphasising a lot of late the Rudd Government hears the industry loud and clear on these issues.

I am liaising with my colleagues Kim Carr, Minister for Innovation, Industry, Science and Research, and Julia Gillard, Deputy Prime Minister and Minister for Education, Employment and Workplace Relations who share responsibility with me on these issues.

Participants at the workshops also raised the role of Government itself as a user of ICT.

The Government's own practices and approach to ICT are indeed critical in setting an example.

These services are often among the first online services that some consumers will have used.

As many of you would know, Sir Peter Gershon has delivered his report on the independent review of the Australian Government's use of ICT, to the Rudd Government.

Sir Peter was asked to develop a new model for operating and spending on ICT Government systems that balances coordination across Government with individual agency autonomy and flexibility.

This is a critical body of work and provides the Government with recommendations on how we can improve the effectiveness and efficiency of our application of ICT.

The model proposed by Sir Peter details a number of critical areas where we can maximise the returns from our ICT investment and improve our institutional arrangements to realise greater benefits.

Sir Peter anticipates that many of the recommendations can be implemented in the next 2 to 3 years.

The Review of Australia's National Innovation System led by Dr Terry Cutler is another essential exercise in identifying the drivers and barriers of innovation and examining the policy options for Government.

The fact that this review received more than 630 submissions shows just how important Australians consider innovation policy to be in shaping their future.

As many of you will be aware, Dr Cutler's review report was released yesterday.

The report is a significant and valuable contribution to the national dialogue on building a better innovation system in Australia.

This was an independent review and it provides a strong basis for the Government to develop a White Paper response.

The Government will be considering each of the recommendations in that context and deliver a response by the end of the year.

The digital economy is of course an important factor in both driving innovation as well as benefiting from innovation.

Ladies and gentlemen, the Rudd Government has placed a major emphasis on the role of the digital economy in underpinning our future productivity and economic growth.

This forum is an opportunity for the Government to listen, and to engage with business and industry leaders on the future of the digital economy in Australia.

To that end, I thank you for investing your time today to discuss these important issues.

As a result of the three workshops and today's forum, we need to be in a position to articulate the role that each of us will play in ensuring that Australia maximises the benefits from our investments in the digital economy.

These gatherings have demonstrated how industry and government can work collaboratively on this important subject.

And this is the key point: collaboration and partnerships are essential to driving a digital economy.

Commonwealth, state/territory governments and industry efforts need to be integrated for maximum scale and effect.

Another key outcome from our Digital Economy workshops was the need to build trust in the digital economy.

This was a point that consistently came up with participants, especially for consumers and small-to-medium enterprises.

I note that some issues in this area, for example, online security and cyber safety can only be fully addressed by the international community acting in concert.

There has been some important progress on this recently.

OECD member countries and many notable non-member countries such as India and Indonesia joined with Australia in agreeing to the Seoul Declaration at the OECD's Ministerial Meeting on the Future of the Internet Economy.

The Seoul Declaration establishes a range of high level principles in key areas such as:

• e-security and cyber safety;
• fostering innovation in the development, use and application of the internet; and
• enhancing global co-operation to address cross-border issues.

In the domestic context, collaboration is required between all levels of Government, between industry and government, and most importantly, between individual businesses and sectors.

I look forward to working with you during today's proceedings.

Let's make the most of this opportunity.