Budget a step in the right direction: IT leaders

Representatives from Australia’s technology sector have praised some aspects of the government’s 2015 Budget but believe more should be done to stimulate the sector and the overall economy.

Major projects including the $485.1 million initiative to improve the e-health records system and the $234.7 million ABS revamp will provide a welcome boost to the local ICT sector, Grant Thornton Australia National Technology and Media Leader Simon Coulton said.

“On the other hand we’re disappointed we didn’t see significant initiatives encouraging innovation or much needed incentives for the private sector to early invest in emerging technologies, particularly for mid-sized businesses,” he said.

“A large number of Australian businesses are facing significant disruption from emerging technologies, business models and overseas competitors. Many businesses at threat of disruption are in industry sectors that have traditionally been a strength to the Australian economy.”

Coulton said the government should have extended incentives such as reduced tax rates and faster depreciation to mid-size companies instead of just small businesses.

“We want to see initiatives ... that encourage investment in new technologies to improve the productivity and competitiveness in our key industry sectors like health, manufacturing, education and services. This in turn would provide indirect support to Australia’s ICT sector. I don’t think the ICT sector is looking for or expects direct handouts.”

Taxation initiatives including the 1.5% cut in tax rates to small businesses and a $20,000 immediate asset write-off will be well received by small businesses, according to MYOB CEO Tim Reed.

“This is the first Budget in 10 years that has put small businesses where they belong - at the front and centre of government policy. The government has two weapons at its disposal - to reduce the taxes small businesses pay and to make it easier to run a business.”

But he added that the government has missed the opportunity to abolish obscure taxes and reduce red tape for companies. MYOB is also concerned about how changes to GST entry thresholds will be implemented, fearing it may add complications in terms of reporting.

SAP Australia and New Zealand Managing Director Andrew Barkla welcomed the Budget, noting that it showed signs of recognising the significance of the digital transformation journey ahead for Australia.

“We are living in a highly competitive, hyperconnected and disruptive global economy. As a nation, we can’t afford to ignore investment in digital transformation,” he said. The government has committed $254.7 million towards the first stage of its Digital Transformation Agenda.

“The modernisation of government services to improve digital experiences for the citizens of Australia is essential if we are to compete in a growing digital and global economy... Investment in digital infrastructure drives further private sector investment and creates business opportunities. It also paves the way for start-ups and creates jobs.”

But Barkla warned that to address Australia’s long-term interests, the government must urgently address the widening ICT skills gap.

“Given that an estimated 75% of the fastest growing occupations will require science, technology, engineering and mathematics (STEM) related skills and knowledge, it is imperative we introduce these skills into our curricula early,” he said.

“The investments announced to improve teacher education indicate a small step in the right direction. However, specifics as to how the government intends to support and invest in curricula, partnerships and programs that integrate education and work experience, providing the skills tomorrow’s talent need to compete, are lacking.”

The government’s planned significant spending on ICT initiatives may ironically exacerbate the effect of the skills gap for the private sector, Ovum Lead Analyst for Government IT Kevin Noonan warned.

“Strong market opportunities will create some big headaches in meeting skills requirements. The federal government is a big market. Any sudden movements in that market can create consequential challenges in other sectors,” he said.

“This would be a very opportune time to lock in contractors and permanent staff, before they start to pack their bags for growing job markets in Canberra.”

Image courtesy of Joel Telling under CC