Channel sees profit in budget promises

Channel sees profit in budget promises

Despite industry complaints of a lack of specific attention to the IT&T industry, the 1999 Federal Budget outlines some major strategies and financial plans for the Australian technology sector.

Michael Hedley, the Australian Information Industry Association's corporate relations manager, said "the budget has a flavour of the knowledge-based economy", in an attempt to appease some elements of the IT community unhappy with the absence of any tax reform.

The continuance of last year's Action Agenda means $740 million has been allocated to an R&D development start program, according to a spokesperson for Senator Alston's office. There is also $108 million for a technology diffusion program and $28 million for a software engineering and test centre to be established. A $22.5 million technology park will also be built on Melbourne's docklands. The creation of an innovative investment fund will also have an impact on venture capital funds in Australia, the spokesperson claimed.

However, one of the more significant measures proposed in the Budget has so far been overlooked by the IT industry, according to Senator Alston's spokesperson. "In this Budget the restrictions on pooled development funds have been lifted. Previously, overseas pension funds or super funds could only own 30 per cent of a pooled fund. They can now own 100 per cent, which will act as a stimulant and a major source of investment for high-risk ventures."

But Rick Taylor, tax partner at Deloitte Touche Tohmatsu, argued that this is still not enough as there is a 15 per cent tax on the money invested in pooled funds in Australia, which investors are exempt from in their own countries.

The Australian Computer Society (ACS) found the general focus on education another redeeming aspect of the Budget. "One of the primary ways of helping to reduce the skills shortages is to fund undergraduate places," said ACS president Prins Ralston. The Government has attempted to begin this process already with the establishment of a skills shortages package that offers an analysis on the current situation, a Web site dedicated to careers in the IT industry, and calls for more industry sponsorship of training and collaboration with universities.

Hedley is also reassured by the fact that rural telecommunications projects have been budgeted for and that expenditure on education has been increased. "There is a definite interest in online education and there is continuing support for teacher training. There is a fair bit of focus on science but it needs to be more detailed," said Hedley, disagreeing with the Government that the science focus should be on biotechnology. "We would have liked to have seen more of a response to the IT&T industry."

Resellers ARN spoke to are relatively content with the Federal Government's proposals. "The Australian Tax Office is going to have a large budget for infrastructure and there has been $600 million allocated to medical research, a lot of it to be specifically spent on infrastructure," said Nick Cuthbertson, managing director of Protech. "It all adds up to some good opportunities for the industry. And of course when you are talking about the Federal Government, the biggest single fact is its ongoing outsourcing initiatives. The Budget is pretty neutral compared to this."

Greg Barraclough, national sales and marketing manager of consumable reseller Specialist Computer Supplies, believes that the Federal Government is in a position to help the IT industry, regardless of its Budget specifications. "If the Government spends more money, and it's the largest spender and is doing a lot of outsourcing, then resellers could feel a flow-on effect," Barraclough said.

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