Budget: Hardware depreciation bonus for channel

Budget: Hardware depreciation bonus for channel

IT players have welcomed the Federal Government's accelerated asset depreciation initiative, claiming it should help revitalise corporate technology purchases. But several lamented the lack of attention being paid to an industry skills shortage.

Under the Federal Budget, released last week, the rate of depreciating assets has been raised from 150 per cent to 200 per cent. Product sales include PC and notebooks, network infrastructure, server equipment and telecoms. Software is excluded. The initiative is worth $3.7 billion over four years.

Both the Australian Computer Society (ACS) and a financial expert at Deloitte said higher asset tax deductions would provide businesses with the incentive to keep pace with new technology. As an example, Deloitte corporate tax partner, Stuart Osborne, said a $4000 laptop would attract a deduction of 66.6 per cent in the first year of purchase.

Commander general manager of strategy and development, Steve Evans, applauded the initiative.

"We see the depreciation acceleration as absolutely sensational," he said. "Given the speed of change in our business, a lot of organisations have been holding off on upgrades because existing equipment still has value on the books.

"Now a lot more organisations will refresh quicker - more so at the larger end of town."

Optima chairman and managing director, Cornel Ung, said SMEs would benefit most.

"SMEs have tight budgets. This [initiative] encourages them to upgrade equipment," he said. "This in turn, will benefit our resellers."

More disposable income from new personal tax cuts would also stimulate opportunities in the consumer market, Ung said.

MCR services manager, Geoff Bowker, said the changes to depreciation were a "no-brainer".

"IT equipment tends to depreciate very quickly anyway - the schedules have not been in line with computer equipment," he said.

But BCA IT managing director, Stephen Harrington, was less optimistic the industry would see a rapid increase in IT spend.

"There's no doubt accelerated depreciation will help organisations, but will it help IT companies in terms of selling more and bringing more prospects? Time will tell," he said. "I'm not sure depreciation is the primary driver for customers making more purchases. They look at the whole return on investment."

Other ICT initiatives in the new budget include a $200 million injection into the Innovation Investment Fund program for start-ups, along with a further $72.9 million in Invest Australia. Schools have also been promised $22.9 million over the next four years to deliver online content. Commander's Evans said the education investment, along with more spending across government agencies, presented new opportunities for the integrator.

"I see it as an ongoing improvement of the economic outlook for Australia," BCA's Harrington said. "It will help industry in a general sense."

But several integrators said more attention should have been paid to the chronic skills shortage in ICT.

"The fact that it is absent from the budget means it will get worse," MCR's Bowker claimed. "We're going into another boom and bust cycle. We had oversupply, so people have dropped out and stopped taking up training. Now we have a skills shortage."

While the IT skills status quo was acceptable today, Harrington said the government was not looking at developing skills for the future. As a result, he said he supported Labor leader Kim Beazley's counter budget proposal to put more funding into skills training.

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