Federal Budget gets industry tick of approval

Federal Budget gets industry tick of approval

Industry announcements in last week's Federal Budget

Long-term innovation and investment plans laid out in the Federal Government's 2008 Budget have been welcomed by several ICT representatives, although they claim more needs to be done to stimulate strategy and development.

Among the biggest industry announcements in the Budget last week was a $40 billion spending spree on infrastructure, education and health, as well as continued support for broadband.

Other key initiatives include providing $42 million over four years to establish a network of Enterprise Connect Centres connecting businesses with new ideas and technology, as well as $209 million over four years to double the number of Australia post-graduate awards and $326.2 million on Future Fellowships for researchers during the same period.

Specific to ICT, the government announced a further $271 million will be handed out under its Australian Broadband guarantee plan. More controversially, it will spend $125.8 million on introducing ISP level content filtering, a plan that has already drawn criticism from industry groups and ISPs.

The government will also invest $2.3 billion over the next five years to tackle climate change and has earmarked $44 million for the establishment of a National Emissions Trading Scheme. It is unclear how much of this will be targeted at ICT.

Australian Information Industry Associate (AIIA) CEO, Ian Birks, said spending on infrastructure, education and health should garner long-term opportunities for the ICT industry. But he expressed disappointment at the lack of business stimulus across the digital economy.

"The long-term future plans could be positive things for our industry as ICT has a part to play in all of these areas. But these are 2-3 years out," he said. "There's nothing new shorter term to stimulate business."

Concerns have also been raised around the Federal Government's decision to cut the Commercial Ready program. The program was aimed at assisting SMEs to enhance and commercialise advanced research in ICT and biotechnology.

Birks agreed this was a blow for SME development and innovation. Although the government is currently reviewing other initiatives to raise innovation, the lack of adequate support in the short-term was disappointing, he said.

"We understand it [Commercial Ready] wasn't the best solution and there were issues identified in government reports. But if you take it away there's nothing else to replace it today," Birks said. "The government is undertaking a major review in innovation - whether that be IT, education or general business. It's a very broad initiative and we hope something comes out of that specifically targeted at SME innovation. But there's no guarantee."

Birks said the AIIA was participating in the industry review and has called for ICT tax concessions for R&D. "At the moment we're not competitive globally - global companies are not getting great incentives to base their R&D in Australia," he said. "The other levers are supporting and commercialising SME products, services and IP."

Another decision which has provoked censure is changes to the Fringe Benefits Tax (FBT). Under the new budget, the government will limit exemptions on laptops, computers, PDAs and other corporate tools.

Partner at accountancy firm Pitcher Partners, John Brazzale, claimed restricting concessions under the FBT regime meant employees could no longer salary package laptops and pass them onto their child for use at school and at home for their studies. This was inconsistent with other Federal Budget initiatives to provide tax refunds for certain education costs, including the purchase of laptops, he said.

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