BUDGET 2013: Initiatives met with mixed reactions

BUDGET 2013: Initiatives met with mixed reactions

Industry experts see lack of private sector and SMB initiatives as missed opportunities

The Treasurer, Wayne Swan

The Treasurer, Wayne Swan

Treasurer, Wayne Swan's, 2013/14 Federal Budget has been met with mixed reactions by the ICT industry.

Ovum public sector technology research director, Kevin Noonan, said there were not many initiatives that directly relate to the IT industry – however many of the strategies and direction requires an IT underpinning.

Noonan said the ICT industry will be affected by the $226.8 million public service cuts, which is being pushed by the move in mobile technology.

“That generally translates into headcount. The government has made similar cuts in the past but this time around, it results in cuts in the middle layer management, increasing the occupancy density in buildings and a move towards shared services,” he said.

But the initiative is good news, Noonan said, as the business side of the government meets IT direction to enable greater adoption of teleworking, more flexible structures, and have fewer requirements for complex management layers.

The Budget also announced savings through initiatives to drive greater efficiency in procurement, which Noonan said is likely to receive a mixed reaction as it will be achieved by expanding AusTender through the increased use of panels and multi-use lists, including co-operative arrangements.

“The government has been doing that quite a lot with the IT industry. Improvements to the government tendering process will be welcome however commodity cost-cutting is likely to be seen as an overused approach to just cutting vendor margins,” he said.

According to Noonan, the study into a whole-of-government ERP system by the Department of Finance could be of interest to Cloud providers, mainstream ERP providers (such as SAP and Oracle) and smaller channel partners.

“There are quite a number of initiatives that are looking at areas of specialist interest, such as data in verticals such as human services and tax,” he said.

Wrong strategy

Data#3 managing director, John Grant, said he would have liked to have seen a budget that stimulated private sector revenue growth.

“Analysts overarching views are that it’s a budget heavily weighted to generating revenues for government by putting more burden in the form of taxation or the removal of benefits, back on the Australian private sector and on individuals. I think that’s the wrong strategy,” Grant said. “The future for Australia is to drive private sector revenues and not to deliver under-funded services to its citizens. You’ve got to create wealth."

Grant said the opportunities for the IT industry rest in the opportunities for private sector revenues to grow, as it can't drive its revenues without being more productive and innovative through applying technology to help them achieve it.

"This government must focus on generating wealth and that's done through the private sector," he said.

ASI Solutions director, Maree Lowe, said the biggest problem lies within the lack of confidence in the market and lack of incentives for the small to medium business sector.

"Everyone will sit on their hands from here to the election in September. We all know government expenditure will be cut," Lowe said. "Looking at the Australian population, small business employs about 7 million people, and what are the incentives for small business? That was an issue that was missed."

Lowe said it would be interesting to see what happens with multinational corporations and taxation in Australia.

"That could bring a few ripples into the IT industry," she said. "Another area that I would have thought we might have seen greater investment was in the health sector and that was a bit of a disappointment."

Peak ICT industry representative body Australian Information Industry Association (AIIA)’s CEO, Suzanne Campbell highlighted the $7.2 million investment over three years to improve the capacity of SMBs and not-for-profit to engage in the digital economy is a small amount for what is a significant opportunity.

“A number of businesses in Australia are small businesses and that amount is hardly enough on the total economy to help them through that transformation nationally,” she said.

Campbell also said that the other NBN initiatives showcase the possibility of the NBN, but what would be better is using the NBN to deliver outcomes.

“In addition, the focus from the existing 40 councils is just on an additional 15 local councils. This doesn’t go far enough and we’d rather see programs that support the take-up of the NBN and the use of NBN,” she claimed.

Good step forward

But Noonan mentioned that the NBN initiatives are a good step forward with discussions moving away from laying cables to get value-add out of the system.

“The allocated money doesn’t have to be huge because it’s trying to foster interests among town councils and small businesses to find business use for high speed broadband. It’s even better for the channel as they become potential customers, especially from a Cloud computing perspective,” he said.

Noonan added that the problem with the budget is that it should have been introduced at the beginning of the government’s term, rather than at the end of it.

“From an IT perspective, the big surprise was the amount of strategy and detail. Many of the initiatives are long-term and require ongoing attention. However, the government is in trouble in the polls and may not be around to see through many of the long running initiatives,” he said.

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Tags cloud computingNBNERPICTSMBsbudgetovumjob cutsAIIAchannelpublic serviceSMEsBudget 2013


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