Federal Budget leaves channel cold

Federal Budget leaves channel cold

The Howard-lead Government delivered its sixth annual Budget last week which landed with a resounding thud for the IT sector.

Not only was it considered uninspiring, but on the whole, most industry pundits feel the IT market will have to be satisfied with the Federal Government's previously announced 'innovation package' as its Budget, because it certainly missed out in the official one.

"I don't see a lot coming out of [the budget]," says Glenn Miller, managing director of software distributor Janteknology, who believes the Government hasn't done enough to stimulate the IT market.

"I don't think the Government is aware how much IT is affecting the GDP (gross domestic product)," says Miller. "And it is even less aware of it's potential affect."

Miller is also critical of the Government's policies, which he feels are reflected in the Budget with a lack of awareness and focus on key IT areas, such as security.

Telecommunication analyst Paul Budde claims visionary statements about where the Government will use IT&T as a spearhead in our society should have been included.

"Followed up by strategic directions, no willynilly handouts, such as opening up competition between IT platforms (telecoms, broadcasting, cable TV and wireless) and executing strategies. We have been waiting five years on issues such as interconnect, local loop access and number portability. We are still working on the 1992 legislation as the 1996 legislation seems to be unworkable."

When asked about the lack of IT announcements in this year's budget, a spokesman for the Minister for Communications, Information Technology and the Arts, Senator Richard Alston, returned to the innovation package as the big spend and big win for the IT sector.

So for the most part the $2.9 billion five-year 'Backing Australia's Ability' plan - designed to provide funding in the areas of science, research and innovation - presented in January will have to suffice.

On the other hand one of the vertical-market winners from the Budget was Health. Greg King, Healthcare business director for ASX-listed boutique consultancy ICSGlobal, claims the government's $18-20 million commitment to the Health Connect network will present good prospects for the channel.

"Basically [Health Connect] will provide a network for all healthcare professionals. This will mean opportunities for companies to build the infrastructure," says King. "This kind of initiative takes the backing of the Government to get it going, and they've showed that."

In its 2001/02 Budget the Federal Government dumped the agency responsible for the controversial IT outsourcing initiative.

The Office of Asset Sales and Information Technology Outsourcing (OASITO) was effectively buried as part of the Government's budget announcements.

It reflects the Government's shift in managing the program following the damning Humphry Review into IT outsourcing, which recommended individual departments manage their own outsourcing initiatives.

Previously, OASITO administered all federal outsourcing, but it has been replaced by the new Office of Asset Sales and Commercial Support (OASACS). The new body will be responsible for the sale of Federal business assets and will assist agencies in market-testing new initiatives.

However, many see it as little more than a name-changing exercise for the Government to appear proactive over an issue that has been a thorn in the Government's IT plans for some time.

While some analysts like Phil Hassey, IDC Asia Pacific senior analyst, outsourcing, claim "the Government had to make it look like it was doing something".

IT Opposition spokeswoman, Senator Kate Lundy takes it further claiming the name change is the "lid on the coffin of a flawed program".

"This is about damage control, the Government is trying to distance itself from the program and OASITO has a bad reputation in government and industry," says Lundy.

The official line from John Fahey's Office of Finance and Administration was that the name change reflects the "development of responsibility" by OASITO for the implementation of IT outsourcing.

The telecommunications sector: - Regional telecommunications scored well in the Government's 2001 Budget, but a hike in the mobile carrier GSM licence fee is tipped to result in higher mobile phone charges for users.

The sale of Telstra also reared its head again, with the sell-off of the rest of the Commonwealth's 50.1 per cent stake delayed until after July 2003.

The $163.1 million (over four years) earmarked for regional telecommunications includes funds to improve mobile and Internet coverage and poor phone line connections in remote areas.

Internet initiatives: - In terms of direct funding for e-commerce activities, the budget's sole contribution appears to be an $8.3 million injection of funds to the government's Business Entry Point Web site for small business.

First launched in 1999 as an online site where business could register for the Australian Business Number, it has developed a number of links to other government sites which allow small businesses to conduct activities such as applying online for R&D tax concessions or becoming suppliers to government. The fresh funds will extend the range and variety of operations they can carry out.

The budget papers include references to a three-year $50 million Internet assistance program to improve Internet access for rural and remote Australians. However, that is part of a larger $163 million program which had already been announced by Federal Communications Minister Senator Richard Alston.

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