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FIRST PERSON: Under the surface

FIRST PERSON: Under the surface

I might be slightly biased, but from where I am sitting, the Australian IT channel looks to be one of the most vibrant sectors of the economy, and also one of the most uncertain.

This is because the channel is particularly sensitive to a number of different pressures, making it the ultimate canary in the coalmine that is Australia's economic climate.

Many Australians look at a world map and confuse economic power with land mass.

Those involved in buying, manufacturing, integrating, designing or reselling IT products, on the other hand, are well aware that we hold a fairly precarious position on the international economic food chain. In fact our GNP (gross national product) represents roughly 1.14 per cent of global production, according to World Bank figures.

With a population of roughly 19 million, a currency which is tossed around international monetary markets like the proverbial hot potato, and a lacklustre manufacturing sector, we are in no position to throw our weight around on international markets.

Global monetary markets can wreak havoc in the IT reseller channel, where business depends largely on imported technologies. When the value of our currency slumps, reseller margins get chewed down to a minimum and start eating into IT channel profits.

Consumer PC and IT retail sales are also particularly vulnerable to fluctuations in household spending. Software and computer upgrades are among the first things to get squeezed out when the belt gets pulled in an extra notch.

Loss of confidence in the currency and a constriction in consumer spending are often precursors to a potential slowdown in the economy, the likes of which we haven't seen since the recession we had to have.

Indications are that when the canary starts to sneeze, the rest of the economy should make for the airlock.

However, our IT channel need not be in such a precarious position.

If Australia had a manufacturing sector capable of supplying some of our own IT requirements, the channel would not be as susceptible to currency-induced price pressures, and as a nation we would benefit from a whole new productive sector of the economy.

One of the reasons we haven't developed such a sector is that we lack an affluent monster-sized population to soak up new gadgets. The situation is not helped by a long history of failing to recognise our own talent, leading to difficulties in raising investment capital.

Experience in places like the US, Italy and the Scandinavian countries has demonstrated that intelligent government investment in the IT sector can bring about a revolution in terms of private sector productivity.

While there is movement at the state level, the Federal Government remains unmoved by calls to take a serious interest in the IT sector.

Unfortunately for the IT sector and the economy generally, both major parties in this country were hijacked by economic rationalist, non-interventionist types way back in the 80s. Neither, it appears, can see the potential benefits to be had from a concerted public sector effort to foster and develop IT infrastructure.

Some industry pundits argue it is important for the Aussie IT sector to foster its own growth, and to a certain extent I agree. In areas where mass reproduction of a technology can be achieved without massive capital investment, Australia is doing very well. Ask any software developer selling into the US market.

Make no mistake, I am not asking for corporate welfare or a high-tech hand out. What the Australian IT manufacturing sector requires is a foot up into a new phase of technology-based economic development before the barriers get too high for us to climb over.

Jeanne-Vida Douglas is usually busy writing features for ARN. Reach her at jv_douglas@idg.com.au


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