Treasurer Josh Frydenberg handed down the federal government’s Budget 2021-22 on 11 May, outlining a $1 billion digital economy fund, patent and depreciation tax relief and cyber security investment, among other initiatives.
Broadly, much of the Budget’s technology industry related spending has been well received by the Australian tech industry, with many local business leaders in the sector lauding the government for its investment in digital infrastructure and skills. However, there were some areas of concern.
According to Rupert Grayston, Australian Computer Society (ACS) interim CEO, the industry organisation was encouraged by the Treasurer’s statement that digital infrastructure and digital skills would be critical for the competitiveness of the economy.
But there was room for improvement, Grayston suggested.
“One important boost for the technology sector and the broader economy would be to boost female participation in the ICT sector,” he said. “Digital Pulse [an ACS report] found if Australia addresses the tech industry’s gender imbalance, the economy could see 5,000 more jobs and a boost of $1.8 billion per year.
“Further reforms to the R&D [research and development] Tax Incentive and depreciation regime will also boost technology jobs while the aim of attracting more leading technology companies will also drive the sector,” he added.
It should be noted that one of the big-ticket items for the technology industry in the latest Budget was the government’s limited patent box scheme, which will offer tax breaks for medical and biotech innovations to boost go-to-market scaling and retain intellectual property in Australia.
From the perspective of Angela Logan-Bell, director of strategic partnerships and alliances in Asia Pacific and Japan (APJ) at Rackspace Technology, the patent box initiative will be truly beneficial for local tech organisations’ R&D activities.
However, she said she would like to see more innovation commercialised in Australia, noting that the patent box idea doesn’t go far enough.
“There’s no doubt of the importance medical and biotech innovation contribute to our society, but what we need is economical support from the ground up for all tech start-ups – including a policy review to allow tech start-ups to be able to break through government red tape,” Logan-Bell said.
“Fostering this level of innovation will bring about growth in the tech industry and reduce the length of development. With patents already taking up to seven years or so to be approved, it's inhibiting our tech start-ups now.
“To effectively scale and be on the world stage, we should be offering tax incentives beyond one industry. Australia has every opportunity to become an incubation for development and lead the way and work as a growth region for tech jobs and digital transformation,” she added.
On the other hand, Australian Information Industry Association (AIIA) CEO Ron Gauci said he was quite pleased with the patent box investment but hoped to work towards getting the initiative extended to other sub-sectors of the ICT industry.
“We have a once-in-a-lifetime opportunity to reshape the technology at the core of the Australian health system,” Gauci said. “We are pleased that the...government has taken our recommendation to implement a patent box, ensuring that business is able to receive tax incentives to ensure that IP is developed locally.
“It’s understandable that MedTech and BioTech are the first beneficiaries, we will work to ensure that these incentives are extended to other areas of the ICT industry,” he added.
Turning to skills, despite the $100 million that has been allocated to the development of digital skills in the workforce, including the creation of cadetships, Simon Vatcher, A/NZ managing director at Avaya, suggested that the focus of the initiative needed to be broadened.
“The federal Budget’s $1.2 billion Digital Economy Strategy, including initiatives like the digital skills cadetships and increases to job opportunities, will play a key role in padding the long-term impact of the pandemic and border closures, as well as existing skills restrictions that are now being addressed,” Vatcher said.
“However, to effectively plug skills shortages and tailor the Australian workforce to the needs of our economic recovery, we need to expand our focus.
“As well as targeting areas like artificial intelligence (AI) and cyber security, education and training need to be enabled to address fields like computer science and distributed education from the early stages – in schools via improved IT curricula – through to professional roles,” he added.
For Lee Thompson, Nutanix A/NZ managing director, supporting and encouraging young Australians to develop digital skills will be fundamental to Australia’s post-recession recovery and long-term economic success, but it will take time for the effects to be felt.
“The events of 2020 saw businesses across Australia embrace digital and multi-cloud operating models, but the skillsets needed to gain the most out of these investments are in incredibly short supply,” Thompson said.
“While Government’s $58 million investment in the Digital Skills Cadetship Trials ($10.7 million) and Next Generation Graduates Programs ($47.3 million) are a welcome start, it will be some time until these bear fruit.
“In the meantime, Australian enterprises face the immediate challenge of transforming and future-proofing their businesses. Automating low-level IT tasks can help in the interim, allowing businesses to gain the most out of their current resources – both human and digital – while also ensuring Australia’s future engineers enter a workforce that values and nurtures high-level skills, rather than just their ability to keep the lights on,” he added.
Mike Featherstone, Asia Pacific and A/NZ managing director at Pluralsight, said that while there were some very encouraging signs in the 2021-22 Budget announcement, including the $1.2 billion investment in the Digital Economy Strategy, a significant gap remains in the form of a clear pathway to technology skills development.
“Digital transformation continues to drive change around the world with markets betting big on the digital economy and driving investment into up-skilling workers,” Featherstone said.
“Few things in business are predictable—as we’ve witnessed firsthand in the past year—but one thing is for certain: your tech strategy is your business strategy—and you can’t have a winning tech strategy without a mature skills strategy.
“Neglecting the development of digital skills within Australia leaves the country reliant on attracting global talent that is both in high demand in every market, and unrealistic in our current climate bound by COVID’s restrictions on travel. While some investment has been made, much more will be required if Australia hopes to become a leading digital economy by 2030,” he added.
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