Has Little Johnny Howard lost IT?

Has Little Johnny Howard lost IT?

Yesterday's federal Budget overlooks the growth of Australia's IT industry and relies too heavily on next year's third-generation spectrum auction, industry executives and analysts have complained.

A need for an estimated 15,000 extra places in university IT courses, as well as tax breaks in favour of research and development, were ignored in a Budget described by the Australian Information Industry Association as "underwhelming".

Furthermore, telecommunications industry analyst Paul Budde ridiculed the federal government's last-minute reliance on money raised from the impending sale of 3G spectrum in order to meet surplus.

AIIA executive director Rob Durie said the federal government "could have done better" with the Budget, given the global IT industry boom still taking place.

According to Durie, one-third of total money spent annually on R&D in Australia is spent by the IT industry, largely on software development. However, on average, this expenditure is less than 1 per cent of annual company revenues -- less than half the amount spent by Australia's overseas IT competitors. Durie said the IT industry has not been allocated sufficient tax breaks to facilitate an increase in R&D spending.

Durie was perplexed by Treasurer Peter Costello's surprise announcement that the government would dedicate nearly $600 million to a rural health program, which includes 100 extra places offered in university medicine courses annually, considering the critical state of the IT skills shortage.

"I wouldn't have thought we were that desperately short of doctors," he mused.

Budde was even more damning of the Budget. To him, the government's failure to sufficiently acknowledge the "brave new world" of e-commerce and telecommunications represents a deep-set problem.

"The Budget . . . highlights that there is no vision and no blueprint of where we see the (IT) market going. It's a continuation of a haphazard approach (whereby) if someone screams -- an Aboriginal group or a rural group -- they get a few million dollars. That's not a vision."

Furthermore, Budde criticised the government's dependence on cash not yet raised through the upcoming 3G spectrum auction in order to meet surplus. He was sceptical of the government's last-minute decision to complete its business plan by relying on these earnings, following the precedent of the 3G spectrum auction in the UK.

"If the UK government had not cashed in sixty billion dollars (raised from 3G auction), it would not have been in the Australian budget. It leaves you wondering when an event that happens in a foreign country only a few weeks ago is suddenly becoming the critical element of our national budget," he said. "It's an easy way out."

Budde was reluctant to speculate on how likely next year's 3G spectrum auction was to raise the $2.6 billion required to meet the Budget surplus. He said it was likely most major players involved in the previous 2G spectrum auction would realise that 3G did little to advance mobile telephony.

Essentially, he said, 3G enables a "bypass" of fixed-line networks for household internet access -- a prospect far more practicable in the trans-European e-commerce market than in the relatively secluded Australian market.

Anecdotally, he cited conversations with One.Tel and Hutchison, the two highest bidders in the recent Australian 2G auction, where the telcos revealed little interest in furthering their spectrum stakes locally.

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