Australia's ICT trade deficit worsens

A new industry report has revealed that Australia's information and communications technology (ICT) trade deficit reached almost $16 billion in 2000-01 as the nation's dependence on ICT imports continues to grow.

Australian Computer Society (ACS) president John Ridge has called for all political leaders to seriously and urgently consider the impact of this large and growing problem and take immediate steps to address the situation. "This is a situation the next Government of Australia will definitely have to address."

The ACS-sponsored Australian ICT Trade Update 2001 was released this week by the Centre for Strategic Economic Studies (CFSES) in Melbourne. The report's author, Professor John Houghton, said the decline in Australia's ICT equipment manufacturing industry, coupled with an increasing dependence on overseas hardware, software and services was contributing to Australia's growing trade deficit.

"Last financial year, we imported ICT equipment worth $17.73 billion into Australia, which is more than triple the 1990-01 figure of $5.58 billion," Houghton said.

"ICT equipment now accounts for around 16 per cent of Australia's total merchandise imports, costing us more than cars and fuel combined, and more than our imports of food, textiles, clothing, footwear, civil aircraft, chemicals, pharmaceuticals, books, toys and leisure goods combined.

"Our deficit on ICT equipment last year, excluding re-exports, accounted for more than $16 billion." Over the decade from 1990-91 to 2000-01, Australia's deficit on ICT trade amounted to a total of almost $94 billion, or around $5000 for every man, woman and child," Professor Houghton said.

The Australian ICT Trade Update 2001 revealed that Australia exported ICT and related services worth $3.8 billion during 2000-01, up from $1.28 billion in 1993-94, and imported ICT and related services worth $3.44 billion. However, the ICT export figure was boosted by one-off payments of $1 billion for television rights to the Sydney Olympic Games and without this event, the result would have been a deficit of around $720 million.

Ridge said the report also underscored Australia's poor performance as an ICT producer compared to other OECD nations.

"Australia ranked 23 out of 29 OECD nations in terms of the contribution of IT equipment to exports, and 24 among 28 OECD nations in terms of the cost of ICT equipment imports per head of population.

"While we are well aware that Australia scores highly as a user of ICT products and services, this alone will not deliver the economic benefits that are there for the taking," Ridge said.

"We urgently need to lift our game as an ICT producer and exporter or face having our growing reliance on imports accounting for an increasing percentage of our trade deficit. This means we need to invest resources to build up our local manufacturing and software development sectors as well as implementing purchasing policies that favour local products and suppliers over their international competitors wherever possible.

"We recognise that both the Government and Opposition have released policy documents that seek to build up our domestic ICT industry, but we are concerned that many of the measures being planned are too distant and we need them to be implemented sooner rather than later," he said.

"Both major political parties must commit to a policy strategy designed to create Australian-owned IT multinationals of the size of Ericsson, Nokia and Acer. These must be in both product producing areas and in IT services. These will provide a basis for secure investment by superannuation funds as well as permitting the imbalance in IT trade to be addressed."

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