IT leaders blast ‘underwhelming' budget: R&D, skill shortages ignored and reliance on 3G sale raises doubts

Australian IT&T industry executives and analysts were disappointed by the federal government's 2000 Budget, which they believe overlooked the rapid growth of the industry and relied too heavily on next year's third-generation (3G) spectrum auction.

The Australian Information Industry Association (AIIA) described the budget as "underwhelming" and "at best, neutral" as far as its members were concerned.

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.

He said the AIIA was disappointed at the lack of incentives in three key areas; support for smaller businesses, the IT&T skills shortage and tax breaks in favour of R&D.

In its first budget in 1996 the Howard government cut the R&D concession from 150 per cent to 125 per cent, and since that time, the IT&T industries have lobbied the government to have the decision reversed.

Durie told The Australian newspaper: "We are not going to give up, but no-one is hearing the knock at the door so maybe we need to change the way we are knocking."

He said 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 one 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. He also stressed the critical state of the IT skills shortage.

The need for an estimated 15,000 extra places in university IT courses, research and development, was ignored, he said.

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.

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 the (IT) market is going. It's a continuation of a haphazard approach," Budde said.

He 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.

Budde was reluctant to speculate on how likely next year's 3G spectrum auction was to raise the $2.6 billion needed 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.

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