BUDGET 2013: A mixed bag for our digital economy

The budget hints at good intentions for promoting the Australian tech sector, but it still lacks vision and intent in bolstering the country's emerging digital economy.

Last night’s federal budget delivered a mixed bag for the Australian tech industry with many programs maintaining their funding or suffering mild cuts, however, the broader picture of the government’s struggle with a changing economy remains the same.

The single measure that will raise the ire of the local tech industry is the doubling of 457 visa charges. This increase, along with the increased scrutiny these visas are receiving, is making it more difficult for locally based companies to fill high skilled positions.

Local workers wanting to gain the skills that tech businesses are looking for will be affected by the $2,000 annual limit on claiming self-education expenses against taxable income. In rapidly changing occupations that require frequent re-skilling, that limit is clearly unfair and stunts the flexibility of the Australian workforce.

Combined with last year’s withdrawal of the living away from home allowance, the increase in visa charges and the difficulties in finding skilled workers, successful local tech businesses are finding it harder to remain based in Australia.

Smaller tech businesses looking to access government assistance programs will have a similar experience. The Enterprise Connect program – which provides business advisors to growing companies – projects that it will help fewer businesses in the coming year, despite the budget blessing the scheme with a small increase in funding. 

For companies looking for export assistance, the budget didn’t disappoint with AusTrade’s funding only suffering a one per cent cut. However, the department’s focus on the recommendations of the Australia In The Asian Century report will probably mean some assistance programs may be harder to access.

One problem facing smaller Australian businesses, particularly in the tech sector, is in tendering for government contracts where agencies have a habit of only considering major multinationals – sometimes to their detriment as the Queensland Department of Health found with their payroll system.

The previously announced Enterprise Solutions programs offers $29.4 million over five years to help small to medium businesses compete for government tenders is untouched. Whether this program is enough to change the attitude of government mandarins who tend to dismiss local or smaller suppliers remains to be seen.

Industry innovation precincts which were also announced earlier this year have retained their $238 million over five years. At this stage of the funding process there’s no idea of where these precincts will be or what industries will be covered; however they may give a boost to regionally based tech businesses.

The long running Co-operative Research Centres (CRC) program that links university researchers and businesses sees its funding cut by eight per cent or $12 million this year. The effect of this is shown in the Department’s projections of falling patent applications over the next five years.

In many ways, the cut to the CRC program is emblematic of the lack of vision in this budget. Rather than give a coherent roadmap of the Australian economy’s direction as the resources boom comes to an end, we have a mis-mash of short term, poorly thought out and often contradictory thought bubbles posing as policies.

The incoherence of the 2013 federal budget can be directly attributed to Canberra’s bipartisan addiction to middle class welfare. With a focus on protecting existing entitlements, it’s difficult for governments to lay the groundwork that helps new industries.

It’s hard to see this changing even if Joe Hockey hands down next year’s budget, although eventually Australia’s political classes are going to have to confront the realities of the 21st century economy.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles