Tech spending cuts could backfire

Manufacturers cutting spending in the face of the high dollar risk shooting themselves in the foot, an Australian Industry Group survey has found, being far less likely to adopt new technology.

Titled Ready or Not? Technology Investment and Productivity in Australian Businesses, the survey finds that only 22 per cent of manufacturers surveyed are looking to invest in new technologies this year, down from 32 per cent last year.

About a quarter of businesses surveyed expect to cut their spending on new technologies, up from only one in 10 a year ago. The same pattern is apparent in research and development spending, where 17 per cent of firms surveyed expect to make cuts, compared with 10 per cent a year ago.

"It will slow productivity growth," AiGroup chief executive Innes Willox said. "The report finds clear evidence of a link between technology investment and improved productivity. In fact, 33 per cent of the businesses that invested in new technologies in 2012 reported an improvement in their labour productivity, compared with only 16 per cent of businesses that did not."

Based on interviews with 350 chief executives, the report finds that half of those that plan to invest in new technology expect their labour productivity to improve, compared with just one in five of those who do not. The survey finds businesses increasingly worried about their ability to take advantage of the new national broadband network with fewer than half saying they know how to put it to work for them, down from 80 per cent when the project was embryonic five years ago.

"This lower business confidence may have a bright side if it means businesses are becoming increasingly aware of their capability gaps," the report says.

Chief executives nominated improved collaboration as the most likely benefit of the national broadband network.

But mobile technologies were more important to them, having more immediate practical benefits.