This was published 10 years ago
More IT heartache expected from federal budget
By Sylvia Pennington
What news will Tuesday night bring for Australia's high tech sector?
The National Commission of Audit report earlier this month highlighted a number of areas where the Coalition's budget axe may fall. They include assistance for the start-up sector via the Innovation Investment Fund, Commercialisation Australia and the Export Market Development Grants scheme.
Federal Treasurer Joe Hockey. Early signs indicate technology and privacy will take a hit in the Coalition's first budget.Credit: Alex Ellinghausen
The Commission also called for a cloud-first approach within government and the appointment of a chief technology officer and a senior minister to oversee the country's technology strategy and spend.
The notion of establishing a shared services super-department in Canberra, to provide back-end IT services to multiple agencies, has also been mooted as a potential cost cutting initiative in recent weeks.
IT Pro polled industry figures on their hopes, fears and expectations for the Abbott government's first budget.
Angel investor
Technology One backer and angel investor John Mactaggart hopes the government doesn't pull the rug out from under fledgling IT businesses tomorrow night but he's expecting the worst. "They will cut a lot of these programs ... Incentives for start-ups, it's an easy target to axe," he said.
Scrapping Commercialisation Australia would make it harder for IT entrepreneurs to turn bright ideas into businesses and drive investors from the sector, Mactaggart warned.
"It's risky enough without the goal posts changing," he said. "It's making something that's risky even riskier."
Small business
IT services minnow Mexia employs 23 staff in Queensland and Victoria. Its projects director Mathew Coleman wants to see a budget that follows through on the government's pre-election promise to reduce red tape and compliance costs.
"Mexia Consulting services customers Australia wide and we are constantly head-butting against red tape inappropriate for the modern ICT organisation," Coleman said.
Having to navigate the complexities of fringe benefits and capital gains tax and employment laws impacted on the growth and success of expanding ICT businesses, he added.
The industry analyst
Gartner industry analyst John Roberts wants to see a budget that focuses on the value generated by the government's investment in systems and services, rather than the cost.
"In an increasingly digital world, we should be exploiting the potential of IT to streamline government processes and deliver more efficient government services," he said.
"Then measure and report the productivity gains in simple, per unit metrics. For example, costs per taxpayer to collect tax, cost per social service payment, cost per student, cost per hospital bed."
Entrepreneurs
Entrepreneur Craig Deveson sold his IT start-up Devnet to Cloud Sherpas in 2011 for an undisclosed sum. His budget wishlist includes more support, not less, for new companies, via matched funding programs and incentives for superannuation funds to provide early stage capital.
"Most of our super goes in the Top 10 ASX listed companies," Deveson said. "How does that grow new companies and businesses?"
Reduced government support in the budget will see fledgling firms founder or flee, Deveson believes. "If some of these things don't happen, many start-ups will fail and others will go overseas, which would be a great shame."
Help cash strapped start-ups by allowing them to remunerate their staff with share options, please Mr Hockey, says MOGOplus CEO Andrew Clouston.
"To assist early stage companies, the government should consider a tax exemption on share options issued to employees willing to take the risk and back themselves joining companies in the first few years of their development," Clouston said.
Doing so would allow new companies to attract highly skilled staff without breaking the bank, he said. A review of employee share options plan arrangements has been flagged by the government.
Capital gains tax exemptions for profits generated by investment in successful start-ups would also result in much needed capital flowing into the sector, he added.
Listed company
Founder of listed IT services company Data 3 John Grant says the government needs to balance its requirement to reduce debt with the need to stimulate investment and generate confidence.
"At the end of the day, it's unlikely we'll be able to cut our way to prosperity," Grant said.
"Technology is a key enabler for our future and compromising investment and commitment to change for short term gain, while understandable and enticing, may prove more expensive in the long run."
Industry body
Australian Comptuer Society president Brenda Aynsley hopes to see more money invested in ICT training and skills development, both for young people entering the labour market and mature workers displaced from other sectors.
Funds to improve the digital literacy of small to medium businesses and the formation of a Ministerial Councils of ICT to provide independent advice to the Minister for Communications were also needed, Aynsley said.