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Wednesday, 25 September 2002
Page: 4856


Senator LUNDY (2:42 PM) —My question is to Senator Alston, Minister for Communications, Information Technology and the Arts. Can the minister confirm that the Australian Bureau of Statistics has found that Australia's information technology and telecommunications deficit grew by over $2 billion between 1998-99 and 2000-01, from $9 billion to $11 billion? Can the minister also confirm that his response to these disturbing figures was to say:

We shouldn't be overly concerned about it so we shouldn't put a great deal of effort into reversing it.

Given that this deficit includes software and applications development—a sector in which Australia has an excellent reputation and potential for substantial growth, along with other information technology services—how does the minister justify this comment?


Senator ALSTON (Minister for Communications, Information Technology and the Arts) —The first point to be made is that the Australian IT&T sector continues to show strong growth in the face of difficult operating conditions. Exports grew by 34 per cent in the last two years, employing almost 240,000 Australians. While obviously there is a difficult operating environment out there which places downward pressure on profit margins, income from domestic production of IT&T goods and services has grown by 25 per cent to $50.2 billion over the last two years. Our support for the sector has seen almost 4,500 new jobs in IT&T specialist businesses created in the last two years—up by 25 per cent—with the sector employing an additional 40,000 Australians between 1999 and 2000. Growth in IT&T employment has been strongest in the computer consultancy services industry and the telecommunications services industry.

I will move to the more general proposition that Senator Lundy puts forward, and that is that somehow we should be once again wringing our hands because there is an ICT trade deficit, as there has been, of course, for many years. In fact, the US has the largest ICT trade deficit by a mile, and yet that has not stopped them achieving very significant growth in productivity benefits. Similarly, in Australia, we have seen the transformation of a number of traditional industry sectors, such as agriculture, mining, the wine industry, insurance, banking and finance—all of those show up under different silos in the trade figures. It is quite simplistic to look at one particular manufacturing sector and say that—


Senator Lundy —Why don't you support it?


Senator ALSTON —Because it is the transformational effects across the economy that are important. Don't kid yourself—


The PRESIDENT —Order! Minister, would you address your remarks through the chair? Senator Lundy, would you cease interjecting, please.


Senator ALSTON —The henny pennies of this world would have it that somehow Australia is going backwards. Australia happens to have the best performing economy in the OECD and it is not accidental. Apart from all the good government decisions that have been taken, it is also because of the intelligent use and application of IT to those traditional industry sectors. As a result, there has been very effective cost reduction because IT offers you those opportunities. It also provides many more opportunities for trading offshore. It does not show up in ICT; it shows up in the sectors where the ultimate end product is exported. But if you do not understand that then presumably you are of the school—and I am speaking of `you' in a generic sense—who would take this line and presumably say that a deficit in any area is bad news. As we know, you cannot possibly expect to have a surplus in every area. You have to choose where you ought to concentrate your efforts.

Senator Lundy would presumably have been all in favour of that $2 billion fab plant a few years ago. We did not fall for that one; we did not give away very significant tax concessions and payroll tax exemptions and all the other things that might be needed to entice footloose capital into this country. We concentrated on the value added end of the market. That is what the innovation action plan is all about. We are concentrating on centres of excellence; we want to build clusters, and we want to attract a lot more intelligent activity in this country. You do not do that just by mindlessly concentrating on low margin, high volume commodity manufacturing products. That is the essential difference. I am not sure who represents the manufacturing unions in this parliament, but you really should look a bit broader and understand how you can have a major impact in sectors well beyond that traditional manufacturing silo.


Senator LUNDY —Mr President, I ask a supplementary question. Can the minister explain why the coalition's IT outsourcing framework still so consistently favours large multinational corporations at the expense of Australian small and medium sized information and communication technology businesses?


Senator ALSTON (Minister for Communications, Information Technology and the Arts) —I would like to elaborate on this at some length. Perhaps if Senator Lundy would like to be a little patient, I will come to that in the not too distant future.