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Information technology: transforming the Australian economy: address to the 15th World Congress on Information Technology: Austin, Texas, USA: 2 May 2006.



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Senator the Hon Helen Coonan Minister for Communications, Information Technology and the Arts

Deputy Leader of the Government in the Senate

Information Technology: Transforming the Australian Economy

Address to the 15th World Congress on Information Technology

Austin, Texas, USA 2 May 2006

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Thank you for that kind introduction

I am very pleased to have this opportunity to talk today about the Australian Information and Communications Technology (ICT) environment and the outstanding opportunities that Australia offers.

Introduction

ICT is probably the most important driver of productivity and innovation right across modern economies.

However, the pervasiveness of ICT can hide its true value, and so in Australia we have been working to quantify this.

Today, I would like to say something about our work in this area and also about how the Australian Government is building a policy framework to better harness this value and encourage growth and investment in ICT.

I will also give examples of the innovative uses that we in Australia are finding for ICT and how our companies are building a first class reputation throughout the world.

All of this will demonstrate why Australia is very well-placed to deal with the challenges of ICT, why it is becoming popular as an ICT hub in the Asia-Pacific region, why Australia is an excellent place to invest and why Australian companies should be on your radar as emerging innovators on the global stage.

Promoting the message of the importance of ICT

The ICT revolution is probably one of the more profound changes in human society. But there are also significant risks if you make the wrong technology choice or if the investment fails to align with your strategic goals.

I was intrigued to find a simple checklist on technology investment in a small Australian magazine earlier this year.

This checklist ran as follows:

æ Will this investment enable me to increase revenue?

æ Will this investment enable me to reduce costs?

æ Will this investment enable me to serve my customers better?

æ Will this investment enable me to be more competitive?

This is just as relevant to the use of technology across the broader Australian economy. But I would add one final point to this broader checklist - will this investment in ICT help Australia solve some of its major challenges as a nation?

Again I believe the answer to this question is yes.

The increasingly intensive use of information and knowledge is driving value creation, productivity and economic growth and is helping us to meet important national challenges.

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Precisely because we are in the midst of these changes, it is difficult to appreciate how profound they are.

Everyone in this room would agree on the importance of ICT, but everyone would also undoubtedly share some of the frustrations in promoting this message outside the ICT community.

For example, how to promote ICT to policy makers responsible for driving innovation in their economies.

How to promote ICT to policy makers, educators and the broader industry in ensuring we are addressing skills needs.

Or to policy makers, industry and the broader community in building trust and confidence in the use of the internet.

The challenge in promoting the fundamental importance of ICT is presenting the case in a way that sceptics will understand.

Part of the answer to this may be in backing up our assertions with solid facts, so that the full potential of these technologies can readily be harnessed to solve major national and international problems.

In Australia we have undertaken some in-depth research to quantify the impact of ICT in the economy.

This research has shown that technology, including ICT, has directly contributed up to 85 per cent of productivity growth in the Australian manufacturing sector over the 17 years to 2001-02.

It also shows that ICT has directly contributed between 56 per cent and 80 per cent of productivity growth in the Australian services sector in the same period.

I’m pleased to say that Australia is proving to be a world leader in its use of technology to drive productivity and transform traditional sectors of the economy.

The OECD recently found that Australia was second only to the United States in deriving productivity benefits from its use of ICT.

Another interesting figure is that only 45 per cent of Australia’s ICT professionals actually work in the ICT sector.

The rest—55 per cent—are distributed across the economy including services, transport, manufacturing and agriculture.

The use of ICT across the economy is also spawning innovative companies within the ICT sector developing technology to feed this transformation across the economy.

These numbers highlight the real transformative value of ICT and provide strong justification for continued efforts to stimulate the Australian ICT industry and the use of technology to help create an information economy.

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Australia's policy framework

Following a national consultation process, the Australian Government has articulated its vision and framework for doing just that.

Initiatives are underway in the areas of skills, supporting infrastructure and R&D and further underpinning the information economy.

Having a high quality pool of skilled workers is essential and the Australian Government is committed to ensuring we have the ICT skills we need and that the market for ICT skills operates efficiently.

To facilitate this, I have established an ICT Skills Foresighting Working Group, which will soon report on how to improve the supply of ICT professionals to meet the future skill needs of industry.

In September last year, I also convened a Summit to examine approaches to addressing the barriers to participation in the ICT profession, particularly by women, but also by men and young people.

Another essential part of our policy framework is fostering greater investment to deliver to all Australians the services they want, particularly Broadband services.

Australia has the fifth-fastest growing broadband market in the OECD and plans are afoot, including significant Government investment, to upgrade Australia’s communications infrastructure to provide next generation broadband services.

Already in Australia we have service providers providing residential services up to 24 Megabits per second using ADSL2+ - providing faster broadband speeds that enable innovative services such as Voice over IP.

There are two separate 3G mobile networks in operation and a third, covering 98% of the Australian population, under construction.

Australia’s largest carrier - Telstra - also has plans to install a fibre-to-the-node network across Australia’s major metropolitan cities.

The Government’s recent Connect Australia package recognises the critical role of broadband in growing Australia’s information economy.

The centrepiece of this package is the $878 million Broadband Connect program which aims to ensure rural, regional and remote Australians have equitable access to advanced broadband services.

The $113 million Clever Networks program, which complements Broadband Connect, will target the strategic roll-out of new infrastructure and innovative applications to improve health, education and other essential services.

Australia's total ICT research and development expenditure is almost $3 billion per annum, including industry and government funding.

As a further investment in innovation, the Australian Government has also committed $380 million to establish a Centre for Excellence in IT research, better known as NICTA.

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NICTA and other research organisations, such as the Commonwealth Scientific and Industrial Research Organisation—CSIRO—are working hard to engage industry and to establish international linkages, to build clusters of interest in IT and its applications.

With over 270 research staff and over 200 PhD students, NICTA is conducting leading edge use-inspired research in areas such as security, telecommunications, water management, traffic systems, life sciences, health, embedded systems and software development.

After starting up less than four years ago - NICTA is very close to commercialising some of its major research projects and has already inked research deals with NEC and Qualcomm among others.

Headed by Dr David Skellern, who was one of the co-founders of wireless broadband pioneer, Radiata, which was sold to Cisco for $US295 million - NICTA is commercially focussed and its research should be making waves internationally in the not too distant future.

Online trust

I understand that one of the key areas of focus for WCIT 2006 is privacy and security.

The Australian Government is certainly working hard in this area to ensure the security and integrity of Australia’s information infrastructure and to support confidence in new digital services.

To date, a range of measures have been implemented to secure the online environment including the introduction of world-leading anti-spam legislation, research into e-security and cross-agency collaborative efforts.

Last year, the Government released the report, Trust and Growth in the Online Environment which investigated a number of key areas relating to online consumer trust.

This included the reasons for transacting online, the perceptions of the security or risks associated with transacting online and experiences with online security breaches.

The report was the first in a series of measures to build a trust knowledge base to inform policy and develop effective strategies to build and maintain trust in the online environment.

This research will feed into the OECD’s Build User Trust in the Global Digital Economy work program.

Australia is also working hard in international fora to promote the development of a consistent regulatory environment relating to the information economy - particularly in the global fight against spam.

ICT in Australia

So, as you can see, we are creating in Australia an environment that fosters ICT development, application and innovation.

I would like to talk now about how this ICT environment is leading to innovative solutions to challenges both in Australia and internationally.

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Australian firms have strengths in high-end services, with significant expertise in wireless and software applications.

Many of these applications have been developed in response to our large distances and the remoteness of communities in Australia.

Australia is building ICT applications in health care, caring for an ageing population, water management, education, delivering government services and in many other areas.

We have, for example, a high bandwidth connection allowing staff in a small regional hospital to get support in real time from specialists in metropolitan hospitals.

Patients in the regional area get better care immediately as the specialists receive several high quality digital video channels, high quality audio, vital signs data, written notes and medical images.

Australia is also delivering high speed interactive video and voice lessons to pupils in remote locations enabling them to interact in real time with their teacher and other students.

Several Australian firms, including Animal Logic, are at the forefront of digital and visual effects production work for films, including for the Matrix trilogy, Harry Potter and the upcoming Superman Returns and Charlotte’s Web among many others.

An exciting development from this is face mapping technology developed in Australia that was originally used in the Lord of the Rings film trilogy - is now being used to construct immobilisation masks for patients undergoing radiation therapy.

Australia’s first full feature-length digital animation Happy Feet will be launched on American screen towards the end of this year.

As another example of our high-end expertise, some 60 per cent of the world’s mining industry software comes from Australia.

Australia and the United States recently entered into a Free Trade Agreement and this has created many more opportunities in the ICT area for both countries.

Two recent examples are HarvestRoad based in Perth, Western Australia and TOWER Software based in our national capital, Canberra.

HarvestRoad is an e-Learning software developer that has been selected in a $40 million education purchasing tender.

TOWER software has signed an agreement for more than $45 million over five years with the United States Department of Defense for its TRIM Context business information system.

Also, to mention a Texas example, an Australian firm, Visean, has just opened an office in Houston.

Visean provides real-time data management and visualisation solutions for the Geoscience and Engineering segment of offshore oil and gas industry.

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It has secured global customers, including Shell, BP, Total and BHP, in more than 20 countries and is now building upon a strategic partnership with Texas-based oil services company Weatherford.

The Australian software firm, Medtamic, is working internationally in the area of healthcare providing clinical information systems to hospitals and clinics.

These systems are now installed in over 50 sites worldwide, including North American hospitals in Stanford, Yale, and Chicago.

I understand Medtamic is currently seeking to expand to Texas.

I am also pleased to say that Visean and Medtamic have both received assistance under the Australian Government’s $122 million ICT Incubators program that I administer and provides capital, mentoring and administrative support for emerging start-ups.

These are just a few examples but I know there are many more Australian companies bidding for work here and taking advantage of the recently-signed Free Trade Agreement between our two countries.

Australia is a great place to invest

The Free Trade Agreement and the work the Government is doing to continue building our ICT environment are only part of why Australia is a great place to invest.

Located on the edge of Asia, Australia has a vibrant and fully open economy, which has performed exceptionally well over the last decade.

There has been strong economic growth, low inflation, low interest rates, jobs growth and declining unemployment, growth in real wages and ongoing productivity improvement.

We have weathered the Asian financial crisis, uncertainty around oil prices, international terrorism and stagnant growth in the economies of many of our traditional trading partners.

According to the United Nations, we have moved up to 8th place on the basis of Gross Domestic Product per capita, and 3rd in the human development index.

In short, the Australian economy has proven to be one of the world's most robust, but this is just one of the reasons that many multinationals are establishing a presence in Australia.

Australia ranks as one of the lowest cost business locations in the industrialised world.

Australia's overall tax burden as a share of GDP is significantly lower than the OECD average, property prices are highly competitive, and we have a very high quality of workforce.

Our workforce is certainly one of our strongest drawcards.

With nearly one quarter of the population born overseas, Australia is easily the most multicultural country in the Asia-Pacific.

The combination of skilled personnel and foreign language skills allows businesses a seamless entry into the Asia-Pacific market and removes the cultural learning curve.

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Australia is one of the top countries globally for the availability of skilled labour, IT professionals, finance skills and qualified engineers.

This impressive skills base is underpinned by an exceptional tertiary education system that places Australia in the top four countries in the world in meeting the needs of a competitive economy.

Many top multinationals have already chosen Australia as their regional operations centre.

These include IBM, Alcatel, Canon, Cisco Systems, EDS, Compaq, Ericsson, Fujitsu, Lucent Technologies, Microsoft, Siemens, SAP, Oracle, Philips and Sun Microsystems.

Australia provides a powerful combination of world class ICT infrastructure and a market which rapidly takes up new technology - providing an excellent environment for business.

Through proactive reforms, the Australian Government has shown a strong commitment to providing businesses with the right conditions for growth and investment.

Businesses can invest with the confidence that Australia's regulatory systems are more transparent and secure than most other locations in the region.

On top of this, The Australian Government's commitment to continuous improvement in areas such as intellectual property (IP) reform and business immigration ensures a streamlined, business-focused regulatory environment.

Another advantage of having a presence in Australia is our physical and temporal proximity to Asia.

The time difference between Australia and much of Asia, including Singapore, Hong Kong and Malaysia, is only 2 to 3 hours.

The ability of companies to service their Asian clients in 'real time' is very attractive.

With around 47 per cent of global trade now focused in the Asia-Pacific, Australia's popularity as a regional hub is well justified.

Conclusion

So, in summary, Australia is the ideal location to perform high value, core research and development to service the global market.

Australia is not just a purchaser of technology — we are creatively developing applications to meet our national needs and to target global markets.

We have in place a proactive policy agenda so we can continue to benefit from the development and application of ICT across all sectors of the economy.

Australia has a thriving, open and innovative economy and is perfectly placed in relation to Asian and global markets.

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As the poet, T.S. Eliot once wrote:

Where is all the knowledge we lost with information? I imagine that over the coming days of the World Congress you will receive a lot of information - but I’m keen to impart some knowledge.

That is - the knowledge that technology is delivering huge benefits for Australia and that Australia is an innovative nation ripe for investment.

We invite you to join the growing list of global companies who have gained this knowledge and are taking advantage of the trade and investment opportunities in IT that Australia offers.

Thank you.