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Speech to the Australian Industry Group Digital Technologies Summit.

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Australian Industry Group Digital Technologies Summit

Wednesday, 10 June 2009

Good afternoon everyone.

It is a pleasure to be here at the Australian Industry Group's annual technology conference.

This is an important gathering of the people working day-to-day to improve the way our nation does business.

It is an important meeting of those experiencing first hand the challenges and opportunities of adopting cutting edge technology.

Just this morning I met with a key group of Australian business leaders to discuss common issues in the area of e-security.

The event, part of National E-Security Awareness Week, highlighted the common responsibility we share in this area.

E-Security is obviously a significant national issue, particularly as more economic activity and critical infrastructure becomes reliant on high-speed broadband networks.

I'm pleased to say that the event this morning demonstrated the high-priority Australian industry has to work together with Government to achieve improved national outcomes when it comes to e-security.

Likewise, the leaders here today are well aware that investing in infrastructure is a vital starting point to ensure that Australia reaps the full benefits of technology innovation in the future.

Australian industry understands the importance of technology - and emerging digital technology in particular.

It recognises the ability of technology to drive productivity and efficiency.

Australian industry also understands the potential for high-speed broadband to support a new wave of opportunity for industry, and the nation.

As Heather Ridout, Australian Industry Group CEO, said last year:

"Investment in this technology is not important for its own sake. It is because the technology has the potential to transform the way Australian business works, with all the associated productivity benefits."


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Additionally, as Optus CEO Paul O-Sullivan noted last week, we must not overlook the importance of the business sector when weighing up the economic benefits of a high-speed broadband network.

He noted that Australian households spend around $8 billion a year on fixed line telecommunications, including broadband.

This is a substantial figure but spending by the business sector is even larger - around $9 billion.

The understanding of industry about the potential for new technology to improve business practices is clearly evident in the investments already being made by Australian companies.

These investments highlight how Australian industry is helping to establish and stimulate our digital economy.

They show how Australian business has positioned to capitalise on improving technology and broadband connectivity.

In the retail sector companies like Woolworths have identified significant opportunities for investing in digital supply-chain information systems.

In recent years Woolworths has achieved billions of dollars in savings thanks to improvements these systems have enabled in stock planning and distribution.

Digital systems help to identify bottlenecks in real-time and for management to forecast stock shortfalls.

Woolworths is able to better manage stock volumes, helping to reduce costs and improve the availability of products.

In transport, Star Track Express, is using connected digital technologies to drive productivity and enhance the quality of its express freight services.

It has deployed a whole range of cutting-edge technologies, examples of which I'm sure will be on show here at the summit today.

Things like:

z wireless interactive freight management devices;

z RFID tag technology;

z XML-based web applications;

z vehicle tracking; and

z mobile broadband.

Star Track Express is investing further in connected systems and is now implementing driver scanners to further speed the process of parcel delivery.

By collecting and interpreting supply chain data, companies like Star Track Express can make their processes more efficient, and importantly, more productive.

This emerging wave of innovation also presents opportunities for improved efficiency, safety and productivity growth in the resources sector.

In Western Australia, Rio Tinto has been working with CSIRO on a range of projects to improve mine equipment automation and remote control.

In fact, Rio Tinto is now investing in a remote operations centre for its Pilbara mines.

The remote facility is located some 1,300 kilometres away from the mines - at Perth airport.

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This project is a key part of Rio's mine-to-port automation strategy, including the development of remote control systems for heavy machinery using 3D imaging technology.

All of these activities are designed to improve safety, reduce water and energy consumption and enhance the predictability of maintenance and repairs.

Of course, they also drive productivity.

This is smart infrastructure.

These examples highlight benefits for three key sectors, and it is important to note that similar opportunities are on offer across the economy.

But such ambitious distributed approaches require reliable, affordable connected infrastructure such as that made possible by the National Broadband Network.

They also require an understanding of the future directions we need to take to foster our emerging digital economy.

This was the view established by the important survey work conducted last year by the Australian Industry Group.

I'm sure many of you here today are familiar with the survey, which highlighted how internet access is already a positive driver of efficiency and productivity for the vast majority of companies.

Indeed, the CEOs of 93 per cent of companies surveyed took this view.

Importantly, 66 per cent of CEOs believe their business will benefit greatly from faster broadband.

In regional areas this rose to nearly 70 per cent.

Significantly, 73.5 per cent indicated they were likely to upgrade… if a higher-speed service was available.

It is worth noting that the CEOs who responded to this survey identified a number of challenges to ensure they benefit fully from high-speed broadband.

They noted the requirement for:

z affordability,

z reliability,

z awareness about the capabilities and benefits, and

z skills and expertise to exploit the opportunities within their companies.

The Government is well aware of these challenges and is working in a number of ways to ensure they are addressed.

We have made a strong commitment to ensure Australia maximises its potential in the digital economy.

This includes ensuring Australian industry has the infrastructure, services and capabilities it requires to thrive.

It includes investments in high-speed broadband and also collaborative work with industry to indentify opportunities, responsibilities and directions for our digital future.

Investing in digital infrastructure makes sense today as we navigate our way out of the global economic recession.

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It is also of vital importance as we prepare Australia to capitalise in the years ahead.

It is worth reflecting on the words of Intel CEO Craig Barrett earlier this year… you don't save your way out of a recession, you invest and innovate your way out.

Australia is not alone in taking the view that high-speed broadband is an important economic investment.

Countries such as Japan, Singapore, New Zealand, Korea and Malaysia are all driving the rollout of fibre-based services.

In the US, the Obama Administration included $7.4 billion for rural broadband projects in its stimulus package.

In more recent weeks it has been reported that senior Obama advisors are taking a close look at Australia's approach and the potential for our wholesale model to deliver "massive social and economic benefits."

You will be aware that the Government is making strides to invest with the private sector to implement our future digital infrastructure platform - the National Broadband Network.

This venture will be the single largest nation-building infrastructure project in Australian history.

It is an important economic stimulus and will help cushion Australia from the effects of the global economic recession.

The project will create 25,000 jobs in Australia for each year of the eight year build - peaking at 37,000.

Additionally, the availability of affordable, high-speed broadband will provide a platform for Australia to maximise its potential in the post-recovery environment.

The Government is aware that affordability of services on the new network will be an important factor to drive take-up rates.

In this context, a critical feature of our approach is that the National Broadband Network will be Australia's first truly national wholesale-only communications network.

This is a critical piece of micro-economic reform that will drive genuine competitive pressure in the telecommunications sector, to the benefit of consumers and businesses that use these services.

It will create an environment where retailers have to compete hard to provide the most innovative and affordable products and services to end-users.

The National Broadband Network will form the basis for a generation of innovators and for businesses to drive efficiency and productivity growth.

This of course includes Australian industry, supporting some of the applications I have already described, as well as a myriad of services yet to be developed.

In this case, the National Broadband Network represents a unique opportunity for Australian innovators to address the emerging demands of industry.

It raises the potential for the creation and commercialisation of a whole range of new products that enhance the way companies go about their business.

For smart companies, it represents an opportunity to make new gains on competitors and establish a strong footing for the future.

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I encourage Australian industry to grasp this opportunity with both hands - to harness the innovation capacity and productivity potential of the National Broadband Network.

As noted by a recent Access Economics and IBM report, national high-speed broadband infrastructure is an important enabler for smart technology across the economy.

The report, 'The Economic Benefits of Intelligent Technologies', highlights the significant economic growth potential of these investments and the likely creation of thousands of jobs.

Access Economics says that adopting smart technologies in electricity, irrigation, health, transport and broadband will increase GDP by 1.5 per cent within ten years.

It would add more than 70,000 jobs to the economy in 2014 alone.

Significantly, Access Economics has based its research on a national Fibre-to-the-Node network and notes that the benefits would be even more pronounced under our Fibre-to-the-Premises plan.

Even based on that less ambitious agenda, Access Economics has predicted high-speed broadband itself to increase the net present value of GDP by $8-23 billion over ten years; and create 33,000 jobs by 2011.

These are significant figures that demonstrate the significance of our efforts to deliver the National Broadband Network.

They highlight the capacity for high-speed broadband to enable innovation, efficiency, productivity gains and employment across the economy.

One particular area canvassed by Access Economics and IBM is smart grids technology for the energy sector.

Indeed, it suggests that a $3.2 billion investment in smart grid technology over seven years could:

z lower electricity use by 4 per cent;

z increase the net present value of GDP by $7-16 billion over ten years; and

z create 17,600 jobs.

The Government is mindful of these opportunities and is investing to ensure smart grid technology is adopted in Australia.

You may be aware that we allocated $100 million for a National Energy Efficiency Initiative in the recent Budget.

This project will harness 21st century technology, including the National Broadband Network, to encourage a smarter and more efficient energy network.

The Government wants to demonstrate an integrated system of renewable energy, smart grid and smart meter technology and infrastructure.

The demonstration will be hosted in an Australian city, town or region and will inform the wider national deployment of smart grid technologies.

We will bring together electricity power generation, transmission, and distribution providers as well as private partners and IT experts to ensure we set the foundations for Australia's smart grid future.

Already, in Australia and elsewhere, providers are testing smart grid networks.

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For households and businesses there are very real opportunities for reduced power consumption and costs.

In the US, estimates have put the cost savings for consumers between 5 and 25 per cent.

Additionally, remote control of connected appliances, thermostats and electric meters will help energy companies balance the peaks and troughs of daily usage.

They can then sell the recovered power on the market, reducing the need for new power generators.

This is efficient for industry and represents a very real possibility of significant carbon emission reductions for the country.

The Government is well aware of this opportunity and is investing to ensure we develop the infrastructure and arrangements we need to capitalise.

Our investment in the National Energy Efficiency Initiative demonstrates the efforts we are making to work together with industry to ensure we all benefit from the National Broadband Network.

We are moving towards an era where every product and every service we consume will in some way be influenced by digital technology.

In the years to come, products will be digitally designed, defined, created, distributed and tracked at every stage of their lifecycle.

Our infrastructure will contain connected sensors to help owners better manage and maintain their investments.

Health and aged care will be vastly enhanced by telemedicine supporting in-home care and delivering specialist services to remote locations.

There will be a digital education revolution, with broadband providing a window to the world for students wherever they happen to live.

Businesses will have new opportunities to partner and trade across the country, or around the globe.

Media companies will have fresh opportunities to deliver new and additional content.

People will have the ability to engage directly with Governments.

In turn, Governments will have the ability to deliver a whole range of applications to citizens - adding new convenience and extending the availability of information and services throughout the community.

In all of these areas there are opportunities for improved engagement, improved efficiency and improved productivity.

But for Australia to truly thrive and grow as a digital economy leader, we need to collaborate to establish our roles and priorities for development.

Some of you may already be aware that we have partnered with industry and other stakeholders to map the future directions for our digital economy.

Through consultations and discussions we have identified key themes and priorities.

This includes key considerations around digital capabilities, confidence and content.

In the coming weeks I will be releasing Australia's Digital Economy Future Directions Paper, which has been developed through these consultations.

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The paper will attempt to describe what a successful digital economy might look like.

Of course trying to describe an end point is an impossible task because the technological drivers mean the goalposts constantly change.

But it is possible to identify that a successful digital economy will include certain key elements.

For example, it will require:

z the innovative use of technology by governments to improve service delivery

and public engagement; z 'digital confidence' among Australian households and businesses that

encourages effective participation online; z skills across our society to ensure everyone has the potential to engage online

and that engagement be as productive as possible; z a regulatory framework to support the highly dynamic nature of the digital

environment; z online business models that contribute to the sustainability and vigour of the

digital economy; z technology that assists in better managing our natural environment and

infrastructure; and z reductions in the environmental impact of information and communications

technology systems and equipment.

By considering these and other important issues, the Digital Economy Future Directions Paper will help Australia to maximise its participation in the digital economy.

It will recognise that digital economies are primarily market-led with Government in the role of key enabler.

Industry has demonstrated a strong willingness to participate in this process and will continue to be a vital player as we chart our digital future.

With your help we can ensure Australia is ready to capitalise on the economic and social benefits made possible by the National Broadband Network.

Together, we can ensure we are best-positioned to drive the significant productivity, employment, social and environmental benefits gains on offer in this environment.

We can collaboratively ensure that Australia does not fall behind the world and we realise our potential as a digital economy leader.

These opportunities, benefits and challenges are ours to share.

I look forward to the continued enthusiasm, innovation and participation of Australian industry as we chart our future directions.

Thank you.

Document ID: 115190 | Last modified: 10 June 2009, 4:39pm

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