What the Government’s Digital Economy Strategy announcement means for innovation in Australia
The Australian government’s 2021-22 Federal Budget announcement on Tuesday 11 May 2021, included a $1.2 billion investment that will be spent on its new Digital Economy Strategy. This is one of the most significant Government announcements in recent years and could have a profound impact on stimulating innovation in Australia.
There is little doubt that Australia has been lagging behind the rest of the world in the digital transformation of its economy and in ensuring that the workforce, both young and old, are equipped with the right digital skills and access to digital resources and infrastructure needed to stimulate productivity and to encourage innovation.
That’s why the Government’s announcement is key, as it recognises that more needs to be done and that the Government needs to take a more ‘hands-on’ approach. Frankly, the investment needed in providing the hardware and infrastructure needed and in giving people the wide range of ‘soft skills’ training is significantly more than this investment but nonetheless it’s a good start. It also provides a framework and potential foundation for public/private partnerships with potential investment from the private sector.
The full $1.2 billion package is spread across a number of key programs and initiatives including:
Digital Skills
Over $100 million is being spent to support digital skills training and to offer a flexible way for workers to build digital skills, investments in the cyber workforce, and scholarships for emerging technology graduates. This will be crucial in equipping the workforce of tomorrow with the ‘soft skills’ needed.
Artificial Intelligence Infrastructure
$124.1 million is being spent to build Australia’s capability in Artificial Intelligence with the establishment of a new National Artificial Intelligence Centre led by CSIRO Data 61, supported by a network of AI and Digital Capability Centres to drive adoption of AI across the economy. CSIRO is a logical choice to lead the AI initiative given its strong pedigree in innovation. However, it’ll be crucial for the digital capability centres to properly cover the spectrum of the Australian economy and for proper systems and processes to be put in place to ensure effective coordination. Furthermore, significantly more investment is needed than this to properly build the AI capability that Australia needs so it’ll require private sector investment to achieve its goals.
Overhaul of myGov
$200.1 million is being spent to overhaul the Government’s myGov, making it easier for Australians to find the services they need. This will also include a $301.8 million investment to enhance the My Health Record and an expansion of the digital identity system.
Investment incentives
These are aimed at supporting business growth, with schemes such as a Digital Games Tax Offset of 30 per cent to support Australia taking a greater share of the $250 billion global game development market, and changes to the way Australian businesses can claim depreciation of intangible assets like intellectual property and in-house software. This will help to increase the competitiveness of the Australian gaming industry and enable it to compete more effectively globally. It’ll also encourage greater development within Australia.
Support Services
$12.7 million is being spent to expand the Digital Solutions – Australian Small Business Advisory Service, and $15.3 million to drive business uptake of e-Invoicing. Both these changes will help small and medium businesses to better build their digital capacities.
Aviation Schemes
$35.7 million is being spent to support emerging aviation technologies such as drones, including grants to support the use of these technologies to address priority needs in regional Australia. This is an exciting and rapidly emerging area of innovation so could propel Australia to be one of the leaders in the field, especially if the Government is perceived to support the industry. Furthermore, the practical impacts on Australia’s rural remote regions could be significant.
Consumer Data Right
Australia has been lagging behind the rest of the world, especially the UK, in unlocking the value of data in the economy and in setting more flexible and agile standards for the next generation of data management. The $111.3 million being spent to accelerate the rollout of the Consumer Data Right in banking, energy and telecommunications is long overdue and will enable a range of sectors to be more innovative in their solutions and product offerings, for example this is likely to enable new neobanks to be more competitive. The opening up of the Consumer Data Right’s in the UK has had a profound impact in improving innovation in the banking sector so we anticipate a similar impact in Australia.
Cyber Security
$50 million is being spent to strengthen safety, security and trust and to enhance cyber security in government, data centres and future telecommunications networks. Strong cyber security is becoming increasingly more important to protect the country’s infrastructure and businesses from threats.
What about skill shortages?
With an expected 85% fall in net overseas migration in 2020-21 from 2018-19 levels due to COVID-related border closures, skill shortages could have a serious impact on the innovative capability and resilience of many Australian businesses. Consequently, the Digital Economy Strategy will certainly help to mitigate this issue, but in itself it’s not enough.
How can Australia reduce the gap between innovation and skill shortage?
There needs to be greater collaboration between higher education sectors, employer organisations, industry and government to deliver more targeted and flexible skills’ development programs. Government needs to recognise that its role is to provide both the foundational training needed, and the collaboration mechanism needed to facilitate this joined up approach. With the Australian economy set to remain largely closed for the next year, at least to new skilled immigrants arriving, there is more of a need than ever before for Australia to focus on ensuring its workforce is properly equipped with the digital skills needed. Otherwise, Australian businesses will fail to complete on the global stage and lack the innovative capability needed to stay ahead.
What does Consumer Data Right mean to Aussie businesses?
The roll-out of Consumer Data Right will give consumers greater access to and control over their data and will be crucial in stimulating competition, especially in the banking and finance sectors. While it is a positive move towards meeting the increasing expectations from customers regarding data privacy, the Government needs to still do more to help businesses meet their obligations as it also introduces the risk that they may suffer from burdensome and unnecessary bureaucracy, which limits their innovative agility and obstructs innovation. We recently published a series of articles on new neobanks emerging and the opportunity that they provide to customers. It’s just as important for the Government to loosen some of its regulatory and prescriptive controls than it is to provide funding.
Does the 2021-22 Budget present opportunities for the future?
There is significant opportunity here with many baby boomers due to retire over the coming years to equip their successors, whether family members or third parties, with the skills and resources needed to transform their traditional ‘analog’ businesses into digital disruptors. This could have a profound transformative impact on the Australian economy in terms of improving productivity and the introduction of new products or services in a range of fields. We recently published a series of articles on the retiring baby-boomers and consider this to be one of the most exciting opportunities for the Australian economy.
Clearly these schemes cover a wide range of areas and many industries that will directly or indirectly benefit from the additional investment or loosening of regulatory controls. However, significant additional investment will be needed, especially in education and training, to equip a wider range of the workforce. The $124.1 million investment in AI, whilst welcome, will also not be sufficient with further investment needed, likely from the private sector.
The investment announced must be spread throughout the country and cannot focus on the main capital cities at the expense of overlooking the regions. The regions have been neglected for far too long which has led to their long-term decline as the young and mobile move to the cities in pursuit of better well paid opportunities. If sufficient infrastructure can be put into the regions then there are considerable opportunities to regenerate areas that have been neglected and in doing so drive regional innovation.
The Government needs to focus just as much on developing networks and alternative technologies. Startups and SME’s in Australia would benefit from the availability of low code solutions to provide them with readily affordable and easily accessible IT solutions, such as UX, UI, service design and the digital infrastructure needed to digitally transform their businesses. These solutions, coupled with schemes like those announced in the Digital Economy Strategy, could drive considerable development.
We hope that this is the first step in a series of measures by the Government to address the long-term infrastructure and training needs and to also deal with the more immediate short-term challenges facing the Australian economy. Only strong Government support will help to ensure that Australian businesses have the support that they need in terms of infrastructure and a skilled workforce, to properly challenge on the global stage.
Photo by Fabian Blank on Unsplash
With a background in corporate law, William Page has assisted business in establishing funding models for venture capital investing as well as external open innovation planning.
