ICT Trade Deficit ignites political debate

ICT Trade Deficit ignites political debate

By Siobhan Chapman

A report which found the information and communications technology (ICT) trade deficit spiraled to $14.4 billion has sparked a political slanging match.

The report, ICT Trade Update 2002 by the Australian Computer Society (ACS), found Australia's ICT trade deficit accounted for 65 per cent of the 2001/02 financial year total and is growing at an average rate of 8.34 per cent over the past eight years. The Federal Government faces a $27 billion IT deficit by 2010 unless it reforms, the ACS warned.

ACS president Richard Hogg said Australia "simply cannot afford this situation to persist," adding continued inaction by all levels of Governments will quickly see the deficit "spiral" further out of control.

According to the report, which was written by Professor John Houghton of the Centre for Strategic Economic Studies, Australia spent almost $20 billion on ICT imports in 2001-02, twice as much as spent on imported motor vehicles. During the same period, Australia's ICT exports fell by $1.7 billion, or 24 per cent.Hogg called for the Federal government to reinstate the full 150 per cent rebate for IT&T research and development, and more government funded promotion of Australian developed products and services, in order to Australia's performance as an ICT producer.

Opposition information technology spokesperson Kate Lundy described the deficit as "appalling" and it demonstrated the need to build the local ICT industry. Lundy said the coalition is "directly responsible" with its "ineffectual" ICT industry development strategy.

However Communications and IT Minister Senator Richard Alston slammed the report as "alarmist" and "little more than a superficial and simplistic stunt peddling discredited 19th century mercantilist dogma that all imports are bad and all exports are good."

The Government said that between 1998-99 and 2000-01, the value of IT production and the number of businesses involved in the sector both grew by 25 per cent, while employment in ICT grew by 20 per cent in the same period. "Even the ACS' own figures show a $700 million decrease in the [ICT] trade deficit from 2000-01 to 2001-02," the statement said.

"It is a view that totally disregards the enormous contribution made by the growing Australian ICT sector to overall economic and productivity improvement," he said.

"All the world, except the ACS, understands that Australia is a net winner when it can afford to import goods that help to transform the products and services base and boost productivity and efficiency," he said.

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