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| Subject: IT exports slump to 10-year low | |
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Author: November 18, 2003James Riley |
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Date Posted: Monday, November 17, 06:59:40am IT exports slump to 10-year low November 18, 2003James Riley EXPORTS of locally manufactured IT and communications equipment have slumped to a 10-year low, aggravating Australia's $14.4 billion deficit in ICT trade, according to research by the Australian Computer Society and the Centre for Strategic Economic Studies. Far from pointing to a shrinking of the technology trade gap in the medium term, the authors of the Australian ICT Trade Update 2003 warn of a blow-out in the deficit for the current financial year. The report says the raw deficit has shown no sign of shrinking in the past year. It has remained at about the same level as last year and exports are weaker in some areas. As the industry showed signs of recovery this financial year, the report says, the deficit continued its decade-long climb, largely because of increased hardware and software imports, as Australian companies invested in their first technology refresh since the Y2K upgrade in 2000. ACS president Richard Hogg said the stagnant deficit was "frustrating" and "disappointing", and it highlighted the need for a government rethink of ICT industry development policies. "The deficit remained constant only because of the ICT industry downturn, which reduced demand for ICT products and services," Mr Hogg said. "As conditions gradually improve across the sector, we expect the deficit to resume its previously high growth unless steps are taken to reverse the trend." The quantity of exports and imports fell during 2002-3, the report finds. Exports totalled $5.3 billion — down about 2 per cent on the previous year — while imports were marginally down, to $19.7 billion. The Centre for Strategic Economic Studies' Professor John Houghton said that even allowing for the stagnation of 2002-3, the ICT trade deficit had increased by a compound average of 7.4 per cent annually for the decade since 1993-94. ICT contributed more to the nation's overall trade deficit than the automotive or petroleum industries Professor Houghton said. Particularly noteworthy among a variety of bad-news indicators was the 9.5 per cent annual decline in exports of locally manufactured ICT goods, which had fallen to levels of a decade ago. Exports of locally manufactured ICT products were now worth $800 million less than they were five years ago. "This is particularly disturbing since it suggests that Australian ICT equipment producers failed to participate in the boom of the late 1990s," Professor Houghton said. "For them to participate in the emerging economy, something has to change." The ICT trade deficit has polarised industry thinking along political lines like no other issue. In fact, the opposing forces can't even agree on what the argument is about. While the ACS seeks solutions to a deficit "problem", others argue that the ICT deficit isn't a problem. "It all comes back to whether you believe the ICT deficit matters," Australian APEC Study Centre chairman Alan Oxley said. "I don't believe it does," he said. Mr Oxley, a powerful supporter of government's free trade agenda, argues that the value of productivity improvements wrought by these new technologies more than outweighs the cost of acquiring them. Some industry watchers say the bilateral Australia-US Free Trade Agreement currently being negotiated could torpedo industry development efforts belatedly put in place to improve the technology trade balance. The IT deficit issues have inflamed passions on both sides of politics, especially in the context of its likely impact — or otherwise — on the proposed FTA agreement. The ACS and the Victoria University-based Centre for Strategic Economic Studies has published an ICT Trade Update for three years, with each successive deficit report generating increasing political heat. Last year, the report's release earned a sharp rebuke from then IT minister Alston, who said the ACS leadership lacked any understanding of global trade issues and was mired in 19th-century thinking. The local IT industry is already nervous about the Federal Government giving away what little industry assistance there is in current FTA negotations. And the latest ICT trade numbers will further polarise political and economic thinking. On one side, the Howard Government has long argued that ICT trade deficit is not a problem. It maintains that the annual productivity improvements the country reaps through being an advanced IT user more than makes up for the annual trade shortfall, and that Australia is too small to support a world-class manufacturing or software development industry. Essentially, the Government argues, annual productivity improvements are worth considerably more to the local economy than the $14.4 billion the nation pours into the ICT trade deficit. On the other side, opposition IT spokeswoman Senator Kate Lundy said the deficit was a result of neglecting the industry. The Howard Government had abandoned a series of industry development programs established during the Hawke-Keating years, and had discriminated against innovative small Australian firms in favour of multinationals, Senator Lundy said. The Government attached too little importance to a high-value indigeneous IT industry to the wider economy, she said. Under the present regime, Australians were missing out on high-wage jobs because of a lack of federal support for Australian producers of ICT, she said. Senator Lundy pointed to the conclusions of Professor Houghton that Australia had missed out on the creation of "new streams of high-value employment" developed in countries that had become creators and producers of ICT products and associated technologies, rather than simply being good users. Mr Hogg acknowledged the value of being advanced users for productivity improvements in the overall economy, but argued the Government's thinking was flawed. "That's one of the myths that really needs to be put to bed," Mr Hogg said. "It is not an either/or proposition. We are going to be good users anyway, whether or not we are manufactuers or software developers." The ACS was joined by the Australian Electrical and Electronic Manufacturer's Association (AEEMA) in calling for the Government to review its approach to industry development, calling for new measures to boost Australia's competitiveness in high-value ICT manufacturing. -------------------------------------------------------------------------------- Closed-door talks stir passions Comment by James Riley THE Australian Computer Society's annual ICT Trade Update is a focal point of political battles over globalisation and a flashpoint for tensions over US-Australia Free Trade Agreement. It's a traditional clash between advocates of pro-active government versus light-touch, free-market minimalists. The stakes could not be higher, as each side says the other is bordering on immoral. The forces lining up behind the Government and the FTA say free trade will create wealth and opportunities in both countries, but that Australia will be the net beneficiary. Those urging caution, such as the federal Opposition and the union movement, are angered by the lack of transparency in the negotiations. They say the proposed FTA could cost jobs, and parts of FTA process threaten national sovereignty. Opposition IT spokeswoman Senator Kate Lundy said a Labor government would reinstate industry development programs and use positive discrimination in procurement to support local businesses. On the table in the FTA negotiations is a regime of equal access to government contracts, which could place a future Labor procurement policy in breach of an international trade agreement — with financial penalties. Because the FTA does not require parliamentary oversight nor approval, there is a widespread view that the negotiation usurps the authority of our elected representatives. Of even greater concern, according to Senator Lundy is that the closed-door negotiations mean we don't know what the Government is trading away. The whole IT industry, Senator Lundy said, was extremely worried about the prospect that the Government was putting Australian hi-tech industry at risk because of its traditional political alignment with agricultural and resources sectors. [ Next Thread | Previous Thread | Next Message | Previous Message ] |