New research has led to calls for Government ICT procurement policy to be urgently reformed, claiming Australia has fallen out of step with international practice when it comes to supporting local industry.
According to the report by independent economic analysts, Insight Economics, reforms announced by the Federal Government in the past two years – such as supporting local R&D and intellectual property creation, tax payments, and skilled job creation – were a step in the right direction.
However, to ensure the Australian community, economy, and taxpayers benefit more from the massive public spending on government procurement, they cannot be the end of the reform agenda, the report states.
Australia’s ICT sector is an engine for growth in the Australian economy: it contributes nearly 1 in every 10 dollars to GDP, is the source of more than 830,000 highly-skilled, highly-paid jobs, is a major driver of innovation and is Australia’s second largest non-commodity exporting sector.
The report found that Australia’s major trading partners have been far more aggressive in using procurement to directly support their own technology industries than Australia has been.
Nations, including the US, Canada and the UK, recognise their ICT industries as fundamental pillars of national self-reliance and economic growth and use procurement to boost them.
This has left Australian high-tech businesses in a loss-loss situation and at serious risk of becoming reliant on overseas supply lines, a situation the Covid pandemic has already exposed as high risk to the economic and social stability of the community.
The report, which underlines the importance of procurement as a tool for driving economic
outcomes, has been welcomed by Australian technology companies, including SaaS ERP provider TechnologyOne, government and critical infrastructure cloud vendor Vault Cloud, cyber security, data centre and ICT business Macquarie Technology Group, custom software development firm Agile Digital, counter-drone defence solutions DroneShield, space technology company Gilmour Space, software and data company Psithur and the Australian Computer Society, the largest professional body in Australia representing the ICT sector.
In line with the report’s recommendation, the ICT industry is calling for a clear framework for measuring and evaluating procurements based on:
- A weighted scorecard approach, especially for smaller contracts;
- A ‘calculator’ to transparently value benefits of medium deals, using standard economic
multipliers; - An economic impact assessment for ICT procurement deals over $10 million, making explicit the expected outcomes as is already commonly done in other industries, such as mining and infrastructure.
“Australian tech is world-best and has shown it can compete and win in every market in the world, but continually finds itself fighting for recognition and respect with Governments at home,” said TechnologyOne CEO, Ed Chung.
“All we are asking for is that our contribution is properly valued before taxpayers’ money is spent supporting the pension funds of people in other countries.”
Australian Computer Society CEO, Josh Griggs, said: “ICT continues to be the defining enabler of Australia’s economic growth, yet our highly sophisticated and world class technology sector is not adequately prioritised by government procurement processes. It’s time to give Aussies businesses a fair go so we can all share in the benefits of a truly advanced, high tech 21st century economy.”
“When we empower Australian sovereign companies, we drive locally led research and development, enabling Australian engineers to lead the forefront of technological advancement,” said DroneShield Chief Technology Officer, Angus Bean.
“For companies like DroneShield, a world-leading innovator in counter-drone solutions, this support not only strengthens our capabilities but also fosters growth in opportunities for emerging talent from our Australian university pipeline, building a skilled, future-ready workforce – right here in the heart of Sydney.”
Vault Cloud CEO, Rupert Taylor-Price, said: “Our allied national security partners are very clear on what control and economic benefit they require when deploying their taxpayer’s funds – they see it as part of their patriotic duty. This paper provides a rational and evidence-based path forward for Australia to join our allied partners in building a secure and resilient country.”
Psithur co-founder, Felix Barbalet, said Australian ICT companies are producing world-class innovation.
“By adopting smarter procurement practices, the government could leverage local expertise to deliver better services and value to all Australians while contributing to economic growth and high-skilled jobs,” said Mr Barbalet.
Agile Digital Executive Director, David Elliott, said that as the cost of living crisis continues, Australians are questioning why so much time and taxpayer money goes into “large, often unsuccessful Commonwealth ICT projects”.
“As a country, we need to rethink awarding massive ICT contracts to multinational companies and consider turning to our local industry instead,” he said.
“This report from Insight Economics urges policymakers to learn from our trading partners — and to consider the benefits Australia could gain if our Government were more strategic, focused, and sovereign in its ICT procurements.”
The 70-page report can be read here.
