The Australian Computer Society has warned that although Australia's deficit in information and communication technology remained steady in 2002-03 over the previous year, it is expected to start increasing again.

The 2003 ICT Trade Update revealed that Australia generated an ICT trade deficit of AU$14.4 billion for the 2002-03 financial year - similar to the deficit of 2001-02 - with ICT exports totalling AU$5.3 billion and ICT imports totalling AU$19.7 billion, each marginally down on the previous year.

"The deficit remained constant only because of the ICT industry downturn, which saw decreased demand for ICT products and services," said ACS President Richard Hogg. "As conditions gradually improve across the sector, we expect the deficit to resume its previously high growth levels unless steps are taken to reverse the trend."

The biggest cause for concern, according to the reports author Professor John Houghton of the Centre for Strategic Economic Studies, is the AU$13.8 billion deficit in ICT equipment.

"Of the $2.8 billion in ICT equipment exported from Australia in 2002-03, only 44 per cent was produced locally, with re-exports amounting to $1.6 billion," said Houghton. Re-exports are items brought into Australia and re-exported with little or no value added. Over the last five years ICT equipment exports have declined by two percent annually, but within that figure re-exports have been growing at eight percent per year while locally produced exports fell by 9.5 percent annually.

"This is particularly disturbing since it suggests that Australian ICT equipment producers failed to participate in the boom of the late 1990s. For them to participate in the emerging recovery, something has to change," said Houghton.

The ACS was even cautionary about the computing and information services sector, which saw a surplus after exporting services worth over AU$1 billion, while importing just over AU$600 million.

"The rapid growth of offshore outsourcing globally has demonstrated just how portable services have become in the 21st century," said Hogg. "We cannot afford to concentrate on services to the exclusion of other potential growth sectors in light of predictions that a substantial proportion of our software and services sector will move offshore over the next few years."

Kate Lundy, Shadow Minister for Information Technology, claimed the Federal Government's repeated practice of awarding its ICT contracts to foreign multinationals contributed to the deficit.

"In contrast to the Howard Government's policy of abandoning Australia's ICT sector, Labor will build the ICT industry with the goal of developing small to medium ICT enterprises into robust ICT exporters," said Lundy. "This is the only way to ensure Australians can benefit from more high-wage, high-skill jobs."

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