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What the latest budget means for the tech industry

Last night Josh Frydenberg handed down the 21/22 Federal budget. The rumour mill had been spinning with sneak peaks being dropped daily in the lead up. Businesses big and small would each be affected by the outcome and many industry leaders came forward with their take on what was announced. We wanted to touch on exactly what the budget means for the technology industry as well as what our experts, here at Talent, had to say about it.

Every business in Australia is now a digital business

Scott Morrison quoted the above sentence last week and it couldn’t ring truer. Over the years the government has put more of a focus on the tech industry and with the announce last night of the Digital Economy Strategy, at a cost of $1.2 billion, it is going to continuously rise.

The strategy covers digital skills training, development of artificial intelligence technology, and tax breaks for computer games developers. Not only that but the strategy also pours $201 million into the MyGov online portal to access federal government services and $302 million into MyHealth digital records. Businesses will be allowed to depreciate software, patents, designs, copyrights, and other intangible assets more quickly. They will also have tax incentives to promote the development of a stronger gaming industry, funding to help small and medium businesses digitise their processes. Under these changes, the taxpayer will have the option to self-assess the effective life of the asset, giving the intangible asset the same status as a tangible asset. The change will begin on July 1, 2022.

Simon Yeung, Talent General Manager Melbourne, observed the announcement and said: “This will bolster staff and contractor numbers of IT workers with the federal government, adding further pressure to high pay rates in an already tight labour market.”

The package also contains a $124.1 million in initiatives to develop the nation’s capability in artificial intelligence, which includes the establishment of a National Artificial Intelligence Centre led by the CSIRO.

$100 million will be devoted to the development of digital skills throughout the workforce.

The $100million devoted to developing digital skills in the workforce is unlikely to flow through to the supply of skilled labour for the above increase in demand but may assist with long term skilled labour supply. A larger factor in the labour supply challenges in the IT market is the absence of approx. 100,000 skilled workers arriving in Australia each year, primarily from countries such as India, which is exacerbating the shortage of IT workers to meet ever growing demand,” Yeung said.  

Another $50 million will be devoted to enhancing cyber security.

“The $50 million budget input to cybersecurity is going to make very little difference to a growing problem recently cited by the AFR is the largest challenge to business for the next 12 months.”

The border debate

With the government announcing that our international borders will remain closed for at least another 12 months, businesses are going to need to source local talent. This is already causing an issue with candidates in high demand, counteroffers happening daily, and businesses needing to increase wages by around $20-$30k.

Matthew Munson, Talent General Manager Sydney, commented on the border announcement. “The lack of available talent in the market cannot be artificially replaced, borders need to come down to open up a new stream of top talent into the country. The actions above will only make the war for talent more intense and increase pressure on wages/rates. With COVID running rampant across much of Asia, outsourcing is becoming increasingly difficult and in many cases is no longer an option.”

With no announcements on improving the skilled migration Visa program, Australia could be left behind.

“The Government has done nothing to improve the skilled migration Visa program, taking no action to plan for borders reopening is a significant mis-step and risks Australia being left behind. Australia has the perfect platform to attract top talent – its handling of COVID, strong economy, high standard of living, attractive lifestyle. However, if people are unable to get Visa’s or have a route to permanent residency it counts for nothing. By introducing an English requirement on Partner Visas, they have in fact made it even harder. Tax changes for new residents is a move in the right direction, but more urgent action is required,” Munson said.

There will need to be a renewed focus on the COVID vaccine rollout as local talent will be stretched for tech businesses.

The future of digital skills

Businesses around Australia have had to transform at a rapid pace over the past year due to the pandemic. People have had to build digital apps and services or have started using existing digital services. With the government announcing $100 million will be devoted to developing digital skills, including the creation of cadetships, there will be a big focus on upskilling these businesses. Small businesses are being supported to adopt digital technologies through a $12.7 million expansion of the Digital Solutions – Australian Small Business Advisory Service. A further $15.3 million will be used to drive business uptake of e-invoicing.

On this, Robert Ning, Talent General Manager Canberra, said: “Digital and Cyber skills training are high on the governments agenda with $10.7 million to be shared by the ‘Digital Skills Cadetship Trial’, $22.6 million for the ‘Next Generation Emerging Technology Graduates Program’ and $43.8 million for the expansion of its ‘Cyber Security Skills Partnership Innovation Fund’. Overall, I believe the budget to a be a big winner for employment in many different sectors, with an emphasis on science and technology. With International borders not scheduled to open any time soon and the inability for employers to attract an overseas workforce, we will only see a continued increase in demand for more locally skilled people.”

According to experts in the tech field, there is much more to be done in Australia to position us as a market leader in this space as well as having the skilled workforce to deliver the results.

“Major reforms designed to improve services to everyday Australians will result in increased demand of skilled resources across Cyber Security, Digital and Data,” Ning said.

One last note

Treasurer Josh Frydenberg stated a vibrant digital economy is key to Australia’s economic future. “Our Digital Economy Strategy will allow Australian businesses to capitalise on the opportunities that digital technologies are creating. Greater digital adoption will improve our competitiveness and lift our productivity – driving job creation and higher wages.”

There is no denying it, the digital sector is key for Australian businesses to thrive, however with borders closed, and candidates in high demand, the next 12 months will test how well this budget is going to perform.