Govt urges tech sector to play to its strengths

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Govt urges tech sector to play to its strengths
Paul Fletcher.

'Seek out areas of competitive advantage'.

Australia’s tech sector needs to focus on verticals in which it can generate or take advantage of genuine competitive advantage, according to one of the government’s most experienced lawmakers.

Paul Fletcher, a former Optus executive and now parliamentary secretary to Australia’s Minister for Communications, told a CEDA conference in Sydney today the tech community needs to better pick its fights.

Fletcher compared today's demands for policies that favour tech entrepreneurs with his time working under communications minister Richard Alston in the mid-nineties.

“At that time, a commonplace call was that Australia needed to have its own ‘fab plant.’  We needed to manufacture silicon wafers, and if we did not then we were locked out of the information technology revolution," he said.

"Another common argument was that we needed to build our own Silicon Valley. Of course, as history now records, Australia stuck with its traditional industries and has enjoyed the fruits of a massive commodities boom.”

Fletcher said while on the one hand he recognised that “digital disruption is one of the most fundamental forces affecting our economy,” he argued it wasn't the role of government to make bets on behalf of industry.

The Abbott-led Government has been widely panned for slashing the funding that supports tech research and development operations such as National ICT Australia and the CSIRO, as well as gutting the financial assistance the previous government offered startups under Commercialisation Australia.

The cuts have angered technologists already smarting from the government's decision to scale back investment in the national broadband network, now faced with the likelihood that Australia’s incumbent telco, Telstra, will be returned to a position of comfortable dominance.

“Identifying [digital] transformations is one thing; identifying the right strategic response, at the level of an individual corporation or at the level of a nation, is another thing," Fletcher told the audience.

"In my view, one sensible principle which should guide our decision making as a nation is to play to our strengths.”

Australia’s strengths are likely to lie in software development, he said, because it “incurs no transport costs” and therefore “no cost disadvantage from being a long way from major markets”, and more specifically in developing software that supports industries with strong comparative advantage, such as mining and agriculture.

“I am not arguing for a second that we should ignore the digital disruption of our economy and retreat to industries where we have traditional strengths,” he said.

“Rather, I am arguing that digital disruption is making the world an even more intensively competitive place. If Australia has a world class, large scale resources industry, or agriculture industry, then the development of IT applications and services to make that industry more productive and efficient might be a niche where Australian companies have an advantage.”

Fletcher argued that Rio Tinto’s remote operations centre provided a great example of technology empowering an industry that already enjoys success on a global scale.

The MP offered the startup community glimmers of hope, re-asserting that the government was close to finalising decisions on allowing for employee share ownership plans and a relaxed regulation of crowdfunding new business ideas.

Further, Fletcher spoke of the pressing need to ensure venture capital flowed into the startup community from within Australia, such that the nation could benefit from future growth.

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