Analysis: Is Victoria stealing New South Wales' ICT crown?

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Analysis: Is Victoria stealing New South Wales' ICT crown?

Cash payments and tax deductions offered as states woo IT investment.

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NSW claims 43 percent of Australia's ICT industry and 37 percent of its ICT industry jobs but for how much longer? Brett Winterford reports on Victoria's drive to become Australia's ICT industry hub.

Eric Roozendaal, who wears two important hats as NW Treasurer and Minister for State and Regional Development, stood before the press last week and claimed that his state was still Australia's innovation capital, heralding the hire of 40 staff at Macquarie Telecom's flash new $5 million contact centre in the Sydney CBD.

It could not have been an easy speech knowing that standing by his side was Federal Communications Minister Senator Stephen Conroy - who had just flown in from Melbourne that morning after opening a facility that promises 500 technology traineeships at Sydney's rival for Australia's biggest city.

Senator Conroy has spent a lot of time in his native Melbourne of late owing to the sheer volume of new facilities to announce or open.

The week prior, he officiated at the announcement that Melbourne would host the network operations centre for NBN Co, an investment in the "10s of millions" that will employ 425 staff.

In Ballarat, Vertex announced an $11.5 million technical support centre that promises to hire 600 staff.

Data centres are being built in Clayton by Telstra and CSC, in Noble Park by Fujitsu (Noble Park extensions), while NextDC, E3, HarbourMSP and GreenEdge Data are building data centres in Port Melbourne.

VMware has opened a Victoria office, hiring 75 in Melbourne and telling iTnews it is negotiating the possible opening of a research and development lab in the Victorian capital. Enex TestLabs added 40 jobs to Melbourne.

Then there was the $10 million GreenIT cluster, an Alcatel-Lucent training facility to employ 22 and the opening of four offices by Indian IT services firms after Victorian treasurer and IT Minister John Lenders took a junket to the subcontinent.

Oh, and did we mention the $100 million IBM supercomputer coming soon to the University of Melbourne?

Lenders, who bore the brunt of the loss of 2000 jobs and $75 million investment when Mahindra Satyam bailed out of a planned investment in Geelong late last year has leaped at every opportunity since to pitch Victoria as a "global ICT centre".


The Victorian Government has shown it is willing to go the extra mile to attract investment.

It offers cash to ICT companies to base themselves in Victoria or employ big numbers of workers.

Government sources told iTnews that it "often offers incentive payments" to companies on the basis of certain "milestones" around local jobs growth.

And it assigns account managers to significant developments to provide a single point-of-reference when they deal with the state. This account manager brings together the relevant bodies from Government departments to quickly tick the necessary boxes or resolve challenges. 

A developer, who scoped the site of an aforementioned investment in Melbourne, said this made the process in NSW appear stone age.

Speaking on condition of anonymity, he said in NSW gains made by working with the Keneally Government can just as quickly be destroyed by a local council with anti-development attitudes. There are councils in Sydney, he joked, that are even opposed to developing industrial areas.

Rather than hand out cash, NSW attracts and retains ICT investment by offering tax rebates.

For example, iTnews can reveal that Macquarie Telecom was offered a payroll tax deduction for the 40 new positions created through the building of its customer contact centre.

"The incentive provided to Macquarie Telecom was in the form of payroll tax rebates against employment milestones for new positions established in NSW," a spokesman for Roozendaal confirmed in a statement.

Roozendaal's office is convinced that payroll tax rebates are a better incentive than cash payments.

"The NSW Government assesses each individual investment project on a case-by-case basis according to its particular set of circumstances," the spokesman said.

"Payroll tax rebates against employment milestones are a key element of the NSW Government's approach to assisting new and existing businesses to establish and grow in NSW."

Read on for an analysis of the size of the ICT market in both states, plus we talk to data centre builders about what incentives compel them to choose a new site...

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