Jennifer Westacott AO
Thursday 18 November 2021
**Check against delivery**
I would like to start by acknowledging the Traditional Owners of the land we are meeting on today, for me that’s the Gadigal people of the Eora Nation, and pay my respects to their elders past, present and emerging.
Thank you for that introduction and the invitation to speak with you today.
Congratulations on another strong year.
In particular, your success in recommending and advocating for the patent box
- Great to see this picked up in the budget, and we also support it being extended to a wider range of industries.
Today I want to focus on why digitisation and information technology matters to business and why it should matter to all Australians.
I want to zero in on four areas where we can continue to work together:
- ensuring modern and smart regulation
- getting the skills we need for this sector – and the whole country – to prosper
- improving digital take up for small business, and
- changing community attitudes.
The pandemic showed how technology intersects all our lives.
What would have taken five years, was accelerated down to just three months.
The slow drift away from cash and paper before COVID-19 became a stampede during the pandemic.
Embracing greater digitisation and information technology is at the core of securing Australia’s economic future for the next 30 years.
It’s how we become a more modern, advanced economy.
Increasingly for any business to succeed, they will need to be digital.
Every company is now a technology company – if they don’t adopt that mindset, they will not survive.
Let’s remember what is happening and will increasingly happen. As I’ve been saying for the last ten years, the consumer is the most empowered person on the planet.
They decide what they buy, when they buy, where they buy from and how much they pay for it, and they increasingly remove intermediaries from the supply chain.
They can mobilise on social media for and against products and causes.
Huge opportunities exist for market disruption.
We are seeing the growth in subscription models sitting alongside loyalty programs, and ultimately it is the customer that will innovate.
So, to go forward we need an overarching vision and roadmap to guide policy decisions and deliver certainty in this space.
This is vital to attracting investment and talent.
If Australia is to remain competitive – both globally and in our region – governments, business and the community must not just embrace, but drive digitisation.
Success here matters to Australians because driving digitisation doesn’t just make our lives and ways of working and doing business easier, it is how:
- we can improve productivity
- create more jobs
- find new markets and increase our exports
- grow wages, and
- increase our living standards.
The government’s announcement this week that it will develop a quantum strategy and commercialisation fund is a great example of this, and one we support.
We need to double down on these kinds of opportunities to have a stronger Australia.
To make ourselves a truly digital economy, the first area we need to work together on is ensuring that regulation is modern, smart and effective.
If we want to have a modern economy, we can’t be trapped in case law from the 1930s.
Regulation needs to be refreshed and updated to reflect the modern economy.
Some examples of unhelpful regulatory proposals include:
- the recent FIRB reforms
- the media bargaining code, and
- some of the ideas floating around about mergers and acquisitions changes.
Our concern is that these send a signal that investment is hard and it is not always clear what problem we are trying to solve.
As I said earlier, all businesses are going to be ‘tech’ businesses.
This means the regulation of technology will affect every business now and into the future.
Well-considered and targeted regulation can have a positive effect on digital investments and the introduction of new services in the digital sphere, just as they do in other domains.
If Australia is to be a leading digital economy by 2030, its regulatory framework needs to continue to be consistent, promote confidence, and reflect the nature of digital systems.
The digital economy has unique characteristics that change how regulators must approach it: it is ubiquitous, around-the-clock, has a relentless focus on the customer, and works at an international scale.
Smart regulation will encourage and support investment while ensuring that Australians are protected from the downsides.
It will create the incentives for local entrepreneurs to invest their time, capital, and creative energies to build and develop software platforms here rather than going to the US to tap into their ecosystems.
Smart regulations also help businesses stay in front of new risks, including cyber security risks such as ransomware.
Regulation shouldn’t devolve the management of these risks to tick a box exercises. It should be:
- proportionate to the problem
- well targeted, and
- allow all businesses to learn from best practice.
So, why don’t our two organisations start really thinking through the best regulation for the future – particularly in cyber.
Ensuring Australians have access to digital skills – alongside literacy and numeracy – is also paramount if we are to be a more advanced, modern economy.
All sectors of the economy increasingly rely on digital expertise. We need Australians with digital skills at every level.
We hear from cutting edge SME manufacturers that the skills they want are high end digital graduates.
- This is allowing them to carve out lucrative niches.
The $10.7 million budget allocation for the Digital Skills Cadetship trial is a terrific breakthrough.
This will help increase the number of Australians with digital skills.
- The four-to-six-month cadetships comprise formal training with on-the-job experience provided by host employers.
- The government is now working with education and training partners to deliver the trial in partnership with businesses.
Let’s advocate for an expansion of this initiative.
We also continue to argue that our skills system needs an overhaul.
Employers tell me they want it to be easier to retrain and reskill their people, especially when they introduce new technology. They are happy to step up and do this.
Employers want to be able to do this through a blend of university and TAFE short courses or microcredentials that allow people to balance working and learning.
Rather than three-year courses that will be out of date when the last module is written, industry wants to co-design and co-deliver:
- specific, and
- relevant training modules.
Of course, this is particularly relevant in your sector.
People and employers want to be able to update courses quickly as circumstances change.
And employees want their credentials to be stackable, widely recognised and portable.
Alongside improving digital skills, we know that moving more businesses to the digital frontier is a necessity for Australia’s prosperity in a more competitive, connected and digitally enabled world.
If we’re going to modernise the rest of our economy, we also need to support our SMEs.
Together we can assist SMES to become more digitally literate and support investment in digital technologies.
There is no single small business digital standard.
Only half of small businesses use cloud-based software to do their tax.
- Even worse, only a third use it to grow their business, and
- One-quarter have no online presence at all.
SMEs say this is because they need to be convinced it’s worth the time to set them up.
We need the right financial incentives for businesses to take up these new tools and services – whether that’s through a:
- tax incentive
- grants program, or
- a voucher scheme.
We’ve called for an investment allowance to get businesses investing again.
A 20 per cent deduction on things like conversion to the cloud would be material for many SMEs.
The existing incentives we use today often support physical investment but miss out on digital investment.
Let’s target investment incentives at new ways of doing business and new services, like cloud-based offerings, so we can accelerate the transformation of our economy.
This will make us:
- more internationally competitive
- more cyber secure
- less carbon intensive, and
- adopt new technologies faster.
And we also need to work with our suppliers and buyers to explain the benefits of digitisation and make it easy for them to make the jump.
We are already doing this for e-invoicing.
Government can lead the way here, by adopting digital as a core part of how it delivers services and runs its procurement policies.
We are seeing this as international arrival cards go digital by the end of the year, and the ongoing implementation of the single trade window.
But why not adopt it in other places, like our infrastructure?
Our roads and rail should be embedded with smart technology to enable more efficient usage, investment, and maintenance.
The NSW Government already requires smart technology to be embedded in all new and upgraded infrastructure, so we know it can be done.
This is particularly the case for our regions.
Every time we speak to regional communities as part of our Strong Australia Network, the bandwidth issues faced by these areas are clear.
We need to make sure our regions have the right digital infrastructure.
- If regional businesses are going to grow and export to the world, they will need business-grade connectivity.
- And it supports other essential services, like education and specialist health services.
Government is investing billion in infrastructure like Inland Rail to connect the regions.
It makes these investments because it recognises that it’s not possible for business to do it alone.
We need to think about digital in a similar way and make similar kinds of investments. And we need look at different ways of doing things.
There are new technologies like low earth orbit satellite constellations – for example Starlink – that make it easier than ever to bridge the digital gap for our regions.
As we shift increasingly to a digital economy, governments need to ensure their services can work together.
This includes for things like digital identity. Our digital identities should be our identities – not the bank’s identity or the government’s identity.
We should be able to use our identities to access a range of public and private services and benefits.
We also have to ensure national interoperability.
COVID has exposed the complexity and disruption of not having comparable state and territory QR check-in codes and permitting systems.
Now is the time to make sure these services work.
Ultimately, as the economy evolves and we drive greater digitisation, we need all need to get better at selling the benefits to the broader community.
This includes explaining the economic return to the whole country
Digitisation doesn’t just make lives easier; it helps create new jobs and new industries.
Research commissioned by Telstra shows increased digitisation could add up to $90 billion to the economy, and 250,000 jobs by 2025.
But this isn’t the story for all Australians and it is incumbent on us to ensure a digital economy is inclusive.
The digital divide, in my view, is far greater than we acknowledge.
It has two elements. One is access to technology such as broadband and inequality of opportunity, particularly for small businesses.
The second revolves around the ability to effectively use technology and function in a digital society.
Labor’s pledge to upgrade the NBN is a welcome announcement. We need to keep thinking creatively about how we can build the digital infrastructure and capabilities to bridge the digital divide.
But as I said, this isn’t just about connectivity.
As our transactions with both government and private services are increasingly digitised, we must guard against introducing new levels of complexity that have the potential to exclude some in our community.
Exclude them simply because they don’t have the capability or problem-solving skills to navigate life.
What I also notice is more and more requests for unnecessary information, and I think – do you really need that?
And while we are at it, we must also ensure that a whole generation of students who missed out on a year of schooling because of COVID have access to some sort of digital catch up.
In conclusion, I believe there are several areas where we can continue to work together in the national interest.
The first is ensuring that any new regulation is sensible and doesn’t lead to unintended consequences.
Let’s get ahead of this.
We know privacy and the ethical use of data are hot button issues.
So why don’t we get out ahead of them and advocate for the type of regulation that solves these problems rather than new constraints that deter investment?
Let’s also join forces to advocate around closing the digital divide and let’s look together to realise the opportunities post-COVID.
By working together – and with the government and community – we can build momentum to realise the vision of Australia becoming a leading digital economy by 2030.
We need to ensure we are offering solutions, not just making asks of government.
And we need to continue building relationships and explaining to the community why this sector remains at centre of Australia’s future success.