This article by Andy Penn (Telstra), chair of the Business Council's digital economy and telecommunications economic recovery working group, and Tim Reed, president of the Business Council of Australia first appeared in The Australian on Monday 10 August 2020.
From telehealth to working from home, virtual meetings to online shopping, digital payments to online learning, COVID-19 is changing our lives and accelerating Australia’s shift to a digital economy.
The pace of change has been dramatic. Out of necessity we have taken more steps in the past few months than in the past five years toward establishing a vibrant digital economy in this country. Importantly we now know what’s possible and we now know the benefits, as businesses, governments and the broader community embrace digital tools, possibilities and opportunities.
What is critical now is that as a nation we continue to build on this momentum to drive connectivity, productivity and efficiency and — importantly — create a new wave of much-needed employment.
There has never been a more important time for Australia to focus on bringing a digital future to life — paperless, cashless and virtual — so we can come out of COVID-19 stronger and more capable as a nation. But realising and maximising the opportunity will mean ensuring all parts of our economy and society are well equipped to transition to a digital economy, particularly small-to-medium enterprises.
Creating digital enablement across the economy will also require policy and regulatory frameworks that encourage investment and innovation in key digitally enabling technology infrastructure, including telecommunications and cloud, as well as broader measures to continue to grow Australia’s technology sector.
This sector already employs around 580,000 people and contributes $122bn (6.6 per cent of GDP) to the economy each year.
The opportunities are real but so are the challenges. MYOB data tells us that more than a third of SMEs have no online presence. This is despite Deloitte studies estimating that SMEs with advanced levels of digital engagement achieved 28 per cent more revenue growth and 60 per cent more revenue earned per employee in the past 12 months than SMEs with basic levels of digital engagement.
Digitally enabled SMEs were also shown to be eight times more likely to create jobs, seven times more likely to export, and more than 14 times more likely to be innovating by offering new products or services. Looking forward, Deloitte estimates that in just three years the contribution to GDP of a digital economy enabled by mobile telecommunications would be $65bn.
So what needs to be done?
To encourage digital enablement, particularly for SMEs, the Business Council of Australia’s digital and telecommunications economic recovery working group supports extending the current instant asset write-off policy past the end of the year for eligible digital and telecommunications business assets only. Consideration should also be given to grants for SMEs that accelerate digitisation so they can develop their e-commerce capabilities and digitise back-office processes.
The slow drift away from cash and paper before COVID-19 became a stampede during the pandemic and this should be encouraged.
The use of e-invoicing, for example, gives SMEs a much better idea of their cashflow while making it easier for larger companies to do business with them and pay invoices sooner: a win-win that reduces time and costs for all players.
It makes sense to provide incentives for all businesses to continue adopting e-invoicing and consideration should be given to a phased timetable towards its mandatory implementation. The removal of large banknotes from circulation should also be considered, though cognisant of continuing to support people in vulnerable circumstances.
A further initiative that should be on the table is the introduction of “digital by default” systems, where all interactions and notifications with government are conducted through accessible online platforms that include the ability to opt in for physical notifications and services, again being cognisant of ongoing support for the vulnerable.
Effective participation in the digital economy requires access to affordable, fast and reliable telecommunications services. With the full rollout of the NBN approaching there is an opportunity now for the government to develop its future vision for the technology underpinning Australia’s digital economy — the telecommunications industry for the next decade — a vision that is technology-agnostic and provides an environment that is pro-investment, pro-innovation and focused on enabling digital future.
COVID-19 has once again underlined the critical importance of telecommunications networks. They often provide the only connective links that keep businesses running, schools open and families connected during the lockdown period and they will be crucial to a fast recovery.
Mobile connectivity and 5G in particular are productivity drivers and growth enablers and going forward 5G will deliver a step change in speed, data capacity and device density (or the number of things that can be connected). The Department of Communications and the Arts estimate it will add up to $2000 GDP per capita at the end of the first decade after the rollout. By facilitating the success of this technology, the government has an opportunity to create additional employment through the economy and drive the productivity growth agenda.
COVID-19 has been unprecedented in terms of its impact on the economy, the effect on our social and working lives and the level of uncertainty around how we best come out of this. But what is also unprecedented is the opportunity now for far-reaching reform and the once-in-a-generation chance to create and accelerate a powerful digital economy in Australia.
If we are bold and if we act now it will shape our economy, our society and our future for the benefit of all Australians.