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Federal Budget does little to encourage investment in Australia’s digital economy

Federal Budget 2013

The announcements made by the Government do not support the ICT sector or the investment in ICT that is required to drive Australian productivity and competitiveness, according to leading accounting and advisory firm Grant Thornton Australia.

“Existing policy positions that have disadvantaged the ICT sector and ICT investment, such as the taxation of equity based employee compensation schemes and the net reduction of R&D concessions, remain unaltered,” said Simon Coulton, Technology Lead Partner at Grant Thornton.

“Amendments to the thin capitalisation rules reducing interest deductibility, increasing tax paid by corporate Australia, and targeting large companies and multinationals, many of which will be ICT businesses, will further adversely impact investment in ICT and the future of Australia’s digital economy.”

“There were no announcements that are likely to significantly benefit the ICT sector. Funding announced in the Treasurer’s speech, such as to connecting local councils to ubiquitous high speed broadband and training regional businesses and communities in early rollout sites, are not new initiatives.”

“Nor is the funding of innovation precincts a new commitment, and in any case, is not focused primarily on encouraging innovation related to the development of Australia’s digital economy.”

“The Government’s mentality seems to be ‘build it (the NBN) and they (the economic benefits) will come’. The Government needs to do more to educate the broader public and business community about both the social and economic benefits of a truly digital economy and must encourage private sector investment in related technology. The digital economy and the NBN is not just about connecting rural Australia and providing households with better internet speeds. Only in making the proper investments will Australia realise productivity gains and improvements in competitiveness required to succeed in the Asian Century and simply, realise an adequate return on its massive investment in the NBN”.

“What we were hoping to see were changes that would encourage a culture of innovation in respect of the NBN and the digital economy and encourage the take up of new technologies, particularly by the private sector. This would have gone some way to support Treasurer Swan’s claim that the NBN will ‘turbo charge’ Australia’s economy. This budget delivered on none of those hopes.” 

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About Grant Thornton Australia Limited
Grant Thornton Australia provides audit, tax and advisory services to dynamic, growing organisations and is a single national firm, with over 150 Partners, more than 1,200 people across Australia and national turnover of AUD $232 million. Grant Thornton International is the fastest growing international accounting network in the world, with a global turnover of US$3.7 billion and more than 30,000 people, and was recently named 2013 Network of the Year by the International Accounting Bulletin.