ACS Defends ICT Trade Update Report

Monday 2 December 2002 - The Australian Computer Society (ACS) has defended the integrity of its 2002 ICT Trade Update, released on Friday, in the wake of stinging criticism from Senator Richard Alston.

ACS President Richard Hogg said he never expected the Government to welcome the news of a $14.4 billion ICT trade deficit that continues to grow at 8.3 per cent per annum. However, he said the report itself was based on Government data and accurately reflected industry concerns that Australia is too reliant on imported ICT products and services when it could benefit enormously from a stronger "Buy Australian" focus.

"In his response to the report, Senator Alston highlighted the fact that other OECD countries like the USA and UK also have large ICT equipment trade deficits. What he failed to point out is that for these countries, and America in particular, their deficits are driven by the off-shore manufacturing efforts of their own multinationals," Mr Hogg said.

"A number of large US hardware firms operate manufacturing facilities in Mexico, accounting for a huge proportion of America's ICT imports and re-exports, but the profits return to America," he said.

The US Department of Commerce recently reported that US investment abroad in computer and office machine manufacturing alone reached almost US$18 billion in 1998, over six times greater than foreign direct investment in the US industry. The OECD has shown that affiliates of foreign ICT firms operating in the US realised total sales worth US$137 billion in 1998, while US affiliates overseas realised sales worth US$370 billion. Trade between US-based parent firms and their foreign-based affiliates accounted for 69 per cent of total US ICT exports in 1998, and over 76 per cent of total ICT imports.

"By comparison, Australia has no multinationals manufacturing offshore and the profits made from our ICT equipment imports remain in their countries of origin, so there is no benefit to Australia," said Mr Hogg.

"The debate in Australia about the productivity impacts of ICTs too often overlooks the impacts of the ICT-producing industries. The OECD has shown that countries with the largest ICT producing sectors enjoyed the highest productivity growth during the 1990s (ie. Ireland, Finland and Korea). Tellingly, these were also the countries with the highest ICT trade surplus."

In Digital Economy 2002, the US Department of Commerce reported that the ICT-producing sector continued to contribute disproportionately to economic growth. Between 1995 and 1999, the IT-producing sector accounted for an average seven per cent of US GDP, but was responsible for 28 per cent of overall real economic growth.

Nevertheless, Mr Hogg said he didn't dispute the Senator's assertion that, "Australia is a net winner when it can afford to import goods that help transform products".

"Our question is whether we can in fact afford it, and whether we are not better served by replacing some of those imports with locally produced goods, particularly in niche markets where we have areas of natural advantage," he said.

"While the ACS welcomes the attention the report has received from both Government and industry, we have no interest in trading insults or value judgements with anyone. We remain committed to the interests of our local ICT industry and its professionals, working in concert with other stakeholders to nurture and encourage this industry's future growth and development.

"We have always sought to support the Government's efforts on behalf of the industry and to point out its failings where we see them. In the Minister's own words, Australia's ICT sector "deserves the support of all stakeholders" and we welcome any opportunity to contribute to initiatives aimed at delivering tangible benefits," Mr Hogg concluded.

The 2002 ICT Trade Update Executive Summary is available online at: http://www.acs.org.au/ICT_Trade_Update_2002.PDF

This media release is available on the ACS Web site at http://www.acs.org.au/news/021202.htm

ENDS

About the Australian Computer Society: The ACS is the recognised association for information technology (IT) professionals, attracting a large and active membership from all levels of the IT industry and providing a wide range of services to its 16,000+ members. A member of the Australian Council of Professions, the ACS is the public voice of the IT profession and the guardian of professional ethics and standards in the IT industry, with a commitment to the wider community to ensure the beneficial use of IT. See the ACS Home Page for more information.

Media Enquiries:

Richard Hogg, ACS National President, Tel: (0408) 549 531, Email: richard_hogg@acslink.net.au

Caroline New, PR Consultant, Tel: (02) 9555 1986 or (0411) 889 456, Email: cnew@acslink.net.au