Outgoing ACS president calls for ICT tax break

Creating a tax break for ICT exports would help lift the local industry out from the "bottom of the OECD pack", an outgoing Australian Computer Society (ACS) president Edward Mandla said at the society's IT in Government conference last week.

"The Australian ICT industry faced a $14.4 billion trade deficit two years ago, which grew to 19 billion last year, and looks to be around $85 billion this year. It's growing at an extraordinary rate," Mandla said.

"In order to put us on the global market, we need to create a Technology Australia organisation, much like we have Tourism Australia. I think it needs a paid CEO and a paid chairperson. We need to unite the ICT industry with the state governments at the board level, in order to start claiming $500 million dollar chunks out of budget," he said.

Although Mandla's reign as ACS president finishes at the end of this year and a new president will be announced on November 28, he said he does not plan to give up on his campaign to advance the ICT industry.

"I now have a lot more freedom to speak my mind and not just the ACS's mind. I'm not going to rest until we get an industry policy out of our minister," he said.

Mandla said that Australia risked becoming a subservient technology nation by becoming an end-user rather than a producer of technology.

"The modern world, with its double tax treaties and FTA's is not as easy to export in as it used to be," he said.

"(I'm convinced there is) a killer idea out there somewhere. Imagine no income tax on ICT Exports, for instance. I'm not talking about a grant- because unfortunately a lot of grants are rorts. This is not an R&D write off- because only the big companies ever qualify for that. It would be a reward incentive for creating ICT Intellectual Property and flogging it to someone overseas."

Mandla said he had spoken with the Communications Minister, Helen Coonan about the idea of offering tax incentives for IT exports, while the two were in India on a Trade mission last week.

"So the government is aware of it. If we can get a document or proposal to the government by March we looking at getting something through the May 2007 budget. It will just take the right economist to come up with the killer idea," he said.

Professor Steve Dowrick, senior fellow from the economics school at the ANU said he could understand why the IT industry, or any industry, would want to be a major exporter but that it was not the role of public policy to do anything about it.

"Giving tax breaks to any industry is a very dangerous road to go down because everyone would like one," he said.

Dowrick said that in order to claim any tax breaks, the IT industry would need to make a specific case about how the scheme would make a significant impact on the broader economy.

"I'm not convinced there is a case for that. It comes down to an argument of comparative advantage," he said.

"Other countries like the US and Japan, have huge amounts of R&D that Australia just doesn't have, and could never have. So those countries have the advantage in hardware and software," he said.

Details of nominations for the ACS president will be announced in the next two weeks.

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Dahna McConnachie

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