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Xaana 2023 Budget Summary: A Tech Perspective


With the current critical shortage of skills in the tech sector it was pleasing to see yesterday’s 2023-24 Australian federal budget includes a number of measures that could impact the technology sector and their services to the public and private sector. Overall, this year’s budget is focused on supporting economic growth, job creation, and innovation with some focus also on Public Sector staffing and Cyber skills.

Defence

The Defence Strategic Review (DSR) was publicly released just prior to ANZAC Day, with 42 classified recommendations. The review suggested a shift in Defence posture, re-prioritisation of projects and reallocation of existing funds allocated for Defence. There was further recommendation for an additional budget to enhance the Defence capabilities. This Budget confirms that Defence carefully considers reprioritisation of its forward estimates to address and implement the DSR recommendations as DSR clearly articulates that the current ADF is “not fully fit for purpose” against the current threat landscape.

The Federal Budget 2023 include $4.2 billion over 10 years leading to the operations of the Australian Submarine Agency, $3.4 billion over 10 years for Advanced Strategic Capabilities Accelerator, a new entity that replaces the Defence Innovation Hub and Next Generation Technologies Fund to ensure advanced technologies can be introduced with urgency, $1.9 billion to expand Australia’s relationship in the Pacific, $397.4 million for a bonus for the ADF members, $318.2 million additional investment for the Department of Veterans’ Affairs. The DSR affirms that speed to capability is a key focus to ensure fit-for-purpose technology innovation is adopted across the Defence. Stay tuned for our special DSR review post by our Partner, Mohammad Siddique later this week.

Digital Infrastructure

One of the key announcements in the budget was the government's commitment to invest $1 billion in digital infrastructure over the next five years. This investment is aimed at improving digital connectivity and supporting the development of new technologies. This could potentially be good news for small technology firms that rely on digital infrastructure to deliver their products and services.

Innovation and R&D

The budget includes a number of measures aimed at supporting innovation and research and development (R&D) in Australia. For example, the government has committed $2 billion over five years to the Research and Development Tax Incentive scheme, which provides tax breaks to businesses that invest in R&D. Additionally, the budget includes funding for the establishment of five new Innovation Hubs in regional areas, which could help to support the growth of small technology firms in those regions.

Skills and Training

The budget also includes measures aimed at improving skills and training in the technology sector. This includes funding for the establishment of a new Digital Skills Centre of Excellence, which will be responsible for developing and delivering digital skills training programs. The government has also committed to providing $100 million over five years to support apprenticeships and traineeships in the technology sector.

Regulatory Environment

The budget includes a number of initiatives aimed at improving the regulatory environment for businesses in Australia. This includes the establishment of a new Digital Business Unit within the Australian Competition and Consumer Commission (ACCC), which will be responsible for ensuring that digital markets are fair and competitive. The government has also committed to providing additional funding to the Australian Securities and Investments Commission (ASIC) to support its work in regulating the financial technology (fintech) sector.

Cybersecurity

The budget includes funding to improve cybersecurity in Australia, which is becoming an increasingly important issue for small technology firms. This includes funding for the establishment of a new Cybersecurity Centre of Excellence, which will be responsible for developing and implementing cybersecurity policies and programs. Additionally, the government has committed to providing funding to improve the cybersecurity capabilities of small and medium-sized enterprises (SMEs).

Public Sector Staffing and Consultants

Public sector staffing levels are set to rise to 15 per cent more than before the pandemic and are up by 10,639 this fiscal year with the average staffing level predicted to rise to a record high of 191,861 in 2023-24. Across the entire federal government sector, including the armed forces, average staffing levels are forecast to rise to 272,924 in the next financial year, up from 247,302 in 2019-20, an increase of more than 25,000. A significant contributor to the increased headcount has been over 3,000 contract positions being converted to employee roles, saving $811 million over the forward estimates. A total of $10.9 million has been allocated over two years from an established public service capability fund to provide start-up funding for an in-house consulting service within the Prime Minister’s Department to deliver high-quality strategic consulting services to the public service.

These measures are part of an election promise to cut $3 billion in contractor and consulting fees.

Overall, the 2023 Australian federal budget includes a number of measures that could potentially help to support the technology sector and Australia’s skills development in the sector. The investments in digital infrastructure, innovation and R&D, skills and training, and cybersecurity are all positive developments that could help to support Australia’s growth and success, however, it will be important to monitor the implementation of these initiatives to ensure that they deliver the intended benefits to the technology sector and the country.

Much more needs to be done to address the shortages in the sector, but at least this is a start.

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