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Budget 2022-23: Focus on Digital Economy eclipsed by a Decade of Cyber funding

by Cameron Sinclair •
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After two bonanza Budgets that injected over $3 billion in total ICT funding aimed at growing the digital economy and making it easier to do business with government, the 2022-23 Budget brings a remarkable change of focus, with a near-$10 billion investment in cyber security to be spent over the next ten years. 

Intermedium’s research has found that pre-election budgets typically feature a reduction in the value of funding for new ICT policy proposals. This is because governments tend to penny-pinch on tech, while directing spending towards measures that will be popular with the electorate (which typically do not include back-office ICT reform). However, in this case the increasingly threatening international environment has necessitated a drastic increase in cyber security funding that will double the size of the Australian Signals Directorate (ASD). 

Treasurer Josh Frydenberg’s Budget night speech highlighted four significant fields of ICT-related funding: cyber capability, skills reform, regional telecommunications, and new tax deduction schemes for small business. Additionally, the Budget includes moderate allocations towards e-health and environment/disaster recovery. 

Cyber Security 

The Treasurer wrapped up by pledging the “biggest ever investment in Australia’s cyber preparedness”. An estimated 1,900 jobs will be added to the ASD, including data analysts, programmers and software engineers. The Budget papers assert that this “will triple ASD’s offensive cyber capabilities and double its cyber hunt and response activities”. The measure will also seek to grow the Australian domestic cyber security industry through partnerships with academia on cyber security, data science, and AI. 

The new funding program has been given the backronym REDSPICE – “Resilience, Effects, Defence, Space, Intelligence, Cyber and Enablers”. The decade-long, $9.9 billion package has been rounded up to $10 billion in media coverage but this figure includes the reallocation of significant funding from the Department of Defence. 

While REDSPICE grabbed a lot of attention on Budget night, the Prime Minister also made a cyber-related announcement the night before. 

Speaking at the US Studies Centre Alliance Dinner on Monday evening, commemorating the signing of the ANZUS treaty, he revealed that the government is establishing a Cyber and Critical Technology Intelligence Centre as a stand-alone entity inside the Office of National Intelligence (ONI).  

The existing Critical Technologies Policy Coordination Office (CTPCO) has been housed in PM&C since July 2020 to provide coordinated Whole-of-Government advice on emerging technological developments, opportunities and risks, and to recommend actions to promote and protect critical technologies. 

The Budget also includes $30.2 million for four Cyber Hub pilots – in the Department of Defence, Home Affairs, Services Australia and the ATO. The Cyber Hubs have been re-announced by Minister Stuart Robert on several occasions in 2021, after being included in the August 2020 cyber security strategy

Telecommunications 

Regional telecommunications benefits from a $1.3 billion investment to expand regional mobile coverage over six years, in response to the 2021 Regional Telecommunications Review (RTR), which was chaired by long-serving former MP Luke Hartsuyker, and tabled in February 2020.  

The government has been often criticised for failing to take meaningful action on the triennial reports, with commentators noting that “nearly all of the recommendations made in the past three RTR reports were included again.” 

The lion’s share ($811.8 million) will go to the Department of Infrastructure, Transport, Regional Development and Communications (DITRC) to pump up the Mobile Black Spot and Regional Connectivity programs. The remaining $480 million will go to improving NBN infrastructure (NBN Co will contribute a further $270 million to bring the total value of the upgrade to $750 million). The upgrade will lift service speeds to 100 Megabits per second (Mbps) to 750,000 premises across the fixed wireless network. While the initial build of the NBN was formally declared ‘complete’ at the end of 2020, this funding is no doubt in part a response to Labor’s $2.4 billion commitment to enhancing the network should they win the upcoming election. 

Digital Economy and skills 

The Digital Economy Strategy was the $1.2 billion centrepiece of the 2021-22 Budget’s ICT program, and has received a $130.1 million top-up in the 2022-23 Budget. The new funding will go towards: 

  • $38.4 million over three years (then $12.6 million ongoing) to expand the Consumer Data Right 
  • $30.2 million to the Cyber Hub Pilot (discussed above) 
  • $18.6 million on emerging technology standards
  • $13.6 million on emerging transport technology and digitisation
  • $6.2 million on digital technology regulation and a Digital Age Policy (presumably, a policy for the ‘Digital Age’?)
  • $4.8 million to the Digital Technology Taskforce
  • $3.9 million to support technology career opportunities for women
  • ​$1.8 million to the DTA for digital identity 

Additionally, $18.6 million has been allocated over 3 years to pilot remote APS digital and data training, and employment opportunities for people living in regional areas. 

The government will launch the Workforce Australia digital platform as single front door for employment and skills programs on 1 July. This will see many government-funded ‘shop front’ employment services close down (or as the Budget paper notes, “a refreshed and refocussed network of providers”).  

$1.5 million will be spent in 2022-23 to extend career coaching trials for ‘digitally serviced job seekers’, - which we assume will be carried out via teleconferencing. 

There are several other items in the Budget that aim to improve skills and training more broadly. The headline figure is $1.3 billion over five years, but $954 million of this is allocated to priority occupations in a new Australian Apprenticeships Incentive System; and $365 million in wage subsidies for employers. 

Small Business Tax Deductions 

The Budget introduces two new targeted tax deduction schemes for small business to enhance productivity by encouraging investment in employee training and adoption of digital technologies.  

Small businesses will be able to deduct an additional 20 per cent of the cost incurred on digital business expenses and depreciating assets, such as portable payment devices, e-invoicing, cyber security systems or subscriptions to cloud-based services. The net cost to the government is projected at $550 million over three years. SMEs will also be able to deduct an additional 20 per cent of the cost incurred on external training courses that upskill staff. 

Both measures are reportedly based on similar schemes in Singapore, and closely follow recommendations in CPA Australia’s pre-budget submission

Health 

$96.8 million will go to Services Australia and the Department of Health for phase three of the Health Delivery Modernisation Program, which aims to automate claims processing for Medicare and other health payments. 

Additionally, $32.3 million will go towards the Intergovernmental Agreement on Digital Health (primarily supporting My Health Record). Another $2.9 million has been allocated for a data migration program at the Australian Institute of Health and Welfare. 

Other ICT initiatives 

A national fire map and the addition of new flood risk data into Geoscience Australia’s online portal are part of several digital and data measures in the $261 million Disaster Risk Reduction Package (jointly funded with the states and territories). 

There is a further $52.5 million over five years from 2021-22 to roll out the Digital Environmental Assessments Program, supported by a National Biodiversity Data Repository. We wrote about the ANAO’s criticism of the EPBC Act approvals process in September

DTA role changes confirmed 

Budget Paper 4 outlines previously announced changes at the Digital Transformation Agency (DTA) which had occurred after the last Budget. It confirms that the DTA’s  funding was trimmed and responsibility for a number of programs was moved to other agencies: 

  • Digital Identity (integrated delivery management) to the ATO and Services Australia
  • National Map to Geoscience Australia
  • Data.gov.au to the ABS
  • Government Domain Names to the Department of Finance
  • Australian Government Style Manual and Digital Professions to the APSC
  • COVIDSafe App to the Department of Health
  • myGov enhancements to Services Australia 

However, in line with its new governance and advisory role, the DTA was allocated $1.8 million in 2022-23 to work on the governance, regulatory frameworks and funding arrangements associated with the Digital Identity system and legislation (as noted above in the Digital Economy section).  In its communique following its 25 March 2022 meeting, the Data and Digital Ministers Meeting noted an agreement to “actively explore” the adoption of a national digital identity ecosystem with a focus on interoperability and mutual recognition. 

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