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Information Economy
Explanatory note on reporting for the Information Economy outcome
Prior to 8 April 2004, Outcome 1 - A sustainable, effective and internationally competitive information economy - was delivered by two functional areas within the former National Office for the Information Economy (NOIE). Appropriation was provided in the 2003-04 Portfolio Budget Statements (PBS) to Outcome 1 and contributing Outputs 1.1 and 1.2.
On 8 April 2004, machinery of government changes resulted in the transfer of the information economy function (Output 1.1) to the Department of Communications, Information Technology and the Arts and the e-government function (Output 1.2) to the Australian Government Information Management Office (AGIMO).
Output 1.1 was: Strategic advice, activities and representation relating to Australia's development as an information economy, nationally and internationally.
In delivering this output, the information economy function of the former NOIE provided policy and strategic advice to the Government on the drivers of the global information economy, with a particular focus on issues such as spam, e-security and e-commerce. It also administered programs to help promote take-up of ICT technology across the Australian economy.
For the purpose of this section of the annual report, the information economy function will be reported as it was funded in the PBS for 2003-04 (Output 1.1 of NOIE Outcome 1). Where reference is made to 'NOIE' the reference is to the information economy function of the former NOIE up until 8 April 2004. A reference to 'the Department' is a reference to the information economy function within the Department of Communications, Information Technology and the Arts after 8 April 2004.
Resources for outcomeIn the 2003-04 Portfolio Additional Estimates Statements (PAES), the former NOIE reported a total price of outputs for Output 1.1 of $13.711 million. This consisted fully of Departmental Appropriations.
In respect to the former NOIE Output 1.1 functions assumed by the Department, AGIMO recognised $9.527 million and the Department recognised $2.950 million for the actual price of outputs (as per note 12B of 2003-04 Financial Statements). This provides an actual total price of outputs for the former NOIE Output 1.1 of $12.477 million.
In addition, the former NOIE reported total administered expenses of $6.322 million for Outcome 1 in the 2003-04 PAES. In respect to the ICT Centre of Excellence responsibilities assumed by the Department, AGIMO recognised expenses of $1.153 million and the Department recognised expenses of $1.931 million (as per note 26 of the 2003-04 Financial Statements).
Performance information index
|
Annual report page reference |
PBS page reference | |
|
Outcome 1 A sustainable, effective and internationally competitive information economy. |
144 |
518 |
|
Administered Items | ||
|
Information Technology Online (ITOL) Grants |
151 |
518 |
|
Output 1.1 Strategic advice, activities and representation relating to Australia's development as an information economy, nationally and internationally. |
153 |
518 |
Achievement of outcome
A sustainable, effective and internationally competitive information economy
Australia's participation in the information economy
During 2003-04, the efforts of NOIE and the Department to contribute to the development of a sustainable, effective and internationally competitive information economy were primarily focused on accelerating effective use of e-business tools by both the business and the community sectors, combined with the promotion of appropriate supporting infrastructure policies in regulation, standards development, connectivity (particularly high bandwidth), interoperability and security. These activities directly increase Australia's participation in the information economy. Supporting this work were extended analyses about this participation and its impact.
The information economy function provided policy leadership at both national and international levels in a range of areas including development of a revised national strategic framework, improving national and international Internet governance, providing catalytic support to the wider adoption of broadband, encouraging more widespread take-up of e-commerce, improving the efficiency of electronic transaction systems particularly through online security, and building a better understanding of the contribution of ICT to productivity growth.
In June 2004, Australia's Strategic Framework for the Information Economy 2004-06: Opportunities and Challenges for the Information Age was finalised for release early in 2004-05.
Building on the strong foundations of previous years, sustained national leadership in Internet governance was provided by NOIE and the Department through continuing support for .au Domain Administration (auDA), and through achievement of the successful transfer of the delegation for the Cocos and Keeling Islands country code domain name. In the international arena, Australia continued to play a pivotal role in the private sector based International Corporation for the Assignment of Domain Names and Numbers (ICANN) together with the United States of America, Canada and the United Kingdom. Australia also played a significant role in achieving cooperative outcomes from the United Nations World Summit on the Information Society in December 2003.
In support of greater connectivity and increased use of higher speed bandwidth, a National Broadband Strategy was negotiated by NOIE with all states and territories in 2003. This strategy outlines the collective vision of all three levels of government for broadband development and implementation across the community. The National Broadband Strategy Implementation Group (NBSIG), chaired by the Department, and with representation from all levels of government, was established to oversee its implementation and measure its impact and success. The NBSIG met four times in 2003-04 and has evolved into a very effective partnership between the various levels of government.
NOIE continued to focus on the development of a comprehensive national regulatory framework by implementing the Government's decision to address business and community concerns regarding unsolicited electronic mail (spam). The prohibition provisions in the Spam Act 2003 came into effect on 10 April 2004.
Following the passage of the legislation, the focus of activity broadened to harnessing international efforts to combat spam. A Memorandum of Understanding (MOU) with Korea on spam was signed in October 2003. At the conclusion of 2003-04, further international agreements were due to be concluded with the United States of America, the United Kingdom and Thailand. NOIE and the Department also played a pivotal role in the OECD's April 2004 decision to establish an anti-spam taskforce.
A significant contribution of the information economy function has been to chart Australia's information economy performance. These analyses of the information economy are published regularly through statistical benchmarking reports, including the Information Economy Index and the Current State of Play and demonstrate the progress towards the outcome of a sustainable, effective and internationally competitive economy.
Level of e-business readiness in Australia
The already high level of e-business readiness in Australia continued to grow during 2003-04. Australian Bureau of Statistics (ABS) figures published in March 2004 show that as at 30 June 2003, 83 per cent of firms in Australia had at least one computer, 71 per cent were connected to the Internet and 23 per cent had a web presence.
More recent figures are provided in the Sensis e-Business Report published in July 2004. Based on a May 2004 survey of 1800 small and medium sized firms (SMEs), the Sensis survey found that 86 per cent of SMEs are connected to the Internet compared with 82 per cent the previous year.
Level of e-business activity (B2B and B2C as a proportion of GDP)
The most recent report from the ABS published in March 2004, shows the proportion of Australian businesses using the Internet to receive orders was 13 per cent for 2002-03. This is more than double that recorded for the previous year (six per cent for 2001-02). The number of Australian businesses using the Internet to place orders increased from 25 per cent in 2001-02 to 28 per cent in 2002-03.
Income derived by firms from Internet transactions more than doubled between 2001-02 and 2002-03. According to the ABS, Internet income reached $24.3 billion for 2002-03. This income represents 3.2 per cent of GDP, an increase from 2.5 per cent in 2001-02.
Level of trust and confidence in the online economy
In encouraging the more widespread use of online technologies, businesses and consumers alike must be able to trust the security, privacy and integrity of electronic systems. During 2003-04, NOIE and the Department undertook a number of activities to improve confidence in the electronic transaction systems. This included leading a multi-layered national and international approach to the problem of spam.
Within Australia, NOIE and the Department's anti-spam work concentrated on addressing legislative requirements, industry codes, technical solutions and awareness-raising (particularly among SMEs) based on developing a wide range of publications. The Department also took an active role in international efforts to combat spam.
In other measures to increase the level of trust and confidence in the online economy, NOIE and the Department:
- successfully undertook collaborative projects within national and international bodies, including the Government-private sector Electronic Security Coordination Group (ESCG) and the e-Security Task Group (eSTG) of the Asia-Pacific Economic Cooperation (APEC) economies. These projects included domestic and international workshops on online security issues, funding the cybercrime capacity building project within APEC, and a security awareness project designed particularly for small and medium enterprises within Australia;
- carried out joint projects with the Defence Signals Directorate (DSD), one of which resulted in the launch of OnSecure, an online incident reporting service for Australian Government agencies, in December 2003;
- participated actively in auDA, the self-regulating body for the Australian Domain Name System (DNS); and
- managed Australia's contribution to the development and management of the Internet at the global public policy level through participation in the Governmental Advisory Committee (GAC) to the ICANN.
The continuing increase in the use of electronic transactions by business and the community is testament to the ongoing success of this group of activities.
 |
Members of the e-Security team. Left to right: Ian Brown, David Hickman, Charles Tyers, Rekha Kattera and Michael Alchin. |
Quality, timeliness and relevance of advice to Government
The information economy function of NOIE and the Department provided 87 per cent of meeting briefs to the Minister's Office on time. It did not perform as well in providing timely question time briefs (58 per cent) and fared least well in responding to ministerials on time (48 per cent). The latter largely resulted from the large volume of correspondence on spam that arrived during the development of the spam legislation and its passage through Parliament.
Table 2.43 Advice provided within agreed timeframes|
Type of advice |
Number |
Provided within agreed timeframes (%) |
|
Ministerial correspondence |
171 |
48 |
|
Briefings | ||
|
- initiated by the Department |
54 |
not applicable |
|
- meeting briefs |
15 |
87 |
|
Question time briefs |
45 |
58 |
|
Parliamentary Questions on Notice |
1 |
100 |
Extent to which Australia is recognised as a technologically sophisticated information economy
Australia has consistently been regarded internationally as a leader in the information economy and, during 2003-04, it continued to rank in the leading group of nations. Australia ranked ninth overall in the World Economic Forum Networked Readiness Index 2003-04. The same index ranks Australia third in its business usage sub-index behind the United States of America and Singapore.
The Economist Intelligence Unit ranks Australia twelfth in its overall e-readiness rankings for 2004 and third in the Asia-Pacific region behind Singapore and Hong Kong. Australia also performed well in terms of home Internet users accessing government websites ahead of leading users such as United States of America and Sweden.
Extent of community connectivity and use of electronic transactions
On average, community connectivity in Australia increased by nine per cent in the first quarter of 2004 compared to the first quarter of 2003.
In Australia, 84 per cent of adults (defined by ACNielsen/Netratings as persons 16 years and over) had access to the Internet from any site in March 2004 compared to 75 per cent in March 2003. The percentage of adults in Australia with home Internet access also increased, with 64 per cent in the first quarter of 2004 being able to access the Internet from home compared to 60 per cent in the first quarter of 2003.
The percentage increases in community connectivity in 2003-04 improved Australia's already strong international connectivity ranking. In March 2003, Australia ranked third behind Sweden and the United States of America in adult access to the Internet from any location of 11 countries surveyed by ACNielsen.13 In March 2004, Australia moved up to second position behind Sweden.
Table 2.44 Adults with Internet access from any location - International comparison|
Adults with Internet access |
Jan-March 2003 (%) |
Jan-March 2004 (%) |
|
Sweden |
90 |
90 |
|
Australia |
75 |
84 |
|
United States of America |
86 |
83 |
|
United Kingdom |
69 |
78 |
|
Hong Kong |
69 |
75 |
Table 2.45 Online activity by adult Internet users in Australia
|
Online activity |
Oct-March 2004 (%) |
Oct-March 2003 (%) |
|
Send and/or receive email |
91 |
93 |
|
Browse |
55 |
33 |
|
Purchase or order goods or services |
34 |
18 |
|
Audiovisual content |
32 |
41 |
|
Use the radio |
19 |
19 |
|
Participate in chat room discussions |
18 |
21 |
This connectivity was well utilised, with almost all adults with Internet access in Australia reporting that they send and/or receive electronic mail. An increasing number of users purchased or ordered goods or services via the Internet in the six months to March 2004 (34 per cent) compared with 18 per cent in the six months to March 2003.
13 Countries covered by ACNielsen include: the United Kingdom, Brazil, France, Germany, Hong Kong, Italy, Spain, Sweden, Japan and the United States of America.
International Organisations Contributions
NOIE and the Department coordinated the Australian Government's participation in the World Summit on the Information Society, a United Nations (UN) Forum. The international community endorsed a Declaration of Principles and a Plan of Action which provide a shared vision for the global information society's values and a roadmap for improving ICT access in all UN countries.
NOIE and the Department also participated in the work of three Organisation for Economic Cooperation and Development (OECD) working groups, the Working Party on Telecommunications and Information Services Policies, the Working Party on Information Security and Privacy and the Working Party on the Information Economy. It also participated in the work of the overarching policy committee, the Committee for Information, Computer and Communications Policy (ICCP).
Australia plays a leadership role in the work of these committees and the main outcomes for the period included contributing to the implementation of the OECD Culture of Security Guidelines, participating actively in the development of privacy in the use of biometrics technologies, and setting up a working group to combat unsolicited email (spam).
NOIE and the Department contributed to a large number of studies and papers, particularly in analysing the take-up and usage of broadband technologies, assisting to build a global culture of security, building international privacy and trust frameworks, and benchmarking Australia's ICT growth performance against others in the OECD. Australia is an active participant in the production of the OECD's biannual publication, IT Outlook.
Case Study The Spam ActA crucial area of policy focus in 2003-04 was combating the growing problem of spam. The Spam Act 2003 (the Spam Act) has reinforced Australia's reputation as a world leader in protecting and developing the information economy. Spam is the term commonly used for unsolicited commercial electronic messaging, particularly by email and, increasingly, short message service (SMS). The initiative by the Australian Government to address spam came at a time when spam was seen in most countries as moving quickly from a nuisance to a serious problem. Various reports estimate that spam comprises between 60 and 80 per cent of all global email. Left unaddressed, the continuing rise in the incidence of spam has the potential to seriously impair the efficiency of electronic transaction systems and limit their contribution to economic activity. The key characteristic of the Government's anti-spam strategy is collaboration. This reflects the Government's early recognition that the actions of governments, while important, could not hope to be effective on their own in combating spam. What was also needed was the positive and active commitment of private sector stakeholders. One of the pleasing aspects to the Government of the anti-spam work has been the strong support provided by a range of industry groups including the Internet Industry Association and the Australian Direct Marketing Association. The Spam Act is an important element in Australia's multi-layered approach to spam comprising industry codes, technical solutions, awareness raising programs and international cooperation. This approach is designed to provide an immediate and long-term impact on curbing spam and to leverage and enhance the benefits available through each element. The Spam Act is widely regarded as one of the best pieces of anti-spam legislation in the world. It has attracted very strong interest from other governments and from a range of international forums. NOIE was approached to assist in the development of model legislation for use by other countries and also gave presentations about the Spam Act in response to invitations from other governments including Korea and Malaysia. The next phase of the Department's role - international efforts to harness and coordinate anti-spam actions - will be even more significant in reinforcing Australia's information economy leadership position in the world.
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Administered items
Information Technology Online (ITOL) Grants
Take up of e-commerce by business in target sectors
The ITOL Program is a competitive funding program designed to accelerate national adoption of e-business solutions, especially by SMEs, across a broad range of industry sectors and geographic regions.
Two ITOL funding rounds held in 2003-04 received a total of 143 applications. Round ten funded eight projects to the value of $1.367 million, with health and transport identified as specific targets. Round 11 was a general round and funded eight projects to the value of $1.228 million from the building and construction, health, community and manufacturing sectors.
The 2004 Sensis e-business report found significant growth in Internet use in many of the sectors in which there had been a high degree of ITOL engagement:
- 78 per cent of organisations in the building and construction sector now use the Internet (up from 70 per cent);
- 89 per cent in the health and community sector (up from 70 per cent);
- 84 per cent in the manufacturing sector (up from 79 per cent); and
- 86 per cent in the transport/storage sector (up from 82 per cent).
Program run within budget
The program was run within the 2003-04 budget. Funding of $2.208 million was provided to ongoing projects. Projects are funded in accordance with individual funding agreements and continued funding is based on performance.
Feedback from stakeholders
Interest in the program was strong as evidenced by the large number of applications received. Additionally, positive feedback was received from clients as part of the Department's annual client service survey.
Number of hits and downloaded pages and documents from NOIE websites
At the end of 2003-04, there were 2582 email subscribers to the ITOL News compared to 1893 in 2002-03. There were also 118 208 'hits' on the website and 13 852 visits from individual discrete Internet provider addresses. This annual figure is extrapolated from a ten-month reporting period.
Number of innovative projects funded
Funding agreements for 16 new ITOL projects involving 80 organisations were finalised in 2003-04. ITOL projects are selected to demonstrate the practical application of ICT innovation across the economy in addition to flow-on benefits to individuals and the Australian economy.
A number of innovative projects supported also have the potential to make a significant strategic contribution to Australian industry. For example two projects funded in Round ten will demonstrate how the EAN.UCC standard, endorsed by the Australian Logistics Council in 2003 for use in the transport and logistics industry, can be successfully applied within supply chains. One of these projects is also making use of emerging Radio Frequency Identification (RFID) technology and web enabled software to track temperature sensitive goods such as pharmaceutical (vaccines and blood) and animal health products. These technologies have the potential to deliver significant efficiencies in supply management.
Number of projects completed successfully
A total of 14 projects from rounds six, seven, eight and nine were completed in 2003-04. Case studies of successful ITOL projects are available on the Department's website at www.dcita.gov.au.
 |
Professor Erwin Diewert at the Asia Pacific Productivity Conference, Brisbane, 14-16 July 2004, explaining research findings on ICT and productivity. Photograph: courtesy of Meyrick & Associates Pty Ltd. |
Outputs
Output 1.1 Strategic advice, activities and representation relating to Australia's development as an information economy, nationally and internationally
Acceptance of a new strategic framework for the information economy including positions developed through the Framework for the Future and the Broadband Advisory Group process
During 2003-04, one of NOIE's major activities relating to Output 1.1 was the development of the Government's new Strategic Framework for the Information Economy. This framework represents a crucial articulation of the Government's medium term objectives in moving Australia to take full advantage of the many benefits that online technologies offer to all elements of society and the economy. The development of a new strategic framework plays a major part in the achievement of a sustainable, effective and internationally competitive information economy.
In developing the new strategic framework, NOIE undertook extensive consultations with Government departments and agencies, state, territory and local governments, the private sector and community groups. This contributed significantly to the widespread acceptance of the new framework by all sectors involved.
This process was undertaken in recognition that, while Australia had made major strides in implementing new technologies across the private and public sectors, new challenges continued to emerge as new waves of ICT became available. In addition, the need for a modified strategy was reinforced by the work of the Framework for the Future Steering Committee, whose report emphasised the need to recognise the role of ICT as a major contributor to productivity growth in Australia in designing policies to support the development of the ICT industry.
The new strategic framework is designed to strengthen cross-portfolio synergies and to maximise the impact of their policies and programs on Australia's information economy development.
The policies and programs embraced in the strategic framework represent the Government's approach to extracting national benefit from the impact of ICT on Australia's economy and society over the three years to 2006.
A key focus in achieving Outcome 1 is to enhance the level of broadband connectivity. Several of the key recommendations of the Broadband Advisory Group (BAG) were implemented through the Government's response to the Regional Telecommunications Inquiry (RTI). The most significant involved developing the National Broadband Strategy based on the vision, goals, objectives and principles recommended in the BAG report. The National Broadband Strategy, developed in collaboration with states and territories, was released by the Minister on 3 March 2004.
Other activities reflect BAG recommendations, such as establishing the National Broadband Strategy Implementation Group (NBSIG) to develop and implement the National Broadband Strategy and to measure its impact. The acceptance of the strategy was clear from the considerable ongoing allocation of resources to this activity from all participants.
The strategic investment and coordination recommendations of the BAG have been addressed as part of the RTI through program elements implemented under the National Broadband Strategy. These programs include the Coordinated Communications Infrastructure Fund, the Demand Aggregation Brokers Program and the Higher Bandwidth Incentive Scheme. Further information on these programs can be found on page 101. These focus on the priority areas identified by the BAG such as regional, rural and remote areas, health, education, research and SMEs.
Level of understanding of the dynamics of the drivers of the information economy
In order to raise awareness of the benefits of the information economy, the Department undertakes monitoring, research and policy development on the community and social impacts of ICT including the digital divide. This work includes publication of discussion papers and case studies on the role of ICT in social capital and community building and on the use of ICT in the not-for-profit sector.
A range of statistical publications, including the annual Information Economy Index (released in August 2003) and the biannual Current State of Play publications (released in July 2003 and January 2004), provide snapshots of Australia's performance in the global information economy.
Econometric studies into the impact of ICT on Australia's high rates of productivity growth have also demonstrated the important contribution that technology has made to Australia's economic performance. This work has resulted in the publication of a paper on Productivity Growth in Australian Manufacturing in March 2004.
Research conducted by Kenneth Carlaw, commissioned by the Department in February 2004, suggests the Australian productivity bonus does not occur contemporaneously with the investment in ICT, but comes later as learning and innovation maximises the productivity potential of ICT. Other complementary research projects have been undertaken at the firm level, to determine how better management of ICT can practically improve productivity and business outcomes. Howard Partners Pty Ltd is currently completing a report on utilisation of ICT by non-ICT manufacturers. Opticon Australia is also currently preparing a consultancy report on ICT organisation and management.
Satisfaction of stakeholders with operations of the Online Council
The Department provides secretariat support for Australian, state, territory and local government coordination through the Online Ministerial Council and its working groups.
At the eleventh meeting of Online Council Ministers held on 26 September 2003, the Council issued a joint media statement outlining areas of cooperation in key fields such as the National Broadband Strategy, regional and remote telecommunications services, programs for remote Indigenous communities, ICT industry development and improving e-government service delivery. Online Council Ministers and senior officials have expressed continued support for the operations of the Ministerial Council and the Online Council Officials' Standing Committee.
Extent to which NOIE advice is sought from other Government agencies
This indicator is particularly relevant in demonstrating the significance of Output 1.1 for achieving Outcome 1. NOIE and the Department's advice was regularly sought by other Government agencies on approaches to interoperability, security, authentication, e-payments and business protocols, and consumer and privacy protection. NOIE and the Department also received numerous requests from other Government agencies regarding the application of the Spam Act and its effect on their messaging practices as well as on domain name policy issues.
NOIE chaired a consultative group comprising key law enforcement agencies (the e-Security Consultative Group), which developed the e-Security National Agenda. It also worked cooperatively with the Department of Transport and Regional Services throughout 2003-04 to support the work of the Australian Logistics Council.
In line with the new Strategic Framework emphasis on collaboration between the public and private sectors on information economy issues, and new governance arrangements to manage that collaboration, the Department started in 2003-04 to explore the possibility of formal arrangements with the private sector for collaboration on e-business frameworks.
A meeting of key private sector stakeholders in e-commerce was successfully convened. However, efforts to secure agreement on an over-arching structure for public-private sector collaboration on e-commerce projects were not as successful. In principle agreement on closer collaboration was secured, and this will be followed up through stand-alone projects in specific areas such as electronic authentication and payments with the possibility of more formal arrangements to be reconsidered in the future.