No skills required, we're Australian

“Our future depends on what we as a nation do today,” declared Treasurer Joe Hockey in opening his budget speech last night.

What we do today is build roads -- other people will do the smart stuff for us.

To the Coalition, the future lies in roads and Baby Boomer healthcare. The failure to address taxation disincentives along with the slashing of research funding and business support is a clear signal that the technology sector isn’t seen as part of the nation’s future.

For anyone who read the Liberal Party’s pre-election manifesto on Tuesday, this government's obsession with roads would not have been a surprise -- nor would the slashing of research and industry support programs. Although there are a few bright spots for the tech sector.

Baby Boomer healthcare

One area that has come as a surprise is the establishment of a $20 billion health research fund underwritten by the Medicare co-payment. This is good news for medical researchers and one of the few good news areas for the tech community.

The other major funding surprise is a new Entrepreneur’s Infrastructure Program, valued at $484 million over the next five years, that will “focus on supporting the commercialisation of good ideas, job creation and lifting the capability of small business, the provision of market and industry information, and the facilitation of access to business management advice and skills from experienced private sector providers and researchers".

For the parts of Victoria and South Australia affected by the collapse of the Australian car manufacturing industry, another bright spot for the tech sector is a $100m injection into a joint state and federal industry growth fund to support the development of high-value manufacturing and economic diversity.

Cutting research and business support

While the Entrepreneur Infrastructure Fund is a welcome -- although somewhat vague -- announcement, the program only offsets half of the money lost to the Industry portfolio through the abolition of a range of other schemes including Commercialisation Australia and Enterprise Connect.

Commercialisation Australia’s axing echoes the Rudd Government’s shock abandonment of the Commercial Ready program in 2008 and confirms short-term thinking and a lack of support for emerging industries is now the bipartisan policy of Australian politics and institutionalised in Canberra’s thinking.

The constant axing and rearranging of these programs without any regard to long-term plans makes it difficult for entrepreneurs, innovators or inventors to make any meaningful investment based upon Australian government funding or support as it may well vanish within three years.

Canberra and the Coalition’s indifference towards the tech sector is further emphasised with the CSIRO losing nearly $150m in funding over the next four years and programs such as the Industry Innovation Councils and Co-operative Research Councils either being cut or abandoned.

Other smaller schemes being abolished include the $10m Interactive Games Fund and the Education Department’s Online Diagnostic Tools Program, worth $38m over four years.

The latter is a surprising cut as the program was aimed at improving teachers’ productivity and the effectiveness of the national testing schemes while giving remote schools access to advanced educational tools; it would have been expected a program like this would have been supported by Coalition MPs and its abolition strengthens the view that this government is indifferent to the benefits of the digital economy.

Cash crunch for the NBN

While the National Broadband Network misses the immediate axe the government has flagged there will be no more capital injected into NBN Co after 2018. This means the company’s next business plan becomes critical in locking down realistic cashflow forecasts ahead of raising its own funds in four years' time.

For NBN Co, this timeframe is tricky as the multi-technology mix mandated by the federal government has left the project with a nebulous scope and uncertain costs. The time for reviews and talking is over and Ziggy Switkowski and Bill Morrow need to define the project and its total price-tag as a matter of urgency.

The other key budget announcement for telecommunications users is the extension of the Mobile Black Spot program that will see $100m allocated over four years to address patchy services. This is good news for businesses in regional and outer suburban areas.

Hockeys wimps out on reform

As both NBN Co and the mining industry have discovered, one of the biggest problems facing the Australian economy is the shortage of skilled workers. The changes planned for the education sector will further exacerbate the problem.

The changes to university fees will have a discouraging effect on enrolments in Science, Technology, Engineering and Maths (STEM) courses, further widening an already chronic shortage of graduates in these fields. The lack of job opportunities for scientists due to cuts in the CSIRO’s funding will again further discourage students in those sectors.

At the certificate level, the abolition of the Tools For Your Trade program will further discourage apprentices in an economy where skilled workers are already at a premium and the extension of the university-style loans to the vocational sector will lead to further labour shortages

Spending is actually the smaller story in what the technology sector was looking for in the Abbott government’s first budget. Major reform is needed in the taxation system to encourage the domestic industry and to attract foreign investment.

None of this was delivered or even hinted at by Hockey.

The biggest disappointment is the failure to adopt even the modest proposal of exempting start-up employee share option schemes from the taxation rules that have made Australia an embarrassing stand-out in the developed world. The prospect of addressing the taxation system’s favouring of passive share and property speculation over innovation and investment is probably further away today than it has ever been in the last 30 years.

With its focus on roads and Baby Boomer healthcare, last night’s budget is more suited for 1964 than 2014. For young people and entrepreneurs the choice is whether to don a high viz vest or to get on a plane.

Joe Hockey was right in saying our future depends on what we do today. What he did last night was guarantee Australia’s future is fixed in a 1960s vision of the world.