'Still a lot to be done' - Muted industry reaction to tech policy in Budget 2022

Digital Economy and Communications Minister, David Clark. Photo / Dean Purcell

Budget 2022 offered only modest new spending tech sector initiatives, with most of the spending pre-announced or repackaged.

It was confirmed there would be $20 million over four years for a digital industry transformation plan, including the NZTE and NZTech-backed The NZ Tech Story promotion, which has been underway since January, in a bid to attract more tech talent to New Zealand to address a staffing squeeze.

Companies in the software-as-a-service (SaaS or "cloud") space a special area of focus, but so far details are scant on how they will be given a leg up via recruitment marketing support. A draft digital industry transformation report called for more education and diversity initiatives to help address the tech labour squeeze, but policy details have yet to emerge.

In pre-announcing the $20m for digital transformation earlier this month, Clark added that the Government's recent immigration overhaul made several IT roles eligible for fast-track visas, including ICT managers, security specialists, software engineers and multimedia specialists.

"These two initiatives will help kickstart efforts, but there's still a lot to be done," Technology Users Association of NZ (Tuanz) chief executive Craig Young told the Herald.

"We know that we are standing still, if not going backwards in some of the measures comparing NZ to other nations, and 2022 has to be the year that we make solid progress.

"The critical shortage in having people with the right skills remains an issue and we're keen to see the final ITP (IT Industry Transformation Plan) released and initiatives commenced, as well as seeing a robust and visionary digital strategy for Aotearoa later this year."

IT Professionals NZ head Victoria MacLennan says the digital industry transformation plan, backed by $20m in new spending, is encouraging but needs a broader focus. Photo / File

IT Professionals NZ head Victoria MacLennan said while the $20m for industry transformation was welcome, it needed to be broadened beyond its software-as-a-service focus.

"While it appears from the statements by the Minister the primary focus in on the SaaS export segment of the Digital Technology industry we are hopeful from his comment "I remain committed to the other industry initiatives which were well supported in consultation" that the broader skills work required - to support services companies, digital agencies, gaming companies and others vibrant growing segments of the sector - will also be supported through this funding," MacLennan said.

Companies in the gaming sector have been pushing Clark to match software development tax breaks being introduced across the Tasman from July 1, which they say will make it even harder to attract talent to NZ. There was no announcement on that front today.

Rural broadband top-up confirmed

Budget 2022 be a $60m top-up, over the next three years, for public-private rural broadband infrastructure upgrades. The new spending was first revealed in February when Communications Minister David Clark said while the pandemic working-from-home had showcased the strength of urban internet upgrades, it had also revealed the wobbliness of some rural networks.

Telecommunications Users Association head Craig Young says the Budget 2022 spending is not enough to fix rural broadband. Photo / File

Young was still seeking more detail on the spending, but earlier said more needed to be done to address what he calls the "stale doughnut" of broadband - or households that are too far from town for UFB fibre, but not country enough to be covered by the Rural Broadband Initiative (a segment that has been attracted to Elon Musk's new Starlink satellite broadband service).

Clark said at his February announcement that the new rural broadband spending would see 47,000 households get fast internet by 2024.

Is the new spending sufficient to fix rural broadband.

"No - it's not," Young said this afternoon.

It will fix some of the issues but there needs to be a long-term commitment to lifting and then maintaining the level of service across rural New Zealand.

A little more money for cyber education, and incident reporting

There will also be an expansion of new funding, which started last year with a $500,000 allocation, for the Government's Computer Emergency Response Team (Cert NZ), which will be used to boost an awareness programme, pilot a victim remediation service, and the development of a new system to make it easier for individuals and businesses to report and respond to cyber-security incidents. There will be $7m for these Cert NZ initiatives this year, and a total $25m over five years.

An unknown amount for cyber-defence

Defence Minister Peeni Henare said the $4.5 billion that will be spent over 12 defence projects over the next half-decade would include "an enhanced Defensive Cyberspace Operations (DCO) capability". The was no immediate detail on funding for the cyber defence initiative, however. Budget documents said a business case would be put to Cabinet in June. The project is still in a "definition stage".

NZ's various cyber-security spending boosts have been on the level of single-digit millions per year.

That trend continued with Budget 2022, which saw the GCSB get $14.3m more in additional funding over four years for maintaining and enhancing cybersecurity services.

pale next to the A$1.35b boost cyber-defence boost that Australian Prime Minister Scott Morrison signed-off on for his country's 2020 budget.

And Health Minister Andrew Little underlined that there would be "joined-up IT systems" with the restructure from DHBs to a central health authority - but expenditure for that project (to the tune of $170m in new capital spending) was included in last year's budget.

More for small business digital enablement

With Budget 2021, a $20m "Digital Boost" programme was introduced for small businesses, including free online courses about how to upgrade technology. The initiative involved $10m in new spending, and drew the other half of its budget from existing spending.

Budget 2022 earmarks $22m for "small business digital enablement."