Commercial News from Australia October 2005

ECONOMY CURRENT EVENTS IT & Telecom IT HEALTH IT R & D SECURITY Israel Trade Commission 6/37 York Street Sydney, NSW 2000 Tel: +61-2-92623943 Fax: +61-2-92625242 Mobile: +61-413055501 E: nili@israeltrade.org.au

Dear friends and colleagues, Last month, the Israel Trade Commission in Sydney organised a high-level briefing session with Mr Ted Pretty, the recently resigned head of Telstra's technology arm, and over 30 locally-based Israel telco companies. Recently returned from a business delegation to Israel, Mr Pretty, who was at the cutting edge of the largest telco company in Australia, was very impressed by the innovations he was exposed to in Israel. With the topic of "How to enhance your activity in Australia - Lessons from my visit to Israel", the Israeli companies were able to hear expert advice on the improvements that could be made when operating in the Australian business environment. A Trade Mission to Australia is being organised for the week commencing 11 November 2005, and if you are interested in receiving more information, or taking part in this delegation, please contact me at your earliest convenience. I wish you all a Shana Tova from 'down under' and all the very best in the forthcoming year. Nili Shalev Israel Trade Commissioner

ECONOMY

Trade deficit jumps in August Australia's trade deficit widened in August to $1.64bn, the highest since March 2005, and well up on a downwardly revised $1.33bn in July, previously reported as $1.46bn. The outcome for the month of August was right at the top of market expectations that ranged from $0.9bn to $1.6bn. Behind the jump in the deficit in August, there was a drop in exports (-3%), with the export decline across both rural (-3%) and non-rural goods categories (-5%). On the import side, there was another small rise in consumption imports (1%) that partly outweighed falls in other import categories, including capital and intermediate goods imported.	Australia jumps 4 places in the Global Competitiveness Index Australia, in 10th place, has risen 4 places since last year in the World Economic Forum's Global Competitiveness Index, with improvements across many of the institutional and technology indicators. The World Economic Forum says Australia has world-class public institutions, sound public finances and very low levels of corruption. Australia's companies are assessed as being highly innovative, while harnessing new information and communications technologies extremely well.
Economic activity picks up National Accounts data in the beginning of September from the Australian Bureau of Statistics showed that businesses are starting to reinvest, and that the resources boom continues to propel the economy forward. The figures showed 1.3% growth in the economy in the June Quarter - the strongest result since late 2003. Annual growth is now at 2.6% for the year ending June, up from 1.9%. The Australian economy has now completed 14 years of continuous economic growth since the deep recession of 1990-91.	Reserve Bank keeps rates steady The Federal Reserve Bank of Australia (RBA) left interest rates on hold again last month. This is the sixth consecutive month that official cash rates have been left at 5.5%. When the RBA last raised rates they cited inflationary pressures and the economy hitting capacity limits. Capacity limits have resulted form two key drivers: a past lack of business investment in the face of constant pressure to increase profits and the economy hitting close to full employment levels. One of the great challenges facing employers at the moment is the shortage of skilled workers. As the remaining skilled workers begin to demand increased salaries, a skilled worker shortage can lead to wage-price inflation and a key trigger for the RBA to look to raise rates.
IT employment strong IT recruitment agents say that the IT sector will remain buoyant for professionals seeking jobs for the rest of the year, with a growing trend towards permanent hirings and strong demand for .NET, Java and J2EE skills.. In Sydney, permanent hirings rose 20 per cent from the third quarter to the fourth quarter of the past financial year, according to Candle ICT. .	That contrasts strongly with a 4 per cent rise in contracting, the recruitment company's figures show. The strongest surge in recruitment came from banking and finance, government, telcos, vendors and professional services. There are shortages of experienced software developers, sales professionals, enterprise architects and project managers with technical and financial management skills.

CURRENT EVENTS

Australians win Nobel Medicine Prize Australian scientists Barry Marshall and Robin Warren have been awarded the Nobel Medicine Prize for their discovery of the bacterium that causes more than 80% of stomach ulcers. Marshall, senior principal research fellow at the University of Western Australia, and Warren, a former pathologist at the Royal Perth Hospital, received the prize for uncovering the Helicobacter pylori bacterium's role in causing gastritis and peptic ulcer disease in the stomach.

Government warned on ID fraud A centralised database of personal information used as part of the proposed national ID card scheme would make Australia's problems of identity fraud worse, privacy advocates have said.The Australian Privacy Foundation has written to government MPs ahead of an expected Coalition party room discussion on the card proposal in Canberra. The letter urges the Government to consider other means of improving national security and other problems associated with identity fraud, saying the cost of an ID card to the Australian way of life was too great.

IT & TELECOMMUNICATIONS

Ted Pretty leaves Telstra TED Pretty, Telstra's dynamic, wunderkind who came to the corporate fore as Ziggy Switkowski's 2IC during the heady days of dotcom mania in 2000, has parted ways with Telstra. It was always a matter of how long, not if, Pretty would survive under the new chief, American Sol Trujillo. Despite the billions blown on Telstra's mooted mega-merger between Solution 6, Sausage Software and Computershare, and despite the aborted $3 billion PCCW deal with Richard Li in Hong Kong, Pretty was a survivor.	Telstra's record spend Telstra is set to pump an extra $500 million into the local IT and communications sector as it cranks up its capital expenditure to record highs. The figure could rise higher after new chief Sol Trujillo completes a comprehensive company review, expected this month. At the centre of new spending is a pre-paid billing platform and a project worth more than $200 million to "rehabilitate" the IT customer access network for broadband services using DSL technology.
Watchdog back Telstra split The Australian competition watchdog, the ACCC, has underlined its support for the operational separation of Telstra's retail and wholesale businesses. Commissioner Ed Willett said operational separation of Telstra's retail business, which supplies services to end-users, and its network business, which supplies wholesale services to third parties, would make it easier to detect anti-competitive behaviour. It would also allow third parties to obtain prices and service levels equivalent to those that are provided to the Telstra retail business, he said. "There is no reason for such a regime to hurt Telstra or its shareholders by adding to its costs," Mr Willett said. "A network business and a retail business are fundamentally different, and an understanding of the costs and relative value of each component should assist management in extracting the maximum value out of the company as a whole."	Telstra sale now expected in 2006 Telstra is about to be sold after the National Party won a $3.2 billion package for additional services in country areas, ending a nine-year crusade to privatise the telecommunications giant. Investors could be offered shares in Telstra from October next year after the promise of high-speed broadband connections in regional Australia gained the support of Liberal and Nationals MPs. But the size of the $30 billion share offer - the largest in Australian corporate history - could be altered according to market conditions. And the shares could be sold off in stages. Australian Prime Minister, John Howard, said the sale of the Government's remaining 51.8 per cent stake in Telstra would benefit all Australians.
Unwired considers 3G ally Sydney wireless broadband supplier Unwired is on the lookout for a mobile alliance, saying a partnership would make sense once it hit its break-even point of 70,000 Sydney subscribers. Unwired chief executive David Spence said the company was examining a relationship with a "virtual" mobile carrier with a 3G service. "I am very interested in people being able to get mail wherever they are. We are more interested in the 3G networks." However, Unwired would only approach potential partners once it had a sufficient customer base, Mr Spence said. Unwired booked a $40.8 million loss for 2004-05. The company had 28,148 customers at the end of June, but subscriber growth had accelerated in the past few months, Mr Spence said.	Business messaging set for takeoff A spate of real-time collaboration projects, including enterprise-grade messaging, will emerge in the financial services sector in the next six months, a visiting Microsoft executive predicts. While US businesses have elevated instant messaging to mission-critical status, their Australian counterparts have been wary of it. Microsoft real-time collaboration business development manager Oscar Trimboli said until now there had been nothing driving the Australian financial services sector to examine the business benefits of instant messaging. "Funds management drove the technology in the US. Maybe the change in superannuation laws will be a driver here," Mr Trimboli said. He said getting more value from customer relationship management platforms would drive collaboration projects.
NZ Telecom plans $200m upgrade New Zealand Telecom has announced a $NZ220 ($203) million project to switch every telephone line in the country to an internet protocol platform within seven years to replace the existing phone network. NZ Telecom and Alcatel announced a joint venture programme to build the Voice-over-internet Protocol (VoIP) network. VoIP is the standard for allowing phone conversations to be carried via the internet. It will greatly reduce costs that should give customers cheaper calls and Telecom higher profits. Telecom said the new voice technology would revolutionise New Zealand's telecommunications infrastructure and is the culmination of five years of planning. The first residential customers are expected to using the new network by early 2007 and by 2012 the country's 1.7 million customer lines will have changed to the new platform.	Telstra in $10m 3G coup Telstra has stitched up the country's biggest third-generation mobile deal, signing a contract to supply accountancy giant PricewaterhouseCoopers with 2000 EV-DO wireless cards in a three-year deal worth up to $10 million. EV-DO is the 3G upgrade for Telstra's CMDA mobile network that has emerged as the dark horse in the wireless data race between the mobile networks and newer wireless players such as i-Burst and Unwired. The contract is the largest single introduction of EV-DO technology in Australia. PwC staff will use Telstra Mobile Broadband-enabled PC cards on their laptops and can access their corporate network, email and internet while out of the office.

IT

Sun shines in Tax's single sign-on deal A pivotal contract to provide the Tax Office with single sign-on and a range of access control features for its 25,000 staff is the latest in a rapidly rising tide of identity management projects.The ATO recently named Sun Microsystems as the successful bidder for the project, which, while not large in value, is expected to have influence well beyond the agency. Government agencies and private firms are understood to be watching the development of the ATO's $1 million project as they formulate their identity management plans. The ATO's identity management contract was put to tender in February as part of its $350 million IT refresh, the Change Program. The office specified an off-the-shelf system "configurable to suit Tax Office requirements with minimal or no need for customisation".	Scientists share on Big Blue The Australian Partnership of Advanced Computing has reached a milestone in its national grid program, installing new gateway systems to ease complex computing problems. IBM is providing 12 eServer xSeries servers to the APAC national grid, a network of computing and data storage that allows scientists to work seamlessly with massive data sets and huge computational capabilities. APAC executive director John O'Callaghan said the technology would serve as grid gateways to multiple sites. The technology will be introduced from this month and be operational in November. "These machines are providing an interface to very complex systems worth millions of dollars," Professor O'Callaghan said. "They provide a secure operational way of getting access to a variety of resources."
IT migration slows The number of computing professionals migrating to Australia has dropped, with industry groups hopeful the figures reflect their push to stem the flow of unrequired workers. In the 2004-05 financial year 8,829 computer professionals migrated to Australia, down from 9,244 (4.5 per cent) on the previous year, according to figures released recently by Immigration Minister Amanda Vanstone. However, the group still represents the largest single profession successfully obtaining visas. President of the Australian Computer Society, Edward Mandla said he had not seen a breakdown of the figures, but he hoped the numbers of ICT graduates had decreased. Graduate unemployment had reached 30 per cent, he said.	New money for old systems Thirty eight per cent of Australian and New Zealand companies and government agencies have increased their outlay on IT compared to 2004, but most of the new money is being spent on existing systems, a new survey has found. A mid-year IT spending outlook study polled 125 organisations in Australia and New Zealand as part of a wider Asia-Pacific survey. While 38 per cent of those polled said they had increased IT spending since 2004, 17 per cent said IT spending had dropped. But investment in new IT infrastructure was found to be particularly low among Australasian firms. Of total IT spending, 82 per cent was going towards ongoing maintenance and operations, the survey found.
Kaz in $200m defence deal KAZ is poised to ink Australia's biggest desktop outsourcing contract - a five-year deal worth more than $200 million that will see the company provide central office IT support to 90,000 restricted and secret desktops around the country. The Department of Defence contract is confirmation that, 18 months after Telstra's $333 million purchase of Kaz, it is finally gaining some real traction in the IT sector.	A Telstra spokesman said: "Kaz is now in negotiations with the government over the Defence Central Office IT Support contract and has no further comment to make at this stage." But a Defence source confirmed that the contract, which covers IT infrastructure management and support services, was expected to be signed in October. Defence has been negotiating with Kaz since January, after market testing IT helpdesk and other IT support services, the source said.

HEALTH IT

Funds battling health tech costs Australia was in danger of experiencing an unsustainable medical technology "arms race", the country's largest health insurer has warned. Increasingly expensive health technologies were not properly assessed for cost-effectiveness and clinical outcomes before they were used, Medibank Private managing director George Savvides said. Costs to Medibank Private in claims for prostheses, such as stents, pacemakers and replacement joints, were growing 19 per cent a year, with payouts rising from $88 million in 2000 to $213 million last year. Mr Savvides's comments, at a Sydney medical conference, follow a Productivity Commission report into medical technology that finds advances such as new drugs and robotic surgery will add stress to the ever-increasing health budget and health insurance premiums.

Passing a long-haul drug test A large Australian pharmaceuticals company is to start testing next-generation radio frequency identification (RFID) chips later this month to stop vaccines and blood spoiling in transit.Victoria-based CSL will join two other companies from the dairy and biotechnology sectors that are waiting on the availability of second-generation RFID tags to begin trials in their temperature sensitive, cold supply chains. Present generation-one tags can only hold 48 data points while the latest ones hold 720 data points. About six companies from the biotechnology, seafood and pharmaceuticals sectors use a RFID-based temperature monitoring service developed by Australian company Exago and Global Licensing and Innovation, which is a subsidiary of Carter Holt Harvey.

Tasmania plays guinea pig to HealthConnect THE covers were lifted on the nation's three flagship HealthConnect electronic health record projects at the Health Informatics Conference 2005 in Melbourne yesterday. While the various projects have been well received by medical providers, consumers and funding authorities, their enthusiasm to get things up and running has been tempered by the size and complexity of the installations.

Tasmania is the first cab off the rank, with a project to standardise electronic clinical messaging from Launceston General Hospital to GPs in the surrounding area, planned to start in November. Tasmania HealthConnect director Mary Blackwood said the plan may not seem very ambitious, but people who knew hospital systems would realise this was a substantial project. The electronic health record project will be aligned with other state e-health work, including replacement of hospital

RESEARCH & DEVELOPMENT

Business on R&D expenditure grows Business expenditure on research and experimental development (R&D) has increased for the fourth successive year, growing by 10% between 2002-03 and 2003-04, to $7.22 billion. As a percentage of Gross Domestic Product, business expenditure on R&D was 0.89%, higher than the 0.87% recorded in both 2002-03 and 2001-02. Businesses in the manufacturing and the property and business services industries were the largest contributors to total R&D expenditure, with 46% and 23% of the total estimate respectively, according to the research undertaken by the Australian Bureau of Statistics.

Wind to power water plant Western Australia's much-touted desalination plant will be powered by a $180 million wind farm of 48 giant turbines.The 80 megawatt wind farm, to be built at Emu Downs north of Perth, will make the desalination plant the largest of its kind in the world to be powered by renewable energy. The $387 million plant, under construction at Kwinana, fulfils a key Gallop Government election pledge to drought-proof the state's thirsty capital of 1.2 million people with a desalination plant powered by clean, green energy. It is scheduled to produce its first purified water next year. The farm will provide enough clean energy to power 50,000 homes a year, displacing the emission of 220,000 tonnes of carbon dioxide into the atmosphere.

Wireless chips to save water National ICT Australia is just weeks away from announcing its first product prototype, a smart, wireless water sensor for use on farms.The Nictor is the centrepiece of National ICT Australia's first priority project, which will be revealed today. Its Water Information Network (WIN) project will develop catchment-wide smart water-use products and infrastructure. The first research and development project is a smart farm irrigation system. The Nictor, developed in Victoria, will enable monitoring and control of water infrastructure.

CSIRO $44 million short of target THE CSIRO has failed to attract financial support from industry for its Flagships research program, in which the CSIRO collaborates with the private sector and universities to tackle long-term problems of national significance. The science agency has a $44million shortfall in its targets for funding from the private sector for Flagships research. In its first three years to 2005-06, Flagships was meant to generate $102million in external revenue, but that figure has been cut to $58million. The 2006-07 estimate will also need to be cut back significantly from the current $82million estimate.

SECURITY & DEFENCE

Australia develops robo-soldiers Australia is developing battlefield robots capable of military operations that could free soldiers from some dangerous tasks. The government was investing increasing amounts in the research and development of "battlespace" technology that can be deployed on land, sea and air. In the future, unmanned battlespace vehicles will be deployed in fleets to gather information, conduct surveillance, sweep for mines, defuse bombs and carry out a range of dangerous tasks. The robots will include a land vehicle capable of navigating difficult terrain while carrying supplies or conducting reconnaissance missions, and an underwater craft known as Wayamba for surveillance and mine detection.

Chips in for passports A $43 million microchip contract signed by Sharp and the Department of Foreign Affairs has opened the door for delivery of e-passports to Australian travellers from October 23. The move will make Australia one of the first countries to issue biometric passports en masse. The five-year agreement between Sharp and the Department of Foreign Affairs and Trade (DFAT) came into effect 8 August. Large shipments of chips have already been delivered to passport contractor Note Printing Australia.

Biometrics win Fed's faith The Howard Government continues its flirtation with biometrics technology, outlaying more than $2.7 million on a six-month trial of an "identity assurance" border control system at Sydney Airport. The system captures three types of biometrics - an iris scan, fingerprints, and a facial recognition image.

These templates will be held in a database for matching purposes. Immigration Minister Amanda Vanstone said the pilot would test the department's capacity to capture, store, retrieve and match a range of biometric data in a real-life setting.