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Slow internet among barriers to growth, says Productivity Commission

Australia is in a race against against technological change and could be left behind, a five-year productivity inquiry into the country’s “data and digital dividend” has found.

Inadequate internet, lack of skills, low awareness and uncertainty about benefits, security concerns, cost and maintaining legacy systems are identified as barriers in the interim report released by the Productivity Commission on Wednesday.

Although Australia is doing well compared to other countries on internet connections and data volumes, the nation is falling behind on more advanced indicators, the report said.

“Australia’s internet speeds are relatively low and business use of data-driven technologies, such as AI (artificial intelligence) and analytics, trails uptake in other countries,” the commission found.

Speed test data by Ookla shows Australia’s actual internet speeds are not globally competitive, with a download speed ranking of 18th in the world and the median fixed broadband download speed ranking 61st.

Agriculture businesses were most likely to cite unsuitable internet speed and geographic location as barriers, suggesting poor digital connectivity in regional and remote areas could be limiting technology uptake.

Digital infrastructure, particularly in regional and remote Australia, is needed for productivity-enhancing access to low-cost and reliable internet for local businesses and workers, the report said.

The inquiry, commissioned by former treasurer Josh Frydenberg, found the federal government invests in regional digital infrastructure, “but current funding often lacks transparency and accountability”.

Social inclusion would also increase if all Australians could access quality essential services and expertise online, with the pandemic accelerating digital change in telehealth, education and other areas.

Cloud technology, which could unlock the next wave of change, was more likely to be used by businesses in knowledge services and information media and telecommunications, at over 60 per cent adoption.

Industries with higher uptake of cloud technology also had higher adoption of artificial intelligence.

Manufacturing and supply chain logistics industries were more likely to use radio frequency identification and electronic data interchange tools.

But some businesses may be underinvesting in cyber security due to underestimating the likelihood or costs of a breach, the report found.

“Digital technology and data will continue to shape global economic growth and social change in coming years,” Commissioner Stephen King said.

“Whether we fully realise the productivity dividend offered by these opportunities will depend on how effectively governments, businesses and individuals can recognise and safely harness these changes for Australia’s benefit.”

The Productivity Commission is inviting submissions by October 7 for the final report due in February.


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