Australia - Country Commercial Guide
Digital Economy
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Overview

Australia’s Digital Economy Strategy 

The Australian government’s digital economy and strategy policies are managed across a number of departments including Department of the Attorney General, Department of Industry, Department of Finance and the Department of Government Services. The Digital Transformation Agency - now housed in the Finance Department - has the responsibility for the digital transformation of government services and in December 2023 it issued the Data and Digital Government Strategy. The document  outlines the government’s 2030 digital vision. 

Key components

Vision and Objectives 

  • Vision: To reform public service and build a digital government that is user-centric, efficient, and transparent, leveraging data to drive innovation, improve services, and enhance decision-making.  
  • Objectives: These include modernizing digital services, fostering a data-driven culture, ensuring robust cybersecurity, and improving digital inclusion for all Australians. 

Key Focus Areas 

  • Digital Services: Streamlining and improving online services to ensure they are accessible, user-friendly, and responsive. This involves investing in new technologies to better meet the needs of citizens. 
  • Data Management: Developing a comprehensive data strategy to maximize the value of government data. This includes improving data quality, enhancing data sharing and accessibility, and ensuring privacy and security. The goal is to use data to inform policy, drive innovation, and support evidence-based decision-making. 
  • Cybersecurity: Strengthening the security of digital infrastructure and data to protect against cyber threats. This includes implementing advanced security measures, conducting regular risk assessments, and promoting a culture of cybersecurity awareness. 
  • Digital Skills and Inclusion: Ensuring that all Australians have the digital skills needed to participate fully in the digital economy and society. This involves investing in digital literacy programs, improving access to digital tools and services, and addressing the needs of vulnerable populations. 

Key Initiatives 

  • Digital Transformation Projects: Launching major projects to modernize government services and systems, such as upgrading digital platforms, integrating data systems, and developing new digital tools. 
  • Data Innovation Hub: Creating a hub to support data-driven innovation, research, and collaboration. This hub aims to provide resources, tools, and support for utilizing data in creative and impactful ways. 
  • Cybersecurity Strategy: Implementing a comprehensive cybersecurity strategy to safeguard against evolving threats and ensure the resilience of digital systems. 

The Australian Government’s Data and Digital Government Strategy Plan aims to create a more agile, efficient, and citizen-focused digital environment, leveraging technology and data to enhance public services and governance. 

Projected Digital Economy Growth  

According to the Australian Bureau of Statistics (ABS), digital activity is defined as the aggregate of digital enabling infrastructure – computer hardware/software, telecommunications equipment and support services that form and facilitate the use of computer networks; digital media which covers digital audio, video and advertisement broadcasting services that can be created accesses, stored or viewed on digital devices; and e-commerce which incorporates retail and wholesale services and margins from digitally ordered or platform-enabled online transactions. 

Most of the value-add in the Australian digital activity sector is concentrated in four industries: information; media and communications; professional, scientific and technical services; and wholesale and retail trade.  Of total digital activity, output was dominated by demand for support services (39.8%), e-commerce – wholesale (22.95%) and telecommunications (18.4%).  The ABS reports that digital activity increased 8.6% (an increase in revenues of about US$6.5 billion) in the 2021-2022 period.  Within digital activity, over 2021-2022, the highest growth was observed within support services (11.4% increase), software purchases (25% increase), online sales from wholesalers (4.5% increase), and e-commerce – retail (increasing 12.6%). 

The Australian Information and Communications Technology (ICT) market is valued at approximately US$112 billion. The information technology (IT) services industry accounts for approximately one third of the total IT market and is valued at nearly US$23.5 billion. The Australian ICT market is mature with many multinational technology companies active in the local market.  

A subset of the ICT market is cybersecurity, which was valued at US$5 billion in 2022 and will grow to US$5.8 billion by 2024, according to a recent report release by Causticizer. The local cyber market is growing at over 8% annually. Much of the growth can be attributed to emerging digital threats, increased exposure to cyber risk, corporate reaction to increased regulation of cyber risk, and business’ evolution to consolidate a digital business strategy. A recent report by the Australian Cyber Security Growth Network entitled Cyber Security Sector Competitiveness Plan suggests that over the next decade, the Australian cyber market has the potential to triple in size.  

Overwhelmingly, the Australian government is spending vast resources on protecting Australia’s critical infrastructure and shoring up its cybersecurity posture. 

For example, Australia has released its 2023-2030 Australian Cyber Security Strategy. The Strategy has a number of planks including ensuring strong businesses and citizens, promoting safe technology, providing world-class threat sharing and blocking, protecting critical infrastructure, ensuring sovereign capabilities, and supporting a resilient region and global leadership. 

Australian Government’s Cyber Security Posture 

The Australian government’s cyber security capabilities are housed under the umbrella of the Australian Cyber Security Centre (ACSC). The ACSC works with government and business to reduce the cyber security risk to Australian government networks, and networks of national interests. It also acts to enable a more comprehensive understanding of cyber threats and sharing information to both government and the private sector alike. 

The ACSC houses the cyber security efforts of the Australian Signals Directorate (ASD), Computer Emergency Response Team (CERT) Australia, the Defence Intelligence Organisation (DIO), the Australian Criminal Intelligence Commission (ACIC), the Australian Federal Police (AFP), and the Australian Security Intelligence Organisation (ASIO).  

Market Challenges  

The Australian government is striving to be a global leader in digital regulation. 

Several notable examples 

Mandatory Bargaining Code of Conduct   

On July 31, 2020, the Australian Competition and Consumer Commission (ACCC) released the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 (Bargaining Code) for consultations. Then, on December 10, 2020, the Australian Government introduced an updated draft Bargaining Code for parliamentary consideration. On February 25, 2021, the Australian Parliament passed an amended version of the legislation. The amended legislation addressed several concerns identified by U.S. stakeholders. Under the Bargaining Code, designated platform services companies are required to engage in negotiations with registered Australian news media businesses to pay the news businesses for content accessed via certain services offered on the companies’ digital platforms.  

The Bargaining Code specifies that the Australian Treasurer is responsible for designating platforms. When designating platforms, the Treasurer must consider whether the platform holds a significant bargaining power imbalance with Australian news media businesses. The Treasurer must also consider whether the platform has made a significant contribution to the sustainability of the Australian news industry. If negotiations break down, or an agreement is not reached within three months, the bargaining parties will be subject to compulsory mediation. If mediation is unsuccessful, the bargaining parties will proceed with arbitration, with arbitrators seeking to determine a fair exchange of value between the platforms and the news businesses. In addition to the negotiation and arbitration requirements, the Bargaining Code imposes information sharing requirements, including a requirement that platforms provide advance notice of forthcoming changes to algorithms if the change is likely to have a significant effect on the referral traffic for covered news content. No companies have been designated under the Code to date. The United States will continue to monitor this issue  

Australia’s Consumer Data Right (CDR). The CDR is designed to give consumers greater access to and control over their data that is held by private companies. The CDR allows consumers the ability to compare and switch between products and services and encourages competition between service providers. The banking and the energy sectors are the first markets where it has been rolled out.  Non-bank lending will follow. 

Broadly, the regulation of data protection in Australia is governed by the federal Privacy Act 1998 and the Australian Privacy Principles. At present, the government is in a consultation phase considering industry comment to ensure that the Privacy Act is fit-for-purpose in consideration of the unique nature of the digital economy.  

In 2022 Australia joined the Global Cross-Border Privacy Rules (Global GBPR) Forum (known in some markets as the CBPR Forum) in a step towards global privacy harmonization. The Global GBPR Forum replaces the existing APEC Cross-Border Privacy Rules (APEC CBPR) and Privacy Recognition for Processors (PRP) certification systems. This Forum has expanded to include non-APEC countries. The UK has been added and the Dubai International Finance Center, DIFC, are members. 

Australia also led the world with the standing up of the eSafety Commissioner to ensure all Australian citizens’ online safety. The Commissioner has powers to counter cyberbullying, image-based abuse, and illegal and harmful online content through the Online Safety Act 2021. 

Market Entry  

Australia can be characterized a mature technology market. U.S. products and solutions are highly regarded in the local market, but it is a competitive and relatively small market with a population of 26 million. As a general rule, government contracts will stipulate that data resides in country, whereas in commercial environments, clients may be less likely to make that stipulation. All the large hosting environments, such as AWS, Google, and Azure have local data centers. Increasingly, we have noted a strong preference from end-users – particularly government – to source from trusted third parties and in this regards U.S. technology companies enjoy a strong reputation locally and are preferred suppliers.  

Public sector procurement.   

In the end-user market, the federal government – including healthcare, social care, education, and defense – is the largest market for cyber sales, accounting for over 30 percent of all cyber security sales 

Digital Trade Barrier  

Thanks to the Australia-U.S. Free Trade Agreement, there are no tariffs on the importation of software. A goods and service tax (GST) is levied on the landed value of goods imported into Australia. GST is also applicable to services that are carried out in Australia, but not on services that are carried outside of Australia. 

Digital Trade Opportunities 

AI has the potential to be transformative for the Australian economy over the next decade. A recent report released by Access Partnership in conjunction with Google entitled “Economic Impact Report Turning Australia’s AI Opportunities into Impact with Google” suggests that AI has the potential to boost economic benefits to businesses by US$210 billion by 2030, that US$5.5 billion of cybercrime losses could be prevented, and that US$2.7 billion of property damage could be prevented if AI-powered products and solutions are implemented in Australia. 

The Australian government has committed to establishing five “AI Adopt Centers” to help small and medium-sized companies understand, adopt and commercialize AI technology responsibly. Companies that have already been chosen and funded to stand up these centers are Boab Ai, Digital Transformation Australia, elevenM Consulting, and Redgrid Internet of Energy Enterprises.  These centers will complement the work done by the National Artificial Intelligence Centre.  

Recent reports have suggested that in Australia there are currently 544 AI companies – on par with countries like Canada. Over the last decade, the number of AI companies has increased notably with 396 having opened in the past 10 years, and 204 in the last five years.  

In the quantum sector, the Australian government also awarded a grant over USD$15 million to the University of Sydney to establish a National Centre for Quantum Growth to build connections across the quantum ecosystem, provide a pathway from R&D to commercialization, educate the broader community on quantum technologies, and position Australia as a leader in the development of quantum technologies.  

Cross-Sector Enabling Technologies, i.e., digital technologies that enhance productivity, efficiency, and functionality across different industries.  

The Quad is a diplomatic partnership between Australia, India, Japan, and the United States committed to supporting an open, stable and prosperous Indo-Pacific.   It is an informal relationship although over the years the Quad has become more aligned in its shared concerns of regional security, economic and health interests. Through the Quad’s Memorandum of Cooperation on 5G Supplier Diversification and Open Radio Access Networks, the Australian government and likeminded partners are focused on harnessing critical and emerging technologies to enhance the prosperity and security of the Indo-Pacific region.  

Open radio access network (O-RAN) technology has featured in key bilateral and multilateral partnerships in the past year. It has featured in a joint statement between the United Kingdom, Australia, Canada, and the US regarding telecommunications supplier diversity. Open RAN was discussed in the Quad leaders’ summit. 

The Australian government is also committed to ensuring the economic and physical security of its Pacific Island nation allies. One such technology initiative was the recent Australia/United States $65 million commitment for branching units off the Google Pacific Connect subsea cable to provide internet connections to Pacific Island countries.   

Other Market Opportunities 

Aside from the federal government, the largest end-user markets in Australia are in the following sectors: 

  • Financial services 
  • Retail 
  • Transportation 
  • Mining 
  • Building and construction  

Solutions that are in demand

Cyber security – monitoring, identity access management, network security and governance solutions 

AI solutions 

  • Cloud migration tools – there are still a high number of companies that are wanting to migrate fully to a cloud model in Australia. 
  • Mobile applications and management tools 

  • Critical infrastructure cyber management tools. 

     

Digital Economy-related trade events

MILCIS – Military Communication & Information Systems Conference (November 12-14, 2024) 

CyberCon – (November 26-28, 2024) 

AusCERT 2024 (May 21-24, 2024) 

Digital Transformation Summit (March 12, 2025) 

Digital Economy Conference (June 16 – 18 2025)