Budget 2014: Govt chops NICTA funds in two years


news The Federal Government tonight revealed plans to totally stop funding the nation’s peak ICT research group National ICT Australia (NICTA) after two more years, with Communications Minister Malcolm Turnbull stating that the organisation would then need to move to a “self-sustaining model”.

NICTA claims to be Australia’s largest organisation devoted to ICT research. Founded in 2002 under the then-Howard administration, focuses both on foundational ICT research as well as spinning off that research into startup companies and licensing the technology it develops. In its time, according to its website, the group has created 11 new companies, collaborated on joint projects with a range of ICT industries, developed a substantial technology and intellectual property portfolio and built a substantial PhD program. NICTA has more than 700 people across five laboratories around the nation.

However, the Coalition has long viewed the organisation as being better funded through its own efforts. In the 2013 election campaign, then-Minister Assisting for the Digital Economy, Kate Lundy, announced Labor would support NICTA with an extra $42 million in funding. The Coalition promptly promised to cut the funding if it won the election, which it did.

In a statement issued tonight associated with the Federal Budget, Turnbull noted that NICTA’s approximate current funding levels ($84.9 million over the next two years) would be maintained, with the Department of Communications and the Australian Research Council each to contribute $21.4 million in 2014–15 and $21.0 million in 2015–16. However, after that point, NICTA would receive no more direct funding.

“It was always expected that funding from the private sector would play an increasingly important role in supporting NICTA’s operations,” said Turnbull. “NICTA’s rapid recent growth in commercial revenue, through its partnerships with domestic and overseas firms, shows it can draw funding from a wider range of sources.”

“In recognition of NICTA’s maturity and current stage of development, the Government considers the time is approaching for NICTA to stand on its own feet from June 2016. The Government expects NICTA to pursue funding from private sector investment and research grants. By making the right choices today, we are creating a stronger economy for tomorrow. This is part of the Abbott Government’s Economic Action Strategy to build a strong, prosperous economy for a safe and secure Australia.”

The funding cut will not leave NICTA destitute. Lundy estimated last year that NICTA had received funding of $564.5 million in total funding over the period from 2002 to 2015. The group’s own website notes that it is also funded and supported by the Australian Capital Territory, the New South Wales, Queensland and Victorian Governments, the Australian National University, the University of New South Wales, the University of Melbourne, the University of Queensland, the University of Sydney, Griffith University, Queensland University of Technology, Monash University and other university partners.

However, at least one of those supporting organisations — the Victorian Government — has also recently cut its funding to NICTA, in a move in February which resulted in job cuts from the group’s Victorian laboratory.

I’m on record as supporting the termination of government payments to NICTA, and I support this move by the Government today. As I wrote back in September last year (and my view has not changed):

“This isn’t the first time funding for NICTA has been threatened — this tends to happen at every Federal Election, and you can understand why. It’s hard for politicians to see the advantage in maintaining an organisation like NICTA, when it seems to soak up so much public funding and yet return so little in benefits to the Australian IT industry. Many people, including myself, have long wondered why the Government doesn’t just take the money it’s spending on NICTA and re-allocate it into tax breaks for the IT startup sector in Australia. That’s where most of the technology innovation in Australia happens — and it happens without support from NICTA.

I don’t personally have a problem with the funding being cut. I don’t see it as the role of the Federal Government to directly fund initiatives such as NICTA. In effect, by doing so, the Government is acting as an investor in projects which may not often have much worth. In my opinion, it would be better for the Government to support the early stage technology startup sector as a whole through significant underlying tax incentives (including to angel and venture capitalist investors), and then let the market sort out where investment should take place. Alternatively, it could fund the education sector more directly to pump up technology skills.

I think NICTA is viewed by many in Australia’s technology sector as a bit of an irrelevance. I’m sure there are many people who put a lot of faith in it. But personally, I’ve never believed that it has a huge impact on the sector, one way or the other.”


  1. “In effect, by doing so, the Government is acting as an investor in projects which may not often have much worth.”

    This is a shortsighted view. NICTA is not about generating new businesses. NICTA is a research organisation. It serves to incubate the countries best thinkers and to give them the scope to think of new ideas, rather than to simply refine existing (money driven) business demands. I’ve done both commercial research and real research. With very few experiments, commercial research is largely money driven and deadline driven and therefore leads nowhere. By shutting down NICTA funding and making it “business driven” the core science and blue sky thinking will disappear. In effect, we are ensuring that the best and brightest from Australia, will continue to move elsewhere. When I’m done with my PhD at Cambridge, should I come back to Australia and build up Australia’s intellectual and research status in the world, or should I continue to live in Europe/the US, leaving nothing behind but an unpaid Hecs debt? With no (useful) NICTA to come back to, I think you know what the answer is.

    • The question is whether or not NICTA was actually doing useful research. This is what Senator Lundy said about it last year:

      Lundy listed some of NICTA’s major achievements since 2002 as being a key member of a national consortium developing a bionic eye to improve the sight of visually impaired Australians; the development of NICTA’s OKL4 microkernel – a crash proof operating system for mobile phones and internet devices that now runs in over 1.5 billion devices; sand pinning off Saluda Medical Pty Limited – a company producing medical devices which stimulate the spinal cord to help relive chronic pain.

      NICTA also has a joint research collaboration agreement with global business consulting and technology services firm Infosys to tackle business problems including cloud resiliency, infrastructure and disaster management, and logistics; and it has also worked with Tip Top bakeries to implement the Cost to Serve Solution software in the transport and logistics sector “to improve productivity and generate significant cost savings”. In addition, it has developed a smart maintenance system which continuously monitors the Sydney Harbour Bridge’s structural integrity for any weaknesses.

      To me, that list doesn’t sound like it’s worth the amount NICTA was being funded for — and most of the problems it appears to have been working on are also problems the private sector is working on. If it was working on or supporting some really great stuff, that would be different — but I just haven’t seen much in this line in my time watching the organisation.

      • I would suggest digging deeper than a minister as they will only point out things which are visible for the community to see and experience.

        Their Smart Grid and Future Grid projects power companies will not invest in this technology as there is no significant benefit to them.


        Distributed Game Platform – Would probably not work without an NBN

  2. This was probably “revenge” after the head of NICTA said that the NBN should be all fibre.

  3. They’re cutting $100m from the CSIRO as well, just as important, this whole budget is anti-research.

  4. There’s more to ICT research than building some new website or putting “2.0” at the end of a tired old product. Many people, and in particular politicians, struggle with the difference between pure and applied research, and between research and development.

    From what I’ve seen of NICTA (never worked there), it undertakes both pure & applied research. Research has an element of risk — that’s a big distinction between research and development.

    Once NICTA shuts its doors we will be worse off without the research in meshed communications, sensors, machine learning etc.

    • I’d love to see some great examples of great research NICTA has been doing, but I haven’t seen many so far. I suspect that scientific research is quite different from technological research, in that scientific research is often more fundamentally undertaken by dedicated research institutions, while technological research is more often undertaken by companies themselves.

      I may be wrong — but that’s the way I tend to see these things playing out in the field.

        • hey Liz,

          if you want to send me information about it (as other organisations do), that’s fine, but I rarely conduct site visits — I have little time.


  5. The question is why continue funding NICTA until 2016? If anyone thinks that NICTA is a benefit to research, then what is wrong with distributing the funding more fairly to universities all over Australia?

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