This funding cut comes only five months after the government announced its vision to double local digital content production over the next decade.
The Australian Interactive Media Industry Association (AIMIA) has received written confirmation from Austrade that funding for its TradeStart digital media export program had been cut by 50 percent with the funds reallocated to other industry sectors.
This will result in the closure of AIMIA's Queensland office, currently servicing export clients in South Australia, Western Australia, the Northern Territory, and Queensland. Delivery of export services nationally will now be consolidated to a single Sydney office with half the number of staff and funding.
The move has come as a surprise as the Minister for IT and Communications Senator Helen Coonan launched the Digital Content Industry Action Report Agenda, Unlocking the Potential, in March this year.
The launch aimed to provide "exciting industry development opportunities" for Australia's Digital Content Industry which employs about 300,000 people and contributes A$21 billion (US$16 billion) annually to the economy.
John Butterworth, chief executive officer of AIMIA, said the funding cut goes directly against the report's recommendations, which identified exporting Australian digital content as a "high priority".
Butterworth said it is both confounding and frustrating to receive mixed messages from the government.
He said the complete about-face has occurred over a five-month period.
"Austrade has made it clear that the decision has nothing to do with the exceptional performance of the AIMIA program or the digital content industry itself, so why do it?" Butterworth queried.
"New digital opportunities are constantly emerging with the rapid adoption of broadband, wireless and digital broadcasting technologies.
"While other countries are suitably investing in these new trends, some members of the liberal government refuse to look to the future and recognize the mammoth potential impact this industry could have on our economy."
This decision, he said, will have serious and immediate ramifications on Australia's Digital Content Industry.
Participants in the AIMIA TradeStart Program also responded angrily.
Che Metcalfe, founder of Kukan Studio, an Adelaide-based developer of content for mobiles that now exports to Europe, Asia, and North America, said the program had helped budding digital content exporters that were not based in New South Wales or Victoria.
"The program was a major help to us in getting our first export sale and to see it cut like this is outrageous. There will be other companies like ours that will take a lot longer or might not ever make it to international markets without help from these sorts of programs. For an export-focused country like ours, it's a bizarre decision," Metcalfe said.
Val Sanders, managing director of Queensland-based Conference Online, said digital content companies outside Sydney and Melbourne will be hardest hit by this decision.
"You can't cut the funding and resources in half, close the office that services the other states, and expect that the whole country is going to continue to get the same opportunities and help from the program. It's just not realistic," Sanders said.
Franco Smargarsi from Compass EduMedia in Western Australia said cutting the digital content TradeStart program would directly reduce the number of Australian companies that could access the export assistance the program provides.
"Getting into international markets is hard enough at the best of times. Given that the world is going digital you'd think they'd be increasing the resources for helping Aussie content companies sell overseas, not cutting them," he said.