Dennis Jensen (Tangney, Liberal Party) Share this | Hansard source

I am speaking in unequivocal opposition to the government’s Tax Laws Amendment (Research and Development) Bill 2010. I am the only person in this House that I am aware of who has worked as a research scientist within both CSIRO and the Defence Science and Technology Organisation. I have spoken in this House many times on this government’s short-sighted penny-pinching budget cuts to such organisations as CSIRO and ANSTO. This legislation just drives another stake into the heart of scientific research in the form of business R&D in this country. So much for the clever country!

The first question which should always be asked about legislation is: is it necessary, especially when there is a very good system already in place? Given this government’s dismal track record based on the philosophy of ‘if it ain’t broke, let’s break it’, what are the alleged problems? Michael Johnson Associates is Australia’s leading specialist R&D tax concession firm, and this is how it views the so-called flaws in the current system that are used as excuses for this legislation:

… 1—The current Concession facilitates bogus, illegitimate claims against the taxpayer

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In fact, all the evidence over the history of the program is that it is responsibly used by the vast majority of users and very few risk assessments proceed to prosecutions. Removing benefits from all taxpayers for the inappropriate behaviour of the few is not a rational response to the issue of alleged misuse.

… 2—The Concession provides assistance to non-genuine R&D

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The real mischief here is when one starts to import a moral dimension to what is genuine R&D. The strength of the current Concession is that it delivers an internationally-competitive definition of eligible industrial R&D. The proposed definition in the Credit, in seeking to narrow the definition to limit assistance to “genuine R&D”, manages to disqualify the vast majority of R&D actually conducted by Australian businesses, large or small.

… 3—The criticism of the Credit has come from those with a vested interest in the status quo

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If a submission comes in arguing for the status quo, does it automatically follow that the submission can be discounted because it is designed to protect a vested interest?

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… responses such as the recent public submissions to the Treasury will always come in the main from those with a vested interest. That is the usual driver for a party to respond at all.

Blind Freddy could see that! Using that ridiculous and specious argument, can we then look forward to the union movement being locked out of any input into IR legislation? It continues:

… 4—80% of the Concession goes to 100 companies

For decades, Australian Bureau of Statistics on R&D have indicated that the vast majority of innovation spend is incurred by a handful of Australian companies. This is, and will always be, a matter of fact. The current trends in the Concession simply reflect this fact. Given that the Concession is open-ended, the share of those 100 companies will be determined by the prevailing rules and the amount they identify and claim. When added to the spend and claim of the other 7,900 firms in the program, the proportions will then be determined as a matter of mathematics.

There is not a finite amount of claims and assistance available. The proportions are only determined after the claims are identified and made against the rules.

The thinking behind the restrictions in the new Credit is that the rules can be changed to alter these proportions. This is entirely possible. You can rewrite the rules so that the proportion of assistance accessed by the other 7,900 is a much larger figure. The problem comes in when the rules are so restrictive that the proportion is larger but the overall value of the assistance to those 7,900 companies falls.

This is exactly the concern being reflected by the commentators regarding the Credit. We are being offered a program that wipes out assistance across-the-board. A larger slice of the cake might go to SMEs but so what if we are now cutting up a cup cake as opposed to a passionfruit sponge.

Yet again, the good old socialist focus on distributing current wealth instead of enabling individuals and companies to create more is writ large in bold italics. This is the classic Fabian sheep clothing of R&D funding hiding the wolf of grabbing back money and wrecking proven and effective programs.

This bill has been condemned by groups and individuals across the business and scientific spectrum. Let us hope that this dissent will not prompt another unscrupulous and indefensible ad campaign from this government. Last February, Peter Roberts wrote a comprehensive article in the Australian Financial Review giving a cross-section of responses about why this bill should be defeated. He said that the change in definitions of eligibility and exclusions will ‘slash the $1.4 billion cost of assistance by as much as half’, according to KPMG. Roberts continues:

While the new credit is a big boost for start-up companies and some foreign companies, it has been condemned by business groups, tax professionals, academics and staunch Labor supporters as betraying an innovation agenda pioneered by Hawke government minister John Button.

Of course we know the respect the Prime Minister showed for John Button and his work. He chose to visit a film star for a photo opportunity rather than pay his respects at John Button’s funeral.

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