Pat Conroy (Charlton, Australian Labor Party) Share this | Hansard source

I am pleased to join my colleague the member for Grayndler and other Labor colleagues in opposing the Tax and Superannuation Laws Amendment (2014 Measures No. 3) Bill 2014. Labor strongly opposes the ill-advised and shameful cuts contained in this bill. The bill abolishes the seafarer tax offset with a saving over the forward estimates of $12 million, and reduces the research and development tax incentive offset with a saving of $620 million over the forward estimates.

We all know that the coalition's vision for the Australian maritime industry is a short-sighted and vicious vision. The coalition want our maritime industry to be dominated by foreign flagged ships, crewed by foreign workers, who are paid low foreign wages, and who work under scandalous foreign working conditions with foreign safety standards. It is indeed 'Work Choices on water', as the member for Grayndler stated.

This bill clearly identifies the coalition's intention to remove the supports that the previous Labor government established to revitalise Australian shipping. The object of this offset was to stimulate opportunities for Australian seafarers to be employed or engaged on overseas voyages and to acquire necessary maritime skills. Isn't there a stark difference between Labor's approach and the coalition's? Labor is supporting Australian workers and Australian industry and the coalition is supporting foreign workers and foreign companies.

This tax initiative was the result of lengthy consultations with industry under the Labor government, and resulted in Labor's shipping package. Even before the tax offset was two years old, the Abbott government moved to abolish it—how typically short-sighted of this government! The Australian Shipowners Association—that is right, the shipowners—strongly opposed the abolition of the Seafarers tax offset and they opposed the abolition for very sensible and rational reasons, principally that this offset is an important element of 2012 reforms which have helped to reduce the operating costs of Australian vessels, increase the competitiveness of Australian shipping and provide significant opportunities for employment of Australians in international trade.

The association has also stated that there are a number of Australian based businesses operating in the offshore sector that have a strong desire to deploy their Australian officers overseas. The Australian Shipowners Association not only argues that the offset should be retained but that it should be expanded to the offshore sector. So we have a situation where the shipowners are arguing that the offset be retained and the Abbott government completely disregards the wishes of the industry experts. By abolishing the offset there is a saving to the budget bottom line of $12 million. Considering the government is happy to pay $112 million to close down a health program, Labor believes that this relatively minor saving to the budget should be opposed because there are many benefits to the offset.

The Abbott government's plans for shipping are clear: we know they want to abandon support for Australian coastal shipping. This is against our national and security interests, and for this reason Labor opposes the abolition of the Seafarer's tax offset, which is a crucial part of those opposite's plan to reintroduce Work Choices on water.

I will turn to the second element of this bill which Labor is opposing, and that is the cut to the R&D tax offset. The R&D tax offset is proposed to be reduced by 1.5 per cent, from 45 per cent to 43.5 per cent for companies with an annual turnover of less than $20 million, and from 40 per cent to 38.5 per cent for all other companies. Cutting support to research and development forms part of this government's anti-science agenda. Admittedly, a Minister for Science was eventually appointed in the second year of this government. However this does not hide the fact that the coalition are hell bent on cutting support for science and research, and we see this in the drastic cuts to science funding that they have undertaken.

In November 2014, Minister Macfarlane told Manufacturers' Monthly:

The Government is putting in place the policies and programmes that will provide incentives for manufacturing firms to invest in technology, and research and development, in order to foster a viable, competitive and successful manufacturing industry.

Sorry, Minister, but I do not see how reducing the R&D tax offset provides an incentive to invest in research and development. Surely it does the exact opposite?

By contrast, Labor has a very proud record in relation to research and development. It stands in stark contrast to those opposite. This bill represents a $620 million cut to support for innovation in this country. It is incredibly short-sighted and it is incredibly silly in an era where we need to grow jobs for the future. Unfortunately, it is part of the broader agenda of the coalition to attack innovation rather than support it. In 1996, when the coalition government came back into power it slashed the R&D tax concession from 150 per cent to 125 per cent. And now the coalition government elected in 2013 is continuing that vicious theme.

We have seen $2 billion of cuts to innovation programs. We have seen the gutting of commercial programs, including Enterprise Connect. We have seen a $112 million cut to the CSIRO, one of the most short-sighted and counterproductive cuts in Australian history. And we have seen a $312 million cut to the precincts initiative. They have renamed that 'growth centres' but it is essentially the same program. It was a program designed to counter a problem we have in this country, which is that we are great at blue sky research but we are not so good at applied research.

The precincts initiatives announced and implemented under the last Labor government were all designed to bring together researchers who had some great ideas with Australian industry, which desperately needs assistance to innovate and develop the new products. It recognised that we are great at invention—whether that be the black box flight recorder, the humble Hills hoist or our part in developing wi-fi. We are great at inventing things but we are pretty ordinary at commercialising them in Australia and reaping the jobs dividend. That is why the $500 million precincts initiative was so important in bringing together industry and researchers to develop clusters.

Unfortunately, when this government came into power it slashed funding from that program, going from $500 million to $188 million. That is a great example of this government's complete mistrust and lack of support for innovation. The $620 million cut contained in this bill continues that theme. It is a theme that they have advanced in other bills. For example, they ended the R&D tax concession for R&D expenditure over the first $100 million—a policy of great stupidity. It is a policy that penalises companies that choose to be high-tech and that choose to invest in research and development. This bill builds on that barbarism, quite frankly.

Their broader agenda is designed to counter innovation, it is designed to counter developing the jobs of the future and it is designed to keep Australia as a farm and a quarry—and a nice place to visit. This is a tragically short-sighted vision for this country, a vision that will condemn future generations to a lack of economic competitiveness compared to the rest of the world.

We have seen their attempts to abolish the Australian Renewable Energy Agency, a very important agency designed to commercialise renewable energy research. We have seen their crusade against the Clean Energy Finance Corporation, so crucial to the innovation chain for supporting clean energy investments and so crucial to supporting the first large-scale deployment of new cutting-edge renewable energy technology. We have seen this approach to innovation in their destruction of the automotive industry, an industry which is a key driver of innovation in this country. It is an industry that contributes four per cent of business expenditure on research and development—more than 10 times their contribution to employment. It is an industry that has gone under this government's economic watch.

The government is intent on sending the work on the submarines overseas, ignoring not only the deep national security implications of that decision but also the loss of a great opportunity to modernise Australian industry. One of the great benefits of the Collins class project begun under the Hawke-Keating Labor governments was that it engineered a modernisation of Australian industry. Before the Collins class submarine project, something like 200 companies in Australia were qualified for ISO 9000, the global benchmark of competitive manufacturing. After the Collins class project, because of all the great firms involved in that project and the challenges of working on such a high-tech project, thousands of manufacturing companies were ISO 9000 compliant. That was the potential of the Collins class project, and that was the potential of the future submarines project that this government is ignoring by its short-sighted attempt to send the work to Japan. The bill we are debating now, which embodies a $620 million cut to research and development, is part of the broader agenda of destroying innovation in this country. They are not just destroying innovation; they are sacrificing the jobs of the future on the altar of economic short-sightedness. They are sacrificing the industries of the future.

I come from a region that has a proud industrial heritage. It is an area of the Hunter that still has steel production. We do not quite have the BHP steelworks anymore but we still have some great steel manufacturers. We have got heavy engineering, railway manufacturing, defence manufacturing, energy production—I am proud to have the largest power station in the country—and operating coalmines. We have a great future in those parts of the economy. We also have the CSIRO's clean energy flagship doing great work on solar research. And we have the Newcastle Institute for Energy and Resource Research—an institute leading the country, if not the world, in research on energy networks and utilisation of fossil fuels in imaginative ways. So my region is well placed to grow jobs and to develop new industries while modernising and supporting current industries. But to do that it needs appropriate support from the federal government—support that recognises the massive externalities, benefits and spillovers that accrue to the Australian economy from innovation and the development of these industries. That is ultimately why we subsidise research and development in this country. We subsidise it because it produces not only a great private good but also a great public good: research and development, innovation and all the externalities that accrue to that. Any move to cut R&D, especially in this manner, is short-sighted. Any move to cut innovation, to stop companies being as competitive as possible, is short-sighted. It is symbolic of this government's economic irresponsibility.

This is a government that does not care about growing the jobs of the future. This is a government that does not care about giving our future generations—my kids and their grandkids—the best possible start in life and the best possible chance to achieve their full economic potential. That is why Labor proudly stands opposed to this bill and the measures within it.

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