Clare O'Neil (Hotham, Australian Labor Party, Shadow Minister for Innovation, Technology and the Future of Work) Share this | Hansard source

Deputy Speaker, thank you so much for the opportunity to contribute to what is a critically important debate about a crucial piece of legislation. A lot of what we talk about in this chamber must feel a little bit esoteric, but we're actually addressing here one of the most pivotal questions that we face as a parliament: how are we going to use the powers and the laws that we have to create a high-wage and high-skill economy for today's Australians and for their children and grandchildren?

Arguably, the single most important lever that we have to influence how innovative we are as an Australian nation is the program that we're talking about today, and that is the R&D tax incentive. It's a huge program. It's important. It's very expensive—we're spending $2 billion a year on this program. And if it's well designed it is an incredibly powerful driver of productivity.

I really want to echo a lot of the comments that were made by the shadow minister who spoke before me. What is most notable about this bill, from my point of view, is not some of the detail that has been included in the bill but it's actually what's not here. What I see when I look at this piece legislation is a gut-wrenching lack of ambition about how much this parliament could be doing to fix the very significant problems that our innovation system faces as country. With so many of the big structural problems that we should spend our time in this parliament dealing with the government comes in and it goes to the margins. It picks off the detail of, 'Should we do this per cent or that per cent or should it be this amount or that amount,' when really there are some fundamental things wrong with the system that we could be here debating today and we're not doing it. I see that as a tragic missed opportunity. I wonder sometimes why people fight so hard to be here in this chamber if all they do with the opportunity of government is just tinker at the margins. There are much bigger problems and much bigger issues and, unfortunately, the bill before us—as it has its good points and bad points—is not going to go the fundamental issue of how we are getting the incredibly creative and clever people of our country innovating and creating new things that are going to drive the jobs of the future?

I note that the bill seeks to implement some of the recommendations of the R&D tax incentive review, which will, I'm sure, in some ways improve the integrity and effectiveness of this scheme, but it doesn't structurally or systemically fix our deficient innovation system. Most importantly, it does not invest any more government capital in direct or indirect R&D support, and I will come to this very significant problem in a few minutes. It also doesn't really contemplate any type of substantial public policy reform to create a high-skill, high-wage economy. And that's the bottom line for us as a parliament. We don't need any more speeches from the RBA governor, or renowned economists around Australia and around the world, to know that we need to start thinking about some new ideas in this country, in this parliament, and the bill before us is not going to help us do that.

That R&DTI, as this program is known, is something that's been under debate in the chamber here for a long time. In fact, it was 35 years ago that the Hawke government first introduced a kind of broad based tax incentive to try to encourage Australian companies to innovate. It was intended that that concession be temporary, but I think the government saw that this was actually driving big productivity benefits in the economy and so the Keating government later decided to make this a permanent feature of our tax system. Since that time we have gone through four big reforms. Some of those were done by the Howard government and some by the Rudd and Gillard governments. In its current incarnation, in 2011 the previous Labor government made some very substantial changes to the scheme. I'm very proud of what that Labor government did to the scheme. It made very significant improvements to the way that the R&DTI operated.

But we are in a new age now. Believe it or not 2011 was nine years ago. Since that time we have seen countries around the world streak past us when we look at measures of how we compare on various innovation statistics. It's pretty clear that we need to think about some new ideas, some fresh thinking on this subject, and again, unfortunately, the bill today doesn't help us do that.

As we continue the debate in the parliament about what is the most effective way for us to support innovation, one of the things I'd like to be a part of the discussion is an issue about whether we provide direct support for innovation or indirect support for innovation. It might sound banal and techie but it's actually a very important decision for us to make. When we look at best practice countries around the world what we see is that they are very reliant on direct forms of support for innovation. So what we see is that they create grants programs where they thoughtfully assess project by project what it is that companies would like to do in the way of innovation.

The measure that's before us today is something called an indirect measure. Basically that tells us it's agnostic to what type of project you're doing. It doesn't matter whether you're innovating in renewable energy, or in the start-up sector, or some other area of the economy. And it doesn't ask anything really in terms of performance outcomes. Often makers of public policy start to hear alarm bells ringing when we're funding inputs but not asking much in the way of outputs to see how hard our money is working for us.

One of the things that's really interesting in the way our program for innovation has evolved as a country is how we've leaned more and more on direct rather than indirect measures, and that, during that time, the best practice countries in the world have gone in exactly the other direction. In fact, there are very highly innovative countries around the world today where 100 per cent of their innovation programs are funded directly; so with the RDTI, this very important, powerful measure we're talking about today as a way to drive innovation, all of the $2 billion per year is indirect spending.

One of the interesting things about that is how different an approach it is to that taken by previous coalition governments. It was Howard and Costello who really pushed for direct measures. They also pushed for an increase in R&D spending. I'm perplexed and fascinated by the different approach that we see from this current incarnation of the coalition government. These days, under the Liberals, the R&D tax incentive measures have been a much bigger part of the program overall for how we fund R&D in Australia. What I don't hear is a clear explanation of why that is. That worries me. We need to be super strategic about this. We're a small country. We're competing in a world of almost seven billion people. We need to be really strategic about every dollar we spend on this. What I see when I look opposite is a little bit of a blindness. This program is growing and growing, and it's a bit unwieldy, but we're not making a big, strategic choice about how we redesign the program; we're just tinkering at the margins and trying to make performance improvements here and there.

One of the other things notable about the way this government is approaching R&D compared to previous incarnations of coalition governments is the lack of government as an actor in this system. For example, our universities are being defunded and run down. In previous incarnations of Liberal governments, there's been a real acknowledgement that some of the smartest people in the country are in these universities and that they want to be engaged in developing research that's used to grow our economy and create jobs. But we're really missing that opportunity when we create programs like this, which don't ask for any collaboration between the different sectors of our economy.

I have a suspicion that some of the reason why we're seeing some of these issues occur is more continental drift than strategic thinking. It shouldn't surprise us that we see that in the area of innovation. All Australians have watched how this debate has unfolded during the last seven years. When the previous member for Warringah, Tony Abbott, became Prime Minister his only objective seemed to be cutting things in the budget, and that's exactly what he did; he took big amounts of money out of pieces of our innovation system. We had one of the previous members for Wentworth, Malcolm Turnbull, come in as Prime Minister for round 2, and the ideas boom was suddenly a thing. That lasted for about five minutes. Since Malcolm Turnbull left the prime ministership, it's really felt like Scott Morrison is just terrified of the word 'innovation'. We did a count in the last election campaign, the lengthy election campaign, in May last year. The Prime Minister uttered the word 'innovation' four times—come on! It's like he's banished innovation into the Albanian forest with Voldemort; it's the word whose name cannot be spoken.

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