Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

One of the consequences of the weak economy under this government's management is that consumption is low, household expenditure is low and confidence throughout the economy is low. That has only been added to. It was a problem before we came into the summer of fires. It was a problem before we were hit by the uncertainty arising out of the coronavirus. The consequence of all of this is that you've got weak business investment. Capital accumulation is very low. We're deeply concerned about this on this side of the House because it means we are kicking the productivity problem down the road. We know that if we're going to get a boost in productivity which is going to underpin growth in wages we need to get new business investment and, particularly, research and development moving again. That's not happening. The tragic thing about this is that the government hasn't got a plan to turn it around. My great concern is that the bill before the House, the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019, is not going to fix this.

We on this side of the House agree that the research and development tax incentives need reform. There's no doubt about the fact that there are some distortions in the system. There's no doubt about the fact that there are some claimants in the system that shouldn't be there. If you've got a system which enables people to claim tax offsets and tax incentives for business-as-usual arrangements, then that's not incentivising new investment and new research and development; it's just rewarding people for things that they should be doing anyway. When Labor set the system up that's not what we intended to occur.

There has been a review. The review put forward a range of recommendations, some of which are reflected in this bill and some which aren't. We think we need a thorough inquiry into the consequences of this. In my own electorate, for example, the steel industry is one of the nation's biggest investors in research and development, but they also have a very high level of ongoing operating costs because of their input costs. The intensity formula within the proposal will have an impact on those sorts of businesses. We want the Senate inquiry to have the opportunity to have a look into this, give stakeholders the opportunity to have their say and hopefully improve the legislation on its way through the other place. With those very brief comments, we commend the bill to the House and consideration in the other place.

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