House debates

Wednesday, 24 August 2011


Tax Laws Amendment (Research and Development) Bill 2010; Consideration of Senate Message

10:41 am

Photo of Bill ShortenBill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | | Hansard source

I move:

That the amendments be agreed to.

The Tax Laws Amendment (Research and Development) Bill 2010 and Income Tax Rates Amendment (Research and Development) Bill 2010 passed the House on 22 November 2010 and were introduced into the Senate the following day. The Senate has made amendments to the Tax Laws Amendment (Research and Development) Bill 2010 that will allow firms that will receive a refundable tax offset to apply to effectively anticipate that offset for quarterly credits from 1 January 2014. This will provide more timely assistance to those firms through increased cash flows. This is another example of the Gillard government acting to assist business. At this point, I would like to acknowledge the assistance of the crossbench in advancing industry views on quarterly credits.

The amendments moved by the government show that the government has continued to listen to industry throughout the development process to frame the best program possible. The precise rules governing whether and how a particular firm will be available to receive quarterly credits and the most efficient and effective means of providing quarterly credits in general will be determined in light of the experience with operation of the new R&D tax incentive. Consequently, it is not feasible to include those details in these amendments, which instead provide for the regime to be implemented for regulations. However, the amendments demonstrate the government's clear commitment that a quarterly credits regime is to be part of the new R&D tax incentive. The government also moved amendments in the Senate to defer the start date for the new R&D tax incentive by 12 months such that the new tax incentive will apply for income years commencing on or after 1 July 2011.

I share the disappointment of many businesses over the delay in starting the program, especially those small businesses who might have hoped that the program would start from 1 July 2010. However, businesses will now be able to plan their research and development activities with confidence, knowing their entitlement to access increased benefits is available from 1 July 2011. In relation to those amendments, the Senate has requested a consequential amendment to the Income Tax Rates Amendment (Research and Development) Bill, deferring its application by one year. I commend these amendments to the House.

10:44 am

Photo of Sophie MirabellaSophie Mirabella (Indi, Liberal Party, Shadow Minister for Innovation, Industry and Science) Share this | | Hansard source

This legislation is yet another example of the extraordinary disconnect that this government has with industry. The Assistant Treasurer spoke about delays. That is right. The bill was passed in last November. Why was it not presented to the Senate for debate and discussion until after 1 July this year? That is because the industry minister lacked the advocacy skills to convince the crossbenches, as they existed before 1 July, and the courage to argue his case. From the very first time these changes were mooted the government asked industry for input. There were discussion papers, there were drafts, and industry took time from its business activities to assist the government. In return for that goodwill, what did the government do? It utterly ignored the advice and the suggestions of industry. We know that the ideas for changes to the R&D regime did not come from the minister; they came from Treasury. We know; we were in government and they had similar proposals. They were in the bottom drawer and they wanted to pull them out because they claim that these changes would be revenue neutral, but in fact this is a revenue-raising measure.

There is a fundamental problem with the changes that the government wants to pursue. Those fundamental changes will mean that, by restricting access to the regime, by changing the definitions, for example, as they relate to dominant purpose and feedstock, the very industries that this week this government says it wants to assist, says that it still wants manufacturing to survive, are going to be hardest hit. So the changes the government is making to the R&D tax regime will make it far more difficult for the manufacturing businesses, the manufacturing industry and the mining industry to actually access the new tax regime.

We have heard great praise from the other side about the crossbenchers—that is, the Greens. The Greens voted for this to pass in the Senate, but do they actually understand what these changes are all about? Obviously, from their comments, they do not. We have had Senator Milne talk about those big, bad, large companies who dominant the scheme. Senator, it is not a competitive scheme; it is an entitlement scheme. Under the old regime, if you satisfied the requirements to be eligible, you got the concessions. Because a large company or a small company may have been eligible and successful did not preclude others from doing the same. A very important assumption on which the Greens have based their support for this bill is based on a lack of fundamental understanding of what the regime actually was, and at a time when the member for Melbourne, another member of the Greens, goes around touting the importance of R&D, one has to wonder what they are doing in supporting this legislation.

When I was made shadow minister for innovation, industry and science, the very first topic, the very first issue, I was bombarded with from dozens of industry players, large and small companies across the country, was changes to the R&D tax regime. We would not be standing here opposing it if it were an actual improvement and industry across Australia told us it would be to their benefit. But they have told us that it is to their detriment, and the government have never been able to provide the modelling to show that their changes to the R&D tax regime would improve investment in R&D, would be good for small business. They cannot prove it because Treasury, in demanding this, never conducted the modelling. It is not their concern whether there is actual investment in R&D in the manufacturing sector, in the mining sector. The government cannot prove that this legislation is a good thing because that is not what they have been told by industry. They do not have the evidence. They have not done the modelling and the hard work. At a time that the domestic manufacturing industry is suffering all sorts of other economic issues, why would the government make it even more difficult for them to take the important steps of investing in new technologies? (Time expired)

10:49 am

Photo of Bill ShortenBill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | | Hansard source

I do not doubt the member for Indi's interest in R&D issues, but there a couple of points which I must briefly take issue with. There is a general discussion in her comments about consultation. The government consulted extensively in developing the new R&D tax incentive. It published a consultation paper and two exposure drafts of legislation. The Senate Economics Legislation Committee held a public inquiry into the bill. In addition, there have been extensive discussions with key industry representatives and advisers over the last three years. The government has made some significant changes where stakeholders have made constructive suggestions for improvement, as well as minor clarifying changes in response to concerns raised by the Senate Economics Legislation Committee.

Our budget announcement in 2009 followed an independent review of the National Innovation System, and most recently, between 11 July and 5 August 2011, interested parties were invited to review exposure draft regulations, the decision-making principles and their accompanying explanatory statements. Submissions were generally supportive of the regulations and decision-making principles, and in fact there were a total of 17 submissions received as part of the consultation from groups of various sizes, registered research agencies and firms.

Again, I take issue in terms of manufacturing. The purpose of what we are doing is to help manufacturers minimise the risk involved in research and development. We believe that Australian firms that innovate are more productive and profitable than those firms that do not. Finally, whilst I noticed the member for Indi be very critical of the Greens, it begs the question why the Liberal Party preferenced the Greens ahead of the Labor Party in Melbourne if they are so concerned about the Greens.

Question agreed to.