House debates

Wednesday, 17 June 2015

Bills

Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015; Second Reading

5:10 pm

Photo of Andrew LeighAndrew Leigh (Fraser, Australian Labor Party, Shadow Assistant Treasurer) Share this | | Hansard source

Labor's position is to oppose this bill. Labor opposed these measures when they were included in the Superannuation Laws Amendment (2014 Measures No. 5) Bill 2014. Moving them from TSLAB 5 of 2014 to TSLAB 3 of 2015 in no way reduces Labor's in-principle opposition to these measures. We oppose the abolition of the seafarer tax offset and the reduction in the research and development tax credit. The abolition of the seafarer tax offset does not have the support of the Australian shipping community. As the Australian Shipowners Association has noted:

The Seafarers Tax Offset … helped to reduce the operating costs of Australian vessels, increased the competitiveness of Australian shipping and provided significant opportunity for employment of Australians in international trades … the impact [of abolition] is severe with regard to future opportunity.

The member for Grayndler will have more to say about this proposed abolition.

Another part of this bill reduces the research and development tax offset by 1.5 percentage points. It is an interesting and somewhat curious story how this comes about. Members will recall that at the last election the coalition campaigned on a platform, in part, that they would introduce an unfair parental leave scheme. That unfair income-replacement parental leave scheme was to be funded by a 1.5 percentage point levy on large businesses. The parental leave scheme is now gone, and the government in the last budget said that the majority of its spending decisions were offset by savings decisions. What they mean is that the unfair parental leave scheme, which never went ahead, had $10.4 billion banked in the contingency reserve and that has now been taken out of the contingency reserve. The 1.5 percentage point levy on large businesses is now gone and is not going ahead, because the unfair parental leave scheme is not going ahead.

Somewhat surprisingly, the government has nonetheless decided to proceed with a 1.5 percentage point reduction in the research and development tax offset. That is curious because the original justification for this reduction has now gone. The original justification for the government was, 'We are going to have an unfair parental leave scheme, we are going to put a levy on large businesses and we are going to reduce their R&D tax offset by 1.5 percentage points commensurately.' Parental leave gone; levy gone; cut to R&D retained. That really says all you need to know about this government's attitude to science and research and development. Any excuse they can find to hack into research and development is an excuse they will take.

In 2013, the science and research community were appalled when it was announced that this would be the first government since 1931 not to have a science minister. The first Abbott government budget cut $3 billion from science, research and innovation—cuts which were maintained in this year's budget. The CSIRO has lost $110 million of funding, resulting in the loss of 500 jobs and the closure of eight research sites.

What does this mean in concrete terms? It means that eight infectious disease researchers at the Australian Animal Health Laboratory in Geelong, the only facility for researching live samples of deadly diseases such as Ebola, will lose their jobs. It means that the Aspendale laboratory, which focuses on marine and atmospheric research, will lose eight staff. Among those staff leaving are Paul Fraser, head of oceans and atmosphere, who has been honoured by NASA. Water research has been targeted. The Office of Water Science Research and the National Water Commission will be abolished. The Sustainable Rural Water Use and Infrastructure program has had a massive cut to its budget. The CSIRO's Victorian site, in Clayton, has seen the loss of staff who did work around advanced materials, nanotechnology, energy, mining and minerals. Organic chemist San Thang, who was regarded at one stage as a frontrunner for the Nobel Prize in Chemistry, has been made redundant. The CSIRO has also lost indirectly, as the government has folded the Australian Climate Change Science Program into the National Environmental Science Program. CSIRO has lost researchers who work on eucalypt forestry. It is hard to imagine what other organisation in the world will fill that vital gap in knowledge in forestry about a kind of tree that grows more in Australia than anywhere else.

The Chief Scientist, Ian Chubb, said in March that the government had 'got it wrong' with its science cuts. The government has been criticised by the head of Obesity Australia and the head of the Australian Academy of Science. We have seen considerable cuts to higher education research, again hacking into the country's science base. Those opposite often like to claim that they are in favour of innovation, and we saw a strong turnout yesterday when the member for Griffith and the member for Casey convened a gathering of the Parliamentary Friends of Innovation and Enterprise. But underpinning innovation and entrepreneurship is significant investment in science and research and development. The cuts to higher education, the cuts to CSIRO and the head-in-the-sand attitude to climate change—which has earned us the title of the only country in the world which is going backwards on climate change action—have left many wondering whether this government is serious about science and research.

The Parliamentary Library estimates that research and development spending will be 0.56 per cent of GDP in 2014-15, the equal lowest share of research and development spending since records began, in 1978-79. That contrasts with Labor, which takes science extremely seriously. That is why science formed a centrepiece of the Leader of the Opposition's budget reply, which focused on how we can make sure that kids at school have the chance to learn coding, the digital literacy of the 21st century, and how we can ensure that more young Australians are studying science, engineering, technology and mathematics so they have the skills to build new start-up businesses. Without significant investment in science and research and development, Australia will not be able to answer that vital question as to where the jobs of the future are coming from. Labor is deeply concerned that, under this government, science and research and development are going backwards.

I look forward to hearing, in the speeches of those opposite—I am sorry; the speech of those opposite; the member for Casey is the only one on that side of the House who has lined up to defend this bill—a coherent explanation as to what, since they are not going ahead with their unfair parental leave scheme or the 1.5 percentage point levy on big businesses, their rationale is for cutting the research and development tax credit by 1.5 percentage points. What is this apart from a cash grab by a desperate government? Why else would the government be trying to hack into the productive potential of the Australian economy, hack into that research base, at the very same time as the government—which began bereft of a science minister and continued by cutting CSIRO—has so put itself offside with the science community and so jeopardised the potential of the Australian economy to create new jobs? I look forward to hearing that 1.5 percentage point cut in the R&D tax credit justified by the member for Casey. Perhaps members opposite may think about joining the speakers list if they are so compelled. Maybe they can come up with more than yet another ad hoc argument for cutting research and development.

5:20 pm

Photo of Tony SmithTony Smith (Casey, Liberal Party) Share this | | Hansard source

As always, I welcome the opportunity to follow the shadow Assistant Treasurer. I am chuffed that he has decided to stay for my contribution. It has rather made my day. He has asked a number of questions, which I will come to in a second. I am more than happy to answer the questions that continue to confound him. I would like him to end this day without any questions in his mind. The member for Fraser said a lot of things, but what he did not say revealed a lot as well. What he did not say was how much the Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015 was saving the forward estimates and the reason why the two schedules in this bill have been moved. He has been agonising, obviously, for almost a month on why the government has introduced this bill. It has been troubling him and he is desperate for a explanation, so I am going to do something unusual with the member for Fraser: I am going to point him to a secret document which explains why the government has moved this bill. Member for Fraser, that secret document is in fact the Assistant Treasurer's second reading speech. That is the person you shadow. You only need to look back to 27 May—and already, unfortunately, we have lost the shadow minister, after a minute and a half. That is a record. But I suspect he well knows this, as he moves up into the chamber to have some conversation with a colleague of mine. As the Assistant Treasurer pointed out in the first few lines of the second reading speech of 27 May, these measures were necessary as part of the suite of difficult measures to put our budget on a more sustainable basis. Here is what he said:

This bill is a further step towards repairing the budget and providing taxpayers with value for money from the government.

In the fifth paragraph of that speech, he said:

The measures in this bill will return around $826 million to the budget over the forward estimates …

Now, $826 million is not a figure you heard from the member for Fraser. He was very quick to point out that he and his colleagues are going to oppose this bill, but in doing so they are opposing $826 million of improvement to the very difficult budget situation that they left this country. Not only is the member for Fraser quite happy to be a fiscal failure; he is apparently happy to be a fiscal sleepwalker as well—seeing a budget deficit that has grown and grown with our net debt at record levels but opposing every single measure to fix it. And he comes into this place and accuses the government of not having a reason for having to take these decisions when that reason is clearly articulated in the minister's second reading speech back almost a month ago.

I know the member for Fraser well. I have known him for a few years now. There are many things you can say about the member for Fraser. But I am not going to say he is unintelligent; he is not. And I am not going to say he does not work hard. He has read this speech. He reads everything there is to read. He has read it and he knows. What he did today was get up and give no explanation as to how Labor would repair the budget, no alternative at all, other than to say 'no' to repairing the budget and to affirm again that Labor are going to reintroduce the carbon tax, which was another interesting aspect of his contribution.

The point he did get right is that there are two schedules. As the Assistant Treasurer, the member for Kooyong, pointed out in the introduction, the seafarer's tax offset has not met its policy intent. That will save around $12 million over the forward estimates. It affects about five companies. Compared to the amount originally put in the forward estimates by those opposite, it is a much lower amount. Yes, the R&D tax schedule will save around $810 million over the forward estimates. It is all clearly there—not just in the bill; in the minister's second reading speech.

In terms of the rest of his contribution on industry and science, I would point him to the many other initiatives that this government have unveiled through Minister Macfarlane to support innovation and enterprise in so many ways: the Industry Growth Centres initiative, the Entrepreneurs' Infrastructure Program, the single business service, the growth fund boosting the commercial returns from research—and many others as well that have been encompassed in the minister's major policy announcements over recent months.

He talked about start-ups again without mentioning the critical importance of getting the tax settings right on employee share ownership. That is something this government has done after six long years from when Labor effectively killed employee share ownership for start-ups. That is something this government has done that has been welcomed by the start-up sector.

Some of those opposite have been up-front and candid enough to admit that Labor botched it terribly and, after they wrecked the employee share landscape, ignored any attempt by the industry to get them to revisit it. For six long years we had the start-up sector starved of the opportunity of employee share ownership. Some of those opposite such as the member for Chifley in this place, in an interjection to me, was candid enough to say, 'Labor got it wrong.' The member for Chifley was candid enough to say that. It is obvious they got it wrong. He said it publicly, but you will not hear it from the shadow assistant Treasurer. You will not hear it from him at all in any of these debates. If he wants to be taken seriously, he should at least acknowledge Labor's failures, at least acknowledge our repair of them and at least acknowledge the fiscal task this nation confronts.

5:28 pm

Photo of Anthony AlbaneseAnthony Albanese (Grayndler, Australian Labor Party, Shadow Minister for Infrastructure and Transport) Share this | | Hansard source

There is something tragic about watching people lose their sense of reality as they succumb to fanaticism. As Napoleon Bonaparte once said:

There is no place in a fanatic's head where reason can enter.

This is what has happened to this government when it comes to anything to do with Australian based shipping. There is one element of this legislation that is about removing the seafarer's tax offset. Once again, this is yet another proposition by the government to increase the taxation that workers have to pay.

I notice that in his second reading speech, the Assistant Treasurer offered the view that abolishing the offset represented a step towards to 'simplifying coastal shipping regulation in Australia'. Now, that is an extraordinary statement from the Assistant Treasurer, because the seafarers offset has absolutely nothing to do with coastal shipping—with domestic shipping taking freight from one Australian port to another around our coast.

The seafarers tax offset was introduced by the former Labor government in 2012 as part of a package of reforms aimed at revitalising Australian shipping. These reforms included changes to taxation regimes to allow Australian based international shippers to compete with their international rivals on a level playing field. We did that in a very practical way. We did not do it in a protectionist way or in a regulatory way; we did it through micro-economic reform. We did it by introducing two tax changes: by having a zero rate in the form of company taxation for Australian ships that were registered on the Australian International Shipping Register and by having effectively a zero rate on Australian seafarers who worked on those ships.

What is interesting about the government's approach is that they are not trying to repeal, through this legislation, the zero rate of taxation for the companies; they are just trying to change it for the workforce. That is consistent with the government's very narrow approach.

This measure provided a rebate to employers of Australian staff for part of the income tax withheld while those staff undertake international voyages. It was a very effective measure indeed, which effectively would assist the companies, as well, which hire Australian seafarers to work on international voyages. The intent in creating the rebate was simple. We wanted to encourage the employment of Australian seafarers on ships. We wanted to see Australians involved in the international maritime industry. We wanted to see jobs for Australians.

What was the logic of this in terms of the debate that we had with Treasury and Finance? I must say that, when initially the proposition was put forward at the extensive consultative process that I established as the minister, Treasury and Finance's starting instinct was not to support zero rates of taxation. But they did because they acknowledged the logic that was there, because, if Australian ships are going to compete with ships that are based in places like Singapore and other competitor nations—let alone some that are registered under flags of convenience in Third World countries—they have to have competitive rates of taxation. Similarly, if you are a seafarer who works in international waters for a lot of the time, you can very easily simply base yourself in a country such as Singapore that provides for essentially a similar regime to that of the seafarers tax offset—effectively, a zero rate of taxation.

It actually is a false cost to government because, unless you have this sort of policy, you will not have Australian-flagged vessels in international trade and you will not have Australian seafarers based in Australia engaged in that trade. And yet this government is attempting to repeal this, which is certainly not in the national interest.

The Assistant Treasurer in his second reading speech chose to conflate the offset with the ongoing debate about this government's attempts to introduce Work Choices on water by dismantling Labor's domestic shipping reforms. What we have here is a case of ideology overtaking reason. Last month, the Deputy Prime Minister and transport minister confirmed his intention to dismantle Labor's 2012 Revitalising Australian Shipping package, which sought to use tax breaks and other benefits to strengthen the Australian industry. Part of his plan is to allow foreign-flagged vessels paying Third World wages to undercut Australian-flagged vessels operating between Australian domestic ports.

A rational person would accept that, if you work in Australia, whether you are moving freight by sea, air, rail or road, you ought to be paid in accordance with Australian law. But those opposite are not rational when it comes to the maritime sector. So obsessed are they with the Maritime Union of Australia that they are prepared to wreck an Australian industry to ensure that there are not Australian jobs in the maritime sector, because therefore you will not have Maritime Union members. It is an extraordinary proposition that they have.

The particular measure that is in this bill, though, is specifically about international shipping. But it is worth saying that, if you were carrying goods by road down the Hume Highway from Sydney to Melbourne, it would be an extraordinary proposition that Toll or Linfox should have to compete with someone who could bring in a Filipino based truck with Filipino based safety standards and therefore costs and overheads and employ a Filipino based driver with Filipino wages and conditions to drive down the Hume Highway. And yet what this government wants to do is this: if you go from Sydney to Melbourne on the blue highway off the coast, on a ship, you can do precisely that—a foreign ship with foreign standards, employing foreign workers, paying foreign wages and conditions. That is an extraordinary proposition. There is no difference between road or rail or air or shipping in terms of these issues.

The government has also tried to do this through the trade minister, who is still pushing to allow this to happen with foreign airlines in the northern part of Australia. He wants them to be able to come in and compete, and undermine the services that are provided by Qantas and Virgin and Airnorth and all of those operators in Australia's north. This is nothing more than unilateral economic disarmament. This is saying, 'Come in, take our jobs, take our economic activity, and we will get nothing in return'. There is no industrialised country in the world that allows a free-for-all around its domestic coast like this government is proposing. The junior minister, the Assistant Treasurer, did not seem to understand that the seafarer tax offset was not a part of that attack. That is a separate attack, I say to the Assistant Treasurer. It must be confusing for him—as he sits in meetings where there is wave after wave of attacks on the rights of the workforce in the maritime sector.

The ignorance of the Assistant Treasurer does not make him a lone soldier. The Deputy Prime Minister and transport minister—the person just a heartbeat away, the person who from time to time is acting Prime Minister of this country—spoke at a Shipping Australia function on 20 May. He surprised his audience when he indicated, in response to a question, that this seafarer tax offset had already been repealed. He did not know! The Deputy Prime Minister was asked if the government would do anything with tax incentives for Australian business, like those in Europe where there is accelerated depreciation in tax rebates for seafarers. And he said in his answer: 'Of course, there were some taxation measures in the previous government's framework that have not been used, and I think they were actually repealed in the last budget.' What an extraordinary statement from the Deputy Prime Minister. The truth is: the government has tried before to abolish this offset, and it was rejected by the Senate for good reason.

So this legislation represents the second time in two years that the government has sought to abolish this seafarer tax offset. Labor opposed this change the first time around and we will do it again. The former government introduced this as a part of wanting to see Australia as an island continent with a strong shipping industry. It is in our economic interest and our environmental interest—and it is in the interests of our national security—to have the Australian flag have a strong presence, not just around our coastline but around the seas, oceans and waterways of the world. We want to see the Australian flag flying on the backs of ships working our coastal trading routes and around the world.

The way the rebate works here is not really targeted just at employees; it is a payment provided to employers to encourage them to employ Australians. Once again, that is something the Assistant Treasurer just did not seem to get at all. The government sees the shipping sector not as an industry but just as an input cost to every other industry. Maritime Industry Australia, known previously as the Australian Shipowners Association, and Shipping Australia both support this offset. They are both industry bodies—the Australian based industries and indeed the foreign shippers that engage in Australia both support this offset, which came after an extensive process.

We will oppose this, as we will oppose the government's 'Work Choices on water' agenda. We believe it is in the national interest to have this proposition opposed. I do say that the major players in the shipping industry, including CSL and ANL, have told the government that the so-called red-tape burden under the post-2012 system is no different to that which preceded it. In a submission to the departmental review of coastal trading last year, CSL said this:

The cost impost on Australian shippers of engaging coastal vessels on coastal trades since the introduction of the Coastal Trading Act in July 2012, as a standalone piece of legislation, is minimal.

ANL also supported the current regime.

We will oppose the abolition of the seafarer tax offset because it is not in the national interest. (Time expired)

5:43 pm

Photo of Pat ConroyPat 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.

5:55 pm

Photo of Kevin AndrewsKevin Andrews (Menzies, Liberal Party, Minister for Defence) Share this | | Hansard source

On behalf of the Assistant Treasurer, I thank the members who have contributed to this debate. The Tax and Superannuation Laws Amendment (2015 Measures No. 3) Bill 2015 represents another important step in the government's economic action strategy. Our economic action strategy is about making our strong social safety net more sustainable and redefining the role of government in people's lives. The economic action strategy is about switching expenditure from consumption towards investment in order to increase our future productivity. And our economic action strategy is about repairing the budget. We are putting it back into surplus so that we as a nation can start living within our means again. Our budget decisions have not been easy ones but these decisions will ensure that our economy is strong and sustainable, because a strong and sustainable economy is a key to a prosperous Australia.

The Treasurer has said it before: failure to fix the budget and to take steps towards improving our economy now will impact on our living standards in the future. There is no alternative to the budget repair task. Therefore there is no alternative to the government's economic action strategy. We need to get on with the job of paying off the $123 billion of debt we inherited from the previous government. This bill will go part of the way towards doing that. There are two measures in the bill that will together return around $826 million to the budget over the forward estimates in fiscal balance terms. While they are both part of the government's economic action strategy and our task to repair the budget, the measures in this bill are about different groups of people. As I have said, the government is committed to returning the budget to surplus for the benefit of every Australian taxpayer.

The first measure in the bill will help us do exactly that. That is schedule 1, which abolishes the seafarer tax offset. Put simply, the seafarer tax offset does not work. The seafarer tax offset provides a refundable tax offset to Australian shipping companies for 30 per cent of salary, wages and allowances paid to Australian resident seafarers who are employed to undertake overseas voyages on qualifying vessels if the company employs a seafarer on such voyages for at least 91 days in the income year. The offset is supposed to increase employment in the shipping industry, but no noticeable increase in the employment of Australian seafarers has occurred. The offset has cost the Australian taxpayer but has achieved nothing. The repeal of the seafarer tax offset will return to the budget bottom line $16 million over the forward estimates period. While this is a small amount compared to the other measure in this bill, every little bit helps when it comes to the task of budget repair.

Australian taxpayers will also benefit from the savings returned to the budget by the other measure in this bill. Schedule 2 reduces the tax offsets available under the research and development tax incentive by 1.5 percentage points for the income years commencing on or after 1 July 2014. The decision to reduce the offset rates provided by the R&D tax incentive was difficult, but repairing the budget must be done as fairly and equitably as possible. Our decision making was guided by the need for every part of the budget to make a reasonable and proportionate contribution, including the R&D tax incentive. It is also important to emphasise that these changes to the R&D tax incentive are simple and straightforward. The changes will not affect the eligibility of companies for the incentive or the way companies claim the incentive; nor will the changes affect the administration of the R&D tax incentive more generally. The R&D tax incentive will continue to support thousands of eligible companies in all sectors of the Australian economy in conducting research and development through the provision of a generous, easy-to-access program. This measure will provide a gain to revenue and savings of around $810 million over the forward estimates period. Again, all Australian taxpayers stand to benefit from the government's efforts to return the budget to surplus.

Today I have spoken to the chamber about the two measures in this bill that cumulatively will return around $826 million to the budget over the forward estimates in fiscal balance terms. These measures are responsible. They represent another important step in our economic action strategy towards a stronger, more sustainable economy and a more prosperous Australia. And on that note, I commend the bill to the House.