DR ANNE ALY MP
MEMBER FOR COWAN
TREASURY LAWS AMENDMENT (RESEARCH AND DEVELOPMENT TAX INCENTIVE) BILL 2019
SECOND READING SPEECH
HOUSE OF REPRESENTATIVES
THURSDAY, 6 FEBRUARY 2020
*AS DELIVERED*
I just want to first of all commend the member for Chifley for so eloquently outlining some of the issues we have with this Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 and also for his passionate commitment to research, development and innovation. I'm a very proud Australian and very proud to be part of a nation where we have such a wealth of talent in the research and development space. In my own electorate of Cowan I have met with so many people who have wonderful ideas and who really just need the investment into their ideas. We can, I believe, be a great nation, be a world-leader in research and development but we have to get the policy settings right. We are lagging behind so many other nations and it's not because we have a lack of talent.
It is a national embarrassment. It is not because we have a lack of talent. It is not because we have a lack of resources. Australians are some of the world's smartest people in areas of innovation. Within my own electorate of Cowan I have people working on renewable energy innovation and medical imaging. I have a start-up that is looking at a world-first way of using thermogenics—the temperature in the space between your eyes—as a very accurate lie detecting test. But they need the backup, they need the money and they need the support to be able to carry out the research that will take their innovation that step further.
We have the capacity to be a world leader in so many fields if we invest. The key word that the member for Chifley used here was 'investment'. We have to view this as an investment into our research and development capabilities. Sadly, though, I don't think that is happening. I don't think we see that as investment. I think this government sees that as a spend not as an investment. Other countries, countries that we lag behind in the OECD, see this as investment and see the value of investing in their in research and development and, as a consequence, Australia is being left behind. Our young talent is being left behind. There is a bleed of talent moving out of Australia and into those other countries where research and development is encouraged, where young people in particular but people of all ages with great ideas, with innovative ideas, can go and actually bring their ideas to fruition.
This Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 seeks to put in some reviews into an existing bill. Just by way of background, the research and development tax incentive was introduced in 2011 by the previous Labor government, which, I believe, shows our history of commitment to research and development, and to innovation. And the principal mechanism used by the Australian government to stimulate industry investment in R&D is by providing these tax offsets for eligible R&D activities. As we heard from the member for Chifley, because some big companies are abusing that in various ways, there is absolutely no reason why we need to take our eye off the ball and introduce measures that are also going to prove a disincentive for those smaller companies and those smaller organisations, those start-ups, those Australians with those brilliant ideas, from pursuing research and development because of the policy settings.
The original bill that Labor introduced was intended to encourage R&D activities that might not otherwise be conducted, and that is an important aspect of the original purpose of this bill—to support R&D that might not otherwise be conducted and to recognise that the new knowledge gained is likely to have a wider Australian economic benefit. That is the crux of investment. That is the crux of what it means to invest in research and development.
This bill was previously introduced, there were some issues raised with it and there was a review of the bill. This new bill still falls short and there are still some issues with this new bill. Many of the industry stakeholders in this bill are concerned about the intensity thresholds and the lack of a collaboration premium. We recognise that the bill may impact existing business decisions. It's of concern to many firms of all sizes including manufacturers and firms across many industries—mining and renewable energy, pharmaceuticals and biotech—and particularly among small businesses and start-ups.
The reforms will reduce concessions to businesses and deliver significant savings. I think that's an important consideration here. This should not be about delivering savings to the government. It should be, as the member for Chifley rightly pointed out, about investing in Australia's future and, indeed, Australia's present.
As the tiered intensity premium rewards those who devote a higher proportion of their expenditure to R&D, manufacturers are concerned that this may punish firms that manufacture domestically and thus have non-R&D expenditure domestically. We want to encourage domestic manufacturing. We want to diversify our economy. Australia's economic diversification has fallen. We now lag behind many countries in the world. The way forward for Australia, the way to sustain the Australian economy, is to diversify our economy.
Industry is also concerned that the government is not implementing the second recommendation of the three Fs review: 'a collaboration premium of up to 20 per cent for the non-refundable tax offset to provide additional support for the collaborative element of R&D expenditures undertaken with publicly funded research organisations'. I note that Labor took to the 2019 election a commitment to a collaboration premium and an R&D target of three per cent of GDP by 2030. These things are now being considered as part of our post-election policy review process.
Labor's position is that we've publicly supported the intent of measures to maintain public confidence in the integrity and financial sustainability of the R&D tax incentive, as per the Senate Economics Legislation Committee's report. However, this bill is being debated at a time when research and development, public and private, continues to slide as a percentage of GDP. It's now at just 1.79 per cent of GDP in total, with business research and development at just 0.9 per cent of GDP. I think that's abysmal in a country like Australia. As I mentioned earlier, I see so many talented people with so many fabulous ideas and so much potential, and they are just so frustrated because they cannot take advantage of R&D opportunities. This is a country where those opportunities should be encouraged. We should be encouraging people with great ideas for innovation. We should be taking advantage of the level of talent in this country. We should not be introducing policy settings that are going to quash that talent and frustrate those people even further.
I don't want to take up too much time on this bill except to reiterate Labor's position and ask the government to properly explain how their minor tweaks from the last iteration of the bill have heeded the bipartisan concerns of the Senate committee that the R&D measure 'should be re-examined in order to ensure that Australian businesses are not unfairly disadvantaged'. Those opposite can't stand here in this place and talk about their support for Australian business and then introduce a measure that's going to unfairly disadvantage Australian business. They cannot talk about growing the economy, having a strong Australian economy, and then introduce measures that are going to weaken it by weakening research and development, taking opportunities for research and development away from small and medium-sized enterprises and start-ups.
In conclusion, I urge the government to heed industry concerns, to look at the reviews that have already been done, to take a look at the impacts the measures in this bill will have on Australian industry and, through this bill, to stay true to their spoken commitment to Australian business, which they often talk about.
ENDS
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