Matt Keogh (Burt, Australian Labor Party, Shadow Minister for Defence Industry) Share this | Hansard source

R&D is an essential part of ensuring that Australian business and our economy as a whole survive and thrive in the modern 21st century globalised economy, yet Australia is ranked as low as 21st in the OECD for R&D investment. As such, it's important that we support research and development across the board. It's the only way that we will continue to be world leaders, in particular across the resources sector, and, similarly, it's the only way that we'll be able to make a significant positive impact on developing further initiatives in Australia's defence industry, as well as across many, many other areas.

The Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 is being debated at a time when public and private research and development funding continues to slide as a percentage of GDP. However, this legislation before us is somewhat concerning. It will essentially suck nearly $2 billion out of R&D investment in Australia. However, its objective of ensuring that the government's R&D incentives spend is efficient and effective is also very important. It is essential, though, to ensure that these changes do not produce any unintended consequences, because entirely legitimate projects may well be adversely affected. For example, Northern Minerals, a company focused on the development of heavy rare-earth projects, say that the $4 million cap on research and development rebates will have a negative impact on groundbreaking, critical mineral resources projects like theirs. They say the cap will force innovative projects, such as their Browns Range project, to develop much more slowly and will result in missed opportunities for Australia in this new and growing sector. This unique project is expected to provide a critical commodity vital to current technological developments, as well as jobs in one of the most remote parts of Australia, by producing a mixed rare-earth carbonate, which includes a high grade of dysprosium and terbium, and will see WA become the first heavy rare-earth producer outside China. This is a fantastic opportunity for Australian trade as we continue to see increasing demand for the critical minerals used in technologies that save energy and produce low-cost or renewable energy, including dysprosium and terbium. Indeed, the critical rare-earth sector is something that we on the Labor side are championing and want to see grow more.

Northern Minerals' Browns Range project is a beneficiary of the current Commonwealth government's research and development tax incentive scheme arrangements. To put it simply, the pilot project is unlikely to have ever gotten off the ground without such a scheme. Northern Minerals freely admit the current R&D scheme added to the company's confidence in undertaking the detailed studies into hard rock heavy rare-earth mining and processing, resulting in several innovative enhancement initiatives as the project has evolved. Their business case is built up around the R&D incentive, as currently configured, as is the case for many R&D intensive businesses across the country. Analysis by Deloitte Access Economics indicated that the full-scale stage of the project will boost the gross regional product of the Kimberley region by some $393 million by 2030, as well as providing hundreds of jobs during the build and operation—an overall package of over $773 million.

So we must ensure that there are no unintended consequences in throttling R&D investment and growth in this nation from this legislative change. Late last year, the member for Brand and I had to opportunity to visit Fastbrick Robotics, a robotic bricklaying company in High Wycombe, east of Perth. Fastbrick Robotics is yet another success story built on the foundation of the government's encouragement of Australian research and development through this tax scheme. They are currently in the pre-revenue research and development cashflow-negative stage, and expect that it will be about three years before they are able to begin to commercialise and export their promising automated technology, which will significantly speed up and lower the cost of housing in Australia and around the world.

Research and development continues to fall in this country, when it needs to do the opposite. We have some amazing minds and opportunities to develop amazing technologies for our diverse industries, including the resources sector, defence industries and manufacturing as a whole. However, under this government the lack of investment in research and science and in the CSIRO is seeing opportunities dwindle. As a recent Australian Institute of Company Directors report said, while the global trend is for national business expenditure on research and development to grow, in Australia it has fallen. Australia is close to the bottom of the OECD ratings for collaboration between industry and researchers. According to the OECD index of research and development investment by government, Australia is falling. This is a trend that must be reversed if we want to support jobs and economic growth and remain globally competitive in resources, defence industry, science, medicine—the list goes on and on. Strong investment in research and development allows all Australians to share in the benefits of new industries, new products, good jobs and a higher standard of living.

Labor supports the intent of measures to maintain public confidence in the integrity and financial sustainability of the research and development tax incentive, as per the Senate economics committee report when it last looked at this legislation. However, the government is yet to properly explain how the minor tweaks to the bill that is now before parliament have heeded the bipartisan concerns that were raised by the Senate committee. That Senate committee unequivocally stated that the research and development measure should be re-examined in order to ensure that Australian businesses are not unfairly disadvantaged.

Labor is proud of creating the research and development tax incentive, the single largest investment the Commonwealth makes in supporting science, research, industry and innovation in the Australian economy. Only Labor has sought to address the decline in research and development spending in Australia. Research and development is key to the future of Australian industry, particularly the future of manufacturing in Australia. The advanced manufacturing research centre competitiveness plan calls on the government to improve government support for business led research and development and encourage industry research collaboration.

If the Morrison government were serious about helping manufacturers to grow, become competitive globally and develop new technologies, they would be investing more in research and development either directly or indirectly. Labor has publicly supported the intent of measures to maintain public confidence in the integrity and financial sustainability of R&D tax incentives, however we are debating this bill at a time when public and private R&D continues to slide as a percentage of our GDP. The government is yet to properly explain how these measures or the tweaks that they've made since they last had this legislation before us have heeded the bipartisan concern of the Senate committee that the research and development measures should be re-examined. As such, Labor believe that it is imperative we refer this bill to a Senate committee and interrogate the potential unintended impacts of this bill, including its timing and the economic and sectorial impacts of these reforms, because frankly we can't afford not to.

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