Madeleine King (Brand, Australian Labor Party, Shadow Minister for Trade) Share this | Hansard source

I'm pleased to speak today on the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019. This bill seeks to implement some R&D tax incentive review recommendations from the 2015 review called by then Prime Minister Turnbull, sometimes known as the three Fs review, which was done in order to improve the effectiveness and integrity of the R&D incentive program while at the same time encouraging additional research and development from participants in the scheme. There is, as other speakers have noted, significant concern among industry participants that this bill will affect existing business decisions across a number of sectors, particularly surrounding the intensity thresholds and the lack of a collaboration premium, which is a premium designed to encourage private enterprise collaborating with public universities in their research and development efforts.

I think it's worth reflecting briefly on some key points regarding the scheme in the last decade, which will of course inform future decisions around the bill and the broader incentive scheme itself. The original R&D tax incentive was introduced in 2011 by the Gillard Labor government after extensive consultation with academics in industry and universities, and is the primary incentive mechanism used by the federal government to stimulate industry investment in research and development, by providing a tax offset for eligible projects. The objective was that industry would participate in research and develop activities that they otherwise might not have without the scheme, which then has a significant flow-on effect for the Australian economy and the broadening of Australia's knowledge pool and scientific research capability.

When Prime Minister Turnbull commissioned this review in 2015 the chairs were Bill Ferris, Alan Finkel and John Fraser. It was handed down in 2016 as part of Prime Minister Turnbull's innovation agenda, with slogans like 'Innovation Nation' and 'Ideas Boom' which were thrown around the parliament and the media in place of any actual policy to do with research, development or science. We all know where that went; the innovation agenda went down the drain eventually and we've yet to see anything take its place from this government.

Any remaining interest that the coalition government had in science went out the window with Prime Minister Turnbull, as well as some of the more reasonable coalition MPs that followed Turnbull out the door recently, last year. And what do we have left? Any action on the Three Fs report has been delayed for three years, leaving industry in the dark about its future while those opposite choose to squabble over energy policy, the realities of climate change and the science associated with climate change, as well as having them review a conga line of leadership aspirants whose commitment to the university sector continues the tradition of former Prime Minister Abbott's notion of continual cuts to that sector.

Industries have been strongly voicing concerns about these changes for a long time. I've been pleased to meet with many industries which are affected by this change to the R&D tax incentive. They've been waiting a very long time for certainty—for nearly five years now—to know what their tax position will be with regard to their research and development spend. They are concerned about the impact this will have on their forward plans, including made-and-paid business decisions.

Manufacturers are also particularly concerned, as well as those in mining and mining exploration, renewable energy, pharmaceuticals and biotechnology, and a number of small businesses and start-ups around the country. Industries are concerned that the government is not implementing the recommendations of the report commissioned by Prime Minister Turnbull in full. They are not initiating the 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 expenditure undertaken with publicly funded research organisations, which we know are the universities and the CSIRO.

Labor is supportive of a collaborative premium commitment and an R&D spend of three per cent of GDP by 2030 target. That went to the last election and is the commitment which no doubt will be considered as part of our post-election policy review process. A very important commitment it was too and, of course, it was utterly ignored by those on the other side. Our proposals went with wide support from a range of sectors, particularly the all-important university sector. Indeed, Universities Australia CEO, Catriona Jackson, said late last year:

Since 2015, Universities Australia has advocated for a premium tax concession for businesses collaborating with our nation’s universities on research and development.

A premium tax concession would boost the number of businesses that tap into the wealth of expertise inside universities and enhance innovation in Australia.

…      …   …

Australia’s expenditure on R&D (1.88 per cent of GDP) now lags most of the OECD, as well as the OECD average of 2.38 per cent.

This statement followed a statement from the Group of Eight CEO, Vicki Thomson, who expressed disappointment at the ongoing drop in R&D investment by the government last year. She said:

A nation walks away from investing in research at its peril. Research creates jobs, stimulates the economy, saves and changes lives and contributes significantly to the economic, social and environmental well-being of the Australian community.

I couldn't agree with her more.

The cuts to research that have been seen in this country under the leadership of the Liberal and National parties in government have been extraordinary. In 2017, the MYEFO attacked research by ripping $328.5 million from universities. So while other OECD nations are increasing their research funding, or at least maintaining their support for research and science, this Liberal government has slashed research and consequently has slashed the potential of this nation. It's also capped undergraduate places of course, leaving regional and outer suburban communities much worse off.

This government has slashed $2.2 billion from universities, denying 200,000 students a place to study. What I've never understood when it comes to research, development, science and the funding of universities is why the National Party and National Party members in this place don't stand up to their coalition partners in the Liberals when they attack research funding and universities. The remarkable agricultural faculties around this country have formed the basis of the success of the agricultural industry in this country.

If I could, I'd just point to a few examples of scientific research that I know have underpinned the development of Western Australia. In the 1930s, Professor Eric Underwood, at the Institute of Agriculture at UWA, led a team that looked into the deficiencies of the soil in the south-west of Western Australia. At the time there was an extraordinary wasting disease that was causing sheep and cattle to no longer be able to process the nutrients that would keep them alive and make them productive beasts for our agricultural industry. He and his team, and also a team in South Australia, discovered, after a number of years, that the missing essential ingredient from the soil was in fact cobalt, and that if we were able to put more cobalt into the soil of south-west Western Australia then the sheep would live and the cattle would be good livestock capable of supporting an industry. This research, and how they went about implementing changing the soil content of Western Australia and South Australia, saved that industry—and that was back in the thirties. Professor Eric Underwood is rightly recognised in street names and the names of halls right around Western Australia for his magnificent contribution to agriculture.

In the 1940s in Western Australia the ewes in our flocks had an extraordinary infertility problem—it was on a massive scale—that was identified as oestrogen deficiency. You can't inject every sheep with oestrogen; it's an inefficient way to try to help them and help the farmers who are trying to maintain their flocks. But what you can do is apply your mind to the problem with science and research and development. What they ended up doing was create a subterranean clover strain that contained that essential hormone. They went about planting it and they saved those flocks. Of course, now the sheep and beef industries in the South West in Western Australia are very important parts of our agricultural industry.

If I could, I'll now turn to wheat, which is one of the biggest exports out of Western Australia; it's very important in my electorate as we host the Co-operative Bulk Handling company. Wheat was also a marginal practice in the thirties and forties, but thanks to the science and research and development that we entered into—cooperatively, I might add, with farmers assisting scientists—Western Australia farmers, along with scientists, developed dry farming techniques. The addition of superphosphate to their soils, the improved varieties of wheat: these were all down to the application of science and research and development and the collaboration of primary producers and farmers with universities and public-funded institutions like the once great WA Department of Agriculture.

So why don't the Nationals stand up to the Liberals when they cut science funding and introduce bills, like this one, which have floundered for five years and have failed to take on the recommendations of leading scientists in our community to have a collaboration premium? Well, I don't know. The Nationals deny a lot of other science, we know that. They deny the science of climate change; they like to pass judgements about what science is wrong and what science is right in their humble opinion. I even believe a Queensland LNP motion was moved at the national federal council or some such organisation to have some kind of oversight body for science run by parliamentarians, which seems to go against the notion of the peer review of scientists judging scientists. They are trained to be objective; this is what science is. The Nationals, in ignoring their past and the heritage of farmers having contributed greatly to the research and development efforts of our nation, are denying the great efforts farmers have put into developing cooperative science in this nation.

In the 1950s the Farmers Union of Western Australia was the first group to introduce a voluntary levy of one farthing per bushel on all wheat. That one farthing per bushel went into a pool and was used to fund science and research and development that would the increase the fertility of soil that's more suited to an hourglass, perhaps, than producing wheat in the Western Australian Wheatbelt. This was farmers, off their own bat, understanding the importance of research and development and science.

In 1954, the WA parliament passed the Soil Fertility Research Act, which was the first such cooperative based research program that would take voluntary levies from farmers to produce research and development. Now, of course, we have widely respected research and development corporations that have all sprung from that move of the Farmers Union of Western Australia: Meat and Livestock Australia, Grains Research and Development Corporation, Fisheries Research and Development Cooperation, the former Grape and Wine RDC, among many others.

We should be very proud of our approach to cooperative science and where it has got us and our agricultural industries in this country. Again, I do not understand why the Nationals in this place, and for that matter outside this place—anyone involved in the National Party—don't take it up to their coalition partners and ask them: 'What on earth are you doing by making it harder for people and private enterprise to collaborate with publicly-funded research organisations to undertake research and development across all sectors—not just farming and agriculture, but all sectors? This should be your legacy as a National Party. Your people—the farmers that you claim can only be represented by you, the Nationals—are betrayed by you at this point, when you fail to support science and research and when you fail to support the funding of science and research; when you let the Liberal treasurers, in the plural, take out money from the proper funding of the science and research capabilities of our great publicly funded universities in this country. You are denying the heritage of farmers in this country—their cooperation with science and scientists and their legacy.'

We know farmers in this country depend on science and research and development, whether it be satellite technology, wi-fi technology, new strains of grain, or wheat or whatever crop they have. Instead you, through you, Madam Deputy Speaker Claydon, flounder in the denying climate science space. It's like you're choosing what science you want to back—as if you can choose your facts. That's a very sad state of affairs for your supporters, or so-called supporters. I hope this will go to a Senate committee and we hear about the timing of the implementation of a program that will cause less money to be spent on research and development—which will be very tough at a time when higher education cross subsidies that require international students to support research in universities is under threat from a disease that is beyond our control. But when you don't plan for the future and you deny proper funding to science and universities, that is the result you will get: an overdependence on other forms of income that are susceptible to global shocks. Good luck to you!

See this speech in context