Ed Husic (Chifley, Australian Labor Party, Shadow Minister for Industry and Innovation) Share this | Hansard source

I rise to speak on the coalition's federal budget because there are not too many on their side who speak about it anymore. We had this budget last month. The government hardly talk about it anymore, and the reason is that it's a budget that basically goes against everything that they portrayed themselves as for years.

The coalition said for years, when we were responding to the GFC and putting the stimulus into the economy to make sure we avoided recession, that they didn't want to see debts and deficits for as far as the eye can see. They've now brought in a budget that will see debt climb to $1 trillion, with deficits as far as the eye can see. It's going to be at least a decade before we clear these deficits, and they have no problem with that. They've walked away from the debt and deficit mantra. It's no longer a big issue for them. They spend money every time. For any spending that's proposed by the opposition, by Labor, we get challenged on where we find the money. These people are operating a printing press. For every single promise that they're putting out, they're just cranking that printing press. There's more money going out the door. There's more debt that's being racked up. They don't care about it, because they've walked away from who they are.

This budget is not a budget with some sort of central focus or theme or something that they're using to drive the whole shape of the budget. There's only one thing in there, and that is fixes—political fixes for all the problems that they have to try and get those off the table. There's no longer-term, genuine strategy about where they're going to head in relation to this.

In the industry portfolio in particular, the portfolio that I cover as a shadow minister, we see a whole lot of ideas announced, but there is no central game plan about what they're going to do. In the last year or so, when we couldn't in the middle of a pandemic make the things that Australians would expect could be manufactured in this country, Australians have not been able to get those items and those products when they need them the most, because we pretty much decimated manufacturing in this country and this government does not believe in manufacturing things in Australia. They believe in manufacturing as a prop, as a slogan or as something to get them out of trouble, but they don't believe in it genuinely. Their heart is not in it.

When they first came into office, the first thing they was to rip out everything that was in place to help work with industry to guide the development of manufacturing longer term. The then Prime Minister Abbott and co tore up all that funding, tore up all that work and decided that that was not something that they would support. They goaded the car manufacturers out of the place, and as a result we saw car manufacturing—and I'm proud to say Labor's side under Chifley had pushed for the establishment of car manufacturing in this country; it provided a lot of full-time, great work for Australians and a lot of small businesses and other providers. That was all gone.

Now the coalition have brought in, hurriedly in the last six months or so, this whole mess of a strategy that they've got. They call it a Modern Manufacturing Strategy. There's a Modern Manufacturing Initiative, a Manufacturing Modernisation Fund and a supply chain program. There's a whole lot of stuff that is going to generate 80,000 jobs, 300,000 jobs or 2,600 jobs over 10 years. The spending is now. The spending is in 10 years. It's a complete mess. It is only designed for them to be able to say that they're doing something about manufacturing. There is no central cent. There is nothing at the core of this government that talks about what they will do to genuinely establish manufacturing in this country in terms of its renaissance and its longer-term viability.

They crowed about the fact that all these jobs came back into manufacturing and then they tried to claim credit for it. It wasn't because of anything the government did. All their programs only just came in. It would be a true miracle if anything this government did actually worked. What does work is the stunt. What does work is the media announcement. What does work is the production of press releases that go out but not the stuff of substance, not the stuff that will see them through.

They also announced, for example, this whole idea that we were going to have—and we've heard it a lot—patent boxes. Patent boxes were the big thing they were going to bring in under this budget, and we heard the Treasurer announce it with great flourish in the budget. Bear in mind that it is not the first time they've done it. In fact, in 2015 the Coalition announced that they were considering a patent box concept. They did a review. It went nowhere. That was 2015. It is 2021. In 2015 they announced that they were thinking about a patent box. They're now saying that from July 2022 the patent box will tax income derived from Australian medical and biotech patents at a 17 per cent effective rate. These patent boxes are not an idea that the government has come up with on its own. The big innovators have come up with stealing someone else's idea. They've been around since the seventies, introduced in Ireland in 1973. France introduced a form of them in '79. The UK has had them since 2013.

In 2015 a European Commission report examined the effect of patent boxes on 2,000 companies in 12 countries from the year 2000 to 2011, and it found patent boxes benefited companies financially but had a limited effect on increasing local research and development capability. So would it run any differently in Australia? We'll wait to see what the government says, but so far it looks like the patent box is a great innovation for company products and does not do very much in terms of innovative output. We have to see what's going to happen there.

The Treasurer, Josh Frydenberg, who announced the patent box in his budget in 2021—I just remembered. As soon as he announced it, I was thinking, 'Where have I heard him mention it before?' In 2019 he had this bright idea that he was going to bring in patent boxes. That was two years ago. So they looked at it in 2015, they talked about it in 2019 and they announced it in 2021. There's the speed of action by the coalition. He talked about it at a business event in London. He said to the then Treasury secretary, Phil Gaetjens, he'd have a few tax policies to work on when he got home. That's the way innovation policy is devised in the Coalition. Like bowerbirds they collect an idea here and there. Then they just put it all together and think it's all going to work. Mash it altogether and somehow it will deliver for the country. That is not the way that legitimate innovation policy should run. It shouldn't be that the latest shiny thing is the thing you put on top of the pile. They should have a way in which they will genuinely work it through, because the jury is still out on the validity of these as a concept. For example, in their supplementary submission to the Inquiry into Australia's Future in Research and Innovation, IP Australia said:

… patent boxes raise serious questions relating to tax competition, with governments effectively engaging in a race to the bottom… patent boxes do not necessarily induce research and development, and … may speed the trend for firms to separate patent income from underlying R&D activity, because of the increased tax incentives for mobile income.

Further, in reviewing the patent box regimes of Belgium, Luxembourg, the Netherlands and the UK:

… the increase in tax revenue from a greater number of patents in each country is not offset by the reduced tax revenues from patent box tax breaks.

I have a genuinely open mind. If there is a benefit out this we should look at it. What I'd urge people in the sector, who are attracted to the idea of patent boxes, to think about is: (1) we have a track record from a coalition government of making big announcements where the detail is light and they can't follow through and (2) this cannot simply be a method to reduce a tax bill. It has to have legitimate R&D outcomes that benefit the country. The coalition does not have an organised approach to innovation in this country. It basically runs from idea to idea and then drops the last one that didn't work. I don't have a problem if ideas don't work and you want to find something to improve, but there is no coherent thread through the work that they do.

Where they are innovative is in stealing a lot of Labor policies. We've been arguing for ages that they should get their focus together on artificial intelligence, which is an economic and national security priority. We've been saying that for years. We announced in 2018 that this government needs to spend $30 million over four years on AI capability for the nation when our neighbours up north were spending five times that. We also called for the establishment of a national centre of AI excellence. In this budget they've set it up.

We've been saying for ages that digital skills in this nation are an issue. Even in the latest digital pulse survey, done by Deloitte for the Australian Computer Society, they're predicting that there might be up to 520,000 more people with ICT qualifications needed by 2026. We need to see more work done on that. We have been pushing for skills in that area. Knowing of the massive skill shortages in the ICT and the tech space the government have finally announced that they'll do some stuff with regard to that in this budget.

I am also surprised to see some moves to cut capabilities out of Data61. Apparently the future of core components within Data61 has been left up in the air. Seventy jobs are predicted to be lost as a result of funding cuts to Data61—within CSIRO. Significant staff cuts—despite the CSIRO receiving more than $100 million in extra funding for artificial intelligence efforts. In a recent announcement, the science agency would be investing a further $100 million over four years into priority research areas. We are seeing more happening in there which we will be pursuing as well.

On Industry Growth Centres, apparently there was a secret report that backed the Industry Growth Centres. An initial evaluation of the six growth centres highlighted though that there was inadequate funding and that the centres had an inability to change the fortunes of the sectors in which they operate as a result of it. According to the report, in particular the growth centres lack of resourcing and structures to drive transformational change at a sectoral level was highlighted as an issue; their funding envelope is small, relative to that of comparable international programs, such as the UK's catapult program; and, finally, additional funding is required for the growth centres to achieve scale. This is the type of stuff we should be seeing money go into, rather than a quick knee-jerk reaction to embrace a new concept that is just basically—for example, patent boxes on the face of it look like a way to reduce someone's tax bill rather than create longer term, value-added innovation activity and we're not seeing it.

While it's too soon to assess the magnitude of some of the changes in the reporting of the growth centres that have occurred, ACIL Allen considers that the growth centres have aimed high and the magnitude of their impact is likely to be large. However, the impact is company-specific and not industry-wide. This is an issue. We need to be able to see industry-wide impacts through serious funding of growth centres, particularly in advanced manufacturing, cybersecurity, food and agribusiness, med tech, pharmaceuticals, mining, technology, services, and oil, gas and energy resources. These all mean a great deal to the country. We should be backing them in and we're not. Again, we will be following this through. There have been a whole lot of announcements in the industry space from this government. But, as I said, beyond the announcement is deficiency of detail.

I'll look quickly at my own area. In my part of Western Sydney, 200,000 people are moving in. The infrastructure cannot cope. We do not have the federal Liberal government and the state Liberal government working together on this. We had the government announce that they were spending an extra $10 billion on infrastructure—and, by that, I mean borrowing $10 billion extra—when it turns out they're underspending to the tune of $1.2 billion a year in their infrastructure budget. How can they underspend when areas like mine are crying out for major upgrades of roads or the use of smart infrastructure funding to help open up areas and give access to low-socioeconomic areas to get young people from those families jobs in high-economic and commercial growth areas? We need to see that happening more and more.

This New South Wales government is completely terrible at infrastructure planning and delivery, and the federal government aid and abet them. So they have an underspend. The amazing thing is the government borrowed $10 billion to underspend $7 billion on infrastructure. They claim to be great economic managers when they can't actually spend the money on things people in my area need. On the issue of infrastructure, we particularly need to see a budget that actually delivers for people that are stuck on congested trains. There is no investment in public transport, there's completely underinvestment in road transport and there's a failure to deliver the infrastructure that people need. Again, the government are big on announcement and poor on delivery, and the Australian people will suffer as a result of that deficiency.

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