Bruce Billson (Dunkley, Liberal Party, Minister for Small Business) Share this | Link to this | Hansard source

I move:

That the amendments be agreed to.

This bill was introduced by the government on 14 November 2013. We are finally moving towards the passage of this bill, nearly 15 months later. This is due to Labor opposing this government all the way in implementing a measure that it itself had proposed. Labor's hypocrisy in this regard has reached new heights. The bill as introduced is essentially in the same terms as the bill that the Labor government themselves introduced on 26 June 2013. Labor's bill was not passed before the election was called. It was one of the 92 announced but not enacted measures that government inherited on coming into office. What is interesting, though, is that not only had Labor announced this measure and introduced the legislation, it had banked the budget impact. It had banked the revenue and then failed to legislate the measure.

Labor's bill would have resulted in a gain to revenue of $1.1 billion over the forward estimates. Labor's opposition to its own measures in the other place amounts to Labor committing to this policy and a further $1.1 billion deterioration of the budget bottom line.

Under the bill we introduced in November 2013—which, as I said, was essentially the same terms as Labor's bill—access to the R&D tax incentive would be restricted to companies with an aggregated assessable income of less than $20 billion. Labor's opposition to this measure amounts to $1.1 billion gift to the biggest businesses in our country.

What has happened now? Labor are opposing their own bill. Labor are seeking to stand in the way of a measure they initiated and then banked the benefits of in their 2013-14 budget. What we have now is Labor in opposition opposing their own savings measure and gifting the biggest businesses in our country a $1.1 billion gift.

I must recognise the substantial contribution of our outstanding finance minister, Mathias Cormann, and the collaborative work he has done with the Palmer United Party and the crossbenchers. I particularly want to highlight the thoughtful and constructive engagement of Senator Zhenya Wang and Senator Glenn Lazarus. I also want to acknowledge the work of Senator Xenophon, who, in bringing his insights and the capacity of the Senate reference committee, helped to fine tune the measures that have now been returned to this chamber.

We have come up with a legislative response that ensures that the measure will be fair to businesses that produce most of their revenue in Australia, and those businesses that mainly produce their revenue in other countries.

There was a briefing by Treasury, extensive discussions with the private sector R&D consultants, and the Palmer United Party amendments were workshopped and canvassed amongst members of the Senate Economics Legislation Committee on 24 November. I note that this bill, as originally introduced by the government, was the subject of a reference to the House of Representatives Economics Committee in March last year. This measure has been workshopped to death.

The amendments now under consideration in this place will, instead, introduce a cap of $100 million on the amount of eligible R&D expenditure that companies can claim at the standard rates under the R&D tax incentive framework. For expenditure beyond $100 million, companies will be able to claim a non-refundable tax offset at the corporate tax rate, which is broadly equivalent to claiming these R&D expenditures as a normal deduction. Small and medium-sized companies, which are typically more responsive to tax incentives for innovation, will benefit.

These amendments represent a fair and sensible outcome. As I have already noted, the amendments were the subject of briefing to members of the Senate Economics Legislation Committee last November. The other chamber debated the amendments for two hours on the Monday just passed before passing the amendments now before us. Labor opposed these sensible and considered measures and the refinements that have been developed in partnership with the Senate crossbenchers, and wanted to gift the largest businesses in our country a $1.1 billion windfall.

Treasury's advice is that fewer than 25 companies are expected to be affected by these amendments. The vast majority of companies claiming the research and development tax incentive will not be affected. Businesses are motivated to invest in R&D by a range of economic and commercial factors as well as incentives offered through the tax system. Adjustments to the level of government support for R&D are not the sole determining factor of the level of R&D expenditure in Australia.

Under the expenditure cap, Australian and foreign resident companies will be eligible for the R&D tax incentive and continue to receive a substantial tax benefit. This addresses concerns about the perceived discriminatory effect of the original measure on Australian resident companies. (Extension of time granted)A R&D expenditure cap of $100 million—

Mr Fitzgibbon interjecting—

That is $100 million, member for Hunter. You are looking to gift those above that with $1.1 billion. A R&D expenditure $100 million will achieve revenue gains approximately equal to the revenue gains from the original measure contained in this bill. I again emphasise: they were measures banked and delivered by the former Labor government. This ensures that these changes will still play an important part in the government's repair job.

I commend these measures to the House. They have been under consideration for some time and they will ensure that the R&D tax incentive system is supportive of Australian enterprise. These amendments that we are now considering had failed to pass the Senate. Labor's hypocritical opposition would have cost the budget $1.35 billion over the current forward estimates. I commend these amendments to the House and ask that all sides of the chamber support this sensible measure.

Question agreed to.