Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Hansard source

I stand to oppose the Tax Laws Amendment (Research and Development) Bill 2013. This bill amends the Income Tax Assessment Act 1997 to deny access to the research and development tax incentive for companies with an aggregated assessable income of $20 billion or more for an income year. The amendment apparently better targets the R&D incentive to businesses that are more likely to increase their R&D spending in response to government incentives, delivering a greater return for taxpayers. That is the argument the coalition has put up in relation to the changes that they want to deliver on this. But what this does is it actually denies some of our biggest companies in this country the capacity to invest in research and development and the incentive to invest in research and development.

We looked at a similar proposition, but what we did when we are in government was this: we actually used any savings that were made from this proposal to build a stronger manufacturing and engineering base in this country. We wanted to create jobs. But that is not what this bill is about. This bill is about part of the coalition's position, where they simply want to cut costs at every corner. They want to cut costs. They want to make sure that this country cannot invest in a proper health system, a proper education system, a proper welfare system and a decent industry policy in this country. This bill is not about trying to balance one part of industry development with another; this bill is simply about an austerity measure. It is about pushing costs out of the cost of government doing business.

The problem with this is that everyone who knows the importance of research and development, everyone who knows the importance of innovation, understands that this is what drives an economy into the future. I have been gravely concerned about the activities of the coalition in relation to the economic base of this country. The economic base of this country over many, many years has had a strong manufacturing and engineering sector, and one of the main drivers for spending on research and development and spending on innovation has been our engineering and manufacturing sector. What we saw from the coalition not long after they came to power was that they basically dared our manufacturing sector, our vehicle sector, to leave the country. That is what they did, and that has resulted in a decline and a diminishing and a narrowing of our economic base. This bill will continue that process because this bill is simply about cost cutting. It is not about trying to look at government investing with industry to create new innovation, to create new research and development, to create new jobs. It is simply cost cutting at its lowest level. And that is not good for this country.

I remember being on the Senate committee of inquiry into the mining tax. I remember that at that time the mining industry and some of the analysts in the mining industry were saying that we had something like 80 years of recoverable iron ore resources in this country. Recently I saw on the ABC a report that said that, because of the increased production in the mining industry, those resources are now down to somewhere around 70 years, and, if we continue to get low prices and we continue to try and increase production, that will decline more and more. It is foreseeable in this country that we have young people at school now who may still be in the workforce when there is no iron ore industry of any significant capacity in this country.

What does that mean? That means that you need to have a broader economic base, and that economic base must include manufacturing and engineering. That economic base must provide the skills, the skilled jobs, the decently paid jobs and the future for the kids who are at school now, because they will not all be able to get into the mining industry. That is the problem. As you see, the mining industry, the coal industry and the iron ore industry are very quick to get rid of jobs as soon as a chill wind hits them. That is why we need innovation. That is why we need research and development. That is why we need a broad base in this country to provide jobs for the future. And what this bill does, simply to try and make savings in the budget, is to deny the reality of innovation and research and development in this country.

Innovation, research and development are the backbone of any advanced economy. I am on the record over many years as saying that Australia cannot simply be a quarry, a farm and a tourist destination. But that is where we are heading under this government, because it fails to understand the need to get a balance between research and development, innovation and co-investment in industry. It does not understand the important issues of ensuring that we have skilled jobs for young Australians into the future.

We need, in my view, a complete re-look at what this government is doing, because this government has lost the plot when it comes to building a strong industry base in this country. The industry base has to be broader. The industry base has to be innovative. The industry base has to be technologically competent. If we simply narrow the base, we will go nowhere in a hurry. The problem with the government is that it simply wants to take money out of research and development. It wants to take that money out of investment without doing the other things that are so important to this economy.

What we did in government was that we said that we would provide a range of incentives in association with changes to the research and development approach, that we would look at ensuring that steel suppliers in this country had access to a fair go around the country, that metal fabricators would get a fair go, and that we would start developing approaches where they could get into the international approach that is taken everywhere else, where you have to get access to jobs through that international supply chain. We said we would look at building and construction and create jobs in building and construction. We said we would look at construction management services, design and engineering as part of the overall broad industry base that is so important for this country.

You can do that a number of ways. One way is through research, development and innovation. Another way is providing co-investment opportunities and support for those industries. Another way is to have a balance between co-investment and support and research, development and innovation. This government, simply as a cost-cutting measure, is saying that major companies that invest significantly in research and development in this country will not have access to any support.

There was an inquiry by the Senate Economics Legislation Committee into this bill. It became clear through the submissions that industry does not support this. Typical of the coalition, they found some little piece of 'evidence'. They used that and said, 'This is the theory: basically, we will reduce support for research and development and reduce industry support, and through this hidden hand the economy will suddenly recover and make everything great. Jobs will be created. Industry will look better.'

But the Australian Industry Group said in their submission, No. 18, to this inquiry:

Innovation by business, including innovation associated with business engagement with research and development, is critical to the future success of the Australian economy. It is particularly important at the moment because we have a legacy of low productivity growth to address and because there is a need for new sources of growth to emerge to assist the economy rebalance as the boom in mining investment wanes.

The Austrian Industry Group are saying that we are going to get a decline and rebalancing as mining industry investment wanes and that it is critically important to future success to have a proper research and development approach and innovation approach in this country.

They are also saying that we need to rebalance. That is the point I have been making so far. We must get a proper balance between mineral resources on the one hand and manufacturing and services on the other hand. There has to be a balance in this. We cannot have a position where some young kids now at school may still be in the workforce when we just do not have access to mineral resources in this country. It is a scary thought.

The coalition's whole agenda is more and more to lock this country into having mineral resources as the basis of the economy. I do not think that is smart. I think it is another short-term approach. It is short-termism at its worst. It is not looking ahead to what this economy might look like in 10, 20, 30, 40 or 50 years time. You have to look ahead. How do you look ahead? You look ahead through innovation. You look ahead through research and development. You look ahead by training the workforce in this country to have the proper skills to compete internationally not only in digging up coal and iron ore but in manufacturing goods in this country that can sell overseas, ensuring that there are decent paying, highly skilled jobs for Australians around this country.

These are the issues that are important, not some short-term, nonsense argument about the budget being in crisis and that we have to slash and burn. It is not our Prime Minister going in front of all the major leaders in the world and having a whinge about not being able to put a $7 tax on pensioners when they go to the doctor. We have to get better than that. We have to get bigger than that. This bill does not help us do that. This bill does not create the proper balance between assistance on research and development and assistance to create jobs in other ways. It is so important that we have a broad base position in this country that will create skilled jobs in the future.

Rebalancing the economy, as the AiG said, is critical. You do not rebalance the economy by simply pouring more and more resources into a mining industry that is creating fewer and fewer jobs. That is the problem we have. We need to have a more sophisticated approach. In that sophisticated approach around the world, as the Governor of the Reserve Bank of Australia, Mr Glenn Stevens, said, 'a culture of innovation is the real key to the challenges of economic transition'.

If we are going to transition, we need support. If we are going to transition, we need industry policy. If we are going to transition, we need research and development and we need innovation. That is something that this government does not understand. It is something that the Abbott government is sacrificing for this push for austerity measures against pensioners, the health system and the education system.

It was interesting: just last week I was having a debate with a coalition member and that coalition member spoke about us, the Labor Party, not having a moral compass. The coalition are the people who lied to this country about health, who lied to this country on education, who lied to this country on manufacturing jobs and who have continually lied to this country about the economic so-called crisis that we are in. So, if you want to talk about a moral compass, let us have a look at the practical position that the coalition have put themselves in.

They could not lie straight in bed, this mob. They are simply the world champions on lying to the Australian public. Look at their position prior to the election on a whole range of issues and look at their position now. They lied their way to power. They coupled that with fear campaigns that would not take into account the science on climate change and a range of other issues. They are unscientific. They are anti science. They have no understanding of what builds a good economy. They are absolute economic troglodytes, this mob. Do not listen to any of the arguments you hear from them that they are great economic managers. They drive our manufacturing industry into the ground, and they may be about to do the same with our engineering industry. This bill will simply make sure that research and development by some of the biggest companies in this country goes overseas. That is not good.

If we are going to rebalance our economy, we need jobs for our kids, we need jobs for our grandkids and we need to look at where this economy will be, not in five years and not in 10 years but in decades down the track. That is what the good countries do. That is what the smart countries do: they look at how they can rebalance their economies and create jobs for their citizens. Is this mob doing that? No, they are not, because they are so short-term and so unsophisticated in their thinking. They would want to rip away support for industry policy. They rip away support for investment in research and development. They rip away support for innovation. These are really the troglodytes of the coalition in action. And it will mean problems for this economy in the future. Not only did they lie to Australian citizens; they cannot deliver an economic strategy.

This bill is a bad bill because it is about austerity principles. It is about ripping money out of what builds jobs into the future. They should be condemned for this. We will not support this bill. It is a bad bill—bad for Australia.