Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Hansard source

At the start of the second reading debate on the Tax Laws Amendment (Research and Development) Bill 2013 I explained that Labor oppose this bill because it is not in the nation's interests. Senator Wang has circulated an amendment on behalf of the Palmer United Party, which will be debated if we actually reach the committee stage. I commend Senator Wang for seeking to alleviate some of the concerns that the Palmer United Party has identified about this bill. For instance, he and his colleagues felt that the government measure unfairly disadvantaged Australian firms over multinationals.

In respect of Senator Wang's concerns I, in fact, have even more serious concerns about the implications of what is being proposed in the Palmer United amendment. The Palmer United amendment would see the removal of the R&D tax incentive for all firms with expenditure over $100 million. In practice this means that, for companies thinking of investing in R&D in Australia, any expenditure above $100 million would not attract an incentive.

In a private briefing before the economics committee, Treasury officials admitted that there was no modelling available to show how many businesses would be affected by this $100 million cap. I repeat: no modelling for this measure has been undertaken. We have got no understanding of what impact this measure would have on whether firms would actually invest hundreds of millions of dollars in an R&D capacity in this country. We have no modelling, either, to indicate the longer term impacts on our economy or on jobs. In the same briefing Treasury estimated that the measure could affect up to 25 consolidated groupings of companies. The term 'consolidated grouping' means that diverse companies held by a common investment company will be treated as one single business entity. As such, when compared to their peers, smaller companies held within the larger group would be disadvantaged by the proposals. Quite frankly, that is not the only concern about this proposed amendment. Capping a firm's ability to claim spending of over $100 million will encourage companies to keep their R&D spending within this amount. Corporate behaviour will change and Australian companies will take the excess of their R&D offshore. This is a recipe for the exporting of job

Companies that particularly trade overseas will ensure that amounts over $100 million will be done in their facilities overseas.

There are also serious technical concerns with the bill, especially with regard to feedstock adjustments and clawback provisions. Taxation experts have told me that manufacturing businesses will potentially get a much lower benefit as a result of the amendment as it is currently drafted.

There is also the issue of retrospectivity. These measures are highly retrospective. That is why I will be moving an amendment, should we get into a committee stage, to limit the effect. When it comes to this issue, I urge my Senate colleagues to consider the implications of what is being proposed. The R&D cuts under this government will affect and reduce R&D spending in this country. (Time expired)

(Quorum formed)