Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

Firstly, in response to the issues raised by Senator Carr: the comparisons he seeks to make in relation to arrangements in other countries are not valid. This is because, essentially, you cannot just look at one aspect of our tax system as it relates to incentives to encourage research and development expenditure, because all of the schemes in different jurisdictions are fundamentally structured differently and obviously the flow-on consequences are different depending on what the specific arrangements are in individual jurisdictions.

In relation to Senator Milne's question, it stands to reason that if, as you are proposing we should do, the government provides a benefit up-front on a quarterly basis before any expenditure has been incurred by a business—so we the government provide the entitlement up-front—and then after the business may or may not incur the expenditure, there has to be a reconciliation. If too much has been claimed, the business has to refund the Commonwealth. The Commonwealth then has to go and chase businesses that might be tardy in refunding the entitlements that they have received from the Commonwealth erroneously or in excess of what their entitlement actually was. There will be such situations. It is just an intuitive reality that some businesses will seek to exploit this sort of loophole in order to facilitate their cash flows.

The advice that we have is that the proposal before the Senate and put forward by the Greens will increase the risk of over-payments, with all of the compliance issues and increased compliance costs that come with that, and will increase the risk of fraud. We accept that advice from Treasury. We accept that advice from the experts. On that basis, the government has decided not to support this amendment.