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

In relation to the last question, the government has been working very closely with Senator Wang, on behalf of the Palmer United Party, to develop this alternative approach, given that Labor was taking this incredibly reckless and irresponsible approach of opposing their own budget measure.

The government is very grateful to crossbench senators—the Palmer United Party, Senator Madigan, Senator Muir, and Senator Xenophon in particular—for the constructive approach they have taken with the government. We negotiated this as an alternative method of achieving the same objective. We wanted to ensure that research and development tax incentives were appropriately targeted and were not directed at those businesses that are extremely profitable.

The initial measure was consistent with what Labor had banked in their budget, essentially applying this measure to businesses generating more than $20 billion in profits, but the Palmer United Party and Senator Wang in particular pointed out quite rightly to us that this would mean that Australian businesses operating and generating profits predominantly in Australia were comparatively disadvantaged compared with businesses that generated most of their profits overseas, but that might be generating more than $20 billion in profits, but outside of the Australian tax jurisdiction. So in order to take that observation on board we came up with this as an alternative method. The advice we have is that the number of companies that will be impacted by putting this $100 million cap in place in relation to eligible research and development expenditure will be broadly the same.

If the Labor Party takes this approach where they oppose their own savings measures we will work with those senators across the chamber who take a constructive approach and are prepared to work with the government in the national interest. That is how we came to this point. And the government, of course, worked closely with Senator Wang in putting the relevant amendment together to make sure that it was technically accurate and well targeted.