Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to 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.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

It is always a pleasure to follow Senator Cameron in any debate! Senator Cameron has a nice way of building himself up into a frenzy, thinking that he is addressing a union branch meeting of some of the only 14 per cent of Australian workers in private industry who bother to belong to a union. I might say to the previous speaker that that sort of rhetoric might impress some of those whom Senator Cameron, as a union boss in a past life, might have related to, but it certainly does not contribute to a serious debate on research and development.

I understand that this bill very much mirrors a bill that was introduced by the former government—one which, unfortunately, was not dealt with through this parliament before parliament was prorogued. Why wasn't it dealt with? Because the Labor Party in government demonstrated time and time again that they could not manage themselves, they could not manage the parliament and, indeed, they could not manage the economy of Australia.

So it is a bill that is principally the same as a bill that the government of which Senator Cameron was part actually introduced. It targeted access to research and development tax incentives to small and medium-sized entities that were more responsive to increasing their R&D spending as a result of government incentives. I think the second reading speech on this bill has clearly indicated that it is a bill worth supporting. It is good. It better targets the limited money we have available for research and development. It would be easy to spend a whole 20 minutes going through some of the achievements that have been made over the years by the assistance that government has given to industries through research and development support.

This is a debate, and Senator Cameron raised the issue of governments lying. This comes from a man who was part of a party whose leader, the then Prime Minister, Ms Gillard, supported by the then Treasurer, Mr Wayne Swan, before the 2010 election promised, hand on heart, that: 'There will be no carbon tax under a government I lead'! Remember that promise? Everybody in Australia remembers that promise, and they remembered it pretty well at the last federal election. They understood: here you had a government that made a deliberate, major, much-televised promise to never ever introduce a carbon tax. Within three months of making that promise, the Labor Party government—of which the previous speaker was, at the end, a minister for a few days—introduced it immediately, in deliberate breach of the commitment and solemn promise they had given. Senator Cameron cannot stand this; he is leaving the chamber, because the truth always hurts him. He is one to talk about governments lying! His party in government set the standard for lying in government. I am always amused when Senator Cameron dares to raise that issue, which just attracts more and more attention to the inconsistencies, the untruthfulness and the mismanagement of the previous Labor government.

I also want to take issue with Senator Cameron on the impassioned plea in his speech about manufacturing industries in Australia. I think he is going to be followed in this debate by Senator Carr, who was, during the term of the Rudd-Gillard-Rudd governments, the industry minister for a period of time. Senator Carr and the Labor Party presided over a government that did more damage to Australia's manufacturing industry than any government of any other country over many, many decades. They shut down industry. They sent it overseas. How did they do this? They did it by making Australian industry uncompetitive. Australian industry could not compete with industries in Europe, America, South-East Asia and Asia generally, because the Labor government introduced a tax on energy that impacted so heavily on manufacturing industries that it simply made Australian industry uncompetitive; it made Australian manufacturing unaffordable. It is the greatest problem that has seen our manufacturing industries over many, many decades. There have been other issues; there is no doubt about that. But the work of the Rudd-Gillard-Rudd governments with their tax on energy has been the greatest failure for Australian manufacturing. You will hear Senator Carr after me try to find a few things where he will say they have supported industry. He will spend a lot of time attacking any other government over their lack of support for industry. But I can assure the Senate that any industry will tell you that, during the Labor period, they simply became uncompetitive because of the carbon tax. That, more than anything, has hastened the demise of Australia's manufacturing industries.

I note a recent announcement by a couple of world leaders. I am delighted to say that one of these world leaders will be joining us in this parliament building later on this afternoon—the Chinese President. I warmly welcome him to Australia, and I warmly welcome his close involvement with Australia. What I am reading in the media is that there will be the signing of a major free trade agreement with one of the world's biggest economies. Coming on top of free trade agreements with the United States, Korea and Japan, this agreement with China will be a wonderful boost for Australia and for many Australian industries. I look forward to it. However, I note that the Chinese government joined with President Obama—I will not say the government overall of the United States, but the one man who is the President of the United States at the moment—to announce a promise to do something about carbon emissions by, I think, 2030. As you see from the Labor Party, promises are easily made but much harder to keep. The Labor Party promised 'no carbon tax' but immediately broke that promise. I understand the Chinese government has entered into some sort of non-binding agreement with the American President to do something about carbon emissions. Good luck to President Obama and to the Chinese President if they have this wish, this goal, of reducing carbon emissions. It is also a goal that all Australian governments have had for some time. The current Australian government has a goal of reducing emissions by five per cent, which is the same goal as that of the previous Labor administration—that is, to reduce Australia's emissions by five per cent.

I have to point out that, when dealing with commitments in this area, there was the Kyoto agreement. Does everyone remember the Kyoto agreement? Many nations signed up to it and made commitments to reduce their emissions. Which country actually achieved the promises they made? Australia was one of the few. So when Australia says, 'We will reduce our emissions by five per cent by 2020,' you can believe that we will do it, because under the Howard government and to a certain degree not interfered with by the Labor government and now under the Abbott government this five per cent target will be reached. Those who were around at the time, as I was, remember the Kyoto agreement and the great work that the then environment minister, the then Senator Robert Hill, did at the Kyoto gathering to get commitments from nations. The Australian government was at that time determined to make a commitment that we could keep—and we have done that.

President Obama indicating that America is going to reduce its emissions by some substantial amount into the never, never is not the same as the Australian government's commitment to a five per cent reduction, which the world knows we will keep. President Obama may have certain views on this, but I suggest they are not shared by his parliament, the congress of the United States. Indeed, my reading of American politics is that a recent nationwide election in America returned a political party that does not agree with President Obama on the sorts of promises he is currently making. Everyone knows that President Obama is a nice fellow—but he is a bit of a lame duck president at the moment; he has only got a couple of years in his reign left—but of course he has the Congress, a parliament elected democratically by the American people, who on many issues including this one disagree with him. So what weight do we put on his promises? Not a lot, I would say. I know the Greens political party are lauding this as a magnificent breakthrough—as they did before the Copenhagen failure; they said that was going to be the great breakthrough. But of course, sensible people know this will not be the case.

Mr Acting Deputy President, I laud the fact that the President of America and the Chinese government have a vision and a commitment towards a goal of a reduction in carbon emissions, and that is great. But so they should have a goal to reduce emissions! Because China emits 22 per cent of the world's emissions of carbon, and President Obama's country emits 15 per cent of the world's emissions of carbon. Australia, I might add, emits less than 1.4 per cent. And I will repeat that: Australia emits less than 1.4 per cent of the world's carbon.

Now if carbon emissions are destroying the Great Barrier Reef, as President Obama seemed to say, then his country, and China and India and the European Union, should reduce their carbon emissions to an extent where it will make a difference. It is not Australia's 1.4 per cent that is—according to President Obama—destroying the Great Barrier Reef; it is the emissions of countries like his own, and like China. If the emissions are destroying the Barrier Reef—and I must add, I do not think they are—but if they are, then it is no good President Obama coming to Australia and indirectly lecturing us. He needs to look into his own backyard, and do something about the 15 per cent of world emissions which his country is putting into the atmosphere and which, according to him, is destroying the Great Barrier Reef. So President Obama: lovely to see you in Australia—a great leader, a great man—but do not come here and raise issues of domestic politics when you have a real problem in your own country. Your country emits 15 per cent. From what I understand on my reading of American politics, you have got Buckley's chance of getting any real movement on that over the foreseeable future. Australia, by contrast, has a five per cent target, which we will keep and which we will meet.

Again I say: the Greens political party get all excited about this; the ABC get all excited about this—President Obama and the Chinese government have made this agreement. But they do not seem to realise that the Chinese nation emits 22 per cent of the world's emissions of carbon, and that the United States emits 15 per cent. Sure, they should do something—but what they emit makes Australia's situation tiny, by comparison. We always need a reality check when it comes to theses highfaluting, fine-sounding promises—and they are no more than promises—about reduction of emissions. And I emphasise, they are only promises. I again remind the Senate that it was the Labor Party promised, hand on heart—hand on Bible, almost—that there would be no carbon tax. So we can see what promises mean. We want action. We want to see things happening. Under the coalition's Direct Action Plan, we are already seeing that happen, and it will increase in speed as the legislation to support plan that is passed through the parliament and is put into effect. Those are the reality checks we need to have, when we are talking about this whole issue of research and development, and about the manufacturing industry. Australia under the Labor government nobbled our manufacturing industries. At the same time, manufacturing industries in China and America—who had very little or no constraints whatsoever on carbon emissions—increased and exploded. Australia's manufacturing industries, under the stewardship of the last government and particularly its industry minister, sent Australian jobs overseas, as Labor made Australian industry uncompetitive.

Finally on this topic, I want to say that research and development is very important in relation to clean coal techniques. A lot of research has been done in this area, and I am forever proud of James Cook University of Townsville and Cairns—and, I might say, the next speaker, the former industry minister, seems to have a bit of a thing about James Cook University: he is there criticising it whenever he can. But I greatly support that great institution, which is one of the leading tropical universities in the world. They are doing a lot of work on algae functions and on research that can help clean up emissions from power stations. It is great research, and that is supported, and has to be supported, by government help—taxpayer help—for research and development.

That is why I think this bill is timely. It is very much along the lines of a bill introduced by the former government, and I would assume that the Labor Party would be supporting it because it is, by and large, their bill. We need research and development: I support the bill.

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

We have just heard from Senator Macdonald from Queensland, who gave us a dissertation on the American President being a lame duck; he attacked the Chinese and he attacked the Americans. Of course, he failed to point out his particular expertise in these matters, because if ever there were a lame duck, it is Senator Macdonald, with 5½ years yet to serve and of course having been dumped by his own party. He is a senator that really has no influence whatsoever within this government. He made the point about the question of the government's integrity, when we know that, in relation to betrayal, Mr Abbott has a gold medal standard when it comes to the question of him saying one thing before an election and another thing after an election. Who could be no greater expert on that than Senator Macdonald himself? His bitterness and hostility towards his government, not to mention towards every other section of this parliament, is predicated on his betrayal by Mr Abbott, and the fact that he is not on the front bench highlights that. He said that promises were easy to make and hard to keep. He knows only too well what the promises were within the Liberal Party which have seen him end up in this parlous position of being a lame duck senator for 5½ years, for the remaining period of this term.

I would like to suggest that his commitment to R&D is very limited, because this is a government bill that gives effect to one of those acts of betrayal, where the government seeks to remove $620 million of R&D support from Australian industries. We know that in advanced industrial economies innovation is the chief driver of increases in productivity, that firms that innovate are more competitive and more able to sustain high-skilled, high-paid jobs. According to the Australian innovation system report, innovation almost doubles the likelihood of productivity growth in Australian businesses, that firms that innovate are 78 per cent more likely to report increases in productivity over the previous year and that firms that collaborate with research organisations and universities are almost 2½ times more likely to report increases in productivity. So, without a strong innovation system, Australia cannot build the diversity in its economy that we so desperately need to ensure the continued prosperity of this nation. Without a diverse economic base, future growth will be unreliable and there will be much higher levels of fluctuation, with booms and declines, particularly as we are so heavily dependent on commodity exports. In Australia, overall levels of business and research collaboration compare badly with those of other OECD countries.

The tax incentive that the government offers is one of the most effective means of encouraging firms to invest in innovation. In the 1980s Labor introduced the R&D tax concession, making Australia one of the first countries in the world to seek to foster innovation through the development of taxation support, through measures such as what is at the core of this particular bill. Another progressive Labor government updated the scheme. I am very proud that, in 2011, the government changed the R&D tax concession to a tax incentive, converting the concession to a credit. We doubled the benefit for smaller firms and raised it by a third for larger firms. These are all measures that were undertaken when I was the minister. The R&D tax incentive was a landmark reform and built on a great Labor legacy of investing in innovation and R&D. The effect was immediate. The sums invested by businesses have grown by 20 per cent and the number of registrations has increased by 16 per cent since the program started.

Now, a little less than two years since the scheme has been in place, the Abbott government has proposed through this legislation a major overhaul of the R&D tax incentive. First, the entire scheme is the subject of two reviews as part of the legislative requirement and through Mr Hockey's taxation white paper. These are in addition to the measures taken through the Commission of Audit—which has sought to call an independent review—which would stretch the imagination by anyone's standards, even by the somewhat rough and ready standards of this government.

To add insult to injury, in April this year the government continued to clamp down on independent expert advice by disbanding the R&D Tax Incentive Advisory Committee. I understand the minister recently went along to the Innovation Australia board and proposed its abolition as well, only to be told by the board itself: 'But, Minister, this is a board established in legislation. You cannot get rid of this particular board without a deliberative decision by the parliament.' But this is not a matter that the government would be concerned about. When the minister goes to a board and proposes its abolition, when it was covered by legislation and he did not appear to know that, that suggests that the advice he has been getting is somewhat poor. I say it fits within a pattern, because this bill reflects that pattern of poor advice. What you expect? The R&D Tax Incentive Advisory Committee, which was established to monitor the implementation of the scheme at the request of stakeholders, has been abolished. The government is relying upon Treasury to provide it with advice and Treasury has not been able to provide substantive advice on this matter for the better part of the whole period that it has been in place.

The group of industry experts on the R&D Tax Incentive Advisory Committee demonstrates that the government is not too comfortable when it comes to the issue of genuine industrial consultation and independent advice. The government's decision to take $620 million from the scheme in the 2014-15 budget established just how astounding the government is when it comes to making sure there is a huge gap between theory and practice. The unending cycles of review and changes to the system make it very difficult for any company that is interested in investing in its own future to rely on this government's own advice. It undermines business confidence and it becomes a disincentive to investment in R&D. It brings me particularly to the example of the duplicity of this government through this matter, which Senator Macdonald sought to lay at the feet of the previous government.

What Labor did was introduce a $1 billion plan for Australian jobs, a package of measures designed to encourage innovation and stimulate investment. To fund it, there was a proposal to provide some savings out of the R&D tax incentives—to transfer moneys across to ensure that there was investment to enable us to ensure that we were able to provide the incentives to build jobs into the future. What this government has done is strip away that program and undertake to actually cut the jobs plan

The other part of the measure was that we were committed to quarterly credit payments, a move strongly endorsed by the biotech sector and small business—once again, aimed at building the innovative capacity of the country. What does this government do? It takes away those measures that help, especially, start-up companies and smaller companies who are cash strapped and, until they get themselves up and running, are left with great exposure to the market. The shadow industry minister said the exclusion of firms earning more than $20 million was destroying confidence in the tax incentive. That was the position the Liberal Party took in opposition: that such a measure would undermine confidence in the industry. But, as Treasurer, Mr Hockey actually proposed that these reductions occur. Having said in opposition that cuts to the incentive were immensely unpredictable on taxation policy, he went ahead and proposed these reductions in such a way.

So we know that the government has in opposition said one thing and in government said another. It has undermined the basic principles of the quarterly credits minus the reinvestment programs to create jobs, and it has created an environment in which the policy rationale has had no basis other than the government's search for budget savings. The government has trashed Labor's jobs package, the innovation precincts have been fundamentally undermined and the Australian Jobs Act is now up for review.

This is a bill which demonstrates the government's retreat from industry policy—a long list of initiatives—

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

Your savings measure.

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

You call them good savings measures here. They are good savings measures in exporting jobs. That is what you are good at: you are about exporting jobs, destroying Australian industry and undermining the capacity of this country to provide the high-skill, high-wage jobs that we need. This is a government that is not actually interested in genuine industry consultation about its plans. This is a government that has a predetermined hostility to Australian industry. We see the Minister for Defence sitting there. We cannot even build boats in this country anymore, because of the government's predetermined hostility to manufacturing. The government will not invest in Australian jobs and will do all that it can to export jobs.

The unending cycle of reviews does not do anything other than add to the uncertainty and the government's cover, when in reality there is an unmitigated hostility: the destruction of Commercialisation Australia, of Enterprise Connect, of the Innovation Investment Fund and of the Australian Industry Participation Plan, and the attempts to destroy the TCF support program—the list goes on and on and on. We know that this is a government that promises one thing before the election and does the opposite in this budget. We are now noticing this attempt to strip away the incentives from the largest firms affected by these measures. This again reflects government hostility to Australian firms investing in jobs in Australia.

The evidence on R&D is very clear. We know that these programs work and that small and medium-sized enterprises are lean innovators, accounting for a very small proportion of the total investment, and are much less likely to generate new-to-the-world innovations. By contrast, large Australian businesses make up the majority of total investment in innovation and are much more likely to collaborate with the research sector and generate new-to-the-world innovations.

What this bill does is strip away support for the innovation system and target particularly the larger firms, who are the backbone of the R&D program in this country. We also know that, of the 18 submissions to the Senate committee inquiry on this bill, all but one opposed the change. The people who are actually involved in making decisions about the development of our innovation system—the people who are actually making it happen—regard this bill as being a fundamental setback for the development of jobs in Australia. The truth of this government's motivation is nothing other than a reduction in public support for jobs, investment and the development of the new technologies, new skills and new industries that this country desperately needs to ensure that it is able to maintain the prosperity that this nation desperately needs to secure its future.

I am told that there will be an amendment proposed to this bill as a result of discussions between Senator Wang and the government. I think Senator Wang has acted out of good intent and is seeking to ameliorate the effects of the bill, but these are substantial amendments and, when they are moved, a Labor senator will be seeking to move that these matters be referred back to the Senate committee so we can actually look at the implications of Senator Wang's amendments. I would urge all senators who are concerned about this issue to have a look at this proposal and allow us the chance to consult with industry about the consequences of what is a very significant change in the innovation system in this country.

I understand that questions are about to start, so I will be seeking to continue my remarks after—

Stephen Parry (President) Share this | Link to this | Hansard source

There being a minute to go, Senator Carr, you can continue for one more minute.

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

I am happy to continue if you like. I am delighted. We know that an official from the Department of Industry's Innovation Policy Branch told the Senate committee that this was nothing more than a savings measure and, as such, was extremely short sighted. KPMG pointed out in their submission to the committee:

The estimated savings of $1.1 billion gained by the proposed changes are flawed and will provide the Government with at best a small increase in consolidated revenue now at the price of longer term growth in Australia in future.

…   …   …

To the best of our knowledge, Australia will be the first country in the world to exclude such a specific and targeted subset of large companies from claiming an R&D tax incentive—

which is an entitlement that you find all over the world. So this proposal will set back Australian industry and will be the first in the world in terms—

Debate interrupted.