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NO SUPPORT FOR R&D CHANGES

June 30, 2020

Researchers and manufacturers have told the Senate Committee reviewing the Research and Development Tax Incentive (RDTI), that the Government’s planned changes lacked consultation and will reduce Australia’s attractiveness as a place to conduct research, costing Australian jobs and slowing economic recovery.

The Senate Economics Committee is reviewing the government’s amendments to the principal mechanism used by the Australian Government to stimulate industry investment in R&D by providing a tax offset for eligible R&D activities.

Stakeholders universally rejected the changes to the RDTI, particularly in relation to the unintended consequences of the intensity threshold, the bill’s retrospectivity, and the budget implications which will undermine future research and development by Australian industry.

Not one industry witness that appeared at the RDTI Senate hearing supported the Morrison Government’s amendments to the bill.

Criticisms from stakeholders at the inquiry were damning and wide ranging:
• ResMed commented that amendments to the bill “makes Australia less attractive to invest relative to other countries”. The company said the Government shouldn’t be legislating bills that would negatively impact manufacturing as, “it just doesn’t seem right.”
• Medicines Australia said the legislation sets them up with a “perverse decision” between investment in manufacturing and research and development.
• Manufacturing Australia said “the bill certainly puts Australian jobs in manufacturing research and development at risk, absolutely.” They also commented that the impact of the intensity measures will “drive manufacturing R&D investment offshore or drive manufacturing production offshore.”
• The Lighting Council stated that “any decline of R&D incentives in Australia will only serve to harm Australian manufacturing and will inevitably lead to job losses.” They also commented that legislation is a “grab for revenue”.
• The AIGroup was “not consulted on this bill. We were surprised.”
• According to the Australian Information Industry Association, “we need to make sure we remain internationally competitive and this bill does not do that.”

In addition, the Department of Industry and the ATO were united in their confirmation they have not consulted industry at all on the bill before Parliament.

The ATO and the Department of Industry however were at odds over whether the bill is retrospective. The bill’s operational date is the 1 July 2019, meaning if passed in its current form, the Government will claw back money from investments made by business under the current law.

Australian businesses need support more than ever to not only survive but thrive post pandemic, and the Government should heed all the evidence from the Senate hearing.

The Government’s lack of an economic agenda poses a serious threat to our economy, industries, and present and future workforce.

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