Denham Sadler
February 22, 2019

RDTI concerns raised in Estimates

Senate Estimates

RDTI concerns raised in Estimates

Kim Carr: Concerns over conflicts of interest in RDTI compliance outsourcing.

The Opposition is "highly concerned" about the government’s plans to outsource some of its crackdown on the research and development tax incentive, and has asked the department to delay the tender until after the upcoming election.

The research and development tax incentive (RDTI) was a main focus during the Department of Industry’s appearance at senate estimates on Thursday afternoon.

Shadow innovation minister Kim Carr criticised the government for its recent call for expressions of interest for a supplier to "assist with program integrity functions for the RDTI".

Earlier this month the department issued an EOI for a supplier to help assess whether companies receiving the RDTI are actually performing eligible activities.

At the estimates hearing, Senator Carr questioned why this "core public service function in the administration of law" is being privatised.

"Compliance of government programs should be the core business of the public service and Labor is highly concerned that this service is going to be outsourced. The department should know more about the issues with the R&D incentive than any subcontractor," Senator Carr told InnovationAus.com.

"This is why Labor has asked the department not to proceed with the tender until after the election."

In response to the questioning, Department of Industry RDTI program general manager Joanne Mulder said the EOI is a new strategy emerging out of additional funding handed to the department in last year’s budget.

"We are not outsourcing core functions or delegations of the department, we are at this stage seeking expressions of interest from external providers in terms of how they may be able to support us in terms of those integrity and compliance functions," Ms Mulder said.

"They will be working with us in a complementary capacity but the core functions of decision-making will remain with the department."

The department added that it had also brought on an additional nine employees to oversee this crackdown on the scheme.

Senator Carr said he is also concerned about potential conflicts of interest, with the supplier also potentially providing advice to companies on their R&D claims.

"Labor is highly concerned that the expressions of interest for the outsourced work will probably come from the same companies who are putting in the claims. Even more concerning is that the government is expecting prospective suppliers to come up with how conflict of interest will be handled," he said. 

The estimates hearing was also told that the reason the RDTI advisory group had not met for nearly two years is because it had begun focusing too much on policy rather than administration, with a new roundtable of about 30 rotating members to meet for the first time at the start of March.

"My understanding is that the purpose of the group had started to sway, and that’s why they decided this. The purpose of the group is co-administered by the ATO, and its purpose was to have stakeholders engage with the administration of the process - it wasn’t a policy forum," Ms Mulder said.

"I understand the original intent had started to move away from that purpose, so we wanted to go through a process and reinvigorate it to go back to the original purpose."

The estimates hearing came on the same day the federal government unveiled new guidelines for companies looking to make software-related claims under the RDTI.

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