Govt not listening on R&D cuts


Denham Sadler
Senior Reporter

The Opposition has accused government of not listening to tech companies on its controversial reforms to the Research and Development Tax Incentive after revelations that no substantial consultation has been undertaken on the new bill.

A Senate estimates hearing on Wednesday heard that there had been no significant consultations on the new changes to the R&D tax incentive (RDTI) – amounting to a $1.8 billion cut to the scheme – before it was re-introduced to Parliament late last year.

The hearing also confirmed that the government has not yet officially responded to its own Senate committee report which recommended its original reforms to the scheme be sent back to the drawing board.

R&D tax incentive cuts
Senate estimates is singing the R&D blues

The government reintroduced its legislation making a series of reforms to the RDTI late last year. The changes had first been flagged in the 2018 budget. The Coalition originally attempted to pass the changes early last year, but was blocked by the Senate committee, which called for more work to be done to get it right.

The legislation re-emerged late last year with minor tweaks, but the primary changes remained the same: an increase to the expenditure threshold to $150 million, a $4 million cap for smaller companies, and a new “intensity measure” to calculate the refund for larger firms.

The start time for the changes was pushed back to the 2019-20 financial year, and small changes were made to how the intensity threshold will be calculated. The legislation passed the lower house, but was referred back to the same Senate committee, which is again conducting an inquiry.

At the Senate estimates hearing, Labor senators asked what consultation had been conducted last year on the new legislation. But department officials could only point to consultation undertaken on the original bill.

Shadow industry minister Brendan O’Connor said this demonstrated that government was not listening to the concerns of the technology sector.

“It is clear the government has no interest in listening to the concerns of innovative firms about the design of their R&D revenue measures. At a time when research and development is in decline compared to other countries, this lack of consultation is of serious concern,” Mr O’Connor told InnovationAus.

“The previous Senate committee recommended that reforms to the R&D tax incentive not proceed and go back to the drawing board, but nothing has happened under this lazy and incompetent government.”

The department officials also confirmed that the Coalition is yet to officially respond to the senate committee report rejecting the original bill in Parliament, despite being required to do so.

“We worked closely with Treasury following the Senate inquiry. I’m not aware of a response to Parliament, but I understand the Treasurer made comments agreeing with the recommendations,” a department official told the estimates hearing.

These revelations were slammed by Labor’s Senator Kim Carr.

“There has been no effective consultation since the last legislation, no audit office review and no proper review since the ‘Three Fs’ review (Finkel, Ferris and Fraser) of the overall scheme. I’m not surprised that you don’t know what’s going on,” Senator Carr said.

The Senate Standing Committee on Economics will report back on the new RDTI bill by 30 April.

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