RDTI changes to be reviewed. Again.

Denham Sadler
National Affairs Editor

There will be another “comprehensive” inquiry into the government’s controversial changes to the research and development tax incentive, with the Opposition planning to “interrogate” the unintended consequences of the reform.

Legislation making a series of changes to the R&D tax incentive (RDTI), amounting to a $1.8 billion cut to the scheme, was debated in the lower house last Thursday.

Labor supported the passage of the legislation through the House of Representatives but flagged that it would be again referred to the Senate Economics Committee and that a number of amendments would likely be later moved in the upper house.

Brendan O'Connor
Brendan O’Connor: a new inquiry for the R&D Tax scheme

The changes are largely in-line with a 2018 budget announcement and legislation that was rejected by the same senate committee earlier last year.

The reforms include increasing the expenditure threshold to $150 million, a $4 million cap for smaller companies claiming the tax offset and the introduction of an “intensity measure” to calculate the size of the offset for larger firms.

Only minor tweaks were made to the legislation after it was sent back to the drawing board last year, including pushing back the start date to the 2019-20 financial year and small changes to the way the intensity measure is to be calculated.

The same Senate committee will now have another look at the legislation and determine whether the Coalition has adequately addressed concerns it raised in the report early last year.

During the second reading in the lower house, a series of Labor MP spoke of their concerns with the RDTI changes and with the government’s broader approach to research and development and innovation.

“Let’s be very clear about our position at the moment: We have major concerns about the way in which the government deals with these issues,” shadow industry minister Brendan O’Connor said in Parliament.

“We are not saying there are not considerable issues that might be besetting this scheme and we have an open mind for some of the issues that have been raised – the scheme is not by any means perfect and we don’t want taxpayers’ money wasted.

“We will be referring this matter off to a comprehensive Senate inquiry. We want to have a very good look at this bill. We want to have real and genuine engagement with the stakeholders who are going to be impacted by the proposed bill if it was not to be defeated or amended.

“Labor will seek to improve the bill, but before we formalise our final position on this matter we do need a comprehensive examination of the effects of this proposition upon companies across all sectors of our economy.

“Labor believes it is imperative that we refer the bill to the Senate Economics Committee and interrogate the potential impacts of this bill.”

The RDTI legislation does nothing to address Australia’s falling rates of R&D in public and private sectors, shadow innovation minister Clare O’Neil said.

“Most notable about this bill is what’s not here. What I see when I look at this piece of legislation is a gut-wrenching lack of ambition about how much this Parliament would be doing to fix the very significant problems that our innovation systems faces as a country,” Ms O’Neil said.

“We need to start thinking about some new ideas in this Parliament and this bill before us is not going to help us do that.”

Through the inquiry process, Labor will be looking to investigate how the changes have heeded the previous concerns of the committee, whether the changes will lead companies to conduct R&D in other countries and whether they will unfairly impact SMEs and startups.

Do you know more? Contact James Riley via Email.

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