The Liberals’ $620 million attack on Australian Research & Development (R&D) has been rebuffed by the Australian Senate.
The Government sought to reduce the R&D Tax Incentive for companies by 1.5 per cent as part of a retrograde Budget measure – claiming this would be offset by a reduction to company tax, which is no longer proceeding. This harsh, unfair and job destroying measure was based on a lie, and the Senate has rejected it accordingly.
Some of Australia’s biggest R&D investors – including companies such as Cochlear, CSL, Telstra and Caltex – made it clear that constant tinkering with the R&D Tax Incentive reduces Australia’s competitiveness, undermines private investment and risks sending more high-skill, high-wage jobs offshore.
SMEs would also have been savaged by the Liberals’ proposal as small to medium sized firms make up more than 70 per cent of the users in the scheme.
This economically myopic Government was simply intent on a short-term cash grab, at the expense of long-term growth.
Labor’s defence of the R&D Tax Incentive is particularly important for Australian manufacturers, which make up 33 per cent of firms registered for the scheme.
The international experience is clear: R&D incentives make a material difference as to where companies invest and increased R&D investment creates jobs.