Mr MOORE (Minister for Industry, Science and Tourism)(5.02 p.m.) —I move:

That the bill be now read a second time.

This bill proposes changes to the Industry Research and Development Act 1986 which make the research and development tax concession a better value program for all Australians, both by stopping unintended use of the concession and by making the administrative procedures better suited to the needs of industry.

Access to the concession is to be confined to a reasonable period after the research and development activities have been conducted. This means that the tax concession program can return to its rightful focus of encouraging new research and new development rather than encouraging consultants to plough through years of company accounts looking for a tax sweetener for their clients. The scope of this gravedigging is so extensive that these measures are expected to result in revenue protection totalling $235 million over the next three financial years.  Other improvements to the registration process, such as advance registration and registration of activities, also encourage companies to direct their creativity towards new technologies and markets.

The bill also validates overseas research and development decisions and internal review decisions taken outside the mandatory time periods prescribed by the principal act. This validation is quarantined to the effect of the mandatory time period and will work to confirm the deductions of companies affected by these decisions. Amendments are also made to ensure that such invalid decisions are not taken again in future. These amendments are made without undermining the mechanisms built into the legislation to ensure that companies receive decisions in a timely fashion.

A number of changes have been introduced to bring the administration of the research and development tax concession into line with the self-assessment principles of taxation administration. These include reducing the obligations of the Industry Research and Development Board prior to registering a company and introducing the ability to set fees by regulation in relation to applications and requests to the board.

This bill represents a huge boost to the integrity of the research and development tax concession, which is long overdue. I refer you to the explanatory memorandum to the bill for a fuller description of their changes and their necessity to the responsible administration of Commonwealth revenue. I commend this bill to the House. I present the explanatory memorandum.

Debate (on motion by Mr Kerr) adjourned.