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Tuesday, 29 August 2000
Page: 19530

Mr BARTLETT (4:27 PM) —We would all agree on the importance of supporting research and development spending—that is, genuine research and development spending. All we have had from the two speakers opposite is the same old line: empty cliches combined with some sort of vague urgings that we ought to be spending more money and hoping that that will do the job—the favoured combination of those opposite but not very productive. Let us look at Labor's strategy on research and development in office—the same strategy that they applied to almost every policy area. That was a scattergun approach with no real accountability: throw money at it, hope the money will do the job but never really target it effectively. Throw taxpayers' money around; do not care how effective it is; do not bother effectively targeting; do not monitor how well those programs are working; do not care about the extent of abuse of taxpayers' funds; do not worry about the effect on government debt; do not worry about the effect on interest rates—just throw money at it and hope that will work! That is exactly what we had with Labor's approach to so-called research and development while they were in office.

Questions need to be asked about the approach they adopted and about the approach they would adopt again if ever they had a chance—questions such as: under Labor, how much of that research and development money was in fact genuine research and development money? How effective was that taxpayers' money that they spent? How much did it cost Australian taxpayers for some of what were really just tax syndication rorts? What impact did that spending have on the level of government debt? What impact did that spending have on the level of interest rates? It is worth reminding ourselves that under Labor's program of R&D spending, $1.8 billion of taxpayers' money was spent to date on those R&D syndicates, yet so far only $400 million worth of sales have been generated out of that $1.8 billion. That is less than one per cent of the $70 billion forecast by those syndicates who were very generously, very irresponsibly funded by Labor with taxpayers' money. Lots of money but few results. It is typical of what we see on the other side: `Throw the money at it. Don't worry about the outcomes. Don't worry about the results. Just ask the taxpaying public. Trust us. We'll be right. We'll spend your money. Don't worry where it goes.'

Labor promised us a clever country. All they gave us was a bankrupt country. They now promise us a knowledge nation. If they have their way, it will be the same—a bankrupt nation. They are great on slogans, but poor on outcomes. They are great on rhetoric, but hopeless on results. The decline in business research and development expenditure does need to be reversed. No-one would deny that. However, the reduction of the concessional tax rate from 150 per cent to 125 per cent in recent years would have done nothing to reduce real or genuine research and development expenditure. It may well have and no doubt has substantially reduced the rorting that went on with some of the tax syndicates but would have had little impact on genuine, bona fide, productive research, productive innovation and real investment.

The coalition's approach has been to create a positive environment that is conducive to successful innovation, positive research, and investment that will produce increased productivity, increased employment and increased growth for this country. That is exactly what we have seen, in conjunction with some very effective and accurately targeted spending programs which will achieve the tangible outcomes that we want. Look at what we have done in creating this general pro-investment, pro-innovation environment in Australia.

Firstly, we have an environment of low interest rates. Look at the contrast. Interest rates in Australia are now at historically low levels; that is, the cost of borrowing funds for research, development, investment and business expansion and growth are far lower than they were at any time under Labor. Small business interest rates have come down in the last four years from 11.25 per cent to 8.9 per cent. Large business interest rates are down from 10.75 per cent to around 9.35 per cent. Compare this with the business interest rates that reached 23 per cent under Labor, which bankrupted many businesses, dried up business investment, dried up research and development spending and simply generated rising unemployment.

Secondly, by July next year, company tax rates will have fallen under this government from 36 per cent to 30 per cent, putting an extra six cents in the dollar back into the hands of Australian business to invest in research and development—a pro-investment, pro-research environment that this government is generating. Add to that the reductions in capital gains tax for individuals and reductions in capital gains tax on venture capital investments for overseas pension funds and for Australian superannuation funds and we see an environment that will increase the pool of venture capital available for commercialising research and development in this country.

Thirdly, we have an environment of strong economic growth. For three years in a row we have had growth rates of over four per cent per annum—an ideal environment for investment in technology, research, development and gross fixed capital expenditure. Fourthly, we have improved labour market policies resulting in substantially increased productivity. Over the 13 years of Labor, we had productivity growth rates of a miserable 1.8 per cent a year. In just four years under this government, those growth rates in productivity have risen from 1.8 per cent a year to 2.8 per cent a year—an environment which encourages business investment and delivers positive growth in this country and an environment which lowers, per unit, labour costs, therefore lowering production costs and increasing the incentive to invest.

We have put in place the right environment for investment. Add to that a range of specific, accurately targeted policies to encourage research and development. For instance, the research and development START program is a competitive merit based program of grants and loans to assist new ventures with an increase of $338 million over the next four years. It is expected under this program that new grants and loans totalling $175 million will be made this year alone. Government spending on R&D tax concessions are down from 150 per cent, removing tax avoidance syndicates, but genuine R&D tax concession schemes will rise by $68 million this year to $553 million.

There are many other programs. We have strengthened the venture capital market for start-up companies through the Innovation Investment Fund and through the Commercialisation of Emerging Technologies program. Investment in start-up programs rose by 148 per cent to $236 million last year alone. Total venture capital investment in Australia has almost doubled since last year to a record of $971 million. This government's innovation policy focuses on building innovations systems in Australia that maintain the high quality of our R&D programs and build stronger links with Australian business. The National Science and Innovation Summit, held earlier this year, brought together all arms of our innovation system to investigate and agree on a strategy to improve our national innovation performance. The innovation action plan that will result will identify and address future science innovation priorities for Australia and these will be in place by the end of the year.

A range of other programs could be mentioned. The Invest Australia program is utilising incentives to attract strategic investment, that is, investment which will increase Australia's R&D capability. Australia's national biotechnology strategy will address a range of issues important to the biotechnology industry—leading edge technology, including support for R&D and the commercialisation of this R&D. There will be a $31 million increase over the next four years, on top of $250 million already there. The Pharmaceutical Industry Investment Program is a five-year, $292 million program of investment support for the important pharmaceutical industry. In all, total government support for industrial research and development for the business sector will rise to $850 million this year—a real increase of two per cent over last year.

The coalition's performance in this area, both in building a positive investment environment and in specifically targeted workable programs, needs to be contrasted with the lack of policy on the other side. We have a right to ask what are Labor's policies and, more importantly, what are Labor's affordable policies? What can they deliver that will not raise taxes? We have a right to ask how much their vague ramblings will mean for increased income taxes. What will it do to increase company tax rates? What will it do to increase capital gains tax rates? What will it do to government debt? What will it do in terms of rising interest rates? The opposition on the other side have great rhetoric, but no policies that are affordable for this country. (Time expired)

Mr DEPUTY SPEAKER (Mr Jenkins)—Order! The discussion is concluded.