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Tuesday, 23 August 2011
Page: 5160


Senator COLBECK (Tasmania) (12:36): It is interesting to hear Senator Milne talking about how cash strapped some of these small enterprises might be and how important this amendment is, but it is also interesting to note that the amendment does not take effect until 2014. If these small enterprises are so cash strapped and if it is so important to make funding available to them, why is this measure not taking effect until after the next election?

The opposition is quite sceptical about how this will work in practice. In particular, given the complexity of tax law, it is probably more likely to increase the adminis­trative burden and the administrative risks and problems for small business and will more than likely increase compliance costs. So while Senator Milne extols the virtue of this measure, I think there are some traps on the other side. The fact that it does not come into effect until 2014 is quite pertinent. If these businesses are so cash strapped then this measure should be introduced immediately rather than in 2014, after the next election. Effectively, this is a process of the Greens and the government trying to make themselves look good, particularly to certain sectors of industry. The reality is that there is nothing immediate about this. It does not happen straightaway; it does not happen until after the next election.

Senator Milne talks about these small enterprises and the importance of their innovation. During the winter break she made a comment that 100 of the largest companies take 60 per cent of the total funding of the current R&D tax concession scheme. This portrays a complete lack of understanding. I made the comment during the second reading debate that this is not about a capped fund or a capped scheme that people can or cannot access. This is a tax rebate scheme, so it is uncapped. If people qualify, they qualify; if they don't, they don't. Making assertions around who gets what and why just shows a complete lack of under­standing of the mechanisms at play here and portrays in the public arena a perspective that does not actually exist.

We have seen a lot of discussion in the R&D community about this, particularly in the manufacturing sector in relation to what the impact might be for manufacturing. Deloitte said, on 1 February last year, that average claims would fall by between 50 and 80 per cent. As we have maintained all along, this is about constraining access to this R&D tax process with the introduction of the new definitions and the purpose test. So we continue to have concerns about the way that this mechanism has been designed, the way that the government has gone about this process and, as I said at the outset, the completely disjointed way that the government has managed this piece of legislation right from the day that it delivered its first and second exposure drafts. Nixon Apple from the Australian Manufacturing Workers Union, a long-time trade unionist, said back in February 2010 when this process was partway through that, 'These laws will decimate support for R&D in manufacturing.'

When we are in circumstances such as these, where we have seen the devastating announcements over the last week from the manufacturing sector and concerns about what might be happening, and the govern­ment is going through with these measures, including the introduction of a carbon tax which is just going to make the burden on the manufacturing sector even worse, we really wonder about the govern­ment's overall policy perspectives. As I said yesterday, the government says it wants to do one thing but its actions belie that and seem to take it in another direction. We do not support these amendments as they are structured basically because, if the government and the Greens genuinely think that small enterprises are as cash strapped as Senator Milne said they are, these measures should not be introduced after the next election in 2014; they should be introduced much sooner.