Mr IAN MACFARLANE (10:17 AM) —I rise today to speak on the Industry Research and Development Amendment Bill 1998 and support its move towards flexibility and overall benefit for companies wishing to register to claim the research and development tax concession scheme. I certainly welcome the comments of the member for Fraser who has spoken previously on the bill and welcome the support that he has given this bill. I think it has, by and large, bipartisan support. It is a bill which not only streamlines but also encourages industry to invest further in R&D. We obviously have a great deal to offer in terms of a government in leadership in R&D. It is something which will ensure that our industries here in Australia continue to be at the cutting edge of commerciality and of competitiveness.

This bill, as I say, will streamline the registration and lodgment requirements to the Industry Research and Development Board and it introduces other measures to ensure the integrity and efficient operation of the concession. It is, in fact, a direct response by government to measures identified in the government's December 1997 statement, `Investing for Growth'.

The subject of R&D is one which I am very familiar with in a rural sense but also, since taking the position as the member for Groom, one which has been brought to the fore in its importance to industry right across Australia. Industry requires its future to be based on improving its competitiveness and the quality of its product and meeting the consumers' needs. In rural industry, of course, the challenges are far greater. We compete in an unfair world marketplace and we also face the challenges of feeding a growing population.

In terms of R&D, Australia has been very quick in the past to take up the opportunities that have been introduced by it. Our people, both regional and city based, have a proud history of being innovators and of being prepared to take the commercial risks to ensure that we have a future here as a nation. Australian inventions and technological adaptations have included such great advances as the cochlear implant, gene shears, and the Interscan aircraft landing system. These advances have made us more than competitive with the rest of the world.

However, of great concern—and this concern is also shared by the member for Fraser—is the fall in R&D. In fact, the latest ABS statistics show that in 1996-97, for the first time since the ABS surveys commenced, business expenditure on R&D has fallen. In the 1996-97 period, business expenditure on R&D was $4,124 billion, a decrease of five per cent on the previous year.

I do not agree with the member for Fraser's comments that that is due to cuts in the taxation benefits to companies which this government has put in place. I think it has a far greater relationship to the economic uncertainty which industry faced after too many years of Labor government. I suspect that industry is now preparing itself for another major thrust into R&D. R&D is an area which involves long-term economic return. Companies can only afford to invest in R&D when (a), there are the right incentives; (b), when there are the right conditions; and (c), when there is economic certainty. The sort of economic certainty that we are seeing being delivered by the Howard coalition government is far and away the biggest incentive for industry to invest in R&D.

Be that as it may, government has a responsibility to do whatever it can to smooth the way for those industries that wish to invest in R&D. The British Prime Minister, Tony Blair, recently said when announcing a large increase in the UK's R&D budget, that science and technology was the absolute bedrock for our future economy. I could not agree more. On that basis, this government and successive governments must do what they can to encourage industry to invest in R&D.

Australia has a relatively small economy and it is essential that we focus our resources and invest now if we hope to become a significant player in the R&D global market. There are great advances to be made, and those advances will not only benefit our industry, our people and our general economy, but also bring a better standard of living to the whole world.

This bill promotes this focus by allowing Australian companies greater flexibility in applying for registration under the R&D tax concession scheme for the 125 per cent tax concession. The key provisions of the bill will allow companies a longer period for the lodgment of the registration applications, and they allow the board the flexibility to require different levels of information from different classes of applicant. That allows it to reduce compliance costs for specific classes of companies, for example, small claimants, and it is small companies that have a major role to play in R&D in Australia, as well as the larger companies.

The provisions will also allow the board limited discretion to accept late applications and to correct minor errors in registration. In particular, the bill directs the board to reconsider six specific cases where the past lack of any such discretion has prevented their application for registration from being validly considered by the board.

Finally, the bill offers the opportunity to improve service to companies applying for certification of offshore research and development by making the effective date for certificates the date on which the application was received, rather than the date of the board decision.

R&D and its commercialisation is widely acknowledged as a key engine of growth in industrial economies. The companies that will prosper in R&D are those committed to continuous renewal through innovation. Firms which are enterprising and skilled enough to differentiate their product and create a distinctive competitive edge are the ones which will succeed. They are the ones which our government wants to do more to encourage.

The bill clarifies the power of the Industry Research and Development Board in relation to companies which fail to exploit the results of success in research and development activities. It goes without saying that, whilst the first step in any successful program is to establish the research and development and its outcomes, until they are applied and put into practice and produce the end result, they are of no benefit to anyone.

I think this bill will be well received by the general industry. It is imperative that, in terms of the federal government's overall operation, not only do we not rest on our laurels following the passage of this bill but also investigate further future ways in which we can encourage industry in Australia to invest in R&D.

Mr DEPUTY SPEAKER (Mr Nehl) —Before I call the next speaker, I would like to suggest to all members and their staff that it is inappropriate for staff people to intrude their persons onto the chamber by leaning right over the barriers. I would suggest that everybody take note of that.