Mr SLIPPER (10:34 AM) —I will be summing up, Mr Deputy Speaker, at this stage. I understand that one speaker has not arrived so I am more than happy to wind up the debate and give the Main Committee additional time to carry out its very important role.

I listened very carefully to the contributions made this morning by the members for Groom and Chisholm, and I have read the contribution made by the shadow minister. It ought to be recognised that the provisions of this bill amend the Industry Research and Development Act 1996, as identified in the government's industry statement `Investing for Growth', which was delivered in December 1997. This bill represents the delivery of another important commitment to business by this government, and is designed to encourage increased private sector R&D and to help reduce the compliance costs involved in administering the scheme.

The member for Fraser indicated that, while the opposition—

A division having been called in the House of Representatives—

Sitting suspended from 10.35 a.m. to 10.47 a.m.

Mr SLIPPER —Before I was so rudely interrupted by the division which was called in the main chamber, I was referring to the Industry Research and Development Amendment Bill 1998 which is the bill currently before the chamber. I was mentioning the fact that the honourable member for Fraser, while indicating that the government was supported by the opposition in this legislation, said that the opposition was critical of some aspects of the government's policies, claiming that they did not position Australia to maximise the opportunities from the growing knowledge intensity of industry.

The member for Fraser also falsely suggested that the government's policies have weakened the infrastructure for innovation, especially through the impact on business research and development, traditional industries, and the university sector. He also claimed, incorrectly, that possible changes to the tax and intellectual property environments would undermine the incentives for innovation in Australia, as would the lack of venture capital.

The government, as you would expect, does reject those allegations by the member for Fraser because, as a government, we are very much focused on the need for research and development. Our policy sees innovation as a key driver of economic growth and that it will be a major factor in Australia's international competitiveness.

The member for Fraser has wrongly suggested that our policies are a vacuum. Our policies have, in fact, been developed after comprehensive reviews of the business programs we inherited from the former Labor government, a Labor government, I might add, which built the budget deficit up to $10.3 billion. Right through the 1996 election campaign the Labor government claimed that the budget was in surplus, yet on the Monday after the poll we found out that was not the case. So the member for Fraser and his colleagues are very much the last people who should ever criticise the policies of this particular government.

The economic and industry policies that the government has pursued since 1996 have been targeted towards achieving stronger growth. In industrialised countries such as Australia, innovation is a key source of economic growth. The government's policies are aimed at strengthening the national innovation system through supporting business innovation and enhancing the linkages between the science base and industry. The government's support for innovation is unequivocal and we are committing close to $1 billion over four years in support of business innovation, and a total of $3.7 billion on science and technology alone. Those figures speak for themselves and illustrate that we are clearly serious about innovation.

The government has also deliberately shifted the focus of support towards R&D which has the potential for high commercial returns. That is, targeted projects are supported on a competitive basis through the greatly expanded R&D START program. The government has already moved to improve the commercialisation prospects of innovative firms.

Let me outline to the chamber some of the things that we have done to improve those commercialisation prospects. We have provided an extra $100 million for the second round of the innovation investment fund. We have provided an extra $108 million to the technology diffusion program and international collaboration initiatives. We have also provided loans through the START program, and we are addressing one of the critical needs of new and emerging firms, patient venture capital.

Honourable members would be aware of the fact that the government is working with the private sector to increase the availability of venture capital for technology based firms. In the innovation investment funds, government and private sector funding is pooled and made available for early stage venture capital investments. This will create an investment pool of $345 million to provide the type of capital investment that early stage firms need. I might add that this is more than 10 times bigger than the $30 million provided under the former government. So the member for Fraser can come in here and huff and puff and criticise the government all he likes, but we have put the runs on the board, and we are continuing to.

It ought to be noted also that a number of improvements to the pooled development funds are being implemented. In addition, the government will introduce new programs to enhance the ability of small firms to gain access to capital and meet the requirements of potential investors. This can be very important given the fact, as was pointed out by my colleague the honourable member for Groom that Australians are a nation which has a capacity to innovate. We are imaginative, and the government's policies are designed to bring about financial advantages to the nation from such innovation and from such initiative. The government is also reviewing business taxation measures to facilitate venture capital flows.

It is interesting to be aware of the fact, and honourable members might be interested to know, that the Treasurer recently agreed to a proposal from Minister Minchin to conduct a workshop this year on research, development and innovation aspects of the Ralph review of business taxation. The workshop will canvass options in relation to the capital gains tax treatment of venture capital and the future of the R&D tax concession in relation to their effects on innovation.

If Australia is to continue to set the agenda for the future and maintain our competitive advantage, a closer partnership among industry, research and the government is necessary. With this in mind the government, in conjunction with the Business Council of Australia, is going to stage the National Innovation Summit this year. The purpose of the summit is to develop a consensus on strategies to be pursued by government, industry and the research community to strengthen innovation overall and improve the level of commercialisation of Australian R&D.

The provisions of this item of legislation, as I said prior to the division being called in the main chamber, do represent the delivery of an important commitment to business and to the Australian community. The original bill lapsed with the calling of the election last year and was reintroduced in an identical form in December after the election.

The provisions of the bill are designed mainly to streamline the administration of the research and development tax concession scheme. The aim is to make tax concession more readily accessible to business, thereby enhancing the role of the concession as a central element in the government's strategy to encourage stronger private sector research and development. The key improvements from the perspective of companies accessing the concession are to make the registration process easier for companies applying for the R&D tax deduction by providing extended times for lodging applications, moving to a lodgment deadline for most companies away from the busy Christmas and New Year period, and giving the Industry Research and Development Board a range of discretions to facilitate the registration process.

The provisions of the bill seek to make the R&D tax concession more user friendly to the business community, consistent with the government's commonsense commitment to reducing compliance costs and eliminating unnecessary regulation for business. At the same time, the bill retains its protection against exploitation and will not weaken the provisions of the act that prevent retrospective access to the concessionary tax treatment. The bill also covers a range of other measures aimed at streamlining and improving the administration of the R&D tax concession scheme consistent with improving its integrity and efficacy, and some measures to improve the effectiveness of the IR&D board activities.

At the outset, I referred to the contributions made by the honourable members for Fraser, Chisholm and Groom. I was particularly impressed by the erudite and thought provoking speech made by the honourable member for Groom. He rejected the false allegations brought forward by the shadow minister. He pointed out that, in his view, the reason that there has been some decrease in R&D funding is all about the economic uncertainty brought about under the former Labor government. We all agree—the country agrees, the government agrees—that we do need to continue to encourage R&D. That is what this bill is all about. This bill seeks to encourage research and development.

It is obvious, as the member for Groom has said, that research and development are key engines in the growth of economies. We cannot rest on our laurels. As the member for Groom said, we need to do more, and this legislation is a very important tool towards achieving even more in this area. The member for Chisholm sort of crawled into the chamber and made the same old tired ideological arguments that one expects from certain sections of the Labor Party.

Mr Sawford —That is okay. I thought you were impugning—

Mr SLIPPER —You ought not to interject, my friend, because you were part of a government that brought the budget deficit into a situation where it was $10.3 billion in the red.

Mr O'Connor —We had four surpluses and we had to get over Howard's—

Mr SLIPPER —The thing is that Labor has failed to stop the exploitation of the R&D tax concession. That is why the legislation before the chamber is targeted and focused. The member for Corio is someone who usually hides with his tail between his legs. The member for Corio ought to be aware that the Labor government of which he was part and of which you were part, Mr Deputy Speaker Adams, was a government which really offered no future to our children and grandchildren. It took this government, which was prepared to bring in sound economic management, to guarantee a real future for this nation. The bill before the chamber is a further step forward in relation to the boosting of the importance of research and development.

The honourable member for Chisholm may have also expressed a concern about the possibility that some companies may go overseas. If the Labor Party were in any way, shape or form, even remotely concerned about keeping companies in Australia and about boosting the economy, they would be respecting the mandate given to us by the Australian people at the last election and voting for tax reform. But the Labor Party refuse to accept that, once again, they were comprehensively rejected at the poll last year, and they refuse to accept that we have a mandate.

Having said that, Labor does support the particular legislation before the chamber although it has made some false criticisms of our approach to this subject. To that end I thank the opposition for supporting this legislation and I would encourage it to support the tax reform bills when they are voted on in the Senate. I am very pleased to be able to commend this bill to the chamber.

Question resolved in the affirmative.

Bill read a second time.

Mr DEPUTY SPEAKER (Hon. D.G. Adams) —If no member wishes to consider the bill in detail, I will put the report question forthwith. The question is that the bill be reported to the House without amendment.

Question resolved in the affirmative.