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Tuesday, 7 May 1985
Page: 1421


Senator SHORT —I refer the Minister for Industry, Technology and Commerce to the Prime Minister's specific and unequivocal 1984 election policy promise to introduce a 150 per cent tax concession for private industry expenditure on research and development. I refer also to a speech made by the Minister on 16 April, when he estimated that this concession would cost the Government $80m in 1985-86, and to another speech earlier in April, when he said he was hopeful that the concession would operate from 1 July. My question to the Minister is in two parts. Firstly, given the reasonable expectation of industry that the concession would take effect from the start of the next financial year, does the Minister still expect this to happen? Secondly, will business taxation reform be considered in the Government's White Paper on taxation and at the taxation summit, as called for by the joint statement on tax reform released by five of Australia's peak business organisations on 28 April?


Senator BUTTON —There are several questions there and, if I might be so bold as to comment, a couple of them are pretty good ones. The essence of the honourable senator's question related to the unequivocal announcement by the Prime Minister in the course of the election campaign that a 150 per cent tax deduction would be offered for research and development done in the private sector. I agree that it was an unequivocal commitment. I do have a difference with Senator Short. Unless I made a very bad speech, I do not think I ever said that the research and development incentive, if introduced on 1 July this year, would cost $80m in 1985-86. If I did, it was a mistake because, clearly, if the incentive was introduced on 1 July 1985 there would be no cost to revenue in that financial year. In fact, the cost to revenue in the subsequent year would be limited.


Senator Durack —Senator Walsh wouldn't agree with that.


Senator BUTTON —With the greatest respect, I do not mind thoughtful interjections but that one was just ill informed. Senator Short referred to the reasonable expectations of industry that the concession could be introduced on 1 July this year. I agree that there are reasonable expectations in wide-ranging sections of industry that it will be introduced on that date. However, I make the point that the preparation of such a scheme, of which the Government does not, in general terms, approve-that is to say, tax concessions, tax havens, things of this kind-would be regarded very much as an exception to the Government's overall strategy in relation to taxation policy. It would be regarded very much as an exception because of the peculiarly bad performance, as honourable senators will be well aware, of the private sector in relation to research and development in Australia in the last 10 years, and the need to provide some sort of incentive to improve that performance if the competitiveness of Australian industry is to be improved and enhanced, at a time when that competitiveness will depend immensely on the research and development capacity of industry and a number of matters which have not normally been considered in the past as such great contributors to competitiveness.

I was also asked whether business tax reform would be addressed in the White Paper on taxation policy. I am unable to answer that question with any degree of conclusiveness because I have not seen the White Paper on tax reform. We will all have an opportunity, including Senator Short, to see it in the not too distant future. The most important aspect of Senator Short's question was when the research and development tax incentive arrangements would be announced. All I can say on that issue is that the Government will make an announcement at an appropriate time.