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Thursday, 6 December 1973
Page: 2555


The PRESIDENT -Is leave granted? There being no objection leave is granted. (The document read as follows)-

This Bill, foreshadowed by the Treasurer (Mr Crean) in presenting the 1973-74 Budget, proposes amendments to the Industrial Research and Development Grants Act 1967-1972. The amendments are designed to impose a limit on the amount of financial grant payable under the selective grant provisions of the Act, and to allow consideration of applications for grants from companies carrying out worthwhile industrial research and development, but whose research and development supervisors do not possess the existing professional qualifications required by the Act. The amendments may be regarded as interim measures aimed at correcting what are two significant shortcomings of the current Act, pending a more fundamental and comprehensive review of the scheme.

The industrial research and development scheme, as it exists currently, aims generally at promoting an awareness within Australian industry of the importance of technological innovation and the central role played by research and development activities in the continuing process of development and introduction of such innovation in the form of new and improved products and processes. In broad terms, the scheme operates as an incentive to Australian manufacturing and mining companies to increase their own spending on industrial research and development activities, basically by means of financial grants related to their increased spending on research and development activities in a particular year- the grant year- over their average annual spending on such activities during a 3-year moving base period. Additionally, industrial research and development plant expenditure is subject to separate special provisions for the purpose of grant calculations. General grants are provided for eligible research and development expenditure of up to $50,000 during a particular grant year. The rate of general grant currently being applied is 50 per cent of eligible expenditure. Selective grant provisions apply to the eligible outlays of a company in excess of $50,000 in the grant year.

The position in Australia, as in most industrialised countries, is that a significant proportion of research and development is carried out by the larger enterprises. It is, however, a fact that a large part of industry in Australia is small to medium sized. Published statistics show that over 93 per cent of all manufacturing establishments operating at the end of June 1969 employed fewer than 100 persons, and less than one per cent employed 500 or more persons. Given the pattern of industrial research and development performance in Australian industry, there are strong reasons for supporting the contention that the largest corporations are in most cases already well aware of the commercial benefits of research and development and are in far less need of a government incentive for this purpose than firms in the small and medium-sized bracket. A large percentage of grant payments under the industrial research and development grants scheme however have gone to the larger companies. Out of the total $14m allocated in grant payments by the Board during 1972-73 about 2 per cent of grant recipient companies received almost a third of the total grant payments made.

The Government proposes, therefore, to amend the Act to allow a limit to be imposed on the amount of selective grant payable to any one company or its wholly-owned subsidiaries for any one grant year. The Bill proposes an initial limit of $200,000 on selective grants for 1972-73 industrial research and development, the bulk of which will be paid out of the 1973-74 Budget allocation. This would mean that the maximum total grant payable to a company for its 1972-73 industrial research and development spending would be $225,000, made up of a general grant component of $25,000 and a selective grant component of $200,000. The Bill contains provision to vary, by regulation, the selective grant limit in succeeding years should circumstances so warrant.

The Government, in proposing this amendment, recognises, however, that there may be cases where there would be significant national interest reasons for providing levels of support exceeding this limit. The Bill therefore contains provision for waiver of the limitation, where a particular company can provide compelling reasons, in terms of benefits in the national interest. As the particular circumstances in which a case for such waiver may arise will vary significantly from company to company, each case arising will be judged in terms of its particular individual merits.

The Bill also proposes an amendment to the professional qualification requirement of the scheme. To be eligible for grants, the existing legislation requires that research and development must be carried out by a professionally qualified person, or someone in a position of direct technical assistance to him. The basic objective of this provision was to provide some assurance that the industrial research and development undertaken by companies could be expected to be of a satisfactory technical standard. Additionally, the requirement was aimed at facilitating the adoption of modern technological developments from academic and other fundamental research institutions and to encourage the provision of employment opportunities within Australian industry for professionally trained research and developmental personnel and laboratory assistants.

Although these are desirable objectives, the provision has meant that a number of Australian companies- principally smaller concerns- performing worthwhile research and development have been unable to receive consideration for grant purposes solely due to an inability to meet the professional qualification requirement. In a number of cases companies have their research and development performed or directed by people with a high degree of skill and experience but lacking formal qualifications. It is the Government's intention therefore to extend the current provisions of the Act to all companies which have skilled research directors and the necessary capability to carry out systematic experimentation and analysis. The Bill provides for applications for grants to be considered when either the person supervising the research possesses a formal professional qualification, or when, by virtue of proven practical experience, the research supervisor can reasonably be regarded as being able to competently supervise industrial research and development.

The proposed amendment is designed to allow recognition of grant applications from companies with persons whose skills, ability and experience fit them to carry out work by way of industrial research and development for the company without lessening the quality of supervision and direction of industrial research and development in companies. It is envisaged that companies seeking to avail themselves of the new provisions would initially make a request in writing to the Australian Industrial Research and Development Grants Board detailing the particular skills and experience possessed by the person or persons directing or performing their research and development. The Board would then refer such cases on to an advisory committee for examination. The Committee will make recommendations to the Minister for Secondary Industry, who will, in turn, advise the Board of his decision as to whether the company's non-professionally qualified industrial research and development director has been approved and that therefore the company's industrial research and development expenditures may be admitted for consideration for grant purposes. The company will, of course, have to satisfy all the other criteria for grants, as is the case for companies whose research is conducted under the supervision of professionally qualified persons.

The Government is aware that the existing scheme, first introduced in 1967, has had some measure of success as a fairly broad incentive aimed at making Australian industries recognise the importance of industrial research and development. Having achieved such a level of recognition, however, the Government is concerned that increasing attention should be given in future to channelling assistance not only into areas of greatest need but also into areas showing the greatest technical and commercial promise. To this extent, then, the current proposals may be regarded as interim only, pending the fuller and more detailed consideration of the whole question of Government assistance for industrial research and development which was announced in the Budget Speech. I commend the Bill to honourable senators.

Debate (on motion by Senator Withers) adjourned.







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