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Ending rorts under Labor leads to decline in BERD.



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ENDING RORTS UNDER LABOR LEADS TO DECLINE IN BERD 4 July 2000

4 July 2000  00/271  

ENDING RORTS UNDER LABOR LEADS TO DECLINE IN BERD  As expected, the latest R&D expenditure (BERD) figures released by the ABS show a reduced level of R&D from the artificially high numbers of 1995-96 when systematic abuse of the R&D tax concession was at its height under the previous Labor government, said the Minister for Industry Science and Resources, Senator Nick Minchin. 

"By closing down the rorts that had occurred under Labor, it was inevitable that BERD levels would decline," Senator Minchin said. 

"While we knew that we would wear ongoing criticism from our political opponents, reductions were an inevitable outcome of ending the rorting and maintaining the integrity of the R&D tax concession.  

"Because Labor refused to act, we were forced to clean up all of the abuses relating to claims for for the general concession, which have also impacted on the measured R&D figures. 

"The syndication component alone under Labor used up to $1.8 billion of taxpayers' funds through elaborate financing schemes, while generating only $400 million in actual sales to date. This is less than 1per cent of the $70 billion in sales initially forecast by the syndicates." 

The impact of the elimination of syndication accounts for a substantial reduction in the level of BERD from the artificially high numbers of 1995-1996 when abuse of the R&D tax concession was at its height. 

"From the start, the Government's focus has been on facilitating better quality R&D that is more clearly focussed on commercial outcomes," Senator Minchin

said. 

"We know that Australia must perform better in R&D and commercialisation if it is to seize the major growth opportunities from the global, knowledge based economy. The decline in investment in R&D in the mining sector is regrettable but is more a feature of lower commodity prices than the decline in the concession rate. 

"The Howard Government has increased funding for business innovation support by 35 per cent from 1997-98 to 1999-00. While Government assistance available to R&D this year is $851 million, there is still much to be done to encourage companies to undertake R&D.  

"Rather than dictate policy from on high, the Government has been working closely with business on developing an Innovation Action Agenda that will be the innovation blueprint for Australia." 

@Continued

  The high-level Innovation Summit Implementation Group (ISIG), commissioned to assess the business case and potential implementation strategies of the National Innovation Summit recommendations, is expected to report to the Prime Minister's Science, Engineering and Innovation Council Ministers on 30 August 2000. 

"In contrast to the Government's determination to provide a comprehensive framework wherein business can invest in R&D with total confidence, Labor's position on R&D is all over the place. The Opposition refuses to commit itself to increasing the concession, while Mr Beazley has threatened to take the tax concession off whole industries. Mr Latham wants to abolish the tax concession altogether. 

"Labor's hollow promise of a target for business expenditure on R&D by 2010 is just like their 1998 election promise of a 5 per cent unemployment target; a nice sounding idea but one that lacks any substance. 

Contact: Steve Ronson, Senator Minchin's office, 08 8237 7190 

CMR322-00

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