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Government admits to an administrative oversight in not legislating tax concession guidelines for research and development in 1993

HAMISH ROBERTSON: The Federal Government has admitted to an administrative bungle which the Opposition claims could cost the taxpayer hundreds of millions of dollars. The Government says it neglected to table in Federal Parliament guidelines covering tax concessions for research and development. The Opposition says the concession scheme is worth billions of dollars and the oversight could leave the Government open to legal action and damages claims, as Lyndall Curtis now reports from Canberra.

LYNDALL CURTIS: Just two days ago at a function celebrating Australian technology, the Prime Minister stood before the Indonesian Minister for Research and Technology and innovative Australian companies proudly outlining the Government's efforts to promote research and development through tax concessions.

PAUL KEATING: In a tax system which is fairly free of tax breaks, where the benefits have been passed along to a lower corporate rate, the one tax break we have left in the system is the write-off of 150 per cent for research and development expenditures. And we've done that particularly to encourage, and be seen to encourage, research and development so that private companies will take it up. And we know that it has been a success and it is now one of the consistent underpinnings of our private R and D effort.

Could I just say a couple of things about the IR and D Board? It's made a thousand grants totalling over 250 million; we've got 4,000 companies registered now for the 150 per cent tax concession, involving total deductions of $1.5 billion and registered syndicates involving research of approximately 1.5 billion.

LYNDALL CURTIS: But according to the Opposition, the basis for granting the billions of dollars of concessions, the guidelines for the Industry Research and Development Board, are invalid. Shadow Science Minister, Robert Hill, has told the Senate the guidelines for just one part of the concession scheme was supposed to be tabled in Parliament in 1993, and that never happened.

ROBERT HILL: On 10 May this year, guidelines under the R and D tax concession scheme were tabled in the Senate. Can you explain to the Senate why these guidelines are being tabled two years after the time for tabling expired, as provided in the Act, and are therefore believed to be invalid? Isn't it therefore the case that hundreds of millions of dollars of investment have been consequently invalidly rejected? Is not the Australian taxpayer now liable, potentially liable, for huge damages as a result of the incompetence of your administration? How can industry have any confidence in your long-awaited innovation statement knowing that you so badly bungled the central component of your R and D investment policy? Is trying to sneak these guidelines into the Senate two years late your idea of innovation?

LYNDALL CURTIS: Science Minister, Peter Cook, has acknowledged the guidelines, which were gazetted but not tabled, don't have any force.

PETER COOK: As a result of an Administrative Appeals Tribunal hearing on 31 March this year, it became evident that the finance scheme guidelines gazetted on 24 March 1993 had not been tabled in Parliament due to an administrative oversight. Consequently, the guidelines cease to have force of law after the disallowance period of 15 parliamentary days following gazettal and became invalid. Mr President, the Government has moved swiftly to rectify this situation and the guidelines were re-endorsed by the IR and D Board on 12 April 1995, prior to being tabled in the Senate on 9 May and the House on 10 May this year.

LYNDALL CURTIS: While many companies have benefited from the scheme, many more have been knocked back. The Opposition believes the Government could be open to damages from the organisations which have been rejected.

HAMISH ROBERTSON: Lyndall Curtis reporting.