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Thursday, 23 September 1999
Page: 10401

Ms JULIE BISHOP —It is a hard act to follow.

Mr SPEAKER —The member for Curtin will come to her question.

Ms JULIE BISHOP —My question is addressed to the Minister for Education, Training and Youth Affairs. Can the minister advise the House—

Opposition members interjecting

Mr SPEAKER —Order! The member for Curtin has the call. The member for Curtin will commence her question again.

Ms JULIE BISHOP —My question is addressed to the Minister for Education, Training and Youth Affairs. Can the minister advise the House on how yesterday's business taxation announcements will improve the links between Australia's research and the development of new products and ensure that good ideas stay here in Australia rather than go offshore? What is the minister's response to comments which have been made about the government's announcements?

Dr KEMP (Education, Training and Youth Affairs; Minister Assisting the Prime Minister for the Public Service) —I thank the member for Curtin for her question. Australia has been very good at producing ideas out of its research. We have not been nearly so good at developing those ideas through to successful commercialisation. Knowledge is mobile and too often good ideas have had to go overseas to be properly developed. One of the reasons for this history has been the uncompetitive capital gains tax that we have had in this country discouraging venture capital investment. Changing capital gains taxation is crucial to investors putting their money in longer term ventures that will deliver gains over the years ahead.

The capital is available. The key thing is to have a taxation regime which will encourage people to invest that capital. As a result of the government's taxation reforms announced by the Treasurer, the incentives for venture capital investment have been dramatically changed. Overseas pension funds that are tax exempt at home will be tax exempt here when selling investments in venture capital enterprises. Australian widely held superannuation funds will be provided with an exemption when they receive income from a pooled development fund representing gains on the disposal of eligible venture capital investment. This is going to further encourage the pooled development funds to engage in such investments. I have no doubt that these changes are going to significantly improve the availability of venture capital for Australian ideas and Australian research.

I was very pleased to see Hugh Nile, the Manager Director of the pharmaceutical group Biota, welcome the reforms by saying:

I think the tax reform puts Australia on an equal footing with other countries. The Australian capital gains tax system is now internationally competitive.

The Australian Vice-Chancellors Committee has also welcomed the lowering of the company tax rate which, it says:

. . . gives companies increased scope to think about the medium- and long-term benefits of higher investment in research and development. This is essential if we are to encourage more and better linkages between business and our research centres.

These decisions are an important complement to the green paper on research and development and research training which I have released. These initiatives of the government are going to make sure that in the years ahead more and more good Australian ideas are developed in Australia and do not have to go overseas to be developed.