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Tuesday, 10 February 2015
Page: 243

Senator KIM CARR (Victoria) (12:32): Yesterday the government was trying to assert that the opposition's concerns on this matter, my personal concerns on this matter, were about fighting old battles. I think it is important to state for the record that the minister of course has completely misread this situation. This is not about fighting old battles. It is an argument about what sort of country we want this to be. Unlike my colleagues on the other side of the chamber, Labor recognises that investments in innovation are critical to the future prosperity of this nation. In advanced industrial economies, innovation is the chief driver of increases in productivity. It makes firms more competitive and it sustains high-skilled, high-wage jobs.

According to the Australian innovation system report, innovation almost doubles the likelihood of productivity growth in Australian businesses. Firms that innovate are 78 per cent more likely to report increases in productivity over the previous year, and firms that collaborate with research organisations are almost 2½ times more likely to report increases in productivity. Without a strong innovation system, Australia will not be able to build a diverse economy.

The perfidy of this government absolutely astounds me. As the minister is well aware, the amendments before the chamber in the name of the Palmer United Party were actually drafted by the government. They have been undertaken without consultation. According to Treasury officials who appeared before the Economics Legislation Committee, there has been no modelling undertaken to support them. There has been no consideration of the impact on future R&D investment and no concern for R&D intensive firms that have hired R&D workers and sought approval for R&D activities in future years on the basis of the current legislation. So this is not about fighting old battles; it is about fighting for what sort of country we want this to be.

What we do know is that it is the largest firms that undertake the most extensive R&D in this country and that the government's assault upon those firms will do untold damage to our R&D effort. We saw this pattern in previous times. We saw it in 1996, when the incoming Liberal government accepted carte blanche the advice of Treasury and cut the R&D incentives. The consequences were felt for years.

We know particularly that manufacturing businesses will be affected, at a time when they need all the help they can get. I find it extraordinary that the minister yesterday, at the last minute, suggested to us that there was modelling undertaken, despite what we were told at the Economics Legislation Committee. I would suggest that 30 years of data demonstrates that the incentive for R&D supports growth and jobs. R&D cuts in 1996 impaired R&D spending for at least five years. The statistics show that R&D spending dropped by nine per cent from 1996 through to 2000. Jobs associated with R&D fell throughout this period, particularly in manufacturing and mining. That is what the official reports told us.

So, Minister, now that you say there has actually been modelling undertaken, contrary to the advice tendered previously, I would like to ask you specifically: how many firms will be affected by the government's—not PUP members'—new measures? I would particularly like to know the number of firms affected, not the number of consolidated groups. Can you provide that advice?