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Thursday, 5 December 1985
Page: 3018

The DEPUTY PRESIDENT —Senator Bjelke-Petersen, it might be helpful if you repeated your question now that Senator Button is here.

Senator BJELKE-PETERSEN —Thank you, Mr Deputy President. I refer the Minister to the Government's decision to replace the commencement grant scheme for industry research with tax concessions for companies spending more than $20,000 on research and development. As the majority of commencement grants were under $20,000, does the Minister agree that this new scheme will effectively prevent many small businesses from qualifying for government assistance in the important area of industry research? In the light of widespread concern in the small business community over the impending abolition of the commencement grant scheme, will the Minister advise whether his Government will reverse its decision to wind up the scheme after 30 June next year?

Senator BUTTON —There is no question of the Government reversing any decision. We have not made such a decision as Senator Bjelke-Petersen referred to in her question. What the Government has done is to introduce a 150 per cent tax deduction in respect of research and development done by companies in Australia as a broad incentive to industry generally. It may be that there are a number of categories of companies which would not be able to avail themselves of that incentive. For example, there may be a number of small high technology companies which may not have sufficient cash flow or may not be generating profits. Those companies would be unable to claim the tax incentive.

We are looking to have two complementary schemes, one being the general tax incentive available to all business and, alongside that, a revised form of the Australian industrial research and development incentives scheme-AIRDIS-which is what Senator Bjelke-Petersen is asking about. It is true that that scheme expires under a sunset clause in the legislation on 30 June next year, but it will be replaced by a scheme which will work to a similar purpose but which will be more closely targeted to the interests of small business and companies which do not have sufficient cash flow to take advantage of the tax incentive. So the two things will mesh together. They will provide the best research and development incentive scheme that this country has ever had--

Senator Durack —Ha, ha!

Senator BUTTON —I say that advisedly. Senator Durack laughs, for goodness sake. He took part in a government--

Senator Durack —Everything is the best that ever was.

Senator BUTTON —Pretty well, but let us deal with the issue in question. The honourable senator presided in government over this country for a period of eight years in which millions and millions of dollars of taxpayers' money were spent on various forms of research and development incentives. What happened in those eight years? Research and development in Australia went down in the private sector. It went down all the time. The reason it went down was that the system of incentives was wrong. The previous Government never had any system for evaluating the incentives which were in place and the results got worse and worse. I am saying that the system of incentives for research and development which this Government will have in place by the beginning of next year-the 150 per cent tax deduction, the revised form of the industrial research and development scheme, plus the existence of investment companies under the management and investment companies scheme, the MIC scheme, to assist new companies to raise venture capital-will together provide the best, most comprehensive and relevant system of incentives this country has had. Senator Durack might legitimately chide me and the Government about some shortcomings which he perceives that we have. I think that is quite legitimate. But I think he missed his mark in picking this example.