We are shooting ourselves in the foot with this cut to R&D

The proposal to cut back on eligibility for the Research and Development Tax Incentive is not only poor policy – it cuts against the Government’s more general policy objectives and priorities.

If enacted, this Bill will reduce spending on innovation and add to the complexity of the R&D Tax Incentive.

Businesses will spend less on their own R&D and they will make less of a contribution to Australia’s research infrastructure and research networks. These costs have been entirely overlooked by the Government and the supporters of these measures.

It is all the more perplexing because the biggest direct impacts will fall on applied and commercial R&D. Yet in other areas, the Government is arguing that the country should be lifting commercial-related R&D.

This is a policy objective that is very broadly supported and the Government is also talking the talk. With the cuts to R&D however, it is not walking the walk.

Cuts to the R&D Tax Incentive were originally proposed by the previous Government. From the start, the arguments in support revealed an absence of insight into the value of commercial R&D and a preoccupation with the cost of the Tax Incentive.

Make no mistake, this Bill is harmful to Australia’s long-term prosperity. We should be encouraging innovation. Instead, these measures will reduce spending on R&D.

The amended Bill that passed the Senate yesterday and which will return to the House of Representatives should not be passed. It is a rushed deal that has not been subject to more thorough assessment or adequate consultation.

While ideally it should not pass, it should at the very least be put to a committee to ensure that the policy is properly designed. In particular, it should not be retrospective and it should not pull the rug out from under existing R&D projects.

If it is not rejected by the Parliament, the Bill should be put to a Committee so the damage can be minimised.

Has the R&D Tax Incentive facilitated beneficial research within your organisation? Or will the eligibility of your business be affected by the amended bill just passed by the Senate? Share your stories or your opinion below.

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Ai Group Chief Executive since May 2012, Innes joined as Director International and Government Relations in 2008. Prior to this he held a number of senior roles in both the public and private sectors: Australian Consul General to Los Angeles (2006-08); Chief of Staff to Minister for Foreign Affairs, Alexander Downer (2004-06); and Manager for Global Public Affairs, Singapore Airlines (2000-04). He began his career as a journalist, with his positions including Chief Political Correspondent and Chief of Staff at The Age.

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