The key points in our submission included:
- This Bill should not be passed in its current form. CA ANZ considers that the proposed R&D changes in Schedule 1 of the Bill would achieve the exact opposite of the core objectives and stated aims of the Bill. We believe the R&D intensity measure is a damaging policy proposal and would do serious harm to the success of both the program and the businesses that are dependent upon its support for their R&D investment. R&D intensity is an inappropriate policy choice as the deficiency in R&D intensity in Australia is a structural issue, as shown by the latest AlphaBeta research.
- Australia can ill-afford such an adverse policy outcome at a time when it is more important than ever for Australia’s R&D Tax Incentive (R&DTI) to encourage businesses to innovate in Australia, to attract increasingly mobile capital, to transition urgently to a zero-emissions economy in response to present and accelerating climate change impacts, to spur economic activity in light of the COVID-19 outbreak and potential recession, and to generate business opportunities, employment, intellectual property, technology, knowhow, efficiencies, productivity and income for the benefit of the Australian economy.
- Australia cannot risk our nation's vital, scarce R&D expenditure being diluted and diverted into grants programs. It is far too important. R&D funding must be available based on the rule of law, i.e. legislated in a broad-based tax system mechanism that enables all companies across the economy to participate. The R&DTI's legislative certainty, fairness and accessibility to all participants is what has made it so successful in the past.
- We call on the Senate Committee to recommend that the Government establish an Innovation Tax Policy Working group to consult with stakeholders on how to integrate Innovation and Science Australia's (ISA's) recommendations that broader non-R&D innovation in the economy should be financially supported. The Working Group should also consider how the overall incentive could be aligned with Australia's 'missions-oriented' innovation policy agenda to ensure the big, important goals for our national wellbeing and prosperity are achieved.