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4 years ago
A Shorten Labor Government will reform the Research and Development (R&D) Tax Incentive to help more firms to do quality research and development here in Australia and employ more Australians.

This election will be a choice between a united Shorten Labor Government which will see Australia return to a leader in R&D, or more of the Liberals’ cuts and chaos. We need real change, because more of the same isn’t good enough.

Labor is proud of creating the R&D Tax Incentive, the single largest investment the Commonwealth makes in supporting science, research and innovation in the Australian economy.

Labor understands that in the 21st century, only nations that invest in knowledge and innovation will create new industries, jobs and opportunities for all their people.

Australia is close to the bottom of the OECD ratings for collaboration between industry and researchers. The OECD says collaboration with research institutions has a highly positive impact on business, and more than triples the likelihood of business productivity growth.

Labor will change the program objectives of the R&D Tax Incentive scheme so that improving Australian business collaboration with research institutions will an explicit target.

These reforms will help achieve Labor’s ambitious national target of devoting 3 per cent of GDP to research and development by 2030, a key priority of a Shorten Labor Government.

Under Labor’s reforms, firms that collaborate with researchers in universities and public research agencies to create new knowledge will be eligible for a 10 per cent premium.

The premium could be claimed by firms that engage in activities such as:

  • Cooperating with a university or the CSIRO to develop an innovative new product.
  • Embedding industry researchers within a university facility.
  • Employing recent PhD graduates in their first three years of employment.
  • Hiring PhD students to do industrial research with a company.
Labor wants the R&D Tax Incentive to be a tool that fosters an alliance between blue collar and white coat to build an advanced industrial system for the 21st Century.

To reach the 3 per cent target, many more Australia businesses, large and small, must invest in quality research and development. We also want to encourage global companies to conduct R&D in Australia. 

Lifting industry engagement with the research sector is vital to achieving these aims. Labor’s reforms will help foster that engagement. 

The chaos and dysfunction of the Abbott-Turnbull-Morrison Government has diminished the effectiveness of the R&D Tax incentive. 

The Liberals have seen business investment in R&D fall by a third in the past three years.

The start-up and software sectors have lost confidence in the program; and even a Liberal-dominated Senate inquiry rejected the Government’s own proposals for reforming the incentive because they discriminated against the manufacturing industry. 

The Government ignored the advice of its own review into R&D, conducted by Mr Bill Ferris AC (Innovation Australia), Dr Alan Finkel AO (Chief Scientist) and Mr John Fraser (Secretary to the Treasury), which recommended a collaboration premium.

Labor will manage the R&D Tax Incentive in a financially sustainable way and ensure effective compliance while encouraging firms to participate appropriately in the program. 

As well as reforming the R&D Tax Incentive, a Shorten Labor Government will undertake the first root and branch review of Australia’s research sector in 30 years.

Under the leadership of the former Chief Scientist, Professor Ian Chubb, the review will guide the Federal Government in setting priorities, including the strategy for collaboration.

Labor will also establish tripartite innovation councils in key industries such as food and fibre; electric vehicles; steel; and the built environment; to bring industry, unions and researchers together and to develop innovation missions that stimulate business investment in research and development.

Unlike the Liberals, Labor understands that to create good jobs and keep pace with technological change, Australia must remain globally competitive and build the industrial structure of the 21st century.

End the chaos. Vote for change. Vote for Labor.