Innovation Minister Kim Carr says Government won’t back down on R&D laws

Innovation minister Kim Carr says the new R&D tax credit legislation will enter Parliament next week and says the Government will make the law retrospective despite protests from business groups.

The comments come as the Liberals and the Greens continue to call for further debate into the new R&D tax scheme, while Family First senator Steve Fielding has also signalled his opposition to the laws.

Carr told SmartCompany the retrospective nature of the laws will continue to be a key part of the legislation. The credit will still apply from July 1, 2010, he says, despite protests in the industry to push that date forward by one year.

“The question is – why shouldn’t companies get the benefit of that legislation? Why shouldn’t they get that benefit for this year?” he argues.

The comments come despite claims from experts and business groups such as the Australian Industry Group saying businesses are confused as to which set of rules applies to them right now, and how they should be spending R&D funds.

But Carr disagrees.

“If we’re talking about companies facing uncertainty, why should they have to wait for a couple of years? We need to put this argument to scrutiny, because what is the argument for delay? Why should companies not get the benefit for the past financial year?”

A spokesperson for opposition innovation spokesperson Sophie Mirabella told SmartCompany yesterday the Liberal party hopes the Government has introduced necessary amendments.

However, Carr says the legislation has gone through several levels of engagement already and doesn’t expect drastic changes.

“We’ve had exposure drafts, accepted a range of amendments and a range of proposals, and we’re prepared to go through the details as it affects individual firms. But we’ve said, show us where the legislation doesn’t meet our policy objectives, and so far no one has been able to do that.”

“We’ve covered the concerns people have raised with all the vigour we can muster because we think it’s such an important reform. It’s about supporting jobs and innovative capacity. It remains central to our innovation program and we are spending more money here than we are on other aspects of the innovation system.”

He also says the legislation is among the Government’s top priorities and he is “very keen” to press ahead with the laws.

“This legislation has had a very substantial level of engagement. There have been several inquiries, several exposure drafts and interviews with company consultants and it has been subject to the innovation inquiry.”

“There have been literally hundreds upon hundreds of company engagements and it is strongly supported by the high tech industry, including the biotech, medical and ICT industries.”

Carr argues R&D tax credit is key priority for the new Government; of the $8.9 billion per year spent on investment in research, the R&D tax credit will take up 18% of that.

“We’re very keen to press ahead with it. It’s in our top priority list for the new session, and it will be introduced, I expect, next Wednesday and then we will wait up on the good favours of the other forces that make up the Parliament.”

The comments are sure to spark fierce debate. PricewaterhouseCoopers partner Sandra Mason says while there are disadvantages and advantages to moving the starting date, there are other pressing issues to be addressed.

“I think more time is needed to get these things right. I’d like to see the removal of the dominant purpose test, because that will be a complexity. I think another area that needs work is the feedstock provisions, they are not worded in the best manner.”

“The program definitely needs some more debate, and we’re hopeful the Government will make further changes.”

Yesterday Institute of Chartered Accountants tax counsel Yasser El-Ansary told SmartCompany yesterday the start-date should be pushed forward to account for delays.

“The senate ought to be allowed to run its course,” Ansary says. “They should be allowed to debate the bill fully and only when that process is completed should the reforms be voted on again.”

“But the notion of applying the laws retrospectively and assuming that businesses will be allowed to make sense of the draft legislation before it comes into law on its own, it doesn’t make sense.”

Carr also says the Government will pursue a range of innovation projects during its next term, including a major review of IP, changes to national measurement and fulfilling its promises regarding the Australian Research Council.