A Beginning, NOT the End
It’s not an unusual observation these days to say that we increasingly see only what we want to see. Things as we wish they were, not as they are.
And so has been the case with the recent recommendations for changing the R&D Tax Incentive (RDTI) contained in the SERD Panel Report, Ambitious Australia.
If you only read certain commentators in recent days, you would be entitled to believe that the Report ended an exhaustive review process of the RDTI involving extensive public consultations and the recommendations contained in the SERD Report should be comprehensively introduced in the next Federal Budget. All good. Case closed. Nothing else to see here.
However, if you’ve been following this Update, you’ll have been hearing a very different story. One where the RDTI was missing from the SERD Panel’s original Terms of Reference. One where the R&D Incentives Issue Paper that was subsequently released appeared to be an amalgam of suggestions contained in public submissions to the Terms of Reference which resulted in more questions than answers as too much of the logic and assumptions used were patently flawed. And now one where the Panel has largely adopted the Issues Paper (with refinements) without question and is recommending a series of reforms that can only be characterised as containing the good, the bad and the flat-out bewildering.
These recommendations, made in the name of simplifying the RDTI, have done the absolute opposite. The Report seeks to introduce differential types and levels of support based on new concepts including minimum project spend, the ‘depth’ of the tech, public sector collaboration, individual revenue growth and whether you are a ‘corporate citizen’. Complexity personified.
The Panel (we think) wants to exclude companies whose annual claim is less than $150,000 which would kick over 3,000 taxpayers to the curb. It wants to lift support for large companies significantly while excluding SMEs that can’t demonstrate year-on-year revenue growth, an intimidating notion in the current economic climate. Peter and Paul are in these recommendations and someone is certainly getting robbed.
We could go into greater detail about the problems with the recommendations in this Update but we’ve decided against that for now.
Why? Because they are what they say they are. They are just recommendations. And they are recommendations that haven’t been exposed to public consultation beyond the ability to respond online to the Issues Paper in two word-limited boxes some six months ago.
In other words, the recommendations need to be seen as the start of a comprehensive review of the RDTI. And this is a proposition we have supported from the commencement of the SERD process. They are NOT the end of any review.
And the good news is that the Federal Government apparently agrees.
At the National Press Club yesterday, Tim Ayres, Minister for Industry and Innovation of Australia, said the following in his address:
“Ambitious Australia sets out an agenda that should guide us for the next decade. This isn’t something you deliver in a single Budget or a single term of government.”
It seems that the Federal Government has realised that the SERD Report is the start of changes in the RDTI that require clever and careful analysis, true public consultation and, ultimately, legislation that builds on an incredible legacy and delivers a better and, dare we say, ambitious support program.
MJA has already rolled its sleeves up to participate wholeheartedly in the next steps. We look forward to hearing about what they are.
Should you wish to discuss any aspect of this article, do not hesitate to contact MJA.