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Research incentive reform needs care

"The recommendations of the long-awaited '3F' Review of the Research and Development Tax Incentive contain risk and opportunity for Australian innovators, and the Government is right to allow further close public scrutiny before deciding on them," Australian Industry Group Chief Executive Innes Willox said today.

"Bill Ferris, Alan Finkel and John Fraser have clearly given very serious thought to Australia's innovation system, in which the R&D Tax Incentive is one of the biggest parts by value. Their recommendations are intended to ease administration and compliance, extend a further incentive for collaborative research, cap the refunds that are paid to SMEs, and limit the existing incentive through a minimum R&D intensity threshold.

"While these ideas show potential, if implemented they would be further major changes to a scheme that has been transformed, reformed or cut nearly every year for the past decade. The incentive needs greater stability if it is to deliver sustained higher investment in innovation. Change should not be made lightly.

"The Government is to be praised for releasing the report and allowing further time for input from business and researchers prior to taking any decisions.

"The importance of encouraging collaboration is emphasised in Ai Group’s recent Joining Forces report, which underlined that collaboration makes innovation more likely to succeed, that successful Australian businesses offer models for good practice, but that collaboration is too rare overall. While the merits and structure of the proposed additional incentive for collaboration deserve careful consideration, other policy measures that build collaboration capacities and remove institutional barriers to collaboration deserve at least as much attention.

"There is always scope to improve the targeting and administration of complex policies like the R&D Tax Incentive, but it would be important not to arbitrarily deprive worthwhile innovation of support.

"Ai Group will consult our members over coming weeks on the merits of these reforms versus stability. It is industry that takes the risks and makes the investments needed to commercialise innovation, and it is industry that will determine whether '3F' gets an 'A'," Mr Willox said.

  Media enquiries Tony Melville – 0419 190 347