Back in December, Prime Minister Malcolm Turnbull launched his National Innovation and Science Agenda under much fanfare.
According to Turnbull, this agenda would “invest $1.1 billion to incentivise innovation and entrepreneurship, reward risk taking, and promote science, maths and computing in schools”, and will include tax concessions and tax breaks for those that engage in start-ups.
On the surface, the plan sounded quite good. However, Turnbull’s actions since launching the agenda have undermined his message.
First, there was the deep funding cuts and job losses inflicted by the Coalition Government on the CSIRO.
Then there is the Turnbull Government’s staunch support of Australia’s negative gearing and the capital gains tax (CGT) discount, thus endorsing the very thing that has held back innovation and entrepreneurship in Australia: too much investment into non-productive housing.
Seriously, who would want to bother with the hardship of taking a risk on a new business when you can instead buy a negatively geared investment property, watch it grow in value, and then sell it for tax effective capital gain?
And which bank is going to lend a start-up funds while there are oodles of “low risk” mortgages to profit from that require minimal capital to be held?
Before he sold-out to the property lobby, Malcolm Turnbull agreed that Australia’s housing tax settings were holding the economy back. In 2005, Turnbull decried Australia’s “very generous” negative gearing and capital gains tax (CGT) concessions which he described as a “sheltering tax haven” that is “skewing national investment away from wealth-creating pursuits, towards housing”.
Today, we received more evidence that Prime Minister Turnbull does not actually care about innovation with news that R&D tax concessions will be cut after the Government struck a deal with Labor. From The Australian:
Under the government’s $6bn Omnibus Bill to repair the budget, the R&D tax incentive would be cut by 1.5 percentage points for the first $100 million of eligible spending…
Mr El-Ansary said R&D tax incentives played “a vitally important role in funding those early-stage businesses to be able to reinvest available cashflow into innovative technologies”.
“Any change has a very significant and very direct impact on early stage businesses right across the economy”…
The chief executive of industry body AusBiotech [said]… “The opposition has — as has the government — contradicted its clear statements of support regarding innovation and entrepreneurship.”
Over the past year, Australia fell from 17th to 19th in the Global Innovation Index, which ranks the world’s countries and economies through innovation measures, environments and outputs.
Given Prime Minister Turnbull has stressed the importance of Australia becoming an innovative country – in order to transition to a value-adding, knowledge-based economy and drive jobs growth – I would have thought that maintaining the R&D tax concessions, adequately funding the CSIRO, and eliminating distortionary property tax concessions, would have topped his agenda.
Like Tony Abbott before him, Malcolm Turnbull has resorted to slogans over genuine policy action.
