R&D clawbacks hit $200m, as tech minister flags NISA review
Minister for industry, science and technology Karen Andrews has pledged to hold clear-the-air talks with tech industry leaders over R&D tax incentives and other controversial policies, as numbers obtained by The Australian Financial Review showed the amount of incentives that had to be repaid by companies almost doubled in the last financial year.
Ms Andrews promised a roundtable meeting with tech industry leaders within the first 100 days of the new government, and promised to advocate policies they agreed could drive growth in the sector.
Ms Andrews retained the portfolio in Prime Minister Scott Morrison's post-election re-shuffle announced on Sunday afternoon, despite concerns in the local technology sector that the previous term of government had seen innovation policy shift away from supporting fast-growth companies with global ambitions.
A number of policy shifts related to encryption laws and policing online content had angered local technology companies, but most shock was reserved for targeted savings on R&D incentives totalling over $4 billion.
Numerous start-ups reported being audited and made to pay back previously paid incentives, with numbers released under a freedom of information request to The Australian Financial Review showing approximately $200 million was claimed back in the 2017-18 financial year.
Documents prepared for Australian Taxation Office officials for February Senate Estimates hearings showed $500 million was reclaimed in R&D incentive compliance cases across three years, with $115 million in 2016-17 and $185 million in 2015-16.
The documents showed that of 12,123 incentive claims made by Australian organisations in 2015-16 just 0.6 per cent were investigated for compliance, whereas a notably higher 2.1 per cent of the 13,156 claims made in 2017-18 were subjected to scrutiny.
Speaking to The Australian Financial Review on Monday, Ms Andrews said she had already conveyed the sector's concerns regarding the R&D cuts to colleagues, and that she would continue to do so.
"I've listened to what the sector has had to say in the past and I've already raised that with the department earlier this year, but I'm happy to listen to specific examples and I have and will continue to raise the concerns of the sector," she said.
"What's important though is that we're not creating unintended consequences with any changes, even outside of R&D tax incentives. Rorting doesn't help anyone and it's bad for any sector."
Ms Andrews said her priority for her first 100 days of the new parliament was to assess what had worked and what had not from the Coalition's National Innovation and Science Agenda, which was introduced by Malcolm Turnbull in December 2015.
While she said the NISA was designed with a four-year time horizon, she would not commit to a wave two of the innovation statement.
Ms Andrews said she wanted to convene the tech roundtable in the coming weeks, and said she hoped industry leaders would come along armed with ideas rather than just grievances.
"I want to meet with stakeholders in the tech sector, work through their issues and concerns and invite stakeholders to come to the table with not just their concerns, but also their solutions so we have a way forward," she said.
"The start-up sector is a key part of the Australian economy and I want start-ups to succeed and I want them to become future medium and large enterprises." Sectoral semantics
Ms Andrews, who started her political life as a parliamentary secretary in the portfolio and is also an engineer, addressed concerns which emerged last week that the minister did not distinguish between start-ups and small business.
She said she was willing to recognise specific needs of the sector, saying one of her biggest strengths was her ability to listen and learn.
"The start-up sector is a key part of the Australian economy ... and I'm happy to work proactively with them."
But Ms Andrews might have her work cut out for her to get some groups in the tech sector on side.
Late last week a number of start-up industry figures took the unusual approach of publicly advocating for Ms Andrews' removal from the portfolio and lobbying instead for Senator Arthur Sinodinos to resume the job he left in late 2017 to receive treatment for cancer.
However, Mr Sinodinos was appointed as Australia's next ambassador to the United States.
Calls for Mr Sinodinos to return to the Innovation portfolio had been led by former Fishburners chief executive and Startup Muster co-founder Murray Hurps, who said Mr Sinodinos was better equipped to drive the growth of the sector.
"The Department of Industry, Innovation and Science has a goal of driving growth and job creation for a more prosperous Australia, by facilitating economic transformation and boosting business competitiveness," he said.
"The responsible minister needs to understand how this can be done, have a track record of doing so, and must know how to get things done in government."
Responding to Ms Andrews' appointment to the portfolio, BlueChilli's Alan Jones said he generally judged anyone in the role by how accessible they made themselves.
However he said he had been disappointed that the minister had previously been quoted saying tech start-ups were a kind of small business.
"That was either an unguarded mis-step, quoted out of context somehow, or it betrays a startling ignorance of what tech start-ups are about," he said.
"I'd [also] like to see an end to this superstitious avoidance of the I word [being 'innovation']."
Like Mr Jones, Assembly Payments co-founder Victor Zheng found her comments lumping start-ups in with small businesses "sobering". But, the fintech entrepreneur welcomed the chance to engage with Ms Andrews.
"She is right in saying start-ups are generally more concerned with direct policy change than bringing the public along for the ride. It’s something for the sector to mull on," he said.
"Assuming the Morrison government doesn’t continue to rush industry-changing policy through without consultation, and this transparency continues, Minister Andrews may genuinely be able to help push the sector forward."
Despite the loud voices on social media, Ms Andrews said she had also received great feedback and was used to engaging with outspoken people, who had differing views to the government.
"I love this portfolio. I am very comfortable in this space. I learn quickly and I'm very happy to work with the sector and listen to what they have to say," she said.
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