It takes tax deductions from those who don't need them
Her industry and innovation statement released Sunday will save $1 billion over four years by preventing firms with an annual turnover of $20 billion from accessing the generous research and development tax incentive. There are only 15 to 20 such firms, many of them in the mining industry. The benefit was equivalent to a 133 per cent tax deduction.
Ms Gillard will tell the Australian Workers Union conference her decision to raid the concession is typical of the tough decisions she is capable of making.
“We got rid of the dependent spouse tax offset and tax breaks for golden handshakes. We slashed tax concessions on super for high income earners, ditched the millionaires’ dental scheme and fringe benefits loopholes for executives away from home. We means-tested the private health insurance rebate,” her speaking notes say.
“On balance, it simply isn't necessary to fund the largest and most profitable Australian companies to innovate, when their resources to do this themselves are so clear and the market incentives for them so well established.”
“This is where savings should come from. Existing poorly targeted subsidies to highly profitable firms can be converted into evidence-based assistance for the small to medium sector.”
The savings will be used to build ten innovation precincts modelled on those in California’s Silicon Valley and Italy's Biella textile district... Each will help direct a total of $236 million in Australian Research Council grants. Two were announced Sunday, a manufacturing precinct based in south east Melbourne and Adelaide and a food industry precinct based in Melbourne. The precincts board will be chaired by John Grill, the chief executive of the global resources and energy company WorleyParsons.
Corporations running investment projects worth more than $500 million will be required to produce plans showing how they will give local firms a chance to win contracts. Those running mega projects worth more than $2 billion will be required to embed so-calleed Australian Industry Opportunity Officers in their procurement teams.
The government also recommitted to the Venture Australia program, guaranteeing $350 million in funding over 14 years to entrepreneurs trying to commercialise new ideas.
In a five-part series published last year Fairfax Media revealed that some of Australia's best and brightest entrepeneurs were heading offshore because funding was drying up.
Niki Scevak, co-founder of startup incubator Startmate welcomed the recommitment was "great news". But Jonathan Barouch, founder of the social media application Roamz, labelled it a "last minute pitch in an election year". The government was "five years behind" where it should be.
The Australian Industry Group welcomed the package, while expressing concern about the loss of top-end R&T tax concessions. It hoped to work with the government to “minimize downstream impacts”. Coalition spokesman Sophie Mirabella said the precincts commitment was a re-announcement of a 2011 Labor promise.
In today's Sydney Morning Herald and Age
. Don't blame the dollar, you were sinking anyway - tough love from Gary Banks
. If there's one BlueScope they'll be hundreds: Why Treasury shuts its wallet tight
. How the high dollar hurts - Colebatch