Major R&D tax reforms in the pipeline

In David Gelb’s discussion about the proposed reforms to Australia’s R&D tax concessions, he raises an important point about the short-term advantages of increasing assistance to organisations involved in research, development and, more generally, innovation.

“Short-term incentives should also encourage companies to invest the money saved in employment, training, infrastructure and collaboration, benefiting the company and the economy in the long run.” David Gelb, The Age 30-3-09

It is vital that Australian businesses continue to invest in innovation, and any support that the government can provide to ensure that this nation continues to spend on continual improvement and innovation will have short and long term benefits. This type of support will be analogous to the domestic “stimulus” payments received by households in the past few months.

Despite its overused and cliched use in the R&D industry, “innovation” must remain the foremost objective of all Australian businesses if they are to remain viable and solvent during these difficult times. There is no point doing the same things if the world around you is changing. Innovation in business processes, systems, products and services must be ongoing, in all economic climates, even if it is incremental and conservative.

Increased government support for R&D will ensure that the many component suppliers, services, consulting firms and manufacturing organisations can continue to provide the economy with people, products and services that are world-competitive, highly skilled and differentiated. Increased R&D assistance may also mean that more money may stay onshore – keeping more Australian’s employed. Halting investment in innovation is tantamount to wearing the same pair of shoes well after the soles are worn through and the stitching has come undone.

Design is just one of many industries reliant on a continual investment in innovation. We cannot let the economic turmoil of the day dissuade us from launching new products or completing planned improvements to our services and management systems. However, it is also important that any incentives, rebates or specific tax concessions are channelled back into the R&D sector in order to achieve the economic stimulation that is intended.

Further information about the National Innovation System review is here.