Big business backs R&D push

Corporate heavyweights including Geoff Levy and David Kirk are urging the government to halt proposed changes to the R&D tax incentive scheme.

Chairman of Monash Private Capital, Geoff Levy

Major corporates are getting behind an initiative to suspend proposed changes to R&D tax concessions, which some say would decimate Australia's technology start-up industry.

More than 3,500 people have signed a petition to stop the changes, with business heavyweights David Kirk, Geoff Levy, Marcus Tierney and Andrew Walsh all publicly declaring that the changes would hurt the local industry.

The proposed reforms, which are currently before a senate committee, would bring in a refund cap of $4m and create a tiered system for R & D tax payments, based on an 'incremental intensity' calculation, measured by R & D expenditure as a percentage of total business expenses.

Dr Adir Shiffman, the chairman of ASX-listed Catapult and Sleeping Duck mattresses said the government should instead freeze those changes and fast track future FY20 R & D tax incentives for companies with less than $20m revenue, paying them in April 2020 and based on a start-up's FY19 claim.

He said that Australia's technology businesses are the ones that are driving the innovations our country needs during the lockdown, such as telemedicine appointments, remote work solutions and deliveries, and are creating jobs and growth.

"The key thing to note regarding the R&D tax incentive is that if start-ups go into administration or even liquidation between now and the scheduled payment date then the RDTI is still paid. It just goes to the creditors," he said. "There is no saving to government, it's just throwing expensive fertiliser on dead crops. This is why a bring forward makes so much sense."

"France has already released a huge package for start-ups including faster access to their equivalent of RDTI. The UK is heading there. This is a global initiative, and there is an opportunity in Australia to achieve this outcome quite literally with the swipe of a pen and no additional cost. An easy, logical, quick win to save a huge number of jobs and probably hundreds of companies."

David Kirk, managing partner at Bailador Technology Investments and former CEO of Fairfax, said Dr Shiffman's initiative was common sense.

"Bringing forward the R&D rebate to April from October or November this year on the basis of what was claimed last year will be a critical step in saving hundreds of small and medium-size tech companies," he said.

"Apart from the time difference, it costs the government budget nothing and will literarily be the difference between survival or wind-up and the loss of thousands of jobs. It’s simple and efficient. We should just do it.”

Geoff Levy AO, the long-time chairman of Cromwell Property, said he's a big supporter of the initiative given the rising importance of Australia's technology ecosystem.

"We must, as a country, stay ahead of the knowledge and innovation curve or we will end this new decade so far behind that, besides the economic calamity, we’ll have the tragedy of an enormous brain drain of our young and most talented," he said.

Andrew Walsh, the CEO of Iress, also threw his support behind Dr Shiffman's initiative.

"We were all start-ups at one point in time and experienced first hand the challenge of transitioning from idea to product to commercialisation. Today's start-ups are facing a more extreme commercialisation predicament and if effective support is not provided, many will fold," he said.