Labor leader Bill Shorten has announced plans to reduce the rates of the research and development (R&D) tax offsets, in a bid to "support some measures" and "improve the budget bottom line".
If he becomes Prime Minister next month, Shorten's plan is to resuscitate former Prime Minister Tony Abbott's stalled R&D Tax Incentive Bill, which was defeated by the Senate in March last year.
The R&D Tax Incentive allows companies to claim a tax break for the money they spend on internal R&D, and in February last year, Parliament passed legislation that limits the amount for which companies can claim R&D tax breaks to AU$100 million.
In March last year, the Senate then voted on the Tax & Superannuation Laws (2014 Measures No. 5) Bill 2014, which included a proposal to introduce a 1.5 percent cut to the current R&D tax offset rates of 40 percent and 45 percent from July 1, 2014.
It was pitched by the Abbott government as a move that would result in savings of AU$550 million in underlying cash balance terms over the four-year forward estimates. On Friday, Shorten projected the R&D incentive would have a positive budget impact of AU$2.8 billion over 10 years.
At the time, both the Labor and Greens parties called the Bill block a win for innovation among local small to medium enterprises, with Shadow Minister for Higher Education, Research, Innovation and Industry, Senator Kim Carr, saying SMEs would have been "savaged" by the government's proposal, as SMEs make up more than 70 percent of the users in the R&D tax offset scheme.
"What this Bill does is undermine the small and medium-sized enterprises as well, not to mention the universities and all the other supply-chain enterprises that are affected by these proposals," he said previously.
"It is the small and medium-sized enterprises which rely on the existence of a permanent and stable tax incentive in order to invest in R&D. This is critical to their business case as much as it is to the larger firms."
Also forming part of Shorten's budget repair measures is the promise to redirect spending from the Department of Foreign Affairs and Trade to other budget priorities, which Shorten said includes the abolition of the Innovation Xchange, adding that the innovation hub -- established by Minister for Foreign Affairs Julie Bishop -- focused on "purchasing bean bags".
The opposition leader said closing the hub will save AU$4 million over the medium term.
Additionally, Shorten said on Friday that he backed the reduction in the HECS-HELP repayment threshold from AU$54,000 to AU$50,638, and that changing repayment thresholds and ceasing the HECS-HELP benefit will result in a positive budget impact of AU$3 million over the medium term.
In September, Shorten introduced a AU$17.8 million startup initiative he hopes will drive a new generation of innovators, risk-takers, and wealth-creators. Shorten wants 2,000 students to partake in a "Startup Year" whilst at university to "develop their ideas, get business know-how, and connect with finance".
This initiative boosted the Labor Party's Australian university investment pledge to a total of AU$2.5 billion.
Shorten originally announced his intention to "kick-start the economy and create jobs" in his budget reply speech in May, outlining a plan if he were to become prime minister to turn Australia into the "science, startup, and technology capital" of the region.
Earlier this week, Prime Minister Malcolm Turnbull came under fire for talking the startup talk, but not walking the startup walk with his election promises.