Labor had demanded Prime Minister Malcolm Turnbull abandon the proposed cut to the R&D Tax Incentive if he is serious about promoting innovation.
Since his elevation, Mr Turnbull has consistently highlighted the importance of innovation to Australia's economic future.
Yet the Government is still proposing to reduce the R&D Tax Incentive by 1.5 per cent - to 43.5 per cent for eligible entities with annual turnover under $20 million and 38.5 per cent for all other eligible entities.
The proposal, which would come on top of recent changes that cap claims under the scheme, is being opposed by Labor and the Greens.
This legislation has a retrospective application date of 1 July 2014, which Labor says is affecting companies’ R&D investment decisions right now.
"Labor has already defeated this reckless policy once in the Senate, but the Liberals have brought it back for a second time," said Shadow Minister for Higher Education, Research, Innovation and Industry, Senator Kim Carr.
"Now the legislation is languishing on the Notice Paper because the Liberals know they don’t have the numbers to cut support for R&D," he said.
"But they still haven’t said they are withdrawing the proposal.
"If Malcolm Turnbull and Christopher Pyne were serious about supporting Australian innovation and industry R&D, they would immediately reverse this measure.
"If they don’t, they’ll be showing once again that when it comes to innovation, the Liberals are all talk and no action," he added.
AusBiotech has also urged the Government to scrap the proposed cut, arguing it it will specifically disadvantage small pre-revenue and start-up companies.