AusBiotech has joined fellow organisations - Research Australia, Medicines Australia, Medical Technologies Association of Australia and BioMelbourne Network – in a joint statement urging the Federal Government not to devastate Australia’s most innovative industry by gutting the Research & Development (R&D) Tax Incentive.
The statement says that the commercialisation of Australian medical research is under serious threat if the package of measures put by the ‘Ferris, Finkel, Fraser’ Review of the R&D Tax Incentive is adopted.
The changes proposed, especially the $2 million cap and the ‘intensity threshold’, will have significant, disproportionate and negative impact on Australia’s medical technology, biotechnology, and pharmaceutical (MTP) sector.
Only around 5.5% of research expenditure registered for the R&D Tax Incentive relates to MTP, however comments from the Report’s authors that the impact of the $2 million cap will be “slight” or that other policy measures, like the Biomedical Translation Fund, will balance out damage, fail to understand the impact likely in the sector, its broader ecosystem, or the nature of clinical trials.
The Federal Government has recognised the potential economic benefit of innovation via the National Innovation and Science Agenda and the MTP sector through its designation as one of six industry sectors of competitive strength and strategic priority (MTPConnect). The CSIRO and MTPConnect said in a recently-released roadmap that the MTP sector can create a further 28,000 jobs and deliver $18 billion in added value to the Australian economy within the next ten years.
The R&D Tax Incentive is the most critical centre-piece program in the translation of Australia’s world-class research into treatments, cures, diagnostics, medical devices and vaccines. The program has been successful in helping attract more investment in R&D and fostering a strong Australian life sciences clinical trials and R&D sector.
Ensuring that any redesign of the tax incentive does not act as a handbrake on this investment is imperative, so that Australia can continue to thrive as a home for some of the world’s most talented scientists and medical researchers, improve its position as a centre for high-quality R&D in medical science and receive the related spill-over benefits.
According to the 2017 AusBiotech CEO Industry Position Survey (due for release in 1 May) of 46 member companies implementing a $2 million cap will impact the ability to employ staff for 58% of companies, while 45% of companies will be have a reduced capacity to employ STEM graduates, 81% will be affected in their capacity to attract investment and 75% will be less able to compete globally. Companies were on average able to leverage the non-dilutive capital provided by the R&D Tax Incentive at $8 for every dollar spent.
The MTP sector does not support the proposed changes as a package, most notably the proposed $2 million cap and the ‘intensity threshold’. It is a firm belief that this effort to limit or divert the R&D Tax Incentive will damage the country’s hard-won momentum in life sciences, especially the stimulation of the clinical trials environment which we are fighting hard to keep.
The full statement can be viewed online.