A hit for medical research in Australia with the Senate passing the Turnbull government's omnibus savings bill including the $600 million cut in the R&D Tax Incentive.
The cut was included in the bill of over 20 measures passed after a marathon sitting last week that will generate combined savings of around $6 billion.
Under the changes, the rates of the refundable and non-refundable tax offsets for the first $100 million of eligible expenditure will be cut by 1.5 per cent. The refundable rate will drop from 45 per cent to 43.5 per cent and the non-refundable rate will drop from 40 per cent to 38.5 per cent.
The biotech sector led by AusBiotech has opposed the reduction, arguing it will undermine government's innovation and science agenda, and should not proceed while the official review of the R&D Tax Incentive program is still in the process of being finalised.
Labor reversed its opposition to the cut during the recent election campaign and backed its inclusion in the omnibus savings bill. The Greens and Nick Xenophon's party maintained their opposition and even unsuccessfully sought to exclude the cut during last week's marathon Senate debate on the bill.
According to Senator Xenophon, "I cannot support a measure which will have a retrograde effect on small and medium businesses involved in research...I am pleased there have been some compromises. I am concerned about those matters where there has been no compromise, particularly in terms of R&D. I acknowledge that we do need to undertake budget repair, but let us undertake budget repair fairly and in a way that does not take away from the productive capacity of the Australian economy."
