Joint statement on the Research & Development Tax Incentive
Don’t rip the guts out of Australian medical research commercialisation
Commercialisation of Australian medical research is under serious threat if the package of measures put by the ‘Ferris, Finkel, Fraser’ Review of the Research & Development (R&D) Tax Incentive is adopted and Australia’s medical technology, biotechnology, and pharmaceutical (MTP) sector is urging the Federal Government not to devastate Australia’s most innovative industry.
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.
The changes proposed, especially the $2 million cap and the ‘intensity threshold’, will have significant, disproportionate and negative impact on the MTP sector. Only around 5.5% of research expenditure registered for the R&D Tax Incentive relates to MTP1, 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. Relative to other sectors, the commercialisation of MTP has longer time frames, due to significant scientific and regulatory hurdles to reach patients and there is higher expenditure on R&D, particularly in later stage clinical trials.
We understand the need for the Government to ensure that the tax incentive is sustainable during challenging budgetary conditions; however, the scheme must be viewed as a tool to encourage long-term investment in Australia that creates highly-attractive jobs, attracts clinical research and grows the local economy.
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.Joint statement_RD Tax Incentive_FINAL_18 April 2017