The government’s shock deal with the Palmer United Party and Independent Senator Xenophon to pass legislation in the Senate last night to limit the Research and Development (R&D) Tax Incentive deals a further blow to Australia’s innovation ecosystem and will impact large and small biotech companies, according to AusBiotech.
The Senate’s passing of a $100 million expenditure cap, while aimed at large companies, will see the impacts felt throughout the industry, with more research and development expected to move offshore and the ecosystem that supports small developing companies set to contract.
AusBiotech CEO Dr Anna Lavelle said: “The R&D Tax Incentive has been the shining beacon of hope and support to the biotech industry. We have consistently praised its success and urged the government not to limit or remove it, and to provide consistency and certainty to the sector to allow its development.
“This is a further blow to an industry seeking to take its rightful place as a pillar of the Australian economy and we call on the government to match its rhetoric on supporting innovation and jobs, stop stripping vital supports and back Australia’s strength in pharmaceuticals and medical devices.”
The legislation as it stands, if passed by the Lower House, will disadvantage local companies with the aggregation requirements. This potential targeting of small companies that partner with large companies will destroy the policy intent of the R&D Tax Incentive, AusBiotech says.
The industry is still adjusting after the loss last year of Commercialisation Australia and the Innovation Investment Fund. While pleased about proposed restoration to employee share schemes announced in the Innovation Industry and Competitiveness Agenda, the industry has found the definition of start-ups in the exposure draft to be unnecessarily restrictive.
Dr Lavelle said: “The unrelenting threat to the R&D Tax Incentive and efforts to trim and cap is unsettling for an industry that takes many years to develop each treatment, diagnostic, cure and medical device. The backdating of this latest amendment by seven months will cause havoc with planning, create even greater uncertainty and discourage the industry from investing.”
AusBiotech fully supported the Australian Greens’ moving of an amendment in the Senate that would revive the much-needed quarterly payments for small and medium-sized businesses eligible for an R&D Tax Incentive refund - a feature that was passed with the original legislation and then overturned at the eleventh hour after the Coalition won government. “This is another missed opportunity for the government to demonstrate real support for biotech innovation and the creation of ‘smart’ jobs and another example of how the rhetoric is failing to match actions,” said Dr Lavelle.
“The government should, in all conscience, now abandon plans to cut the R&D Tax Incentive by a further 1.5% in line with a corporate tax rate cut (that has not eventuated) and seriously consider the need for the Australian Innovation and Manufacturing (AIM) Incentive, which would provide a lower tax rate for profit derived from home-grown intellectual property and keep its flow-on benefits in Australia.”
Help employers find you! Check out all the jobs and post your resume.
