Proposed Changes to Research and Development Tax Incentive will discourage investment and undermine innovation
Medicines Australia is disappointed that proposed changes to the Research and Development Tax Incentive were tabled without notice or consultation in the Parliament yesterday – despite the recommendations of a Senate Committee inquiry this year to defer the Bill until further consideration was given to the effects of the reforms. This recommendation acknowledged that further tinkering with the R&D tax incentive creates business uncertainty especially when incentives are seen to be weakened and not strengthened.
Medicines Australia CEO Elizabeth de Somer said: “It is troubling that the Bill persists with the introduction of an intensity threshold for the research intensive pharmaceutical sector, which would diminish Australia’s attractiveness as a destination for clinical research at a time when we are seeking to expand Australia’s export capacity in the knowledge economy that includes clinical research expertise and infrastructure.”
“Medicines Australia supported the Inquiry’s recommendations to reduce red tape, improve transparency and increase efficiencies. However, given the Bill’s hasty introduction it is not possible to determine if real efforts have been made in this direction and we therefore believe this requires further consideration and consultation,” said Ms de Somer.
Australia currently attracts more than $1 billion a year in pharmaceutical R&D investment and is also one of the largest employers of medical science graduates in Australia.
The economic contribution of pharmaceutical companies is amplified through substantial linkages with other parts of Australia’s medical research sector and changes announced in this Bill could put a brake on investment at the very time when economic growth is essential.
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.
Medicines Australia welcomes the opportunity to engage with the Government on this issue in order to ensure that there are no unintended consequences and that investment in R&D within the pharmaceutical sector is supported.
Natalie Wimmer, Media and Communications Manager, Medicines Australia – 0450 728 660