Winding back R&D tax credit would diminish investment and cost Australian jobs
Winding back the R&D tax credit, which was introduced by the Federal Government last year, would discourage investment in Australia and cost high-value research jobs, Medicines Australia chief executive Dr Brendan Shaw said today.
Responding to recent media reports of possible changes to the R&D tax credit in the Federal Budget, Dr Shaw urged the Government not to tinker with the tax credit.
“Scaling back the R&D tax credit would be extremely damaging to R&D investment in Australia,” Dr Shaw said.
“Such a move would put a brake on investment at the very time when policy makers are trying to stimulate growth. It would effectively add up to 10 per cent to the cost of investing in Australian R&D and would put at risk hundreds of high-skill, high-wage research jobs.
“Australia currently attracts more than $1 billion a year in pharmaceutical R&D investment. That investment would diminish if there were any winding back of the tax credit.
“There would be some companies that would simply stop bringing R&D investment dollars to Australia.
“The tax credit has been operating for less than a year, so we haven’t yet been able to see the benefits it is delivering in terms of investment. Tinkering with the system so soon after it has been introduced would be premature. For a Government that espouses the virtues of evidence-based policy, it simply wouldn’t make sense.
“The Government went through an extensive consultative process in developing the tax credit system to replace the previous tax concession, which was inefficient and ineffective.
“To do a U-turn on such an important policy measure after less than a year would send quite the wrong signal to the investment community.
“It would severely undermine business confidence, send investment offshore and threaten Australian jobs.
“The fact is, the tax credit is the only incentive the Government offers companies to invest in Australian R&D. It absolutely must be retained.”
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