Joint statement on the Research & Development Tax Incentive
The MTAA along with other key stakeholders has been working to highlight to Government the importance of R&D tax incentives for the MedTech industry. The proposed reforms by ‘Ferris, Finkel, Fraser’ Review of the Research & Development (R&D) Tax Incentive if adopted would have a devastating impact. MTAA has been proactively engaging with Government to highlight case studies to show the potential decline in this critical activity from members and the impact to the Australia economy.
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 MTP, 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 timeframes, 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.
The Federal Government has recognised the potential economic benefit of innovation via the National Innovation and Science Agenda and the MTP sector through its designation as one of six industry sectors of competitive strength and strategic priority (MTPConnect). The CSIRO and MTPConnect believe the MTP sector can create a further 28,000 jobs and deliver $18 billion in added value to the Australian economy within the next ten years.
Clinical trials give early access to new treatments for Australians and have a pivotal role to play in the economy of the future, which will strongly rely on innovative jobs, exports and productivity. Clinical trials bolster the economy and are already supporting its transition from a post-mining boom. Beyond the economic benefit to Australia, R&D in the life sciences can develop therapies, cures, medical devices and diagnostics for patients around the world.
The MTP sector does not support the proposed changes as a package, most notably the proposed $2 million cap and the ‘intensity threshold’. It is a firm belief that this effort to limit or divert the R&D Tax Incentive will damage the country’s hard-won momentum in life sciences, especially the stimulation of the clinical trials environment which we are fighting hard to keep.
