More than three-quarters of Australia’s biotech, medtech and health tech companies expect to be “significantly or moderately” negatively impacted by proposed Budget changes to the R&D Tax Incentive (RDTI), according to a recent survey.
The nationwide survey was conducted by industry group AusBiotech and canvassed its members’ views on the proposed changes and their likely impacts.
Many of the companies surveyed said they were “actively considering” relocating overseas or moving lifesaving clinical trials, warning that the proposal to limit the RDTI’s refundable tax offset for companies less than 10 years old is “not fit-for-purpose” and does not cater to the realities of the sector.
AusBiotech CEO Rebekah Cassidy said the survey results were “yet more evidence that the proposed changes will do harm and must be reversed to ensure the sector is afforded certainty and confidence.”
“The results send a clear message – companies already know they will be worse off under these changes – and if implemented as proposed, many will choose to leave,” Ms Cassidy said.
“The changes could cause irreversible damage to our vibrant and world-leading biotech, medtech and health tech sector.
“The impacts are already being felt by the sector, with the changes being discussed within boardrooms, investment committees and development teams. Decisions about where clinical programs are located, where investment is deployed and where companies establish long-term operations are being influenced by perceptions of Australia’s future competitiveness.
“The consequences are real and profound – lifesaving technologies could be shelved, promising clinical trials cancelled, companies closing, investors fleeing and some of our best talent leaving Australia.
“The proposals are at odds with existing Government policy which is confusing for the sector. For example, ‘Biotechnology’ is one of the Australian Government’s seven Critical Technologies in the National Interest and a priority sector for the National Reconstruction Fund, while ‘Health and Medical’ is the first pillar of the Ambitious Australia: Strategic Examination of R&D report.
“Biotech is a major economic success story, supporting more than 350,000 jobs across almost 3,000 organisations. It makes no sense to jeopardise a sector which contributes so substantially to our economy and prosperity.
“We have been working with the sector on options to help Government urgently fix the unintended outcomes of these poorly conceived proposed policy settings and get them right so that the sector can continue to grow, thrive and save lives. We just need Government to urgently meet us at the table.”
Key insights from the survey include:
- Fifty-nine companies responded, with 76 per cent indicating they will be either significantly or moderately impacted;
- Of these, 30 said the changes would impact them significantly, which could involve moving overseas to more favourable countries, moving critical clinical trials overseas or reconsidering Australian manufacturing;
- One hundred per cent of companies aged 6 – 15 years expect significant or moderate impacts, with many citing reduced Australian investment, jobs and clinical trials. For biotech companies specifically (82 per cent aged six years and older), the impact would be significant;
- Thirty-six (61 per cent) said the proposed CGT changes would negatively impact them.
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