The Australian biotechnology sector was looking for two things from this year’s budget — the retention of the R & D Tax Incentive and some certainty about future Government funding.
It was extremely pleasing to see the R&D Tax Incentive remain in its current form, but a question mark still looms over the latter.
This is because no news may not necessarily mean good news. The Government has yet to respond to the 3Fs recommendation, which included the possible introduction of the $2 million cap. The theme of the budget was one of growth and investment in the future but there has been no positive statement from the Government about its commitment to the program which forms the cornerstone of innovation support in Australia.
Given the difficulty, this uncertainty brings to strategic planning the sector as a whole must continue lobbying Government to provide long-term assurances regarding funding support. The R & D Tax Incentive has made Australia an extremely attractive location for conducting clinical trials, with many overseas companies bringing research to Australian labs to take advantage of the favourable funding conditions. This has, in turn, helped enhance the capabilities of the local biotechnology industry as well as the economy as a whole.
Partnerships with overseas-based researchers and companies were further complicated by the Government’s changes to work visas, with the abolition of the 457 visa program and the introduction of a foreign worker levy. Given the highly specialised nature of much of the work in advanced biotechnology, these changes present an unfortunate barrier to international collaboration and the ongoing innovation and global leadership of the sector.
Although there is little doubt the sector will continue to press the Government for greater certainty, for individual technology firms they must plan for a future with limited Government funding. That means continually seeking new funding sources and strengthening relationships with existing investors to ensure any shortfall in Government funding can be at least partially replaced with other grants or capital injections.
One possibility that emerged in the 2017 budget was the Government’s $100 million Advanced Manufacturing Fund. Although many in the sector might have hoped that such a fund would attract more funding, it still presents an important opportunity for many companies. As a new initiative, the Government will also be looking to collaborate with industry to help shape how the fund operates, which may lead to a closer partnership between Government and the sector.