Biotechnology has been Australia’s largest value-add export industry outside primary industries since 2016. Now the sector says a Budget tax change made without consultation is putting that at risk.
The Federal Budget included a proposal to limit the refundable tax offset under the Research and Development Tax Incentive to companies less than 10 years old.
The RDTI has long provided eligible companies with a tax offset on qualifying R&D expenditure, and the refundable component has been particularly important for early stage companies that are not yet generating taxable income.
The nine organisations that co-signed the letter to Treasurer Jim Chalmers are AusBiotech, Pathology Technology Australia, MTPConnect, ANDHealth, Life Sciences Queensland, Life Sciences WA, BioNSW, BioMelbourne Network and ARCS Australia. Together they represent a significant portion of Australia’s biotech, medtech and health tech sector.
Why the sector says it won’t work
The core objection is straightforward. Bringing a medical product to market does not happen in under a decade. The 2025 National Health and Medical Research Strategy Issues Paper from the Department of Health and Aged Care put the average timeframe at 17 years. The 2024 Medical Science Co-investment Plan from the Department of Industry, Sciences and Resources described the process as spanning decades.
AusBiotech CEO Rebekah Cassidy said the proposed change ignores what the government itself has acknowledged about the sector’s commercial realities. “The long timeframes required to translate and develop medical research into health products for patients are not new news. It is well understood by industry and government that bringing these critical health products to market routinely takes well beyond a decade,” she said.
Cassidy described the journey companies take as bridging multiple commercial valleys of death, moving from research through pre-clinical development, clinical trials, regulatory approval and manufacturing scale-up before any revenue from market access becomes possible.
Blindsided and concerned
What has added to the frustration within the sector is that the change came without consultation. Cassidy said the industry was caught off guard. “Our sector has had a longstanding, collaborative working relationship with governments, so we were blindsided by this proposed change which occurred with no consultation,” she said.
The sector is also pointing to its economic footprint as context for why the change is concerning. Cassidy noted that biotechnology has been Australia’s largest value-add export industry outside primary industries since 2016 and supports more than 350,000 jobs across almost 3,000 organisations.
“We are struggling to understand why the government would jeopardise that by making changes that are fundamentally misaligned with long held understanding of the commercial, regulatory and market access realities of this important sector,” she said.
The concern is not abstract. Cassidy said the proposed changes are already creating uncertainty for companies making long-range decisions about where to undertake clinical development programs, with some considering moving those programs overseas.
What happens next
AusBiotech says it has been engaging at the highest levels of government and across parliament since the changes were announced and is asking for an urgent review before the changes are legislated.
Cassidy said the sector is not looking for a fight. “We want to work with the Government to get these policy settings right and at speed so we can give Australia’s biotech, medtech and health tech companies the policy certainty they need to continue to thrive. We just need Government to meet us at the table,” she said.
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