The Senate Economics Reference Committee will today hear how innovation holds the key to the future of Manufacturing and a great number of jobs, in a presentation by medical device manufacturer Cook Medical Australia.
The Committee is in Brisbane to hear verbal submissions for the Inquiry into Australia’s Innovation System and Cook Medical will be one of two manufacturers to share their insights. The submission will be made by Mark Muller, Director of Finance – Cook Medical Asia Pacific.
“It’s our strong view that innovation and manufacturing are inextricably linked. However, the precarious state of Australia’s manufacturing industry, struggling with comparatively high taxes, high labour and operating costs, is of particular concern for the future of Australia’s innovation system”, explained Mr Muller.
“We will share these concerns with the Committee and implore them to take action. To maximise Australia’s Capability to innovate and to become a knowledge-based economy, there is a need for structural change within policy frameworks to attract business and commercialisation of our innovations back to Australia. Without this, the intellectual property, manufacturing and all the associated jobs will leave our shores. It’s the Australian future for companies like Cook Medical.
“The Government must do something to help the retention of domestic manufacturing and industry. Our recommendation is to consider the implementation of a ‘patent box’ style tax incentive for Australia, specifically a model that would provide a reduction in the tax payable on profits derived from the commercialisation of qualifying IP in Australia (either via licensing or manufacturing and sale of products incorporating qualifying IP),” said Muller.
Under the model, termed the Australian Innovation & Manufacturing (AIM) Incentive, qualifying IP profit would be taxed at the lower rate with the standard corporate tax rate to be applied to other income.
This would ensure Australia benefits from investment in any R&D by encouraging companies to locate all activity associated with the development, manufacture and exploitation of that IP within Australia, which would support the full spectrum of industry sectors.
Adding to the IP retention issue is that, R&D Tax Incentives such as the one Australia implemented are now recognised globally, with 30 countries, including the top 10 global manufacturing countries also offering similar frameworks.