Proposal for new manufacturing incentive

A Brisbane-based manufacturer has proposed a new incentive for companies that manufacture locally products for which they own or have licensed the patent.

As AAP reports, the plan is the idea of Barry Thomas, Asia-Pacific director of Brisbane-based manufacturer Cook Medical.

Such an approach would contrast with industry subsidies like those received by the struggling auto manufacturing industry. (As it stands, car manufacturers are on track to receive $5 billion in subsidies by 2020).

According to Thomas, his idea recognises the importance of keeping research and development (R&D) and manufacturing together. He says that if researchers come up with good ideas but the manufacturing is completed overseas, a forum for local innovation is lost.

"The country is investing in the R&D tax incentive but then we don't capitalise on the investment – we are letting the manufacturing part go overseas," Thomas said.

"As any advanced manufacturer will tell you, most innovation – in respect of products, ideas and advancements – originates on the factory floor."

According to the idea, the Australian Innovation and Manufacturing (AIM) Incentive, companies would be given a tax incentive, equal to one per cent of domestic sales or two per cent of export sales, for products made in Australia under patent or licence. This figure would be deductible from the company tax bill.

The AIM Incentive idea is not for industry grants. It is a tax benefit only accessible to companies that make and sell their products.

In addition, there would be a need to cover the gap where companies that licence overseas technology miss out on the federal government's R&D tax incentive.

Both the national biotechnology industry body, AusBiotech and the Medical Technology Association of Australia have thrown their support behind the proposal.

Thomas said the scheme could provide a guaranteed benefit for companies that did invest in manufacturing.

However, he does not want the proposal to be seen as a total solution to the problems that manufacturing is facing and says that other measures also need to be taken.

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