The absence of a “patent box”-style measure to encourage the local commercialisation of IP was a disappointment for Cook Medical Australia, whose managing director said yesterday’s innovation statement “lacked any significant changes for manufacturing.”
Barry Thomas, who has led a push for an AIM incentive – with a lower, 10 per cent rate of tax for profits from IP developed in Australia – said urgent and bold action was needed.
“The same sort of brave policy reform that saw Australia as the first country in the world to introduce the R&D tax incentive, the kind of thinking that led the UK to introduce its patent box tax incentive – a decision they must be celebrating as early reports of manufacturers returning to the country’s shores emerge,” he said in a statement.
Thomas said that the Innovation connections program – a expanded and relaunched version of the current Research Connections scheme – was welcome, but only focussing on the beginning of the innovation cycle would not increase commercialisation.
“The conditions that make it unappealing to manufacture in Australia still remain, including one of the highest corporate tax rates in the world,” he added.
A number of submissions to the senate innovation system inquiry suggested a patent box-type scheme, modelled on the UK measure, be adopted. And last Friday, the Australian Advanced Manufacturing Council released research showing that this could increase Australia’s manufacturing taxation competitiveness from 10th to 3rd of 12 nations examined.
However, not everybody is enthusiastic regarding the approach, with the Department of Industry’s chief economist’s office warning last month in a report that it could trigger a regional “race to the bottom”, and that such “winner-takes-all policies and adjustments at the margin are likely to hurt the economy”.