June 2018 Sydney Morning Herald

In a joint submission to the Turnbull government, blood products and vaccines manufacturer CSL and hearing implant pioneer Cochlear have warned Australia could lose out to countries overseas that offer more attractive tax incentives and easier access to skilled migration.

Paul Perreault

CSL CEO Paul Perreault has a warning for Australian government.

Mr Perreault has long called for tax policy certainty, and he still hoped the federal government's plan to reduce Australia’s corporate tax rate from 30 to 25 per cent for large companies would pass the Senate. “I think that underneath it all government realises that the innovation has to come from somewhere,” he said. “Hopefully they'll realise what needs to be supported.”

Mr Perreault also spoke about previous attempts by governments to cut back on skilled migration and on tax incentives like research and development grants.

CSLWhile both CSL and Cochlear continue to spend big on research and development in Australia, the submission noted business R&D spending had fallen from $18.9 billion in 2013-14 to $16.7 billion in 2015-16. It said the federal budget decision to increase the cap on eligible R&D expenditure to $150 million was “warmly welcomed, although a cap at any level is an arbitrary line in the sand after which there is no economic incentive to increase investment onshore”.

The submission says R&D should be “core to Australia’s industry policy”. CSL's R&D arm employs 1500 people around the world. The company spends between 10 to 11 per cent of its annual revenue on R&D. Last year it spent $US645 million globally. Cochlear chief executive Dig Howitt said the company spent $150 million on global R&D last year, with most of it in Australia.

Dig Howitt

Dig Howitt, CEO of Cochlear says the company spent $150 million on global R&D last year.

Mr Perreault said R&D tax incentives were especially crucial for smaller tech start-ups. “Tax credits are extremely important and I do worry that if that goes away, it does stifle innovation significantly.”

The CSL-Cochlear submission also addressed skilled migration issues. It said that if all of the changes to 457 visas, as announced on April 1 last year, had been formally enacted “they would have had a devastating effect on Australian medical research and manufacturing”.

The submission called for “strategic and comprehensive reform of Australia’s migration regime”.

Mr Perreault said Australia needed to educate and develop skills for high-tech jobs. Despite Australia being a high-taxing and strongly-unionised labour market, he said CSL was here to stay with its Broadmeadows manufacturing facility recently expanding. Mr Perreault also called on governments around the world to stop introducing policies that dilute patient access to healthcare and medical drugs and treatments.


Patient groups in the United States have been lobbying against President Donald Trump’s healthcare changes.

Last year the Trump administration managed to pass through Congress laws that repeal the Affordable Care Act (ACA) and make deep cuts to Medicaid, the federal and state program that helps with certain people with limited income and resources with medical costs. Mr Perreault said the US was a complex market but the lack of access to healthcare because of government policies wasn't a problem unique to Donald Trump and America. “We deal with these issues all over the world,” he said. “Every government is trying to reduce healthcare spend and they all look at pharmaceuticals as way to do that. They also limit product availability ... Or they limit the use of those products for patients that actually need them.”

He said CSL would continue to advocate for access to care in America and around the world. “They [patients] have to have access and they need [product] choice,” he said. CSL runs more than 170 blood collection centres across the world through its plasma products business CSL Behring. While in Australia blood is donated voluntarily through the Australian Red Cross, in America donors give their blood to CSL plasma centres across the country for US$50 to US$60 a donation.

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