A Queensland manufacturer is pushing a national tax incentive plan to turn the tide on offshoring
July 16, 2013
Cook Medical Asia Pacific Director Barry Thomas has developed an Australian Innovation and Manufacturing incentive (AIM) proposed to save jobs and secure Australia’s competitiveness.
Thomas, who received an
ExportHero award from the Australian Institute of
Export in 2012, has written to Queensland Federal MPs and candidates standing against them in the upcoming election, to request backing for the plan.
Thomas’s AIM incentive proposes tax relief based on the retention of intellectual property and manufacturing in Australia.
Under the plan, companies would receive an inducement equivalent to two percent of sales on locally manufactured products, for which they hold patents or licenses.
The relief would be offset against a company’s tax bill, linking it directly to commercial success and resulting in no upfront government costs.
The plan was reportedly developed after consultation with the Export Council of Australia and major industry body, AusBiotech.
“The high-dollar and cheap cost of labour elsewhere are obvious challenges for manufacturers in Queensland, and throughout Australia,” Thomas says.
“What we need is some innovative thinking, and I believe AIM gets us part of the way there.”
Thomas says domestic manufacturing is vital because of the role it plays in innovation – a key driver of global competition.
“The factory floor is the real breeding ground for innovation,” Thomas says.
“Once production is sent offshore, company engineers and scientists no longer engage with the manufacturing process, during which potential improvements to a product are identified.
Designs cannot be amended correspondingly, and as a result they may be under-designing compared to the competition.”
Thomas says the United Kingdom and France have introduced similar versions of the AIM incentive.
He says in the UK GlaxoSmithKline recently invested more
$800 million in new operations and took on more than 1000 new staff due to ‘patent box’ legislation.
“Queensland has an opportunity to lead the way, and offer up a solution to this national problem,” Thomas says.
Investigations into the likely impact of the incentive are being undertaken by Deloitte.