The country’s largest biotechnology manufacturer, CSL, says government and community complacency puts Australia at risk of missing out on future jobs as companies invest where workers are more productive, tax rates are lower and governments are more supportive.
The $33 billion blood plasma and vaccine maker said Australia urgently needs a plan to become more competitive to attract investment. A $500 million plant, which will create 500 jobs, that CSL has decided to build in Switzerland is evidence of how Australia is already losing out, chief financial officer Gordon Naylor said.
Despite Switzerland’s high labour costs and strong currency – two drags also faced by Australian manufacturers – a range of factors led CSL to decide it was the best location to manufacture new products to treat haemophilia. These factors included CSL’s existing plant in the Swiss city of Bern and a lower corporate tax rate, Mr Naylor said. The average corporate tax rate in Switzerland is about 18 per cent according to KPMG, compared to 30 per cent in Australia.
The therapies that will be manufactured in Switzerland come from research and development that CSL undertook in Australia. Mr Naylor said if Australia had a tax scheme similar to the UK’s patent box, it would have made the decision to overlook CSL’s original home more difficult.
The Australian biotechnology industry, including companies such as Cochlear, advocate such a tax regime. The UK has moved to tax profits from locally manufactured goods from local patents at 10 per cent, compared to the normal tax rate of 23 per cent.
Outside of tax, Mr Naylor said there is an understanding in Switzerland, from management to the factory floor, that the strong currency and high costs mean the country’s manufacturers have to be more productive.
To decide on the new plant’s location, the Melbourne-based company took 18 months to consider factors including tax, labour and sovereign risk for 23 countries. CSL then sought proposals from four shortlisted locations, including Australia. Mr Naylor said the Swiss government was very supportive in terms of finding land and “expeditiously” managing approvals. “These countries like Switzerland they get it that they’re competing,” he said. “[In Australia] there’s actually not a national imperative to compete.”
