Pitt Street Research Life Sciences Conference

I am very pleased to speak at the Pitt Street Research Life Sciences Conference.

The Liberal National Coalition is a big believer in the scientific and economic importance of Australia’s life sciences and biotech sector.

I want to speak firstly today about the strength and potential of the sector, including factors which give us a competitive advantage.

Next, I want to argue that policy settings under this Labor Government are selling the sector short.

Third, I want to touch on what you could expect from a Coalition Government.  While I will not be making any policy announcements, I will be pointing to the track record of Coalition Governments over the past ten or more years as an indicator of the approach we will bring to bear should we return to government at the next election. 

Let me turn firstly then to what has been achieved by the Australian life sciences and biotechnology sector to date – and the potential that the sector holds for the future.

According to a study by KPMG, there were 810 Australian biotechnology enterprises in 2022, up 66 percent on the number in 2008, and the workforce rose 51 percent over that period. The largest segment of the sector is human health, which generates more than half of Australia’s biotechnology revenue.

This reflects Australia’s strength in health and medical research. This is one of our strongest research areas, with over 60 per cent of research outputs ranked as ‘above’ or ‘well above world standard’.

Our strength is evidenced in the number of clinical trials carried out in Australia. Pharmaceutical, biotechnology and medical device companies commence around 1,000 new clinical trials each year, representing approximately A$1 billion in investments.

Several factors equip us well to host so many clinical trials: skilled clinical trial researchers, English-speaking population, availability of secure and advanced infrastructure, a seasonal difference to northern hemisphere markets, a trusted regulatory system, and advanced digital capabilities.

Our diverse patient pool, thanks to our status as one of the world’s most multicultural countries, also positions us well globally in terms of testing. 

Australia’s location in the Asia-Pacific region, and our established trade agreements, help put us in a good position to emerge as a significant supplier of biotechnology products and processes.

Being physically closer to export markets can be a particular benefit for both food and medical products, which often demand cold chain distribution. When I was working on Western Sydney Airport as Minister for Urban Infrastructure, the pharmaceuticals export opportunity was one we did a lot of work on.

Another factor which bodes well for the sector is that Australia’s leading universities and research institutes have strong capabilities in oncology. 

We are fortunate to have some significant biotech companies in Australia, including 

• CSL Limited, Australia’s only commercial-scale vaccine manufacturer and Australia’s largest biotechnology company.
• Amgen Australia, which develops human therapeutics.
• Gilead Sciences, a biopharmaceutical company with a focus on viral diseases, inflammatory diseases and oncology.

My electorate of Bradfield, in northern Sydney, is only a few minutes away from the important life sciences cluster at Macquarie Park, with its extensive array of pharma companies and other life science businesses including Cochlear, located at the Hearing Hub at Macquarie University. 

Such clusters are very important to the vibrancy of knowledge sectors like life sciences; internationally clusters like Route 128 in Boston are home to a wide array of biotech businesses.  Australia’s clusters – such as Macquarie Park, or Parkville in Melbourne, or the cluster around Monash University – are similarly important for the growth prospects of this vital sector. 

While Australia, as I have argued, enjoys a rich endowment of strengths in the life sciences, not all is rosy.  Sadly, current policy settings under the Albanese Labor Government are not conducive to boosting growth in the life sciences sector. I want to highlight three problems.

The first is that science portfolio funding is falling under this government. Science funding for 2024-25 was $480 million, compared to $494 million in the Coalition’s March 2022 Budget. 

Since the May 2023 Budget, Labor has made further cuts, including terminating $452.4 million over the forward estimates for the Morrison Government’s ­National Space Mission for Earth Observation program. 

The second problem is this government’s wide array of anti-business, anti-investment policies.  It has driven up the price of energy markedly, with many manufacturing businesses reporting gas and electricity prices up by ten, twenty or thirty per cent. It has made the industrial relations system markedly more cumbersome and expensive, discouraging businesses from hiring more staff. 

It is making a range of changes to the rules governing personal investments.  These include imposing extra taxes on superannuation balances exceeding three million dollars, and recent attempts to change the eligibility requirements to comply with the sophisticated investor test, the latter being quietly shelved by Minister Stephen Jones following industry backlash. The Government’s moves in these areas are likely to reduce the number of Australians in a position to invest in early stage companies.

The third and perhaps most troubling issue is Labor’s appetite to spend public money on making specific bets on particular technologies and businesses, under its so called National Reconstruction Fund and its Future Made in Australia policy.

Labor has announced a one billion dollar commitment to supporting solar panel manufacturing in Australia.  This money will almost certainly be vaporised because it is very unlikely Australia can match the scale economics of the huge Chinese solar panel industry.

The Albanese Labor Government has also announced almost a billion dollars of taxpayers’ money will be handed to an American company called PsiQuantum. 

This decision which raises very serious questions. How were PsiQuantum chosen? Why did they get this funding and a whole range of Australian based quantum companies did not? 

Why is it that several months after Minister Ed Husic visited PsiQuantum in Silicon Valley, the government then conducted an expression-of-interest process which on any analysis was a reverse-engineered sham? Its rules said that participants were not allowed to speak to Australian government officials – when PsiQuantum had been given the opportunity for months to speak with Australian government officials up to and including the Minister. 

Nobody – not even genuine quantum experts who have spent their life working in this field – knows for certain whether quantum computing is going to work and, if so, which variant is going to work.

For this reason, venture capital investors – in quantum as in many other fields - typically place bets across multiple different companies and technologies.

But now Labor is setting itself up as the biggest, baddest, most risk-loving venture capitalist of all time, with a huge bet on one technology (quantum computing), one particular path to turn that technology into a commercial product (photonic qubits), and one particular company following that path (PsiQuantum).

Extraordinarily, just weeks after Labor announced this spending, there was another announcement by the government of the US state of Illinois: they too are doing a deal with PsiQuantum to build a fault tolerant, error corrected computer, and putting in USD 500 million. It seems the Australian government was too clueless even to negotiate exclusivity in exchange for its huge financial commitment. 

Sadly, this kind of amateur hour approach to science and industry funding is the current government’s modus operandi.  It is certainly not a plus when it comes to maximising the prospects of Australia’s life sciences and biotechnology sector.

Let me turn to the approach you could expect the Coalition to bring to bear should we return to government at the next election. I want to highlight four major themes:

• A focus on getting research out of the lab and into the marketplace
• A focus on attracting private sector investment 
• Backing sectors where Australia has strengths 
• Not trying to pick winners.

A key theme for the Coalition will be getting research out of the lab and into the marketplace.  We know that Australia has deep, world class capacity in life sciences research.  I have certainly been very impressed with what I have seen in the many universities and institutions I have been able to visit in my time as Shadow Minister for Science. 

Visits to Murdoch Children’s Research Institute in Melbourne, the Hunter Medical Research Institute in Newcastle and the Menzies Research Institute in Hobart have helped me understand the role of these specialised institutions. It has also given me an appreciation for way that their research is enabled and strengthened by close day to day connections with the large hospitals they are affiliated with.

Similarly, the depth and quality of research done in Australian universities is very evident, whether it is at James Cook University’s Australian Institute of Tropical Health and Medicine in Townsville, Flinders University’s work through its Medical Devices Research Institute work, creating new assistive technologies for rehabilitation, or Monash University’s work on preclinical models to study prostate cancer through its Biomedicine Discovery Institute.  The size of the teams at these institutions and the world class expertise they have is very evident.

The Coalition thinks it makes sense to focus our policy energy on supporting work to get the fruits of this research out of the labs and into the marketplace.  This is so for economic reasons, obviously – there are significant economic returns to be captured if a particular drug or treatment enters into widespread use around the globe.

But it is also key if this research is to benefit humanity. Consider the experience of the COVID pandemic.  Scientific work was critical to develop the new vaccines. But it took the global manufacturing and distribution capabilities of the big pharma companies like AstraZeneca and Pfizer to get billions of doses of vaccines delivered. The same is true of Australian success stories like the cervical cancer vaccine Gardasil. 

This thinking was key to the decision of the Morrison Government to establish Australia’s Economic Accelerator, a $1.6 billion program announced in February 2022.  This program was designed to reshape research funding in Australia, to emphasise projects with a high potential for commercialisation. As then Prime Minister Morrison said, “Stronger commercialisation of research and ideas will mean a stronger economy and a stronger future for Australia.”

Our next priority when it comes to science policy will be working to attract and stimulate private sector investment into the commercialisation of scientific and technological research.  This is complementary to – but not the same thing as – the focus I have already discussed on getting discoveries from the lab to the marketplace. 

The Coalition specifically believes that involving private sector capital is critical.  We differ from the current government which all too often thinks that the way to succeed is to throw large sums of public money at a particular project – with their fundamentally misconceived cash splash in PsiQuantum but one of many examples which could be given.

A key reason why attracting private sector capital matters is that doing good research and development work in life sciences is expensive and capital intensive.  It requires investments in high-tech equipment, costly materials, and a highly skilled workforce. 

Stimulating more private sector investment in innovative companies has been key to our policy approaches over the last decade or more. It was a central focus of the 2015 National Innovation and Science Agenda (NISA). 

Under NISA there were important changes to the tax system to incentivise private investments in eligible early‑stage companies with high growth potential.  These incentives included a 20 per cent non‑refundable non- refundable tax offset on investment, capped at $200,000 per investor per year; and a new 10 year capital gains tax exemption for investments held for 12 months or more.

Another element of NISA was establishing Main Sequence Ventures, a venture capital fund operated by CSIRO, with private sector participation, to invest in early stage businesses which are commercialising technology.  

It was the Howard Government in 2007 which established the Early Stage Venture Capital Limited Partnership (ESVCLP) as an investment vehicle to facilitate investment in early and growth stage innovative companies. As part of the NISA, the Turnbull Government made further reforms to the ESVCLP structure which were very successful in stimulating further investment. 

Such a focus on attracting private sector investment into the commercialisation of scientific discoveries will remain central to the Coalition’s approach. 

Backing sectors where Australia has strengths 

Let me turn then to the next important principle: backing sectors where Australia has strengths.

There is always a delicate balance to be struck here. It is important that our science funding is supporting fundamental research across diverse areas of science. Very often it is impossible to know where such research will lead and whether it may have any practical or commercial application. 

But at the same time we have to recognise that funding is finite and Australia is a country of 26 million people in a world of eight billion. We punch well above our weight in the number of papers produced, the global rankings of our universities and so on – but nevertheless from first principles it makes sense to try to develop particular areas of strength in research, where we can develop world class expertise. 

This was certainly part of our thinking when the Coalition in 2015 established the Medical Research Future Fund (MRFF).  We recognised that the scale and excellence of Australia’s medical research sector – and not coincidentally of our broader health system – made it logical to have a particular focus on research in this sector. 

Nearly ten years on, the MRFF is well established as one of the main sources of funding for Australian medical research along with investment through the National Health and Medical Research Council and Australian Research Council. 

Of course, government funding is one very important policy tool in playing to our strengths.  But another increasingly important tool is the rules and governance we establish around data.  Australia has excellent population level health data, covering a population which is very ethnically diverse, as I discussed earlier.  Our data is a significant national asset, particularly in a world where artificial intelligence tools are being developed at a furious pace in the health and medical sector.

Australia has some remarkable success stories in this area, such as Harrison.AI.  Their Australian developed AI tool supports radiologists in interpreting patient scans, with increasingly impressive accuracy.  According to the company their technology is now used by about a quarter of Australian radiology practices. 

But developing such tools requires them to be trained on large volumes of data – and that means that high quality public health databases such as we have in Australia are a very valuable national asset.  I was discussing this issue recently with a Professor of Artificial Intelligence and Machine Learning, who raised his concern that he is seeing examples of access to such databases being provided to foreign companies – without recognising just how much value we are giving away.  This is certainly an issue that the Coalition in government would want to focus on. 

The last theme I want to highlight in our approach to science policy is not trying to pick winners.  Some might ask if there is a tension between this principle and the principle of having a focus on our strengths.  In my view the answer is emphatically no, and again I think quantum computing is a good case study.

There is no doubt that Australia has significant strengths in quantum computing. We have multiple companies well advanced on different research and development paths, including Silicon Quantum Computing and Diraq – both spin outs from the University of New South Wales; Quantum Brilliance – which is a spin out from Australian National University; and Q-CTRL – a spin out from Sydney University.  The Coalition has no concerns at all with the concept of providing funding for quantum computing research, and indeed we did precisely that while in government. 

What you will not see however, under a Coalition Government, is a Minister making a personal decision to back one particular company pursuing one particular technology path, and putting a very large sum of money into that particular company.  Such an approach is entirely the wrong way to go about science funding, and we will not be doing it.

Let me conclude then with the observation that life sciences and biotechnology constitute a sector with huge potential to improve our quality of life, and to generate very substantial economic value.  Australia has strong endowments when it comes to being globally competitive in this sector, and we can be optimistic about our future prospects.

The Coalition believes that our policy settings, when it comes to science funding and more broadly, should back the growth prospects of this sector.  Unfortunately we are not seeing a rational or well designed strategy under the current Labor Government.

But should the Coalition return to power, you can expect us to continue to apply the principles which we brought to bear when last in government to support fundamental research; to support the commercialisation of research; to get discoveries of out the lab and into the marketplace; and to stimulate more private capital to come into this sector.