Government must stand firm on IP in trade negotiations - Sky AM Agenda





SUBJECT/S: Trans-Pacific Partnership negotiations; Start-ups; Prime Minister’s Economic summit.

KIERAN GILBERT: Welcome to AM Agenda. With me this morning is the Shadow Assistant Treasurer, Andrew Leigh. Andrew, thanks for your time. I want to explore the Trans-Pacific Partnership negotiations; they've hit a stumbling block. My advice from Atlanta this morning is that the trade talks are about 50/50 chance of getting across the line according to advisers on the ground. What's your take on this issue about intellectual property and the pharmaceutical industry in the States? They want a 12-year freeze on their intellectual property, can you explain to our viewers what we're talking about here?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Yes, Kieran. The conversation has gotten down to a class of drug called biologics which are a new class of medicine – large molecules rather than small and synthesised from living matter. They've got great potential and there's a large range of biologics in areas like cancer, asthma and diabetes. They enjoy patent protection for 20 to 25 years but in most countries they also get data exclusivity which means someone trying to copy a biologic can't use the data which went through clinical trials for a period. That period is five years in Australia at the moment but 12 years in the United States. And the Americans would like us to go to their duration. That obviously raises the costs for our health system if we're going to be using more and more biosimilars that push up the cost to the Australian taxpayer.

GILBERT: But apparently this is the one stumbling block so far, at this very late point in these negotiations across the dozen nations of the trade negotiation. Does Labor support the Government on this, in standing firm against the US pharmaceutical lobby?

LEIGH: Absolutely. We're deeply concerned that the Government doesn't cave in on this. It's really important for the Australian consumer and Australian taxpayer to not blow out our health budget. What it illustrates too, Kieran, is that many modern-day trade agreements now aren't about bringing down tariff barriers, they're about other issues. So the conversation we've been having about the Chinese agreement, for example, isn't about trade barriers at all – it's about migration provisions. The conversation we're having with the Americans now is about intellectual property.

GILBERT: And actually greater protection?

LEIGH: Indeed.

GILBERT: Their position would see greater protection, not freer trade in this space?

LEIGH: Exactly. When I look around most markets in Australia, I’m concerned that there's too much monopoly power being exercised. So I wouldn't want a situation in which we extended the power of monopolies for drug manufacturers even further.

GILBERT: Ok, now the Financial Review is reporting that David Coleman, a Coalition backbencher and a tech industry veteran, has proposed an idea for start-ups in the tech space with a turnover of less than a million dollars and in operation for less than two years. That is, they’d be free of any capital gains tax as an incentive for entrepreneurs. Do you like the sound of that?

LEIGH: I'm a big fan of boosting start-ups in Australia, Kieran. We rank too low on many of the international innovation indices. But any time you're doing anything with the tax system you've got to be really careful that you have a good economic justification for introducing another loophole. Saul Eslake, in an important speech last week, said that our personal tax system is a bit too much like Swiss cheese – there are too many exemptions and not a broad enough base. I don't think that the case has yet been made that a tax break is the most efficient way of encouraging start-ups. Labor's plan which Bill Shorten, Chris Bowen, Jason Clare and Ed Husic recently announced has things like an entrepreneur’s year for 2,000 students, a challenge platform which encourages innovation in the Government sector and new entrepreneurial visas. These are more carefully targeted measures which don't have the potential long-term effect on the tax base of putting another Swiss cheese hole through it. 

GILBERT: Indeed. It makes sense when we look at the broader debate about taxation, where it's at, with the revenue problem versus the spending problem. Just quickly, we've only got about 30 seconds left but the economic forum – the Prime Minister's summit last week – was encouraging and the ACTU was apparently pleased to at least be around the table with a Liberal Prime Minister. Are you encouraged by the sounds you're hearing from the Government on that stuff?

LEIGH: Yes, very encouraged. I've now realised that any time I have a meeting with more than eight people, I need to be calling it a summit. The conversation taking place is good, but what we now need to see is action from the Government on things like renewables, and proper answers on climate change like a price on carbon pollution rather than slush fund to polluters. That's what Malcolm Turnbull has stood for in the past. He has previously said that his leadership would be marked by strong action on climate change including a price on pollution; let's see if he delivers.

GILBERT: Mr Leigh, good to see you.

LEIGH: Thanks, Kieran.



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