BRASH, Mr Sebastian, Senior Policy Manager, Tech Council of Australia CASSIDY, Ms Rebekah, Chief Executive Officer, Aus Biotech Ltd CORNICK, Ms Kate, Chief Executive Officer, Tech Council of Australia NAVE, Mr Chris, Aus Biotech Ltd PRASAD, Ms Navleen, Chief Executive Officer, Australian Investment Council WADDELL, Ms Vanessa, Aus Biotech Ltd CHAIR: Welcome. I understand that information on parliamentary privilege and the protection of witnesses giving evidence to Senate committees has been provided to you. I now invite you to make a short opening statement. At the conclusion of any remarks, I'll invite members of the committee to ask questions. Perhaps we'll go to the Tech Council of Australia first. Ms Cornick : Thank you very much for the opportunity to be here today. The Tech Council of Australia represents startups and scale-ups in almost every sector of our economy, including health, education, energy, agriculture, cybersecurity and beyond. As a sector, tech is now the second-largest in Australia, contributing nearly a quarter of a trillion dollars to GDP and employing nearly a million people. I'm five weeks into my role as CEO of the TCA, having previously led the Victorian government's startup agency. Over the last decade, the number of tech startups in Victoria increased fourfold. Their valuation grew 20 times from $7 billion to $139 billion, and they created nearly 67,000 new jobs. There are few industries that can claim this growth, but realising it isn't easy. Having helped thousands of Australians working Australians with entrepreneurial ambitions, I've seen the risks taken by founders who leave stable employment to build a company, risks taken by investors who backed them early before they knew they were profitable, risks taken by employees who forfeit secure income for equity, hoping a future exit will reward their work and help them create a better future. In Victoria, data showed that only one in four founders actually managed to raise capital in the first place to get their startup idea off the ground. When they do get investment, global data shows that 70 per cent will fail, 25 per cent will return the investment to the investors, and only five per cent will actually create a return on investment. Productive risk taking must be rewarded. We acknowledge what the government wants to achieve with broader tax reform package, including housing affordability and a fairer tax system, but the proposed CGT reforms will see early stage startup equity taxed more heavily than the passive assets the reforms are meant to target. We support broader concessional capital gains treatments that incentivise the creation and scaling of truly innovative, high-growth businesses. The concessions should be set when the equity is acquired and run for the life of the investment, providing certainty that when productive risk is taken that it will be rewarded. This is consistent with peer innovation economies. Without a technical adjustment for startups, Australia risks becoming an outlier. While most founders may not begin their startup journey with the government's tax savings front of mind, if no change is made, they'll quickly learn the hard way that talent and capital are mobile. If you cut the after-tax rewards for founders, employees and investors, the negative impact quickly compounds, investors back away, fewer founders will get the capital they need to grow, or they move overseas to more attractive innovation ecosystems. They will find it harder to attract skilled employees from safe jobs and stable firms. That's a poor outcome for budding entrepreneurs but it's a poorer outcome for Australia, for our productivity, for jobs and for our ability to build new industries that will assure the success of our economy for future generations. Australia has challenges: flatlining productivity, declining R&D spend, stagnating per capita growth. At the same time, we are preparing to undergo significant transformation through energy transition and the impacts of new technologies like AI. Our ability to mitigate and, importantly, capture the opportunities will depend on our ability to foster new, high-growth, innovative businesses that can develop scalable products and services with global appeal from here—Australia. Let's not give them a reason to forfeit before they're even out of the starting gate. Ms Prasad : Thank you for the opportunity to contribute to the committee's work. It's good to appear alongside the Tech Council and our Aus Biotech colleagues, whose work is complementary to ours. The Australian Investment Council is the peak body for private capital investors, venture capital and private equity funds, superannuation and pension funds and other institutional investors. Collectively, the council's members support 700,000 jobs, back 2,200 companies, mostly SMEs, and add $120 billion to the economy each year. These are the people and organisations that allocate capital and invest it into startups and unlisted, high-growth companies that are supporting national priorities, rebuilding resilience, underpinning a more dynamic and competitive economy, and ensuring that we keep making things in Australia. Investors in companies such as sustainable packager BioPak, phone mounting manufacturer Quad Lock and Total Artificial Heart developer BiVACOR do more than write a cheque. They put financial and human capital to work to build founder and team capability, develop product, and expand into new markets. These investments deliver competition and choice in our economy. We agree that tax settings are a lever for government to increase the supply and affordability of housing, and there's been an extensive national discussion on this topic. At the same time, Australia's economy is not growing at the rate needed to sustain living standards. Just six months ago, the Productivity Commission stated, 'The most important driver of productivity is new ideas' and 'investment, both public and private, fuels innovation and growth'. Productive risk sits at the heart of these two statements. It is the third type of earnings alongside personal exertion and owning assets, and it was somewhat overlooked in the framing of the CGT changes. Productive risk requires ideas, talent and capital—three legs of the one stool. If any one of these legs are broken, the stool falls over. There are two issues that put a sturdy stool at risk. First is a zero or low-cost base, which is an issue for both technology and non-technology businesses. Indexation is of no benefit. If you index a zero-cost base, you end up with zero, resulting in a far more punitive outcome than for other taxpayers. Second is Australia's competitiveness relative to peer countries. Under the changes, CGT rates will be between 30 and 47 per cent, which is about twice that of the US and the UK. Relativities matter. As a middle-power economy, Australia does not set the global market yet we compete against G7 economies for capital and talent. The impact of these weaknesses and the role of tax settings should not be underestimated in a world where capital and ideas are mobile, and where talent has choices. Canada recognised this last year when it cancelled CGT increases in, as Prime Minister Carney said, 'recognition of the vital role that builders and small business play in shaping Canada's future'. In Australia, the CGT discount has underpinned venture and growth capital policies, which have been supported by the parliament over the past two decades. For example, the Venture Capital Limited Partnerships program and its early-stage version have, since inception, channelled more than $36 billion of investment, backed more than 3,000 companies and galvanised more than 16,000 investors. It is an example of the tax system as a driver of desired behaviour that is a feature of tax systems all around the world, not a distortion. In this case, the desired behaviour is taking productive risk that grows the economy, strengthens it and keeps our best assets onshore. Thank you. We're here to answer the committee's questions. CHAIR: Thank you. I see we've got your statement as well, circulated, so we can incorporate that. Mrs Cassidy : Thank you for the opportunity to appear today. Life sciences, including biotechnology, medical technology and healthtech, contributes to the health of Australians, our economy and our sovereign resilience. Life sciences already employs around 350,000 people in Australia. It is valued at more than $250 billion and has cumulatively been Australia's largest value-add export industry outside primary industries since 2016. The proposed changes to capital gains tax and their intersection with proposed changes to the research and development tax incentive will drive these numbers and this contribution down. The process to deliver new health technologies to patients is rigorous by necessity and well known to take more than a decade. The cochlear, for example, took more than 15 years. Along the way, founders face extraordinary scientific and clinical risk. For those who do succeed, most remain pre-revenue for well beyond a decade while continuing to invest heavily in local Australian R&D. The current CGT framework rewards risk in this non-revenue environment, where capital is locked up for many years and success is far from guaranteed. The proposed changes would weaken that incentive at precisely the point when Australia needs more people willing to start, fund and scale innovative life sciences companies right here. They specifically risk weakening employee equity arrangements, which are the only way that some Australian life sciences companies can compete on salaries with their peers overseas. The CGT changes combined with proposed changes to the research and development tax incentive create a double threat and a policy environment that supports the science in Australia but not necessarily the commercialisation of that science and the jobs that come with that activity. Together, these new tax pressures would deeply impact both sides of the life sciences equation—the capital needed to start and scale companies and the cash flow needed to keep them here. Our members are already telling us that they are reconsidering where future investment, clinical trials, manufacturing activities, intellectual property and headquarters will be located. Today, I am joined by Chris Nave, the founding partner and managing director of Brandon Capital, one of Australia's leading life sciences venture capital investors, and Vanessa Waddell, chief strategy officer at PolyActiva, a Victorian-based biotechnology company developing world-leading therapies for eye conditions. We are grateful for your time today and welcome any questions you may have for us. CHAIR: Thank you very much. We'll go to Senator Chandler first. Senator CHANDLER: All of my questions today can be answered by each of you. So I'll try and keep them as pointed as possible. When did you each first hear about these tax changes from the government? We might go to the tech council first. Ms Cornick : I actually started my role the week directly prior to budget, and the very first meeting that I had was with the council on this issue. We certainly brought it to the attention of government prior to the budget. Ms Prasad : We became aware of a possibility of the changes being more broad-based through coverage in the media. We raised issues related to our sector with government upon receiving that. Senator CHANDLER: Prior to the budget? Ms Prasad : That was prior to the budget, yes. Senator CHANDLER: Biotech? Mrs Cassidy : We became aware of the changes and the impacts on our sector on budget night. Senator CHANDLER: I thought that would be the case with you. Perhaps then, to the tech council and AIC, what consultation was undertaken with you before the budget announcement? Or did you have to proactively raise your concerns with government? Ms Cornick : We had listened to the government, so we did write a letter to government before the budget. Ms Prasad : Upon hearing or reading about the media coverage, we provided information to the government prior to the budget. Senator CHANDLER: And was there any response to your letter, from the tech council, or the information that the AIC provided to the government before the budget was handed down? The tech council can go first. Ms Cornick : We did not enter into a consultation with government before the budget was handed down. We met after the budget. Senator CHANDLER: AIC? Ms Prasad : We didn't enter into consultation with government until after the budget. Senator CHANDLER: Treasury have said that the CGT discount as it previously existed overly benefited higher risk, higher return businesses. The AIC might be best placed to answer this one. Does that align with your understanding of the investment landscape in Australia? Ms Prasad : I probably wouldn't think about it in a relative sense in that way. If I look at what the CGT discount has done, particularly for the venture and high-growth sector in Australia over the last 20 years, the entire policy architecture for venture and growth investment has been predicated on the CGT discount. As a result of that, and as I had mentioned in the opening statement—we started in the early 2000s post the dotcom crash. We pretty much had no venture capital sector in Australia at that time. Through policy settings that have been supported by parliament over the last 20 years, we now have a sector, at least through the venture capital and the early-stage venture capital limited partnerships, which has channelled $36 billion of capital into the venture and growth sectors. I would argue that, if we didn't have that policy support, we wouldn't have companies like Canva or Employment Hero with us today. Senator CHANDLER: Aus Biotech might be well placed to answer this next question. If the government is serious about productivity and innovation, should it be increasing the tax burden on successful risk-taking? Mrs Cassidy: From the perspective of biotech, which is an inherently high-risk, high-reward sector, I would say that we exist in a highly competitive global environment. We have countries globally and many of our peer nations actively competing to retain and attract life-sciences capability, and the investment and the highly skilled job creation that come with that as well. It is important that Australia creates a holistic policy and taxation environment that supports more of Australia's growing biotech, medtech and healthtech companies—and we do have more of them in Australia now—being able to stay onshore. Mr Nave : As the largest life-science investor in the country, to talk about it over-benefiting innovation investors is the wrong way to look at it. The risk of failure is so high in the technology sectors, including biotech. When I think about investment, I don't think about my maximum return. The reality is that for every 10 investments I make, five of them will go to zero; I'll get no return. If I'm lucky, I might get my money back on two or three of them—so I need that one investment or maybe two investments that generate return to generate a higher return to make the overall scheme work. With property, even in a property downturn I've still got something to sell. The CGT has attracted capital to these innovation sectors. Without that reward, when you actually get a winner, my real concern is we'll see a fleet of money running away from these high-risk sectors, when you compound the risk and also the timelines it takes to generate a return. Senator CHANDLER: I might ask this question of the Tech Council, although I note Mrs Cassidy foreshadowed this. How does Australia stack up compared with our international peers as an attractive place for high-tech investment? Ms Cornick : I think over the past decade, as Navleen referred to, there have been legislative changes and a development in the architecture in Australia that's encouraged a flourishing venture capital system. Right now we are holding our own, and we've seen the ecosystem develop quite substantially over the past decade. But we have concerns that, if the CGT changes go ahead as proposed, we would be an outlier and Australia would look very different compared to peer economies—the US, the UK, Singapore et cetera. Mrs Cassidy: For life sciences, we are seeing globally that a number of our peer nations, as I said before, are actively seeking greater life sciences capability in their markets. Many of those markets are actively using tax incentives, grant funding, patent boxes and procurement preferences for technology, as well as investor incentives to attract life-sciences companies. The UK has its patent box regime that taxes qualifying R&D income at 10 per cent. Singapore offers a range of targeted R&D incentives, accelerated capital allowances and a highly competitive personal tax regime, of course. The United States offers a federal R&D tax credit, state-level incentives and a deep pool of specialist venture capital as well. We would be happy to provide more information on some of those incentives to the committee, after, if required. Senator CHANDLER: Are any of you aware of any modelling that Treasury or the government might have done regarding the impact of these changes on the competitiveness of your sectors? Mrs Cassidy : We are not, in life sciences, aware of any modelling from Treasury on the impact of these changes on our sector. Senator CHANDLER: Anything from Tech Council? Ms Cornick : Not for us. Senator CHANDLER: No, I didn't think so. Have you done any modelling of the impact of these changes on your sectors? Mrs Cassidy : We have done a small amount of modelling, just on the impacts that we would expect to see—and our submission did include this data as well, on a few scenarios to illustrate the potential impacts. On the scenarios that we modelled, we saw an increased tax burden of 92 per cent for founders, 107 per cent for employees on employee share plans and 77 per cent for investors. Ms Prasad : We certainly know that, for any company or anyone that has a zero or a low cost base, when you move from effectively what is a 23½ per cent tax rate, based on the top marginal tax rate, to 47, that is going to be a more punitive impact than on any other taxpayer under those changes. Senator CHANDLER: Anything from the Tech Council on that? Ms Cornick : We presented some data in our submission on the impact and we've certainly done some very high-level modelling scenarios, but we have not done a comprehensive model. Senator CHANDLER: Just finally, would you support a further set of inquiries—and I'm happy to hear everyone's views on this—to land better tax settings to support investment in Australian tech companies, before these changes that we're inquiring into today are passed? Mrs Cassidy : We do believe that further consultation is absolutely required on these changes. Senator CHANDLER: AIC? Ms Prasad : The process is a matter for government, and we work with what we are given in terms of the process and the timeframes that are involved. Senator CHANDLER: This has been a pretty quick timeframe, though, hasn't it? Ms Prasad : It has been a quick timeframe. I would say that, I've seen policy consultation processes that have gone for eight weeks, six weeks, four weeks or two weeks, over the course of the last 20-odd years that I've been in public policy. So I would provide that context around that answer. Senator CHANDLER: Mr Nave? Mr Nave : As an industry participant who is not a member body—so perhaps I can speak more freely—to me, it doesn't make sense. The unintended consequences of these changes are damaging emerging industries that are going to create the future jobs and income for the country. So more time to think about these impacts, I think, is essential. Senator CHANDLER: The Tech Council? Ms Cornick : We've been having conversations with government that have been positive, and the government's sensitive to our issues. As Navleen said, we're expecting a consultation paper to come forward from government, and we await that. Senator CHANDLER: Just quickly, when do you expect that consultation paper to come forward? Ms Cornick : We're waiting. We're following what's in the media. We understand the public statements that have been made. We don't have any advice on exact timing for that, but we are certainly waiting for it. Senator CHANDLER: So you haven't been given any indication from the government as to when that consultation paper will be delivered? Ms Cornick : No, we have not. Senator CHANDLER: Even though the parliament will most likely deal with these legislative changes at some point in the next two weeks—wow! I'll leave it there. Thank you. CHAIR: Senator McKim. Senator McKIM: Good afternoon, folks. Thanks for your time. Firstly, for Aus Biotech: can you talk the committee through how biotech, medtech and healthtech companies differ from other startups—and not just in the context of the way capital gains are taxed but also in terms of R&D tax settings? Mrs Cassidy : Absolutely. There are a number of unique aspects of biotech, medtech and healthtech companies. The first, of course, is the very long timeframes that are absolutely required, by necessity, to produce products that help and save lives. These products go through well over a decade of research, preclinical testing, clinical trials across multiple phases, regulatory approvals, market access approvals. The timelines are long, but they are long by necessity, which means that the vast majority of our companies remain prerevenue for very long periods of time. A biotech company can invest $50 million to $150 million in R&D over more than a decade before generating a single dollar in revenue, for instance. This is unlike other sectors in many ways. There is a case study in our submission, in relation to our Argenica Therapeutics, which illustrates this clearly. This is a company that was founded in 2019. It is conducting phase 2 clinical trials today, with first expected revenue in 2034, which is 15 years after incorporation. The investment risk for our sector is high and sustained, as, I think, Chris has already spoken to. The probability of a therapy entering clinical trials and then eventually reaching market is seven per cent. It does vary across disease and technology types, of course, but that's on average. Investors and founders are regularly medical scientists, so they specifically accept that risk, because they believe in the products that they are creating, in many instances, of course—but also understanding that, when products do come to market, there is also high reward. The potential capital requirements for biotech also come very late. When we talk about biotechs undertaking research and development activities after 10 years, we're actually talking about their most intensive phases of R&D. This is when companies are undertaking late-phase clinical trials—stage 2B, stage 3 clinical trials. They are large scale. They require clinical manufacturing. As, I think, Chris has said multiple times in other forums as well, this is the period when these companies are working out where they're laying down their clinical manufacturing as well. So there is, in the later stages of development, high-intensity R&D, which also has high job creation and high productivity. It does mean that government has, for a very long time, recognised the difference of our sector. The 2025 national health and medical strategy issues paper pointed to average 17-year timelines. The Medical Science Co-investment Plan from 2024 talked about a decades-long process. So the uniqueness of our sector is well understood by government. The double impact of the CGT changes and the RDTI changes—including the proposal to include a new, 10-year limit on the refundable RDTI—is particularly problematic for our sector, given those long timeframes by necessity. Senator McKIM: That's really helpful. I'll just offer the Australian Investment Council and the Tech Council the opportunity to respond to that question—if you wish. Ms Prasad : I think there are probably a couple of things. One is—and I think I echo Rebekah's comments—there are some particular issues for biotech, particularly around the length and the duration of development. I do think it's also really important to focus on—we've talked a lot about the zero-cost-base issue for tech companies in particular. It is not just a tech company issue, and a great example of that is companies that are in distress and that also have zero- or low-cost bases. A really great example of that is Toll Global Express, which was a logistics business owned by Japan Post. It was in distress under its previous ownership; there was no way to structure that company out or return it to some form of profitability. It was acquired by a strategic investor, and, as a result of that, it saved 8½ thousand jobs around the country and is trialling hydrogen trucks. I go back to what I said in my opening statement: whether it's in biotech, in tech, in software or in some of these businesses, this is not just putting cash into a business; it is actually providing a human capital support as well, whether that's strategic support and the like. Senator McKIM: I will come to the issue of companies with a zero- or low-cost base shortly, but I just want to see whether the Tech Council want to respond specifically in regard to biotech and healthtech. Ms Cornick : We completely agree with the comments that Rebekah from Aus Biotech made. We would also add that there are other areas of deep tech that have exactly the same challenges, where there are deep technologies, extended timeframes and the need to develop and manufacture product. We certainly see that in the quantum space, for example. We see it across almost every sector of the economy, including in climate tech. We spoke to Climate Salad only last week about some of the challenges they have about very extended timeframes for some of their deep technologies. I also share concerns around the research development tax incentive. We have consulted with our members and shared our concerns with them, particularly around the 10-year timeframe that's being applied to the refundable offset, as well as the proposed removal of supporting R&D activities. Senator McKIM: That's helpful. The issues around the proposed indexation adjustment on companies with a zero cost base or a low cost base have been fairly well ventilated in the public debate. I think they're reasonably well understood by this committee, including by virtue of the submissions that have been made. What proposals would you put to this committee that would mitigate or avoid some of those issues, but still result in an equitable tax treatment for capital gains? Ms Prasad : We have an existing policy framework and architecture that has been phenomenally successful in growing startup, scale-up and growth businesses in this country. It is by no means perfect. No set of policies is perfect. The track record would suggest that it's been highly effective not only in terms of backing startup and scale-up companies but also in terms of bringing capital into this sector. The competition for capital is pretty fierce out there. It's not just a geographic competition. It's also an asset class competition. As a country, if we want to see companies start here, build here and stay here, we need to see capital coming into this particular part of the sector. I cited the Venture Capital Limited Partnership and the early stage version of that as being really good examples of successful policies that have had long-term support by government. The employee share scheme rules are another excellent case in point. As Rebekah mentioned in her opening statement, I think that in some cases it is the only way in which startup or small companies can compete with larger companies for high-quality talent. Again, it's another good example of some of the existing policy architecture that's been very effective. Senator McKIM: Aus Biotech? Mrs Cassidy : I would say that, with regard to specific definitions and solutions, it's clearly very complex. We, with our members, have been thinking about different characteristics of the innovation sector and life sciences that set it apart a little. We have had conversations around existing definitions as well, including the R&D tax incentive eligibility criteria and the R&D intensity criteria, as well as innovation tests. Our view is very much that these need to be worked through the correct modelling with Treasury to avoid unintended consequences. Senator McKIM: Tech Council? Ms Cornick : We agree with what's been said. I think the biggest challenge is actually identifying who the target audience is. As I said in my opening remarks, we're focused on innovative, high-growth startups as a category. There are certainly international examples that we can look to, but we don't want to pre-empt the government's process. As I said earlier, we are waiting for the consultation paper. Senator McKIM: Thanks. CHAIR: Senator Pocock. Senator DAVID POCOCK: Thank you for your time this afternoon. Have any of you have had input into the paper that the Treasurer is reportedly going to release this week about a workaround for tech and biotech startups? Ms Cornick : I'll go on behalf of the Tech Council. We have certainly met with government, but we have not had direct input into that paper, nor have we cited it. Unidentified speaker: Could you please repeat your question? You weren't quite clear. Ms Cornick : Apologies for that. I said we have had conversations with government— Unidentified speaker: No, the senator, not Kate. We didn't quite hear Senator Pocock's question in full in the room. Senator DAVID POCOCK: I was saying: have you had input into the paper that the Treasurer is going to release this week about a workaround for tech and biotech startups and small businesses with low or zero cost base? Mrs Cassidy : We have been continuing a range of conversations with government over the past few weeks. With regard to any particular input into the paper, I could not— Mr Nave : We're not aware of it. Mrs Cassidy : Yes, I'm not aware of that. Ms Prasad : Like my colleagues who have already provided answers, we've been engaged in conversations with government about the issues and the impacts, but I'm not aware of the extent to which any of that feedback will be in any policy paper. Senator DAVID POCOCK: As part of that, has anyone been asked to sign NDAs as part of consultation? Ms Prasad : No. Mrs Cassidy : No. Ms Cornick : No. Senator DAVID POCOCK: Great. That's good to hear. This is for the Tech Council, what percentage of your members are smaller scale startups, and what percentage are bigger, more established tech companies? Ms Cornick : I'm afraid I will have to take that on notice, because I've only been in the role for five weeks, so I'm not deeply familiar with the membership base yet. But we do have representation across the board, and we've certainly hosted roundtables with different segments, including the smallest of startups as well as scale-ups. So we have a representation, but we will certainly get you the precise breakdown. Senator DAVID POCOCK: In terms of startups, why do you believe that the early-stage innovation company can't provide a framework for protecting investment in those businesses? Ms Cornick : The early-stage investment company regime we certainly see as a very useful mechanism. It's been in place. We don't feel it's broad enough, and we've certainly spoken to a number of companies, as well as venture capital funds, that are not using it. One of the key issues that we have identified is that, in Australia, about 70 per cent of first-time investments happen through a SAFE note—that's an agreement for future equity—and those particular agreements are not allowed to be counted as part of the ESIC regime, so 70 per cent of investments that are taking place in the environment that ESIC is targeting don't count. There's also a requirement to achieve certain milestones within a timeframe. In order to be eligible for ESIC, you have to be under three years old and have spent under $1 million. There are plenty of companies, including in the biotech industries, that either overspend on the million-dollar target or are over three years old before they seek their first investment. So the scheme is a useful scheme, but it is by no means exemplary of the entire early-stage ecosystem. While we see that it is a useful marker, it is too narrow, and it certainly wouldn't satisfy us in its own right as an individual marker for an innovative company. Senator DAVID POCOCK: Is that expansion of ESIC, the early-stage innovation company framework, something that you've put to government. Ms Cornick : We have not directly put that to government through the Tech Council. With another hat, I was a member of the panel for Strategic Examination of R&D. We produced our Ambitious Australia report last year, and in that we did encourage an expansion of the ESIC regime. We certainly recognise that an expansion of that regime could be a good thing, but whether that would go broad enough would be a question that we would continue to have. We certainly see that there are a lot of companies that do not qualify for that regime. We would need to see it quite significantly expanded before we would be satisfied that it would provide a sufficient carve-out for innovative high-growth companies. Senator DAVID POCOCK: On the SERD review, Robyn Denholm took a slightly different view recently, saying that Australian startup founders need to 'stop whingeing about government policies and focus on building globally competitive companies for the artificial intelligence era'. What do you make of that? Ms Cornick : I do agree with Robyn that, while most founders don't start their startup journeys thinking about government tax settings, the reality is that they do make a difference to early-stage founders. It's certainly something that Robyn and I share and discuss through the SERD committee at great lengths: the importance of having a really vibrant early-stage ecosystem, including making sure that we've got a supportive environment to support investment so that investors are choosing to back Australian companies so standards get the capital they need to grow so that they can hire the employees that they need to scale so that we create success. That success will then flow back into the ecosystem; therefore, we set off a flywheel. That was set out very clearly in the SERD review. Senator DAVID POCOCK: Finally, given the Treasurer flagged that there were potential changes for startups for tech and biotech, is it a concern that it doesn't sound like you feel like you've had direct input into whatever workaround is potentially going to be announced? Ms Cornick : We feel like we've had a very positive consultation with government. We have not seen the final outcome of what's in the consultation paper, and we wait for that, but we hope to see that the information we've been sharing is encapsulated. As I said, we'll wait to see that paper before we can comment on that. Senator DAVID POCOCK: Do you know when that is? Ms Cornick : I'm afraid we don't. Senator DAVID POCOCK: Thank you very much for your time. CHAIR: I think Mr Nave wanted to add something else? Mr Nave : If I could, I want to make two points. The first point is about ESIC. I've been investing in biotech companies for over 20 years in Australia. We've not been able to utilise ESIC on any occasion, and I've invested in over 68 Australian companies during that time. It's not fit for purpose for biotech, because of not only the capital caps but also the short timeframe to remain eligible. So I want to make the point that it is not fit for biotech. The second point I wanted to address is the concept that founders are complaining about tax changes. I would suggest that it's not founders complaining about tax changes; it's founders really concerned that this will see a flood of capital leave the sector, and the only thing that enables founders to develop their technologies is access to capital, so maintaining incentives for capital to stay in the innovation sectors is essential for them to continue to grow. Senator DAVID POCOCK: Well said. Thank you very much. CHAIR: Thank you. I've got one question. I think the Tech Council alluded to this in an earlier answer to Senator McKim, when talking about some of the approaches from overseas, and I think it was with regard to investors with a low- or zero-cost base. Noting what you said, in terms of the consultation paper coming et cetera, could you talk a bit about what those approaches are that we could potentially consider or learn from? Ms Cornick : Absolutely. There are different schemes, and I note that my colleagues have also touched on this in their applications as well. CHAIR: Yes. Ms Cornick : We've certainly looked at the United States. They've got a qualified small-business stock scheme, which exempts up to 100 per cent capital gains. In Singapore, there's no CGT regime—same in New Zealand. In Canada, they have got a lifetime capital gains exemption for buying small-business shares, and that should see an effective tax rate of between 24 and 27 per cent. And in the UK the Business Asset Disposal Relief provides 18 per cent for founders and qualifying shareholders. So there are certainly schemes that we can look to overseas that drive competition. I think it was Rebekah at Aus Biotech that noted the competitive landscape and that many countries are working hard to build industries not only in life sciences but also more broadly in quantum, in AI, in robotics and other areas. We are working in a globally competitive landscape, and it is very fortunate that Australia is seen as being highly competitive and is able to attract, attain and grow businesses that are going to lead to future prosperity for all Australians. Ms Prasad : If I may add to that, the programs that Kate is talking about—I agree that they have been very effective in their respective jurisdictions—operate alongside headline CGT rates that are far more competitive than what we would be moving to in Australia. As I said, in the US, headline CGT rate is 23.8 per cent; in the UK it's either 18 or 24 per cent. So you do need to look at these two things together. CHAIR: Yes, we've heard some commentary about that throughout the last day and a half. Thank you very much for your time and for coming today. We appreciate it..