LIFE SCIENCE companies are losing millions of dollars in investment that is instead allocated to software because investors misunderstand the benefits of investing in the sector, a prominent venture capital fund said today.

Stoic Venture Capital partner, Geoff Waring said private investors were wrongly deterred from pursuing life science companies and this was leading to millions of dollars-worth of lost opportunities for the industry. 

Software start-ups attract around 70 percent of venture capital investments, compared with life science which attracts around 15 percent and other categories such as hardware, clean energy and advanced manufacturing which attract even less, Dr Waring estimated.

“Investors tend to prefer software companies over life science because of an erroneous belief that life science requires more capital per product so the returns will be more attractive,” he said.

“Offsetting this is the ability of life science discoveries to be platform technologies. One successful clinical trial can make it easier to launch other products derived from the underlying technology.” 

Mesoblast, a listed cell therapy company is an example, Dr Waring said. If one application is approved by regulators, it will be easier to get approval for the wide range of diseases treatable by their stem cell therapy platform.

Similarly, a life science drug that enhances immunity would be able to both prevent and treat multiple diseases.

Dr Waring said there were many new health companies springing up that would become ever-more critical to communities because of Australia's ageing population.

“More people are living longer, with one or more chronic or complex health conditions,” Dr Waring said. 

“Health technology has huge potential to improve patient experience, outcomes and quality of life and this makes it very valuable for all stakeholders.”

Dr Waring said the multiple stages of clinical trials for gaining regulatory approval were milestones for evaluating health tech companies.

Too many investors were deterred by erroneous assumptions, he said, including that there were few exit opportunities in a pathway to market for a drug or treatment that could take 10 years to reach that market.

“A preference for faster returns is a key reason why investors shy away from health technology,” Dr Waring said. “People believe it will be a decade before they get their money back.

“But there is a common exit opportunity at the end of phase 2 trials, before any revenue is generated, which can be as low as a three-year holding period. A software company might wait seven years to get their revenue to a level where it is acquired.

“If investors manage the risk of individual technologies by diversifying across companies, health care is less affected by downturns, has very strong patent protection and scalable production that present valuable solutions for both communities and investors.”

www.stoicvc.com.au

About Stoic Venture Capital

Stoic Venture Capital provides financing for early-stage companies, particularly those arising from university research. Stoic is unconditionally registered as an Early Stage Venture Capital Limited Partnership (ESVCLP) and takes a collaborative approach to investing in the highest potential companies. Atlas Advisors Australia AFOF is the major limited partner for the fund. 

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THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell has urged struggling small business owners to reach out for help on World Mental Health Day, October 10.

“This year, the World Mental Health Day focus is to campaign for greater investment in mental health services as the COVID crisis takes a heavy toll on wellbeing globally,” Ms Carnell said.

“The enormity of the lockdowns and the psychological distress this has caused for small business owners cannot be underestimated.

“Given small business loans are often secured against the family home, it means if the business goes bust they can lose their home. This is a key factor impacting small business owners’ mental health right now.

“The good news is that Australian governments at all levels have recognised and substantially boosted mental health support in the wake of increased demand over the course of this pandemic.

“Just this week, the Federal Government committed $4.3 million in the Budget to rolling out a new mental health program for small business owners, called NewAccess for Small Business.

“This new program has formed part of the government’s $5.7 billion commitment to mental health, including $100 million to double the number of Medicare-subsidised sessions with a psychologist from 10 to 20 per year," Ms Carnell said.

“The NewAccess service, to begin early next year, will provide small business owners with access to free one-on-one telehealth sessions with specially-trained mental health coaches.

“Crucially, the NewAccess coaches providing support to small business owners on strategies to manage stress, actually have experience in small business themselves. This approach will make a real difference," she said.

“My office will be working in partnership with Beyond Blue to promote NewAccess and connect small business owners with the service via our call centre and assistance team.

“Finally, my message to small business owners on World Mental Health Day is this: You are not alone," Ms Carnell said.

“It’s vital to seek help if you need it. Our My Business Health web portal provides free practical resources to help with running your business and also links to leading mental health organisations such as Beyond Blue.”

Watch Kate Carnell’s World Mental Health Day video here.

www.asbfeo.gov.au

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THE Tax Practitioners Board (TPB) has terminated the company registration of Sydney based agent TLL Tax Pty Ltd (TLL) for misconduct and banned them for two years.

The TPB determined TLL breached the Code of Professional Conduct in the Tax Agent Services Act 2009 relating to competency, honesty and integrity and noted TLL attempted to rort the COVID-19 stimulus Cash Flow Boost for over $20,000.

The investigation into the case focused on two clients and highlighted that TLL had breached the TPB’s Code of Professional Conduct in the following ways:

• TLL had changed the bank account details of its clients to those of the agents company director, Liying Tong, without authority.
• Lodged income tax returns and business activity statements on behalf of one client who was no longer trading, without their knowledge or authorisation, which included false amounts.
• When confronted by the first client TLL subsequently lodged unauthorised amendments to the client’s tax returns and business activity statements.
• Lodged a further business activity statement for the second client, reporting an amount that the client was not aware of and which could not be substantiated.

In the investigation, it was found that two days after the falsified refund had been received, Ms Tong had contacted the first client and made an offer to purchase the client’s business, which the client declined.

Following this Ms Tong offered to apply for COVID-19 related stimulus funds in return for a commission, despite knowing that the client was ineligible to receive the stimulus benefits as it had not been trading.

With the second client, TLL had reported false turnover amounts, to dishonestly qualify them to receive a Cash Flow Boost payment, which it was not eligible to receive.

Unjustified Cash Flow Boost and GST claims of over $20,000 were subsequently paid into a bank account held by the company’s director, Ms Tong.

This payment was retained by the agent and transferred to another of their accounts and not passed onto the client. 

TPB chair Ian Klug said the misconduct of TLL and the company’s director, Liying Tong was of grave concern to the TPB.

"To fraudulently claim COVID-19 stimulus payments affects the entire Australian community and takes advantage of the pandemic situation we are all living under," Mr Klug said.

"Ms Liying Tong was in a position of trust, operating in an uncertain environment, and she abused that trust."

The TPB is asking that if people become aware that an agent is attempting to make a fraudulent claim against the COVID-19 stimulus measures that they contact the TPB immediately.

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THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell said Labor’s alternative Budget plan to make childcare cheaper, would deliver essential support to women in small business.

Ms Carnell's comments follow Labor Leader Anthony Albanese’s Budget reply speech, during which he pledged $6.2 billion over three years to increase rebates on childcare fees for all families.

“About 38 percent of small businesses are owned and operated by women, many of whom have been hit hard by the COVID crisis and rely on childcare as they work to get their businesses back up and running again,” Ms Carnell said.

“Right now childcare is unaffordable for many women in small businesses, particularly those who have businesses that have been severely impacted by COVID restrictions.

“We know this recession has had a disproportionate impact on women and with childcare fees remaining unaffordable, mothers – more often than not – need to spend more time at home to look after their kids. It’s bad for small business and even worse for the economy.

“There is an overwhelming economic case for affordable childcare, with many credible economists arguing it would boost the participation rate and deliver significant productivity gains.

“Crucially, affordable childcare would allow more women to work on growing their businesses – an important contribution to Australia’s economic recovery.”

www.asbfeo.gov.au

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THE IMPACT of natural disasters and COVID-19 in 2020 has affected lives all over Australia, and now the Parliament’s Electoral Matters Committee has launched an inquiry into the future conduct of elections in emergency situations.

Committee Chair Senator James McGrath said this year’s COVID-19 pandemic in particular had underscored that emergency situations can and do arise during election periods.

"From health pandemics to natural disasters, international conflict or civil unrest, we want to find out whether our electoral law and the Australian Electoral Commission are as prepared as possible for unusual events or disruptions in the future," Senator McGrath said.

"We have a healthy and secure electoral system but we need to make sure that in all scenarios barriers are identified early and issues worked through before they are needed so that everyone can have their say."

The Committee would particularly like to hear from constitutional experts; emergency management services; cyber-threat experts; Commonwealth, State and Territory governments and agencies; disability and inclusion advocates; Indigenous peak bodies and voters; and electoral commissions.

"We’ve seen from the Eden-Monaro by-election, as well as elections in Queensland, the Northern Territory and the Australian Capital Territory, that measures are already being put in place to deal with COVID-19," Senator McGrath said.

"I’m very interested in taking the lessons learned from these examples, as well as next month’s state election in Queensland, and seeing how they might apply on a federal level."

As part of the inquiry, the Committee will examine the short and long term impacts of unexpected, rapidly developing external events that could substantially interrupt normal voting, election administration or campaigning, including contingency plans for an increased demand in alternative voting options.

The Committee invites written submissions addressing any or all of the terms of reference. Information on how to make a submission may be found at the following link. Submissions are requested by November 13, 2020.

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THE parliamentary inquiry into the destruction of Indigenous heritage sites at Juukan Gorge will hold three public hearings next week where it will hear from witnesses including the Puutu Kunti Kurrama and Pinikura Aboriginal Corporation (PKKP), Rio Tinto, and the Western Australian (WA) Government.

In its submission, the PKKP Aboriginal Corporation were critical that Rio Tinto had not protected the gorge, despite the PKKP, as well as anthropologists and archaeologists, providing Rio with information on the significance of the Juukan rockshelters.

Following their previous appearance at the inquiry, Rio Tinto has provided additional information to the Committee suggesting that it had held discussions with the PKKP prior to the destruction of the rockshelters and that the significance of the site was well understood by both sides at the time contracts were signed.

The WA Government has also provided additional information to the inquiry, particularly around features of its draft Aboriginal Cultural Heritage Bill and the role of its proposed Local Aboriginal Heritage Services.

Northern Australia Committee Chair Warren Entsch said the upcoming hearings would be a critical juncture in terms of the Committee’s work.

“We are looking forward to hearing from the PKKP to get their perspective on how the tragedy unfolded and what impact it has had on their community," Mr Entsch said.

“One of the key objectives of this inquiry is to look at what needs to change to ensure that Indigenous heritage is better protected in the future. Part of that is really digging into what went wrong at Rio and how it allowed this to happen.

"The other part is about strengthening legislative protection, and so we look forward to hearing what the WA Government is doing to ensure that we never have another situation like the destruction that occurred at the Juukan Gorge," Mr Entsch said.

Public hearing details

Date: Monday, 12 October 2020
Time: 12pm to 3pm AEDT
Location: By videoconference/teleconference

Date: Tuesday 13 October 2020
Time: 11am to 4pm AEDT
Location: by videoconference/ teleconference

Date: Friday 16 October 2020
Time 12pm to 3pm AEDT
Location: by videoconference/teleconference

The hearings will be broadcast live at aph.gov.au/live.  Programs are available on the Committee’s website.

Further details of the inquiry, including terms of reference, can be found on the Committee’s website.

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THE Federal Budget bringing forward Stage 2 of the legislated tax cuts and backdating them to July 1, 2020 is a welcomed boost for the economy and small business says the Institute of Public Accountants (IPA).

IPA chief executive officer, Andrew Conway said the economic benefits of the retrospective component, however, may not translate into ringing cash register sales as soon as Treasury expected.

“The unfortunate news about the retrospective nature of these tax cuts is that they may not be realised by some until the end of the calendar year, which reduces the immediate impact on the economy,” Mr Conway said.

“The ATO is unable to retrospectively deal with the PAYG overpaid for the first quarter of the financial year.  Therefore, many salary and wage earners may not get the ‘backpay’ for the months of July, August and September as instantly as first thought.

“If you take someone who was going to receive the maximum benefit of $2,564, one quarter of this amount ie $641 has already accrued and will not be immediately available to stimulate the economy as intended.

“The ATO has communicated that it will not be adjusting withholding tables to pick up the overpayments.  Doing so could create the scenario where taxpayers find themselves underpaying tax during the year and having a tax debt to deal with when they lodge their annual return. It could potentially lead to another robo-debt situation," he said.

“In any other given year, with a Budget in May, this issue would have been mitigated as the lag time between the end of the financial year and changes to tax tables would have been quite short. In addition, tax table changes are normally adjusted prospectively to start from 1 July of the next financial year, so we are dealing with uncharted waters. 

“Treasury’s ideal scenario is that this money would be out in the economy as soon as possible and being spent so that the sugar hit delivered by the tax cuts was more immediate.  

“We had hoped that single touch payroll may have allowed for the flexibility to deliver the desired outcome. However, this does not seem to be the case," Mr Conway said.

“However, all is not lost. Taxpayers earning income outside of wages and salaries can immediately take advantage of Stage 2 tax cuts by varying down their quarterly instalment in the September BAS which is due on October 28, 2020.  Small business entrepreneurs are mostly unincorporated entities and therefore are also beneficiaries of the Stage 2 tax cuts.

“We are encouraging all our members to vary down PAYG to take advantage of this initiative,” Mr Conway said.

About the Institute of Public Accountants

The IPA, formed in 1923, is one of Australia’s three legally recognised professional accounting bodies. In late 2014, the IPA acquired the Institute of Financial Accountants in the UK and formed the IPA Group, with more than 38,000 members and students in over 80 countries. The IPA Group is the largest SME focused accountancy organisation in the world. The IPA is a member of the International Federation of Accountants, the Accounting Professional and Ethical Standards Board and the Confederation of Asian and Pacific Accountants

www.publicaccountants.org.au

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THE CLIMATE COUNCIL has welcomed new modelling showing the economic benefits of the Project EnergyConnect interconnector between South Australia and New South Wales. 

"Not only will South Australian homes and businesses see energy savings when the NSW-SA interconnector is delivered, the transmission line can also unlock thousands of new jobs and economic opportunities," Climate Council CEO Amanda McKenzie said.

"The Climate Council's Clean Jobs Plan shows that 2,500 jobs can be created across South Australia by investing in renewable energy, storage and transmission. 

"This project can cement South Australia as a leader in the energy transition and will accelerate progress towards the state's net 100% renewable energy target, delivering the urgent emissions reductions we need to tackle climate change.

"Households, businesses, workers, and the climate all win when the SA-NSW interconnector goes online. We call on all parties to support this important, job-creating project,” Ms McKenzie said.