Australian medical researchers are looking for a share of an unprecedented boost to public research funding as the Australian government responds to the global financial crisis.

Australia's 2009–2010 federal spending on science and innovation will soar 25% year on year, a commitment welcomed by the Federation of Australians Scientific and Technological Societies, a research industry association, as “exceptional” and “well above expectations.”

The 2009–2010 budget allocates an extra AU$430 million ($340 million) for health and medical research, AU$596 million more for cancer research and a 12% increase in funding for basic research through the National Health and Medical Research Council.

A major reform of tax incentives will offer a 45% tax credit for research and development (R&D) spending by firms with annual revenue of less than AU$20 million, available as a cash refund for firms not earning taxable revenue.

Larger firms and those undertaking R&D in Australia for which the intellectual property is held offshore will be eligible for a 40% tax credit.

Rebecca James, chief executive officer of advocacy group Research Australia, says the changes offer considerable help to small companies who spend on eligible R&D.

The local pharmaceutical industry, however, says changes to the Pharmaceutical Benefits Scheme, which subsidizes retail medicine prices, will cost the industry AU$175 million over five years.

Medicines Australia chief executive Ian Chalmers also rejects the move to require the industry to fund the scheme's advisory committee.

“It is fundamentally inappropriate for the industry to pay for government procurement decision making,” Chalmers says.