South Australia’s vaccine funding proposal risks trouble for Coalition in Victoria

CSL is investing $2bn into a world-class export-orientated vaccine operation without the need for government money. Picture: Getty Images

Black swan events often cause surprise election results. Six months before the last election you could see that Labor’s franking credit bungles had the potential to create such an event.

Fast forward to 2021 and another corporate bungle is on the horizon. But this time it is the ­Coalition that faces the danger.

Whereas the franking credits bungle covered the nation, the ­Coalition’s potential corporate bungle is concentrated on one company and one state – CSL and Victoria.

CSL is an outstanding Australian corporate success story, having found a remarkable path through the jungles of the world pharmaceutical industry. Its market value of $135bn makes it the largest non-bank company on the ASX.

Most companies that go global forget their Australian origins, but CSL stunned the world pharmaceutical industry by embarking on a $2bn export-based expansion centred in its home city of ­Melbourne.

The CSL projects represented the biggest private investment in Australian medical research and pharmaceutical product manufacturing in Australia’s history. here was no government money involved.

There are three closely linked parts to the $2bn expansion:

● A regional vaccine hub including $800m for a new influenza vaccine facility at Tulla­marine and an mRNA plant based on local technology next door.

● A $900m new plasma base fractionation facility supplying medicines to Australia and the ­region.

● The two production facilities will be backed by a $350m global research centre being built in Melbourne alongside CSL’s new headquarters. And that research investment will be further enhanced by the CSL links to the nearby research facilities at Melbourne University and the Walter and Eliza Hall Institute.

Overseas pharmaceutical companies simply do not contemplate commitments of this magnitude to Australia.

The commonwealth is responsible for vaccines, so naturally CSL officials discussed their plans with Canberra public servants. As I ­reported on August 20, CSL soon ­realised that an “ABV” (Anything but Victoria) view had infected parts of the Canberra public ­service.

Nevertheless CSL proposed to the government that it would erect a mRNA vaccine plant next to its influenza vaccine facility to complement its massive research and other vaccine investment. Unlike the $2bn plan, CSL requested government assistance for the mRNA plant.

CSL is a global pharmaceutical giant and has refused to become engaged in local politics.

South Australian Premier Steve Marshall picked up the Canberra “ABV” vibes and encouraged a US company, BioCina, to back a rival mRNA vaccine project in his state based on overseas technology. SA has an excellent medical network so Marshall is perfectly entitled to do that, but he wants the federal government to fund part of the project. So now the government must chose between turning their back on both projects, choosing one or both.

CSL sees Australia as the base for a massive regional research, development and production hub. It is possible the commonwealth will now undermine this by excluding CSL from part of the local market while trying to enable the Coalition to retain control of SA.

It would be outrageous for the commonwealth to back a rival plant to the disadvantage of the ­locals. In my view, if it wants to throw money at mRNA plants it must give the same deal to all parties.

Closely watching these events is Victorian Premier Daniel Andrews. The Victorian government linked with CSL and Walter and Eliza Hall in a small pharmaceutical industry incubation project so it understands the drama that is unfolding but has remained silent.

If the commonwealth backs SA and does not treat Victoria equally, Andrews has the issue he has been looking for to take the focus from his Covid-19 controversy.

He will almost certainly declare that Scott Morrison and the commonwealth has finally declared war on Victoria. While Andrews is ahead in the opinion polls, the recent protests showed there is an enormous opinion tide running against him. If Morrison hands him a weapon, he will use it with great skill to attack the so-called “prime minister of NSW” who will now have SA added to his title. The huge defence funds going into SA will become controversial.

As readers know, I am not a fan of Andrews, but he has no peer in Australia with his ability to crystallise issues in short, sharp barbs.

Andrews will make it uncomfortable for the Prime Minister to come to Victoria during the election campaign. Victorians understand vaccine politics better than people in any other state, so the community fury will be intense. It will undermine Victorian Liberal leader Mathew Guy, who has announced a $2.5bn plan to boost Victorian manufacturing.

If the government desperately wants to be involved with the SA project, it should consider following the precedent it set with CSL’s AstraZeneca plant. There was a small investment but it was made economic by a take or pay contract. That formula should be applied equally to both mRNA projects.

Meanwhile, CSL as a $135bn global company wants to distance itself from politics, whether it be in Australia or anywhere else in the world. It will let the facts speak for themselves.