Pre Budget Submission calls for greater investment in health and medical research and innovation

Research Australia’s Pre Budget submission to the Treasurer ahead of the 2024 Budget has made the case for increased investment in Australian health and medical research and innovation to support a healthier and more prosperous Australia.

The Australian Government’s investment in R&D is below the OECD average.

There is an additional $323 million approved for release from the MRFF in 2024-25 that the Government is not investing in medical research and innovation.

The Universities Accord process provides the ideal opportunity to increase the investment in the NHMRC, ARC and indirect research costs.

We have advocated for a greater role for the Australian Centre for Disease Control, for the greater use of Government procurement to support Australian innovation, and for the full development of the National HMR strategy and workforce strategy.

Read Research Australia’s submission here.

 

Getting better value from the MRFF and the NHMRC’s MREA

 

In May the Department of Health announced a national consultation focused on optimising the government’s funding arrangements for health and medical research by improving strategic alignment and coordination between the MRFF and the NHMRC’s Medical Research Endowment Account. Research Australia welcomes this initiative and the commitment that this reform will be undertaken within the broader context of a new National Health and Medical Research Strategy, a long-term campaign by Research Australia (and others).

Following consultation with our membership, Research Australia has made a submission in response to the Discussion paper.

Unified governance of the MRFF and the MREA presents a real opportunity to ensure the MRFF Priorities are developed with greater regard for what the MREA is funding, thereby ensuring better differentiation and complimentarily of the two funds. There is also an opportunity to address equity and health disparities through more coordinated and streamlined funding.

Research Australia has largely supported the proposed Model 2 as a way of improving coordination while recognising the distinct objectives and purposes of the two funds. Establishing one administrative funding body provides the opportunity for successful research projects to graduate more seamlessly from one funding program to the next including from an NHMRC program to an MRFF program. T

This new model must be delivered in such a way that preserves the MRFF’s funding for medical innovation, and that input from outside academia and medical research institutes is retained. Stakeholders from commercialisation, finance, and industry have a meaningful advisory role in both the priority setting and funding processes of the MRFF. Basic research can be funded by the NHMRC in a way that will ultimately support MRFF Priority areas if the two funds are better aligned.

Finally, a Workforce Plan must form part of the broader national HMR Strategy. This Workforce Plan should seek to address the challenges faced by early and mid-career health and medical researchers and identify careers/jobs critical to a future economy underpinned by a thriving innovation and modern manufacturing sector.

Consultation on changes to align the MRFF and MREA are ongoing and Research Australia is continuing to liaise with the Government on the sector’s behalf on these important reforms. If you would like to get involved please contact Research Australia’s General Manager Lucy Clynes at lucy.clynes@researchaustrlaia.,org or Head of Policy Greg Mullins at greg.mullins@researchaustralia.org

Research Australia’s submission is available here.  

New MRFF Strategy 2021-2026

Research Australia welcomes the release of the Australian Medical Research and Innovation Strategy 2021-2026, which sets clear objectives to support and foster Australian HMR to meet future health needs. This is a definitive step towards tackling the challenges and opportunities presented by the pandemic so that we emerge with a stronger health and medical research sector, capable of delivering better health and economic prosperity for Australians. Research Australia’s consultation Health and Medical Research – Australia can do better! seeks your input on how we do this. Visit our consultation hub and let us know your views on the key reform areas here.

For more information about the MRFF Strategy and Priorities, visit our webpage here.

A new Strategy for the MRFF

Research Australia’s submission in response to the consultation on the new MRFF Strategy 2021-26 and related Priorities has proposed several critical changes:

    • It has emphasised the need for the Strategy to provide more guidance about how the MRFF should be invested.
    • Greater engagement with health systems in the states and territories is essential, as is a focus on preventive health.
    • The Strategy needs to address how evidence arising from the research and innovation funded by the MRFF is embedded into the health system.
    • The new MRFF strategy should identify and address gaps in skills and capability that prevent the implementation of evidence into practice into our health system.
    • Infrastructure funding priorities for the MRFF should be developed in consultation with Department of Education Skills and Employment and state and territory governments, to ensure research infrastructure is funded where needed and complements other programs and initiatives.
    • The Strategy should propose a mechanism for better differentiating the funding programs of the NHMRC and the MRFF. The Strategy should also propose the development of a national HMR strategy to better coordinate funding for HMR from all sources, in much the same way the first strategy proposed a whole of government approach to addressing funding for the full cost of research.
    • COVID-19 has highlighted the particular difficulties facing early- and mid-career researchers. The Strategy could commit the MRFF to considering how the design of the MRFF’s funding programs could better support EMCRs.
    • The effects of COVID-19 in our region provide the opportunity for the strategy to consider how Australia can use its research capability to support our neighbours’ response to and recovery from COVID-19, as an exemplar for broader engagement on regional health issues.

Read Research Australia’s submission here.

The new MRFF Strategy, for the period from 2021-2026 was subsequently published on 2 November. It is available here.   More information about the MRFF Strategies and Priorities is available on our website here.

Changes to MRFF investments and disbursements

The Investment Funds Legislation Amendment Bill 2021 will:

    • change the way the MRFF is invested,
    • allow the annual disbursements from the MRFF to be set for a period of up to five years, and
    • change the period for the MRFF Strategy and Priorities to six years and 3 years respectively (currently 5years and 2 years.)

In its submission to the The Senate Finance and Public Administration Legislation Committee Inquiry, Research Australia has welcomed the changes, which have the potential to increase the funds available from the MRFF to fund research and innovation and provide greater stability. Research Australia has urged the MRFF Act be amended to make it explicit that the capital value of the MRFF is to be maintained in the long term.

Research Australia’s submission is available here.

Research Australia monitoring important new MRFF legislation

The Government introduced the Investment Funds Legislation Amendment Bill 2021 into Parliament on 25 August. If passed, it will, among other things, fix the amount of funding disbursed from the MRFF for five years at $650 million per annum. At the end of the five-year period, the investment performance of the MRFF will be assessed to determine if sufficient earnings have accumulated over the period to raise the annual rate of disbursement. This five-year review period will become a permanent feature of the MRFF.

The MRFF 10-year Investment Plan introduced by the Government in the 2019 Budget has allocated roughly $550 million per annum over the period to 2027-28. The proposed legislative change will allow these commitments to be met, while providing approximately $100 million per annum for new commitments and programs.

This change is about reducing the volatility in MRFF disbursements that arises because of the link to annual investment returns. This volatility caused the Government to tip in $175 million to MRFF disbursements in December last year to keep the MRFF 10-year Plan on track.

Research Australia will be closely monitoring performance of the MRFF and continuing to advocate for fund growth to mirror the growth of the health and medical research sector. While fixing the disbursements, as is proposed by the legislation, provides certainty as to how much we can expect to see disbursed from the MRFF every year, we are seeking clarity as to whether this amount will be indexed. At a bare minimum, the MRFF should keep pace with inflation. Research Australia members remain concerned that other key funding streams like the ARC and NHMRC are not indexed to CPI, meaning they don’t keep pace with inflation and, in real terms, are funds in decline.

The Senate Finance and Public Administration Legislation Committee is undertaking an Inquiry into the Bill and is due to report back to the Senate by 14 October.

For further information or to contribute to Research Australia’s submission, please contact Lucy Clynes, General Manager at lucy.clynes@researchaustralia.org

Improving approval processes for new drugs and medical technologies

Research Australia has responded to the Parliamentary Inquiry into the Approval Processes for New Drugs and Medical Technologies.

Opportunities exist to change our approval processes to benefit patients and better support research and development in Australia. Faster and more effective approval processes mean new medicines and technologies reach patients faster. Improving the environment for clinical trials enables Australian patients to benefit from the latest medicines and technologies developed overseas while also helping Australian health and medical research to flourish in a competitive and lucrative world market. Research Australia’s submission identifies some of these opportunities with the twin objectives of improving Australians’ health and prosperity.

Research Australia’s submission is available here.

The Committee is expected to hold public hearings in early 2021.

Research Australia proposes new MRFF Priorities

Research Australia has a made a comprehensive submission to the consultation on the new MRFF Priorities 2018-2020.

Working with our broad membership, Research Australia’s approach was to start with the Strategic Platforms and examine every Priority and all the existing and proposed funding programs.  We looked at how well they were aligned, where the gaps were, and what wasn’t working. Research Australia gratefully acknowledges the contribution made by our members through discussions and the exchange of ideas and proposals.

Research Australia proposes that four Priorities be retained in their current form and that a further seven be retained but amended. We also propose five existing Priorities be discontinued and six new Priorities created. Research Australia’s response to the consultation is available here.

With the consultation period now completed, the next stage rests with the MRFF Advisory Board which is responsible for developing and issuing the next Priorities. We wish the Board well with this important task and look forward to seeing the new MRFF Priorities towards the end of 2018.

 

Budget 2018-19 | Budget Analysis

Summary

The 2018 Federal Budget provides an optimistic forecast for Australia’s economic future, with increased revenue and several new funding announcements, as might be expected of an election year Budget. The health and medical research and innovation sectors have not missed out, with confirmation the Medical Research Future Fund remains on track to reach its capital target of $20 billion by 2020-21 and the announcement of a long list of MRFF funded projects stretching over the next decade (well in advance of the current two year funding priorities).

Consistent with Research Austrlalia’s earlier calls, including in its Pre-Budget Submission, the Government will direct $240 million of MRFF funding to a Frontier Medical Research program to develop innovative medical ideas, research devices and treatments.

A $500m Australian Genomics Health Futures Mission will help more than 20,000 Australians live longer and receive better treatment tailored to their needs.

The Government has announced plans to cap the funding available under the refundable R&D Tax Incentive at $4 million per year. While the caps will probably be more than enough for most small companies developing a new product, such a cap could have had a significant impact on small companies developing new medicines and therapies. However, the Government has heard our arguments and in a really positive development it has announced that clinical trials will be excluded from the cap.  This is a great outcome for the health and medical research and innovation sector.

While there is some good news for tertiary students in rural areas with increased funding for sub-bachelor and bachelor programs and new rural medical programs in Victoria and NSW, the cuts announced last year remain.

In other news we have funding committed to research infrastructure.

Read on for more detail.

Medical Research Future Fund

$20 billion in capital by 2020-21

As at 31 March 2018 the MRFF had $6.7 billion in capital. Tonight’s budget confirms that the MRFF remains on track to reach the target of $20 billion in capital by 2020-21, with a forecast balance of $20.2 billion at 30 June 2021. $2.3 billion is scheduled to be added to the capital in the next financial year. The heavy lifting comes in financial year 2019-20, when $7.8 billion is forecast to be added to the MRFF capital balance. This is likely to be after the next Federal election.

MRFF Capital

$m.
17-18 18-19 19-20 20-21 21-22
Capital to MRFF 2,242.199 2,288.550 7,830.490 2,409.476 Nil

Funding from the MRFF

Forecast spending from the MRFF also remains as expected, with more than $222 million available to fund medical research and innovation in 2018-19, rising to $646 million by 2021/22, the first year after the MRFF reaches full capitalisation of $20 billion. Total funding provided by the MRFF up to and including 2021-22 is forecast to be just shy of $2 billion.

MRFF expenditure

$m.
17-18 18-19 19-20 20-21 21-22
Funding (2018 Budget) 143.315 222.383 392.703 650.236 645.951

Funding Announcements

The Budget included numerous announcements of further funding to be made in the next financial year and further years, including:

  • $125 million over 10 years from 2017-18 for a Million Minds Mental Health Research Mission to support priorities under the Fifth Mental Health and Suicide Prevention Plan;
  • $75 million over four years from 2017-18 to extend the Rapid Applied Research Translation program that supports Advanced Health Research Translation Centres and Centres for Innovation in Regional Health;
  • $18.1 million over four years from 2017-18 for a Keeping Australians Out of Hospital program to support preventive health, behavioural economics and reduce avoidable presentations to hospital;
  • $39.8 million over four years from 2017-18 for a Targeted Health System and Community Organisation Research program with a focus on comparative effectiveness studies and consumer-driven research; and
  • $17.5 million over four years from 2017-18 for research into Women’s Health and research into Maternal Health and First 2,000 Days to address the underlying social determinants of health that impact on a child’s early days of life.

The Government also announced that it will provide $1.3 billion from the MRFF over 10 years from 2017/18 for a National Health and Medical Industry Growth Plan to improve health outcomes and develop Australia as a global destination for medical sector jobs, research and clinical trials. The announcements include:

  • $500 million over 10 years from 2017-18 committed to the Genomics Health Futures Mission, including $10.7 million in 2017-18 for genomics research;
  • $240 million committed to the Frontier Health and Medical Research program;
  • $248 million for expanded clinical trial programs;
  • $125 million over nine years from 2019-20 to contribute to the Targeted Translation Research Accelerator for chronic conditions focussed on diabetes and heart disease; and
  • $94.3 million for biomedtech programs and industry research collaborations.

Research Australia is particularly pleased to see the announcement of the Frontier Health and Medical Research Program, which we have been calling for.

NHMRC and ARC Funding

In its Pre-Budget submission, Research Australia called for increases in funding for the NHMRC and ARC’s research programs.

NHMRC Programs

The 2018-19 Budget reveals that funding for the NHMRC’s programs is falling in real terms. Funding to the Medical Research Endowment Account (MREA) for the NHMRC’s research programs is $829 million for 2018-19. Estimates for the following three years have the funding remaining virtually stable with increases of roughly 1.5% each year. The CPI was 1.9% for the year to 31 March 2018, so in real terms NHMRC funding continues to decline over the forward estimates, as it has for several years now.

NHMRC MREA Funding

$m.
17-18 18-19 19-20 20-21 21-22
Funding to the MREA 2018 Budget
817.990 829.324 842.766 855.407 868.238

ARC Programs

The Australian Research Council’s Funding Programs are critical to Australian publicly funded research including to the life sciences and medical technologies.

Over the forward estimates, the funding to the ARC for the Discovery Program declines slightly in later years compared to the estimates in last year’s budget. The increases year on year are a little greater than the current inflation rate of 1.9%.

 

$m.
17-18 18-19 19-20 20-21 21-22
Discovery (2018 Budget)
493.858 495.099 508.965 516.506 528.572
Discovery (2017 Budget)
492.736 493.708 511.540 522.537

The Linkage Program was singled out in the Government’s National Innovation and Science Agenda (NISA) as an important component of Australia’s innovation system, and it was announced that from 1 July 2016 the Program would be open to continuous applications and decision making would be fast tracked. Funding over the forward estimates is slightly higher than forecast in last year’s budget, and shows increases of around 3% each year, around 1% higher than the current rate of inflation.

$m.
17-18 18-19 19-20 20-21 21-22
Linkage (2018 Budget)
266.678 273.990 285.432 293.492 297.862
Linkage (2017 Budget) 265.319 265.843 275.444 281.366 N/A

While not funding ‘medical and dental research’, the ARC Linkage program remains important to the health and medical research and innovation sectors. For example, the latest round of ARC Linkage Program grants included funding to develop bio inks for 3D printing, a better inhaler for medicines, better understanding antibiotic use, and improved brain imaging.

Research Support

In addition to providing funding for the ARC Program, the Department of Education and Training also provides funding to universities to help cover the indirect costs of research. The forecasts for the next financial year and the following two years reflect increases of around 6% per annum, flattening out to a little more than 2% between 2020/21 and 2021/22.

Research Support Program

$m.
17-18 18-19 19-20 20-21 21-22
2018 Budget
923.709 903.425 959.816 1,018.879 1,042.302

The question of funding for the indirect costs of research funded by the MRFF continues to remain unclear. Research Australia will be investigating further whether the increase in the Research Support Program is a decision to increase the ratio at which funding is awarded, or simply accounting for an expected increase in direct research revenues, such as MRFF funding to universities.

The whole issue of indirect research costs remains an important unresolved issue for the whole health and medical research sector. Research Australia continues to call for a whole of government approach to the issue of funding indirect research costs. Research Australia proposes that the Chief Scientist lead a review of the funding of indirect research costs to establish a sustainable and equitable funding program. In the short term, MRFF funding to universities needs to be treated the same as NHMRC and ARC competitive grant funding, and the pool of funding for the Research Support Program should be increased proportionately.

Research Infrastructure

The key response to the Research Infrastructure Roadmap was a commitment by the Government to develop a Research Infrastructure Investment Plan to guide future funding. This Investment Plan has now been released as part of the Budget. A 12-year National Research Infrastructure Investment Plan will commit $1.9 billion to critical national research infrastructure, including $140 million for upgrades to the two most powerful computing facilities in the Southern Hemisphere.

R&D Tax Incentive

The Research and Development Tax Incentive is available to all companies that incur expenditure that meets the definition of eligible research and development. For larger companies that are making a profit, it provides a non-refundable tax incentive, at a rate of 38.5% of the eligible R&D expenditure (otherwise claimable as a business expense at the corporate tax rate of 30%). This reduces their tax bill.

Smaller companies, with revenue of less than $20 million are eligible for a refundable tax incentive. This tax incentive applies at the rate of 43.5% of the eligible expenditure, and is payable even if the company has not made a taxable profit. It is a direct (‘refundable’) payment to the company from the ATO.

Introduced in 2012, the R&D Tax Incentive has been a victim of its own success, with expenditure on the measure consistently exceeding Government forecasts. Relatively minor changes have been made to the R&D Tax Incentive in recent years, including introducing caps and reducing the rate by 1.5% to the current 38.5% and 43.5% but other measures were blocked by the Senate.  In 2015 the Government initiated a review of the R&D Tax Incentive. Proposals by the review to better target the R&D Tax Incentive have been strongly opposed by industry.  More recently the ISA’s report Australia 2030: Prosperity through Innovation (the 2030 Plan) has proposed a couple of further amendments to the Review’s recommended measures, including doubling the cap on the refundable R&D tax Incentive to $4million, and modifying the proposed intensity threshold to be applied to the non- refundable tax incentive.

In tonight’s Budget, the Treasurer has confirmed a range of measures to improve the integrity of the R&D Tax Incentive Program, including introducing a $4 million annual cap on the refundable component of the R&D Tax Incentive. Crucially, for the health and medical research and innovation sector, clinical trials will be exempted from this cap. This is a great outcome for the sector, which has argued that the high costs of taking a new therapeutic to market mean that small companies in this field would be unfairly disadvantaged by the cap.

CRC Program

Funding forecasts for the CRC Program are largely in line with last year’s budget. The program is forecast to receive $892 million over the period from 2017/18 to 2021/22.

$m. 17-18 18-19 19-20 20-21 21-22
2018 Budget 160.868 167.341 184.331 187.540 192.240

The CRC Program is important to health and medical research and innovation with about one third of the CRCs funded over the life of the program being health-related. The most recent round of CRC funding included $55 million over 7 years for the Digital Health CRC.

 

 

Research Australia’s response to the 2030 Plan

Research Australia welcomes today’s announcement from Innovation and Science Australia (ISA), Australia’s independent science, research and innovation advisory board, calling for the Government to enhance the national culture of innovation to help drive the country’s prosperity.

We are pleased to note that the 2030 Plan, “Australia 2030: Prosperity through Innovation”, articulates the jobs of the future and skills we need to ensure Australia’s world class research can translate into global outcomes.

Research Australia has long stated that Australia has the potential to lead and create new markets by applying cutting-edge science and technologies to new, first in world applications that improve human health. However, to achieve or even entertain these possibilities, we have to be courageous and adapt our current approach to funding to reach “an economies of scale” ideal. This includes funding for areas such as machine learning and artificial intelligence, robotics and automation, high performance computing, and of course genomics and epigenetics.

While there are some questions about the Plan’s detail, Research Australia looks forward to working through them with our membership and the Government.

Research Australia is particularly pleased to see that many of the recommendations made in our June 2017 submission to ISA in response to the 2030 Strategy Issues Paper were adopted in the report, specifically the focus on frontier technologies and embedding research in Australia’s health system.

Continue reading “Research Australia’s response to the 2030 Plan”