Senator REYNOLDS (Western Australia) (17:53): I rise to speak on the Medical Research Future Fund Bill 2015. I am proud to be a member of an Abbott government that is so focused on ensuring that our best and brightest Australian medical researchers remain at the forefront of developing treatments and creating cures that will improve the lives of Australians and millions of people around the world. Innovative research is a key driver of better health care and health service delivery in Australia and internationally.

 

I come from Western Australia, a state that has always understood the need to be competitive and productive, and to be competitive and productive you need to be innovative. We have demonstrated that in so many ways —in mining, oil and gas and agriculture, and also now in shipbuilding. On top of that we already have a highly innovative medical research facility. We understand the need to keep driving innovation. This fund is an absolutely critical component in that.

 

Health and medical research has an important role to play in identifying opportunities and strategies to increase the efficiency of health services and ensure the sustainability of the overall health system. That is why last year in the budget we committed to creating the $20 billion Medical Research Future Fund, the biggest sovereign endowment fund of its kind in the world. It is truly innovative and truly world-beating.

 

The Australian government is establishing the fund as a dedicated investment vehicle to fund medical research and medical innovation, and, importantly, this funding is in addition to existing government funding for direct medical research. The new fund will help to ensure Australia continues to advance world-leading medical research projects and attracts and retains first-class researchers. Ultimately, the fund will deliver improved health and medical outcomes for all Australians. The fund will also be a dedicated investment vehicle to provide a sustainable and secure source of funding for medical research and innovation across all sectors of medicine. Importantly, it will also provide the opportunity to fund research strategically and address our national priorities in a very coordinated and cohesive way, which will undoubtedly complement existing medical research and innovation funding that exists today in our country.

 

The government is committed to boosting health and medical research and funding a medical and research innovation system, but, as we know, this does require a national approach. So, when looking to the future it cannot be just more of the same. We have to demonstrate greater value and return for the Australian people for their investment in this new future fund.

 

The fund will give particular impetus to medical research and innovation being translated into health and economic benefits. The fund will also complement the Medical Research Endowment Account operated by the government, and leverage the existing capabilities, including research peer review, grant management, and the provision of expert advice. The Future Fund Board of Guardians will be responsible for deciding how to invest the money in the fund in order to enhance the government’s ability to make grants of financial assistance for medical research and innovation in a way that will most benefit the Australian people.

 

To ensure a high level of transparency in the decision-making process, and to provide for the effective disbursement of funds from the fund, the bill includes requirements for, firstly, an expert Australian Medical Research Advisory Board to ensure that spending from the fund is informed by a group of skilled leaders in the field of medical research, and it does so on the basis that it is provided by and the decisions are made by medical experts. Secondly, an Australian Medical Research and Innovation Strategy will be set independently by the board to prioritise Australian health needs. Thirdly, Australian Medical Research and Innovation Priorities will also be developed independently by the board to give certainty in the long term about the nature of investment activities to support the delivery of the national strategy. As we all know, certainty and continuity are so important in the field of research and development and innovation. Fourth, it will also include a requirement that decisionmaking mechanisms for the disbursement of funds must take into account the strategy and priorities worked out by the board and the experts.

 

Additionally, the health minister is to report every two years on medical research and innovation investment to ensure that it is truly accountable to the Australian people. Also, to further support the transparency requirements, it will be published online, consistent with Commonwealth reporting frameworks for grants. Further, the health minister will report to parliament every two years, advising the parliament, and through them the Australian people, how the grants of financial assistance for medical research and innovation were consistent with the priorities, as determined by the advisory board.

 

Once established, the fund will receive an initial contribution of $1 billion from the uncommitted balance of the Health and Hospitals Fund. Earnings from the fund’s capital can be used into the future for health infrastructure and also for health purposes that are wider and more strategic than those allowed under the current HHF legislation. But the mechanisms will also help to bridge gaps in the existing system. They will ensure that medical research can make a greater difference to health outcomes.

 

The bills were amended by the government in the House of Representatives to ensure certainty and permanence around the government’s policy approach for distributing the fund’s earnings. Those amendments made it clear that the fund will have strong governance and expert leadership. It will support investment across the research spectrum from laboratory research to clinical trials, the commercialisation of new drugs or devices, and the translation of new techniques or protocols into clinical practice and public health improvements. These mechanisms will help bridge the gap into the existing system. They will ensure that medical research can make a greater difference to health outcomes. The bills were also amended by the government in the House of Representatives to ensure certainty and permanence around the policy approach to distributing the fund earnings. Those amendments made it absolutely crystal clear that the fund will have strong governance and expert leadership and will be accountable and transparent to all Australians.

 

The independent advisory board will bring extensive expertise from across fields including medical research, medical innovation, health policy, finance and investment and commercialisation. Commercialisation is particularly important. It is something, again, that we are focusing on in the West: how we can take research and development and innovation and commercialise it into the businesses and into the jobs of the future. Having the CEO as a member will leverage the experience and expertise of the organisation at the board level. The advisory board will provide advice to the health minister every two years on key medical research and innovation priorities for expenditure on the disbursement of funds. Additionally the health minister will be required to report to parliament every two years, advising how the grants of financial assistance have provided for medical research and innovation and are consistent with the board priorities. The transparency, the strong governance and the expert leadership of the fund are at the core of this fund’s creation and have clearly been a strong theme throughout the drafting and amendment of these bills. Membership of the advisory board will be strictly skills based and will include professionals who collectively possess expertise and experience in medical research, policy relating to health systems, management of health services, medical innovation financing and, as I said, commercialisation.

 

It is really easy to see and to appreciate that this is truly a landmark coalition government initiative. It will be transformational not only for the 23,000-plus research professionals in Australia but also for the medicines industry in Australia, which stands behind them and is expected to employ at least double the current workforce into the future. It will truly provide funding for Australian scientists and medical researchers to become simply the best in the world. Some may be questioning why the creation of another fund is truly necessary. Innovation in health and medical research is absolutely a key driver of better health care and health service delivery. Health and medical research also has an important role to play in identifying opportunities and strategies to increase the efficiency of health services and ensure the sustainability of our health system in Australia, which I think all in this place would acknowledge is something that, as we have an ageing population and the cost of health keeps exponentially increasing, is vitally important. It is particularly wonderful that this fund will stimulate that innovation here in Australia rather than overseas. Probably the most important thing for all Australians is to make sure that patients get the best possible care we can provide and afford and to make sure the cost of that care is sustainable into the future. But if we are going to have a sustainable health system we cannot expect taxpayers to keep paying for things that are not effective and are effectively a waste of taxpayers’ money. With a good bit of thought and innovation they could be done more effectively and therefore our health dollars and our research dollars could go a lot further. Finally the aim of this fund is to reduce future health expenses through medical research advancement and medical innovation.

 

It is for all of those reasons that this fund is being established under these bills. It is a dedicated investment vehicle to fund medical research and medical innovation in this country. The fund will undoubtedly help ensure that Australia continues to advance and lead the world in medical research projects, in innovative thinking and in innovative health care. The fund is also critically important not only to support the 23,000-plus research professionals we currently have in Australia but also to attract new researchers and to give young Australians an opportunity in this field. That is very important. We want to train, attract and retain first-class researchers and, as I have said, deliver improved healthcare and medical outcomes for all Australians.

 

One aspect of the fund that I am particularly supportive of is that it is capital protected into the future, thus providing a secure revenue stream dedicated to funding medical research, which means that future governments will not be able to raid the fund for recurrent expenditure. The fund will support the sustainability of the health system into the future and enable vital research that may lead to the discovery of new medicines and new technologies for treatments and cures. Some may ask why it is necessary to establish another fund. But this fund is clearly very different and far more significant. In fact it is going to be the biggest fund of its kind in the world. This fund has specific purposes that are absolutely consistent with the government’s investment in medical research and medical innovation. It has the capacity to transform how medical research is conducted by encouraging innovation, supporting research and development and supporting the commercialisation of great ideas. The use of a capital protected fund ensures that this funding for medical research and innovation is available well into the future, which provides much more certainty for researchers to be able to develop from R&D to innovation and commercialisation and through into the market than they currently have today.

 

Under this bill, and as announced in the 2015-16 budget, the fund was to commence on 1 August 2015, subject to the passage of the legislation. As the legislation is still going through the Senate, we are hoping it will be passed so that it can be implemented straight away. Delays in the commencement of this fund are impacting on the level of investments and earnings of the fund and are currently now reducing the amount of funding available for distribution to medical research and innovation next financial year.

 

It was also interesting to me to note that the fund is a capital preserved fund. Net earnings from the fund will be distributed annually and will support ongoing investment in health and medical research. The funding will be distributed to address the Australian medical research and innovation priorities which, as I have said, will be developed by the board. Currently the bill does not contemplate the inclusion of philanthropic funds into the fund, but there are still provisions in this bill such that if a future government wanted to do so it could.

 

The investment of funds collected from health expenditure savings through the fund will make a positive contribution to reducing net debt insofar as they comprise cash or debt or debt-like securities. However, investments in other asset classes such as equities are not included in the calculation of the debt, and the $1 billion transfer of the uncommitted balance of the Health and Hospitals Fund will not affect the net debt. It is for all of those reasons that I commend this bill to the Senate.