The article below was published in the Australian Financial Review on 11 April 2013.
By Carrie LaFrenz
Australia’s independent medical research institutes are facing a $70 million funding black hole due to changes to research grants by the federal government.
Professor Brendan Crabb, the president of the Association of Australian Medical Research Institutes (AAMRI), said the changes were lobbed quickly and without consultation and will have dire effect at a time when Australia should be promoting medical research.
“We have had flat funding from the NHMRC [National Health and Medical Research Council] for the past four or five years,” he said.
“Due to recent changes in the payment schedule, the sector is facing an immediate $140 million in cash flow deficit. This will translate to an ongoing $70 million reduction in research outlays this year.”
Following the mid-year economic review last year, the research council outlined the changes in timing of payments which will now be paid in arrears, rather than upfront.
It will also be paid on a monthly basis, rather than quarterly.
While funding commitment is the same, there will be a $70 million shortfall to the AAMRI, which will receive 11 payments instead of 12 payments a year.
“The reason they are doing this is to get $70 million saving for this May budget,” Professor Crabb said.
“As their own McKeon Review states, medical research contributes greatly to better health and greater wealth.”
The research council denied the move was putting a hopeful budget surplus ahead of medical research funding.
“It is no longer appropriate for the Australian government to incur interest by making payments three months in advance of an activity, particularly given that administering institutions underspend against their first year of funding,” a spokesman said.
“Payment in arrears removes the unnecessary interest cost to the Commonwealth, and is more consistent with the cash requirements for funding NHMRC grants.”
The spokesman declined to comment on whether the council is expecting a cut in next month’s budget for funding, which was maintained at $746 million in 2011-12.
Last week, Minister for Health Tanya Plibersek released the McKeon Review. The Gillard government commissioned CSIRO chairman Simon McKeon and a panel, which included former CSL chairman Elizabeth Alexander, Professor Henry Brodaty, CHAMP Private Equity executive chairman Bill Ferris, Professor Ian Frazer and Professor Melissa Little, to review health and medical research in 2011.
Its main recommendations include more investment, advancing clinical trials, establishing Silicon Valley-style research hubs, and providing incentives for philanthropists.