Australian medical research being ‘short-changed’

Australia’s sovereign fund for medical research is being underspent by hundreds of millions of dollars a year, even though it is on track to accumulate almost twice as much capital as originally planned.

Universities, scientists and cross-bench politicians are lobbying for the removal of the “arbitrary” A$650 million (£330 million) cap on disbursements from the billion-dollar Medical Research Future Fund (MRFF), which was established in 2015 by the then conservative government.

As originally conceived, the fund’s A$20 billion capital was to be maintained in perpetuity with the net earnings made available for research. This was expected to generate grants worth A$1 billion a year after the fund reached its full capitalisation in 2020.

However, allocations have languished well below A$1 billion, rising only to A$650 million in recent years. Distributions will be maintained at this level until 2029 according to budget papers, and until 2034 according to the MRFF’s 10-year investment plan.

These commitments override advice from the Future Fund Board of Guardians, which determines how much money can be allocated from the fund each year. It has authorised disbursements of up to A$1.055 billion this financial year and A$1.1 billion in 2026-27.

Meanwhile, the fund’s capital has ballooned well over A$20 billion, reaching A$24.8 billion last September. This will rise to A$35.4 billion by the middle of next decade unless distributions are increased, according to modelling by the Parliamentary Budget Office, which found that the fund could afford to disburse about A$1.4 billion a year without reducing its capital.

The Group of Eight argued for disbursements to be raised to A$1 billion in a pre-budget submission to the Treasury Department. “Holding back these funds is a false economy,” said chief executive Vicki Thomson. “The cost of delayed research is paid in poorer health and lost productivity.”

The Australian Society for Medical Research said the real value of the disbursements was declining every year. “Research is…getting disproportionately more expensive as it gets more detailed,” said CEO Shane Huntington.

Almost four in five applicants to the MRFF prove unsuccessful, with data indicating a grant rate of about 21 per cent. Bids for National Health and Medical Research Council funding fare even worse, with competitive schemes last year recording an overall success rate of 12.1 per cent – the lowest in at least 13 years – and 8.1 per cent for Ideas Grants, the council’s second biggest funding stream.

“When you’ve got a sub-10 per cent success rate, you’ve got to ask, how many grants do I have to apply for in a given year to have even a reasonable chance?,” Huntington said. He said senior scientists were spending their time writing fruitless grant bids instead of training the next generation of researchers. “This is going to have long-term consequences. It’s literally changing the way…people allocate their time and value what they’re doing.”

Asked in November why the government was withholding promised medical research funding, health minister Mark Butler said the MRFF had better grant rates than other research funding schemes. “We’d all like that to be higher, but the MRFF performs pretty well,” he told parliament.

Butler said allocations from the MRFF might be reconsidered in line with a new national health and medical research strategy, which is due for release early this year, and a 10-year statutory review of the fund completed over a year ago by Finance and Treasury departments.

The review noted that MRFF commitments had often fallen well below the Future Fund Board’s recommendations, raising stakeholder concerns about “missed opportunities”. It suggested jettisoning the board’s recommendations and instead specifying annual disbursements – set initially at A$650 million – in legislation.

The disbursements “would remain the same regardless of short-term investment performance of the MRFF”, the review said. They “could be set at a level that provides meaningful…support while ensuring the MRFF is not overdrawn over the long-term”.

The Liberal-National government similarly planned to cap annual MRFF disbursements at A$650 million, as part of a 2021 bill which lapsed after the 2022 election. Science minister Tim Ayres, then an opposition senator, condemned the plan as “yet another broken promise” and insisted that A$1 billion disbursements were feasible.

Huntington said that by keeping disbursements low, the government avoided criticism for reducing allocations in years of poor investment returns, while enhancing its image as a responsible financial manager. “That extra money…is just sitting there in the budget bottom line. It looks pretty good when you’re trying to save.”

john.ross@timeshighereducation.com