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Tuesday, 11 August 2015
Page: 4986

Senator SINODINOS (New South Wales) (17:38): I rise to make a contribution to the debate on the Medical Research Future Fund Bill 2015 and related bill. Let me say at the outset, I think this is a landmark coalition initiative. I was very excited when this was first floated after we came to government and I was very keen that it be supported. It is one of the biggest sovereign endowment funds of its kind in the world. There are some big ones like the Wellcome Trust in the UK but this is a very big one.

The reason I particularly support the fund is because when I look at health and medical research in Australia, it is one of our competitive strengths as a nation. When I think about the great institutions in that space in Melbourne and in Sydney, I think of the Garvan, for example, which has a fantastic name internationally. If you think of some of the institutes, you think of some of the various cancer research centres in Sydney and of the Peter MacCallum Centre in Melbourne. The list goes on and on. If you go to Melbourne there is now a precinct of the city which is effectively a health and medical research hub. It is very important to see because health and medical research hubs are where we bring together world-class research and world-class technologists working on cutting edge health problems.

The point of this particular fund is to create a capital amount of about $20 billion by the early 2020s and the net interest from that as determined by the Future Fund will be used to fund health and medical research. It will be on top of existing funding under the National Health and Medical Research Council so it is not substituting funding. It is additional funding and that is why it is a very important initiative—it will turbocharge our role in this space. As I said, it is one of the biggest sovereign endowment funds of its kind in the world.

The reason that this will be important to Australia is because we have 23,000 research professionals and the medicines industry that stands behind that employs nearly twice as many Australians, so it is a world-class industry and we can have a world-class edge in this sector. It will provide funding for Australian scientists and medical researchers to become the best in the world.

This aspiration to be the best in the world is very important. We often hear about how we must benchmark ourselves against others overseas, against the best in the world. But what we are saying here is we want to become the benchmark. We want to become the best in the world by providing the funding that will turbocharge this particular sector.

I recently had a conversation with the new vice-chancellor of the ANU, Brian Schmidt. He had been on a business mission to Europe as part of the Australia-German advisory council set up as a result of the visit by Chancellor Angela Merkel to Australia in the context of the G20. That council is chaired ably on our side by my good friend and colleague the Minister for Finance, Senator Cormann. What struck Brian Schmidt when he was in Germany was the fact that the German aspiration was to identify four or five areas of research and to say, 'We are going to be the best in the world. We are going to be the pacesetter, the pacemaker in those sectors.' He said that a country like Germany has more resources than us to do this. We cannot hope to match the scale of the German investments in some of these identified areas, these four or five strengths of Germany, but here we have made a big bet on a sector where we already have runs on the board.

If we go back and think of CSL, originally Commonwealth Serum Laboratories; if we think of ResMed with its inventions around sleep apnoea; if we think of Cochlear, the bionic ear then we have a track record of doing health research well in a leading-edge way. This Medical Research Future Fund Bill will establish the Medical Research Future Fund and will provide over $400 million for distribution over the next four years, as I said, in addition to existing government funding for direct medical research.

Importantly, the Future Fund addresses some of the concerns which were identified in a major strategic review of health and medical research commissioned by the previous government and published in February 2013. That review, known as the McKeon review, led by Simon McKeon AO, a former chair of CSIRO, found that Australia needs a more strategic model to get the best health results from its research efforts. The McKeon review identified a particular need to create greater linkage between healthcare providers and research organisations by 'fundamentally embedding research within health care delivery'. This was about greater industry and research collaboration.

One of the observations that Brian Schmidt made about his trip to Germany was the fact that industry and academic and research institute collaboration is of a very high standard, a very high level. For example, the chief scientist of BMW may also be a top professor at one of the local universities and hold dual appointments, the point being that in a physical way this collaboration reflected a capacity to take research results and translate them into practical outcomes, not just commercial outcomes. We are talking here about practical health outcomes.

The McKeon review made the case for new emphasis on priority driven research to help bridge some of the gaps between research excellence and the translation of research into applied technologies and practices, and that this required additional investment in translating the research findings into bedside applications. It requires more commercialisation and stronger partnerships between the researchers and the health practitioners, including hospitals and GPs. This fund will support investment across the whole research spectrum, from laboratory research—in other words, fundamental and basic research—through clinical trials to the commercialisation of new drugs or devices and the translation of new techniques or protocols into clinical practice and public health improvements.

In evidence before the legislation committee that looked at this particular legislation, CSL made the point that the fund was addressing Australia's ability to commercialise our intellectual property. They said:

Too often it is either not translated from an idea into a product or goes offshore for development at a very early stage and Australians miss out on the real economic payback. And the employment and multiplier effects that come from manufacturing.

We are talking here about advanced manufacturing. They said:

To help address this, we would like to see the (future fund) have a strong and strategic focus on Translational Research.

In their submission, they talked of seeing 'at least 20 per cent of disbursements go towards'this strong and strategic focus on translational research. They went on to say:

It is important to take a proportion of appropriate novel ideas to the point where there is the potential for commercial interest. Where the technical concept is proven, but commercial viability is uncertain and commercial risks remain. Translational research is the leap from fundamental science to its practical application. From an idea to a candidate product. From the lab to a Proof of Concept clinical trial.

Intellectual property around a project at the pre-translational stage is far less valuable than that same intellectual property at the post-translational stage.

CSL go on to say:

We believe that this critical nexus between academia and commercialisation is underfunded in Australia and this impedes the overall productivity of the medical research sector.

New targeted funding from the MRFF could help recruit substantial, complementary research funding from the commercial sector as well as increasing the pool of sound research projects that firms like CSL can take forward to the later stages of development.

How often have we heard, here in Australia, about good ideas having to go offshore in order to be funded. I have heard this many times when I have done work in the commercial sectors in Sydney and Melbourne. This future fund gives us a capacity to do things which we could only have dreamt of doing some years back.

It has a very strong accountability framework, and I just want to quickly canvas elements of that framework. There is an Australian Medical Research Advisory Board to determine the strategy around medical research and innovation every five years and to determine our medical research and innovation priorities every two years. So we identify a strategy and then we prioritise elements of that strategy and then the Minister for Health and the cabinet, through the budget process, make the program level funding decisions based on the best advice provided and the strategy and priorities set by the advisory board. Payments are then made into the Medical Research Future Fund special account and from there they will go either to a Medical Research Future Fund health special account, under the control of the National Health and Medical Research Council and other expert bodies to manage distribution, or this special account may involve disbursements to the Council of Australian Governments' Reform Fund, which will disperse moneys to states and territories for payments—for example, to hospitals that are participating in appropriate research projects. In the case of the Medical Research Future Fund health special account, medical research institutes like the ones I mentioned before—the universities, corporations including charities and not-for-profits, as well as corporate Commonwealth entities like CSIRO—will have a capacity to obtain funding. So, as you can see, the funding is being spread around. This is not a situation where we will be saying that only one set of entities is able to be funded. There will be a broad church when it comes to the funding.

The Medical Research Future Fund will be managed by the Future Fund Board of Guardians, which has a proven track record of managing investment portfolios on behalf of the government and maximising returns over the long term. It has had a remarkable record with the Future Fund since it was established of maximising returns to the Commonwealth, and the bill requires that the Treasurer and the finance minister issue directions setting out the government's expectations as to how the funds will be managed and invested by the Future Fund Board of Guardians, including setting a benchmark return for earnings. The Future Fund Board of Guardians will have responsibility for preserving the capital of the fund in perpetuity. So this is not about raiding the biscuit tin—none of that. The capital will be preserved in perpetuity. What we are doing is investing the capital and then using the best expertise available to the Commonwealth through the Future Fund to maximise that return. That net interest return, which will be a mixture of investing in cash, in equities, in bonds and so on, will provide a capacity to maximise the return so that we will be effectively doubling the investment in health and medical research when the Medical Research Future Fund is up and running.

The Medical Research Future Fund will be a new secure revenue stream for medical research and innovation supporting a sustainable health system into the future. This is important. This is about continuity. We had a debate the other day about shipbuilding in South Australia and we talked about the virtues of a continuous build. It is a very important concept. Here we have this concept of providing certainty to health and medical researchers about the amount of funds that will be available over time, and innovations in health and medical research will play an important role in increasing the efficiency of health services and improving health outcomes. It will not be just about new health products and services, it will also be an investment in more efficient provision of health services. This will help to achieve even greater breakthroughs in years to come and improve the health and wellbeing of all Australians, and strengthen our standing as a global leader in medical research and give us the strongest benefit from new discoveries and improved healthcare practices.

I think it is very important to put in context some of the debates we have in this country about what innovation means. Innovation fundamentally means building an ecosystem. The framework in this bill builds an ecosystem from go to whoa, from basic research, through the practical health outcomes, underpinned by a strong, secure source of funding from the Commonwealth.

I will conclude on the following note. There have been some suggestions for further amendments to the bill. All I will say in that regard is that we must guard against excessive red tape. I went through the governance and accountability mechanisms. They are strong, they are transparent, they are world's best practice. So I believe the bill as it stands provides the best possible framework for turbocharging health and medical research in the years ahead. I commend the bills to the chamber.