Ms Catherine King (Ballarat, Australian Labor Party, Shadow Minister for Health) Share this | Hansard source

I rise to speak in this cognate debate on the Medical Research Future Fund Bill 2015 and related bill, and in doing so I rise six months after the government promised that this so-called landmark of its last budget was supposed to already be in operation. In fact we should have really been debating these bills yesterday. What we saw was, frankly, eight hours of debate on a bill in which 150 members of the House of Representatives were all going to vote yes. This was purely because—and those opposite decided that they had to restrict their members to five-minute speeches towards the end—they all wanted to make sure that they had something to say in their electorate newsletters. In the meantime there is this bill, there is the bill that enacts the sixth pharmacy agreement, and there are a number of other bills in the health space that are languishing because the government wanted to have eight hours of debate on a bill that every single person in this House agreed with.

Going back to this bill: the government promised, with much fanfare in its last budget, that the Medical Research Future Fund would be established by 1 January this year, meaning that this bill would have had to come before House in November last year for that to be achieved. In fact it was originally listed to do so but did not appear. What is far worse is the government does not appear to have used those months of delay by actually doing any detailed policy work needed to develop the best possible fund to support health and medical research in this country—no work at all.

We know the idea for a Medical Research Future Fund first came about just weeks before the last budget and it was announced with no consultation with the National Health & Medical Research Council, no consultation with Australia's chief scientist, no consultation with the medical research community at all, and the health department only found out about it a few weeks before the budget. What is clear in the months that followed is that the government has not set up a fund that will distribute funding subject to peer review or to proper independent oversight. It has instead established a fund that will allow the government to distribute health and medical research funding in this country according to its own decisions. There is no peer review and no independent oversight in the legislation at all, which will allow the government to fund its own pet health and medical research projects.

I do intend to go into some detail about the concerns Labor has, but they are concerns that I express out of disappointment above anything else. If we are to have a Medical Research Future Fund, it should be established in good faith and in cooperation with the health and medical research community and it should have good governance at its heart. Because if we do not do this, if where the money goes is subject purely to the government's decision making, we are absolutely trashing the reputation of Australia's health and medical research. The government should be using this fund to invest in the best possible health and medical research, based on independent peer review and on the advice of experts in the field who are independent of government and subject to the scrutiny of their peers. These are principles that do not appear to be reflected in this bill, which is a real lost opportunity.

In developing the bill, the government certainly has not been consulting with the health and medical research sector. I am very concerned that the way it has been drafted does not even meet the principles of governance that the government itself has set. If the government took this fund seriously, as it claims publicly to do, then you would think it would have taken the time to consult with the health and medical research community and eminent individuals like Simon McKeon, who is responsible for the strategic review into health and medical research. You would also assume that the government would take a principled approach to ensuring that funding is administered at arm's length from government, if it truly believes in the value of health and medical research. To do anything less will trash the reputation of health and medical research in this country.

If you do take the government at its word on these things, you would be right to be surprised and greatly concerned at the way the government has drafted this bill. We know how much more competitive health and medical research grants are becoming. If the government truly believes in supporting the best health and medical research projects, not just its pet projects, it would be taking the advice of experts. I know that the health and medical research community has been as surprised as Labor about the way the funding is to be administered through this fund. It should be rightly sceptical about what it will mean for the quality of projects being funded, which is why Labor will be making amendments to this bill, especially as they relate to the disbursement of credits.

The 2014-15 budget glossy explicitly stated that:

Fund earnings will be directed to medical research, primarily by boosting funding for the National Health and Medical Research Council.

I want to repeat that: 'primarily by boosting funding for the National Health and Medical Research Council'. That is from the government's own budget papers, their own health budget glossy, on establishing its fund. That is what it said it was going to do. I am sure the former CEO of the NHMRC, Professor Warwick Anderson, and, I suspect, all those involved in the health and medical research community, are very disappointed to see the way this bill has been drafted, especially when the NHMRC was never consulted on the announcement that there would even be a fund in the last budget. Professor Anderson did in fact warn of this on 15 April this year when he said in a Press Club address:

I think the researchers out there and in the audience today have to keep an eye on this so the public benefit from this big investment, and the public will benefit best if the public disbursement is peer reviewed.

Sadly, those views have now been realised and the bill, as it now stands, does not include disbursements from the fund that are subject to independent peer review.

So, once again, the reason that Labor has such significant concerns is that this bill does not reflect the principles that the government set even for itself, and it does not guarantee that a single extra dollar in funding will travel through to the National Health and Medical Research Council. Specifically, the bill does not provide the governance assurances that would satisfy Labor that the fund credits will be disbursed in the most prudent manner. Frankly, the way that the government has established it leaves no assurance that funds will not simply be channelled to fund the coalition's own election commitments and pet projects, so long as they meet very broad purposes as stated in the bill.

As it stands, the bill is creating what could very likely become another government slush fund: $20 billion in funding with no independent oversight of how the earnings from that money is to be spent. Credits are not proposed to be directed through the existing mechanisms for health and medical research in this country—the NHMRC. They are not even primarily going to be disbursed through the NHMRC. It is not even proposed to have the disbursements overseen by an expert panel or even have any peer review at all. In fact, despite the government saying—as did the Treasurer saying in his second reading speech—that there would be an advisory board, there is no mention of any advisory board in this legislation at all. Setting that aside, why would you establish a separate advisory board, a potentially separate peer review system, if that is what they are proposing? Why on earth would the government consider it appropriate to set up a completely separate body? But there is not one mention in this legislation of any advisory board or any separate peer review.

The bill also allows the finance minister to credit funding to the COAG reform fund for making payments to the states and territories, as long as it fits the purpose of the bill as broadly defined, as well as to corporate Commonwealth entities outside the general government sector, such as the CSIRO. And note that it is the Minister for Finance, not the Minister for Health or the Minister for Industry and Science. I am very concerned that this bill allows for the Minister for Finance to debit funds from the Medical Research Future Fund to the MRFF Health Special Account for the purpose of making grants to financial institutions for medical research. It allows, particularly, for it to be credited to corporations.

Departmental officials at Senate estimates yesterday could not provide an answer about what sort of corporations might be funded other than to reference an assumption that this is a catch-all inclusion to ensure that no potential funding recipient is excluded. So everybody is in. They were unable to give the Senate estimates committee even a definition of 'medical research' that would be funded under the scheme. Instead, we were told a yet to be appointed ministerial advisory committee that is not in the legislation will advise the government on what research could be funded under the program.

Remember, Treasurer Joe Hockey said this was the fund that he hoped would find the cure for cancer. The fund that was going to cure cancer will now, it seems, be directing money to pet projects. Designing mobile phone apps is one of the uses the fund could possibly be put to. Its priority is determined not, as promised, by the National Health and Medical Research Council but by an as yet to be appointed ministerial advisory council that is not in the legislation at all, so there is no obligation for the government to pay any attention to it. The principles on which it will make decisions are also not in the legislation, and the finance minister is able to hand out grants as he sees fit.

This is sounding awfully like what Senator Brandis has done to the Australia Council, taking the money away from independent, arms-length experts and claiming it for himself—a giant, personal arts slush fund for his favourite projects. That is simply not good enough when it comes to the health and medical research sector in this country. This is a signature policy for the government, and the governance is simply not there in the bill. The health and medical research community ought to be very concerned that these governance structures are not in place and that the government can effectively allocate money from this fund however it pleases.

Given the government's record when it comes to health, the opposition has the right to be very cynical about what this government's actual motives are. We know from Senate estimates that there is to be an advisory board of eight people providing the government with advice on what medical research and medical innovation is to be funded. There is no mention of such an advisory council or board in the bill and no explanation given as to why the NHMRC is not doing this, given that a Medical Research Endowment Account—already a special account—is already managed for that purpose.

We know from Senate estimates, too, that the Department of Health had no consultation whatsoever with the health and medical research community on the development of this bill, something I find quite astonishing. It is also of significant concern that existing funding to the NHMRC is in no way quarantined. As Department of Health officials confirmed in Senate estimates, it will be a policy decision of government as to what the existing NHMRC funding arrangements are. So there is a very real prospect here that, as money comes into the MRFF via the massive cuts to health, money will be ripped out of the back door of the NHMRC and, instead of a boost to medical research, all we will get is an accounting transaction funded by billions of dollars of cuts to the health system.

The lack of any formal role in this legislation for the National Health and Medical Research Council in the way the bill has been drafted is something that Labor finds deeply concerning, and anybody who cares at all about health and medical research and has any integrity in this place should have concerns about it as well. At best, it is sloppy policy. At worst, it is a deeply cynical example of rank political opportunism. It is, frankly, astonishing just how little policy work has gone into developing this bill. It is a fund that is so important. If it is a fund that is to support this activity in perpetuity then it should not be kept at arm's length from the health and medical research peer review community.

This, unfortunately, is becoming something of a characteristic of this government, and what comes to mind immediately, as I said, is the decision around the arts council and this government's complete disregard for any independent oversight. If the government is to achieve its objectives, then its governance structures for this fund—not just for the investment of this fund but for the governance structures for the way in which the earnings of this fund are dispersed—must be above question. They must be, because this is health and medical research we are talking about.

It is not like road funding, and we believe there should be proper governance processes for that as well. The government has a different view, but we believe there should be, through Infrastructure Australia, proper processes for that as well. This is health and medical research. If the government wants to trash the reputation of health and medical research in this country by creating a great big fund and deciding where this is going to go to—and there are lots of voices out there about a whole raft of things that people want to develop or research—then the government has set up a fund that will exactly do that, which, of course, brings me back to the role of the National Health and Medical Research Council.

The principal reference to the NHMRC in the bill is that the government, under just one of the funds established in this bill, could possibly ask the CEO of the NHMRC to manage some of the distributions, and that is it. It does not sit with the test the government has set itself that the funding go primarily through the NHMRC. That is what the government said it would do. That is not what it is doing in this bill. It is a very important point. What is the point of having the NHMRC if it is only to be recognised in such a cursory way, almost as an oversight in this bill? If the purpose of the NHMRC is as the pre-eminent body through which health and medical research is funded in this country, why is it treated in such a shabby way by the government in this bill?

The NHMRC held its first meeting in February 1937 and became an independent statutory authority within the portfolio of the Australian government Minister for Health and Ageing operating under the National Health and Medical Research Council Act 1992. The NHMRC is already responsible for administering more than $700 million in health and medical research grants every single year. It has six principal committees, including the Australian Health Ethics Committee, Research Committee, Embryo Research Licensing Committee, Human Genetics Advisory Committee , Health Care Committee and Prevention and Community Health Committee—eminent experts across the country who independently peer review health and medical research as part of the NHMRC functions.

So why on earth would the government be seeking to set up, not entrenched in legislation, another advisory board which the government may or may not pay any attention to, and why on earth would it set it up separate to any existing structure? Why is the government setting up an advisory board of some eight people, as we understand—no-one seems to know who they will be or what they will be doing—in secret, in essence, with no details about it all? We have no details about who the people will be, but the biggest problem is that it is not entrenched in the legislation at all. It has no official role at all.

Equally important is that Department of Health officials could not say what definition of medical research and medical innovation would be applied. It was, as I noted at the time, a policy development process that read more like a script of The Hollowmen than the way an adult government conducts itself. I remind people that this is how I previously reflected on the bill on the establishment. You might recall an episode of that satirical TV series where political staffers, concerned about the lack of a budget centrepiece, decide at the last minute to create a $150 billion national perpetual endowment fund to meet the nation's future challenges. 'The best part is we'll never need to specify how it'll all work,' the character of central policy unit director David Murphy declared. The similarity between the coalition's policy and The Hollowmen episode was also noted by Rob Sitch, one of the creators and stars of the show. Mr Sitch told a recent Melbourne Press Club event:

When the budget came out, it was like they'd watched the show and gone, 'That's actually a really good idea.'

That is all particularly worrying when you look at the way in which this has evolved.

It is particularly worrying given that the health portfolio is supposedly responsible for advising this eight-member advisory panel that will provide the government with some advice, which it may or may not pay attention to, as to how disbursements of what, I remind people, will eventually be $1 billion a year should be invested. Equally, as I said, this is not how the fund was envisaged to work—not at all. As I already stated when the fund was announced as part of the 2014-15 budget, it was promised that 'fund earnings will be directed to medical research, primarily by boosting funding for the NHMRC'. With something as important as this, the government should not be picking winners—it is not in a position to decide what is the best health and medical research in this country—in a way that, in essence, will allow it to fund a whole raft of projects. It can fund projects through the COAG Reform Fund to states and territories. It can fund projects through the Medical Research Future Fund health special account to private companies. It can fund Commonwealth corporate entities without any say from the health and medical research sector or any peer review around whether the project it is choosing is the best.

We know there are very real challenges for health and medical research. We know there are very real challenges for the National Health and Medical Research Council as we have more and more researchers doing more and more fantastic work in this country and the pool of money becomes harder and harder to stretch across those researchers. But, if we do not have a strengthening of the NHMRC processes and if we do not have a very clear view that we must have independent, peer reviewed allocation of funding for health and medical research, we will trash the reputation of the NHMRC and we will trash the reputation of health and medical research in this country.

As I said at the start of my remarks, the government have not undertaken any policy development work here. They announced it in the budget, did not consult anybody, did not really tell the health department, set it up in a particular way, decided they were going to do this and did not do the policy work behind it at all. Then, despite the fact that there have been months and months when they could have started to speak to the medical research community, they have not done so. Labor has. The members for Chisholm and Scullin have had almost 30 consultations with the health and medical research community. They have met with almost every health and medical research institute across the country. They have met with people who have been involved in medical research for a long period of time. They have heard about a whole raft of issues. They have looked again at the McKeon review. They have actually done the work. They have undertaken an important consultation and one that will continue to inform Labor's policy development process when it comes to health and medical research.

In the almost two years I have been shadow minister for health, I have travelled to a number of health and medical research institutes. I have been to the Garvan Institute, the Murdoch Children's Research Institute, the Westmead Millennium Institute for Medical Research, the Burnet Institute, the Victor Chang Cardiac Research Institute, the Walter and Eliza Hall Institute of Medical Research, the Hunter Medical Research Institute, the George Institute for Global Health and the South Australian Health and Medical Research Institute and spoken with hundreds of researchers doing terrific work across this country. It has been a privilege to meet with them. As we know, many of the recommendations in the McKeon review reflect what health and medical researchers have been telling us about what needs to be done to support reform in the sector as part of these consultations. But, rather than take the recommendations of McKeon and look at the totality of what is needed in health and medical research, this government has done no policy work. There is a real challenge heading right down the pathway now around what is going to happen with the employment of substantial numbers of health and medical researchers come the end of this year. Instead, this government has, in essence, set up its own private slush fund in this bill to allow it, at its own whim, to disburse large amounts of funding that have come, remember, from massive cuts to our health system.

From the moment this fund was announced, Labor have been consistent that we will always support measures to grow health and medical research in Australia but that it should not be at the expense of sick Australians. Before I get to the measures that are contributing to the fund, it is worth briefly mentioning the budget's handling of the fund itself. As Ross Gittins, The Sydney Morning Herald's economics editor, outlined, the fund is every bit as much an accounting trick as it is a medical research fund, but it is one that only students of government accounting can see. As Ross Gittins says:

The saving to the budget bottom line is immediate, though the change means this saving will be reduced a fraction by the increased spending on research.

Like many budget fiddles, this one relies on exploiting loopholes in the definition of the bottom line, the 'underlying cash deficit'.

Indeed, the minister himself boasted of how the $20 billion Medical Research Future Fund can be counted in the budget as a savings measure to offset debt, with only net earnings being distributed for medical research. In August last year, he admitted:

Up to $20 billion of revenue generated, which under the proposal would be generated in the first six years, helps to build up a capital fund and that in itself helps to reduce government net debt as the capital fund accumulates.

And the net earnings, only the net earnings of that fund will then be reinvested into additional medical research, which in itself will help improve health services …

Returning to Ross Gittins' article, he goes on to express his concern that, over time, the government will allocate less money to the National Health and Medical Research Council, meaning the overall level of health and medical research funding will not increase at all. This is something that remains a great concern for Labor, as this government has proved it cannot be trusted on any measure, especially when it comes to health spending.

This is a government which wiped $57 billion from public hospitals and denied it was a cut. This is a government which wanted to levy a tax on every visit to the doctor and said it was about improving Medicare. This is a government which took another $600 million from crucial health programs and described it in the budget as 'rationalising and streamlining'. So, forgive us if we remain suspicious of this government's consistent refusal to rule out simply using this fund as a means of shifting the existing funding for medical research. Having learnt nothing from the experience of announcing this policy without consultation, the government has still not consulted the health and medical research community in developing the MRFF, which is why the opposition have some serious concerns about the way the government intends to establish it.

In terms of the funding in this bill, according to the budget papers the MRFF will have a cumulative balance of $3.4 billion this year, $5.7 billion in 2016-17, $9.3 billion in 2017-18, and $14.3 billion in 2018-19. But we know that these figures cannot actually be relied on, and it is quite duplicitous of the government to be making these promises to the medical research community when the government itself knows that the figures cannot be relied on.

We know $1.3 billion of the capital going to this fund is from the pharmaceutical benefits hike to the price of medicines that, whilst it passed this House, will not pass the Senate. The government knows this measure does not have the support of the parliament. And the government is trying to have it both ways on the MBS indexation freeze. This is a cut of more than $2 billion from Medicare over this budget that will have a serious impact on bulk-billing rates, out-of-pocket costs and the level of access vulnerable patients have to general practitioners. We know from analysis published in the Medical Journal of Australia that it is in fact a GP tax of some $8 plus that the government has put in the budget by stealth. Of course, funds from this measure will be put into the Medical Research Future Fund. It also includes the massive cuts to public hospitals, and we know that other cuts in the government's 2014 budget—again, many of them to the not-for-profit sector—will as well.

If the government do truly believe in health and medical research, it begs the question why, in this budget, they have cut $2 billion out of health, again, and some of it in an incredibly petty way when you look at the cut to support for those with inborn errors of metabolism. They have not allocated any of that to the Medical Research Future Fund. We know from Senate estimates that all that is in fact going to other health priorities—in other words, the government is going to make a range of announcements around that.

The government have also included in this bill the transfer of the remaining $1 billion in the Health and Hospitals Fund. This is not something Labor will support. We think it is important that that money remain available in a fund to enable better health services and funding of other parts of the sector, so we will certainly be talking bit more about that. As I said at the outset, Labor are very strong supporter of medical research. We proved that in government. We committed large amounts of money to health and medical research, including building large medical research institutes across this country.

This bill does not meet the government's own test of good governance and it does not reflect the expectation that the funds would primarily be going to the NHMRC. With that, I move:

That all the words after "That" be omitted with a view to substituting the following words: "while not declining to give the bill a second reading, the House notes the bill:

(1) does not achieve the objectives the government itself has set;

(2) relies on cuts to vital health programs; and

(3) does not define medical research and innovation in the way in which the government has itself described it."

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