Medical Research Future Fund

The Medical Research Future Fund (MRFF) was established on 26 August 2015 by the Medical Research Future Fund Act 2015 (MRFF Act). It provides an ongoing funding stream for medical research and medical innovation into the future with the credits to the MRFF preserved in perpetuity. The capital of the MRFF is invested, with the earnings used to make grants of financial assistance for medical research and medical innovation over the long term.

For information on the Australian Medical Research and Innovation Strategy 2016-2021 and the accompanying Australian Medical Research and Innovation Priorities 2016-2018, and disbursements from the MRFF, refer to the Department of Health website.

Legislation

The MRFF Act gives effect to the following:

  • Establishment of Government bodies: Australian Medical Research Advisory Board (Advisory Board); 
    • the Advisory Board is tasked with determining the Australian Medical Research and Innovation Strategy and related Priorities to inform Government decision making on Medical Research Future Fund disbursements. 
  • Investment Mandate: the responsible Ministers are required to issue an Investment Mandate (detailed below).
  • Crediting amounts to the MRFF: the responsible Ministers make credits to the MRFF. For information on the credits, refer to the Investment Performance and Financials webpage.
  • Maximum Annual Distribution Amount: The Future Fund Board of Guardians (Future Fund Board) determines the maximum annual distribution amounts for each financial year, this will enable the preservation of the credits to the MRFF in perpetuity.
  • Debiting amounts from the MRFF: the Finance Minister, on request from the Minister for Health, will authorise disbursements (debits) from the MRFF, subject to the maximum annual distribution amount. The Treasurer is responsible for payments to States and Territories.

Investment Mandate

The responsible Ministers provided the Future Fund Board with strategic investment guidance through a written direction in respect to the MRFF. This is a legislative instrument that is not subject to disallowance.

The Medical Research Future Fund Investment Mandate Direction 2015 came into effect on 23 November 2015. It requires the Future Fund Board to adopt a benchmark return of the “average return of at least the Reserve Bank of Australia Cash Rate target + 1.5 to 2.0 per cent per annum, net of investment fees, over a rolling 10-year term”.

In targeting this benchmark return, the Future Fund Board must determine an acceptable but not excessive level of risk for the MRFF measured in terms such as the probability of losses in a particular year. In determining the level of risk, the Future Fund Board must take into account; the principle that the nominal value of the credits to the MRFF be preserved over the long term; and the need to moderate the volatility of the maximum annual distribution.

Investment Performance and Financials

The Future Fund Board of Guardians (Future Fund Board) publicly discloses the Medical Research Future Fund's (MRFF) asset allocation and investment returns in its quarterly portfolio updates.

Financials since inception to 30 September 2019

(Equals) Cash Balance 17,648
  $ 'millions1
Total Credits 16,788
(Plus) Net Earnings2 1,189
(Equals) Total Credits and Earnings 17,977
(Less) Debits (Withdrawals)3 329

Notes:
1. Data may not sum due to rounding.
2. Earnings are net of investment and administration fees incurred by the Future Fund Board.
3. This amount represents debits made for policy purposes under the relevant Act.

Quarterly performance result to 30 September 2019

For the quarter ending on 30 September 2019

Nominal Return
(Per cent per annum)

Benchmark Rate1 
(Per cent per annum)

One year return to date 5.1 2.9
Annualised return since inception2 4.4 3.0

Notes:
1. The quoted benchmark rate of return follows the relevant investment mandate direction.
2. Annualised return since inception on 22 September 2015, when the Fund received its initial credit.

Annual performance results

Year

Nominal Returns
(Per cent per annum)

Benchmark Rate1 
(Per cent per annum)

Cash Balance of Fund as at 30 June
($ 'millions)

2015-162 2.1 2.5 3,208
2016-17 4.8 3.0 4,609
2017-18 4.7 3.0 7,188
2018-19 5.2 3.0 9,755

Notes:
1. The quoted benchmark rate of return follows the relevant investment mandate direction.
2. The Medical Research Future Fund investment commenced from 22 September 2015.

Transfers (Credits) to Medical Research Future Fund

The following table provides a history of financial transfers to the Medical Research Future Fund, with links to the associated documentation.

Total Transfers
8,957
 
Summary of Transfers
Date
Source of Funds
Amount

($AUD m)
Documentation
28 August 2015 Uncommitted balance of the Health and Hospitals Fund 1,010 Medical Research Future Fund (Amount to be Transferred from the Health and Hospitals Fund) Determination 2015 (Explanatory Statement )
26 November 2015 Value of health saving measures announced in the 2014-15 Budget and residual amounts from the closure of the Health and Hospitals Fund 2,139 Medical Research Future Fund (Crediting of Amounts) Determination 2015 (No. 1)  (Explanatory Statement )
26 August 2016 Value of health saving measures announced in the 2014-15 Budget and residual amounts from the closure of the Health and Hospitals Fund 1,277 Medical Research Future Fund (Crediting of Amounts) Determination 2016 (No.1) (Explanatory Statement )
3 July 2017 Value of realised health saving measures announced in the 2014-15 Budget 2,242 Medical Research Future Fund (Crediting of Amounts) Determination 2017 (Explanatory Statement )
 
10 July 2018 Value of realised health saving measures announced in the 2014-15 Budget 2,289 Medical Research Future Fund (Crediting of Amounts) Determination 2018  (Explanatory Statement )
23 July 2019 Value of realised health saving measures announced in the 2014-15 Budget 7,831 Medical Research Future Fund (Crediting of Amounts) Determination 2019  (Explanatory Statement )

Disbursements (Debits) from the Medical Research Future Fund

The Finance Minister can authorise debits from the Medical Research Future Fund, on request by the Health Minister for the purposes of medical research and innovation. Disbursements can be grants of financial assistance to the States and Territories; grants to bodies referred to in the legislation; or grants to corporate Commonwealth entities. 

Net earnings for a given financial year will be available for drawdown the following financial year, with the credits preserved in perpetuity. The Future Fund Board of Guardians is responsible for determining the maximum annual distribution amount for each financial year.

Details of disbursements from the MRFF are available from the Department of Health


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