Labor is frantically priming the electorate for a “tough Budget” and health and medical research has borne the brunt of the Government’s political posturing in recent weeks.
A strategic leak from the Gillard Government proposed a $400 million cut over three years only to be followed by unconfirmed reports of a back-flip.
It is likely the Government was preparing the sector for a worse-case scenario before delivering lesser cuts with the headline message that they had spared research from the worst. It remains a possibility.
Whatever the outcome on the night, the Government’s flip-flopping messages for sectors such as medical research and pharmaceuticals are creating enormous uncertainty and scaring away capital investment.
After years of scandalous waste and mismanagement, the Government is desperate to deliver an elusive Labor surplus to salvage some semblance of economic credibility. It has pinned a lot of its scarce political capital to it.
The much promised surplus in 2012-13 was always wafer-thin with no margin whatsoever for the unexpected. Not surprisingly, the Government is now in a difficult bind.
But by targeting productive sectors the Gillard Government will cost the country, including the Government, a lot more in the long run and there are ample opportunities for savings elsewhere.
The $16 billion overpriced school halls are still being built in the name of stimulus at a time when the Government is making cuts as part of a supposed contractionary fiscal policy.
The over $2 billion spent on putting insulation in ceilings and taking it out again could have delivered enormous dividends for our economy and health system for years to come if it had gone to health and medical research.
It is little wonder respectable researchers and scientists took to the streets in their lab coats with placards in hand.
Only weeks ago, Julia Gillard reaffirmed the Government’s promise of close to $1 billion for a raft of new bureaucracies including Medicare Locals, the Independent Hospital Pricing Authority, the National Performance Authority, the National Funding Authority and more, under the guise of health reform.
The projected jump in health costs, particularly in relation to chronic disease, has been core to the Government’s rhetoric on health reform. There is no disputing that some of the figures are staggering, such as a projected 430 per cent increase in diabetes costs in the next two decades and an almost doubling of the Australian Government’s expenditure on health as a proportion of GDP.
However, it defies common sense that the answer to health reform is spending hundreds of millions of dollars on more bureaucracy and red tape whilst catapulting medical research and pharmaceuticals into policy uncertainty.
For Australia, the runs are on the board with health and medical research as an investment for Government as has been well canvassed in the recent debate.
Australia’s successes are many and well documented in the work of the likes of Sir Frank MacFarlane Burnet, Professor Peter Doherty and Professor Ian Frazer for just a start.
Whether it is a cervical cancer vaccine, the discovery of the Heliobacter pylori bacterium or the many other important but less well known advances, the results of health and medical research are real and measurable and Australia has punched above its weight.
This was recognised by the Coalition and in Government we provided a five-fold increase in funding.
There was an expectation that bipartisan support for this important investment would continue.
To provide greater certainty, the Coalition at the last election allocated $200 million in additional funding for health and medical research and committed to developing an indexed funding model.
That election promise seems all the more important now.
The sector relies on significant capital investment for infrastructure, including large philanthropic contributions.
This makes the Government’s leaked proposal for cuts and subsequent unconfirmed reversal, all the more damaging and destabilising. Without long-term policy certainty, it is near impossible to attract private investment and large donations.
Unfortunately though, the decision to attack a productive, successful and important sector is not without recent precedent.
It follows closely the decision of the Gillard Government to ignore the advice of its independent Pharmaceutical Benefits Advisory Committee (PBAC).
The Gillard Government has refused to list six drugs and a vaccine on the Pharmaceutical Benefits Scheme that were recommended by the PBAC, blaming its current fiscal situation.
The change means that access to lifesaving medicines will be based on political decisions irrespective of the clinical evidence.
This action directly contravenes the Memorandum of Understanding the Government signed last year with the sector and is a radical departure from the convention of successive governments of both persuasions.
The development of medicines and vaccines also has very long lead times and requires significant investment. The enormous uncertainty created by the Government’s actions may leave many organisations questioning whether it is worth attempting to bring innovative new medicines and treatments to the Australian market.
One company has already announced that the decision is likely to impair its ability to make new anti-diabetic drugs available in Australia.
All this is not just bad news for people who work in the sector, students and researchers, but it is devastating for patients and their families with chronic and complex health needs who live in hope of advances and timely access to new treatments.
For governments, good economic management should involve cutting waste and inefficiency, but importantly also, investing in productive and proven areas for the future betterment of the nation.
Medical research and pharmaceuticals are areas that can alleviate the growing burden on our health system, improve outcomes for patients and contribute to our economy.
Whilst Labor might eventually see the folly of its reckless policy handling of medical research and pharmaceuticals, confidence in the sectors has been dealt a severe blow and long term damage may have already been done.
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