Australia: The NHMRC Amendment Bill 2006 - Greater Autonomy and Transparency

In the February edition of Life Sciences Insights (www.claytonutz.com/areas_of_law/controller.asp?aolstring=22&na=1135), we reported that a new Bill was being proposed to restructure the National Health and Medical Research Council ("NHMRC"). This has now taken the form of the National Health and Medical Research Council Amendment Bill 2006 (Cth) ("NHMRC Bill") which was introduced into the Senate on 29 March 2006.

In summary:

• The purpose of the NHMRC Bill is to amend the National Health and Medical Research Council Act 1992 (Cth) ("the Act") to introduce new governance arrangements and to clarify accountability and reporting functions of the NHMRC.

• The new governance model provides the NHMRC with financial and operational autonomy while maintaining its independent statutory responsibility for expert health and medical research advice to the Government.

If enacted, the changes will not immediately impact on those in the health and medical research sectors. However, as those with experience in dealing with the NHMRC will appreciate, a legislative change which embraces a revamped governance and accountability structure is usually expected to produce pragmatic observable differences. Perhaps of greatest interest will be whether the "new" NHMRC turns its focus inward to look at the structure and operation of the principal and working committees. Will the organisational change percolate into that part of the Council where the Australian health industry actually has a connection?

Since September 1936, the NHMRC has played a visible national role in funding and supporting health and medical research in Australia. The NHMRC's charter has included the aim of raising the standard of individual and public health by fostering health and medical research/training. This has included a developing emphasis on the monitoring of ethical issues relating to health.

The NHMRC's responsibilities and functions were eventually codified in the Act. The object of the Act was to provide for a national body to pursue activities including the development of consistent health standards between the various states and territories, and medical/public health research and training.

A number of recent reviews, primarily the Governance of the National Health and Medical Research Council Report published by the Australian National Audit Office in February 2004 and the Grant Report dated December 2004, have identified governance concerns. A common perception is that the NHMRC is conservative. It has had difficulty in establishing a national and international profile. Further, it was deprived of its executive power because of a lack of clarity regarding the roles of the Chair of Council and the Chief Executive Officer. Hence, it appeared that the purpose and strategy of the NHMRC were driven by crowded committees that had an apparent "consensus orientation".

In seeking to address these issues, the NHMRC Bill is designed to improve the corporate governance of the NHMRC. It is hoped that Australia's health and medical research sector will benefit through a more accountable and independent NHMRC. The NHMRC Bill proposes to provide the NHMRC with greater financial and operational autonomy, as well as ensuring its continued independent statutory authority status. Of course, it is only in practice that the effect of these changes will become apparent.

It is proposed that from 1 July 2006 the NHMRC be established as a statutory agency for the purposes of the Public Service Act 1999 (Cth), and as a prescribed agency under the Financial Management and Accountability Act 1997 (Cth). The new agency will remain within the Federal Health and Ageing Ministerial (Cabinet level) Portfolio but with a reporting and accountability framework that clearly separate the NHMRC roles and functions from those of the Federal Department.

The NHMRC Bill streamlines the reporting structure. Previously, the NHMRC's Chief Executive Officer has had a cumbersome accountability framework with three concurrent lines of reporting, including the Minister for Health and Ageing, the Secretary of the Department of Health and Ageing and the Council itself. Under the NHMRC Bill, the Chief Executive Officer will report directly to the Minister for Health and Ageing, while keeping the Secretary of the Department of Health and Ageing informed on a 'no surprises' basis. The new agency will be financially autonomous, with direct appropriations, and the CEO will be responsible and accountable for the financial and day-to-day operations of the agency.

While the accountability and reporting structure has been streamlined, the roles and functions of the Council, the Principal Committees and the working committees have not been altered. The Council will continue to provide independent expert advice and inquire into medical research and health related issues. Such issues include the preparation of guidelines; advising the Government/community on matters relating to the improvement of health, the prevention, diagnosis and treatment of disease; the provision of health care; public health/medical research; and ethical issues relating to health.

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