I knew it. The much-vaunted Medical Research Future Fund (MRFF) is nothing more than an economic sleight-of-hand. This morning, Matthias Cormann has confirmed it in the Australian:
Plans for a $20 billion medical research fund are being locked into the Abbott government’s budget strategy despite growing concerns about the idea, as ministers insist on keeping the scheme, as well as a controversial GP co-payment to pay for it.
Fighting off calls to scrap the idea, Finance Minister Mathias Cormann is arguing for the fund as a vital structural reform that will cut net debt and pour money into long-term research without deepening the deficit.
“That fund will not be spent but invested, generating a regular return … That capital fund becomes an asset on the government’s balance sheet, reducing government net debt by $20bn once fully accumulated.”
You read it first in Quadrant’s July-August issue, where I said precisely this in the opening paragraphs of my article on the MRFF. So it looks like the MRFF is going to be used in much the same way as was the NBN by the Rudd-Gillard-Rudd governments – as an ‘asset’ on the balance sheet, rather than the ridiculous liability it represents in real life.
Tony Abbott has made the MRFF a key part of his budget sales pitch by talking of a “tremendous pay-off” for the nation from long-term work on medical cures. Piffle. It’s gambling – nothing more, and nothing less. It would be far smarter for us to piggy-back on overseas research, which would save us both time and money. Senator Cormann redoubled the argument for the fund by portraying it as an economic reform that reduced net debt, built a national asset and set up a way to pay for research without any net impact on future expenses.
“This is a budget-neutral way to double investment in future medical research,” he said. Yes, but why fund it at all? This is the vast, unquestioned assumption underpinning this fiscal catastrophe.
Why does the Commonwealth have to fund medical research at all, when it has a proven track record in Australia of very poor returns on that investment? Read my article from the July-August edition, which is no longer beyond the paywall.
Philippa Martyr blogs at Transverse City