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Cost recovery implementation statement 2016-17
V1.0 June 2016
Financial and non-financial performance
a) Financial performance
| 2014-15 Actual $'m |
2015-16 Forecast $'m |
2016-17 Budget $'m |
2017-18 Estimate $'m |
2018-19 Estimate $'m |
|
|---|---|---|---|---|---|
| A: Revenue3 | |||||
| Revenue from Government | 6.995 | 2.227 | 1.800 | 1.800 | 1.800 |
| Sale of goods and services | 130.764 | 133.908 | 138.384 | 142.035 | 147.568 |
| Other revenue and gains | 1.027 | 0.249 | 0.200 | 0.200 | 0.200 |
| Total A | 138.786 | 136.385 | 140.384 | 144.035 | 149.568 |
| B: Expenses4 | |||||
| Employee expenses | 83.552 | 79.108 | 94.308 | 96.284 | 98.236 |
| Suppliers | 42.071 | 44.587 | 45.498 | 43.165 | 41.405 |
| Depreciation and amortisation | 5.620 | 4.368 | 8.190 | 8.190 | 9.927 |
| Write-down and impairment of assets | 2.205 | 0.510 | |||
| Other expenses and losses | 0.001 | 0.001 | |||
| Total B | 133.448 | 128.574 | 147.996 | 147.639 | 149.568 |
| Surplus (deficit) | 5.338 | 7.811 | (7.612) | (3.604) | 0.000 |
TGA's activities are primarily cost recovered from industry. However, the TGA received appropriation funding in 2014-15 for aligning Australia's and New Zealand's regulation of therapeutic goods. In addition, the TGA continues to receive appropriation funding in the form of an interest equivalency payment for funds held in the TGA special account (reserves).
While our financial performance is within the target budget range when compared to budget, the surplus in 2014-15 was largely the result of lower than expected employee expenses due to lower staffing levels and stable employee remuneration over recent financial years.
Detailed financial performance information is discussed with industry representative bodies at bilateral meetings held each year.
The TGA aims to maintain reserves to provide a buffer for volatility in revenue streams (the number and type of evaluation applications) and respond to major external or unplanned impacts (recalls, product tampering). Depreciation is also accumulated for the replacement of assets. The Government expects the TGA to manage within its cost recovery resources and therefore investment, such as the Business Improvement Program, must also come from the responsible management of these reserves. The target for the reserve balance is set to be at least one quarter of operating expenses. During 2015-16 our reserves will remain above that target but then reduce in 2016-17 as a result of the costs of implementing the 2016-17 Budget measure “improving the Regulation of Therapeutic Goods in Australia” which involves expenditure of $20.4 million from TGA reserves over four years.
Financial performance by industry sector group is included in Appendix 1.
b) Non-financial performance
The TGA reports to stakeholders at six monthly intervals on performance against a set of agreed KPIs. The KPIs have been endorsed by the Australian Therapeutic Goods Advisory Council following consultation with the TGA-Industry Consultative Committee. For more information on the TGA's KPIs please visit: TGA key performance indicators.
The KPIs are high-level indicators of performance against our strategic intent. Within that matrix of KPIs is a requirement for measuring whether 'business operations are consistent and meet agreed service and timeliness standards'. Measures of specific business activities will continue to be documented in our half-yearly performance reports.
These reports are provided to members of the TGA-Industry Consultative Committee to enable us to report on specific parameters of relevance to industry stakeholders and to enable stakeholders to provide performance feedback. They provide detailed quantitative information about our performance on the timeliness of business activities as well as information for industry about the volumes of work performed. Key highlights for 2014-15 were:
- The TGA worked closely with industry on new initiatives to help improve the efficiency of a number of application and administrative processes. This included implementing a new business services portal to provide industry with self-service technology to conduct simple regulatory transactions with the TGA.
- For medicines, the pilot to introduce the electronic Common Technical Document (eCTD) format for over-the-counter and prescription medicines was completed, eliminating the need for paper applications. Other initiatives included releasing an electronic smart form for sponsors to notify the TGA of prescription medicines shortages, reducing the reliance on phone, email and letter communication.
- Medical devices initiatives included implementation of regulatory changes to allow Australian medical device manufactures to obtain market approval for most products using European notified bodies' conformity assessment.
- The TGA substantially met all performance targets in relation to completing applications for registration of therapeutic goods within the legislated timeframes.
Footnotes
- Excludes Office of Drug Control
- Excludes Office of Drug Control