Volumes

The TGA estimates demand for its services based on prior years' volumes which are adjusted for forecast changes in the industry operations and changes in the regulatory framework and/or service delivery models.

Compliance monitoring and enforcement

Estimates for the number of products on the register incorporate expected cancellations and new goods. New goods estimates include the outcomes of work on assessing products for registering on the ARTG.

The activity level assumptions are based on the number of premises for manufacture of blood, blood components and human tissues; human cell and tissue therapy products; and good manufacturing practice inspections for manufacturers of human cell and tissue therapy products that are subject to annual licence charges and/or inspection fees.

Audits of manufacturers of primary blood sites are entitled to three free inspections within a three year period under the terms of their annual licence charge.

Costs of the activity

Fees and charges are established to cover the cost of all direct and indirect costs for the sector. The costing methodology allows costs to be allocated to activities based on their resource consumption at each stage of the process through to the final product or service.

In line with the Australian Government's CRGs total costs are categorised into the following groups for cost allocation and transparency purposes.

• Direct costs: can be easily traced to a cost object with a high degree of accuracy. The allocation of direct costs to a cost object is relatively straightforward if the entity's financial system is able to generate relevant information. The most common direct costs are staff salaries (including oncosts, such as training, superannuation and leave) and supplier costs (e.g. office supplies and workers compensation premiums).
• Indirect costs: are the costs that cannot be easily linked to a cost object or for which the costs of tracking this outweigh the benefits. Indirect costs should be apportioned to a cost object using the entity's documented internal costing methodology. Common indirect costs include overhead costs such as salaries of staff in corporate (e.g. finance, human resources) and technical support (e.g. legal) areas, or accommodation costs (e.g. rent, maintenance, utilities).

A new software solution is being installed to improve TGA's ABC capability. Staff work effort surveys will be undertaken periodically and they will identify the time regulatory staff spend on our activities. A review of the results against current fees and charges will be carried out in 2015-16.