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Cost recovery implementation statement: Blood, blood components and biologicals (human cell and tissue therapies), From 1 July 2015

Version 1.0, July 2015

2 July 2015

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Financial performance

Cost recovery revenue will be reported in the Department of Health's Annual Report in accordance with the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015.

In 2015-16 total revenue for the Blood, blood components and biologicals (human cell and tissue therapies) sector is forecast to be $3.3 million. The total costs associated in generating that revenue are forecast to be $2.4 million. In 2013-14 TGA began an extensive review of its activities and cost drivers using current ABC best practice methodology. This project involves each of the six sectors that TGA regulates. In 2014-15 TGA began the implementation of an advanced ABC software tool. This tool will provide improved transparency of costs and the associated revenue. This information will be used to inform management and external stakeholders of where improved alignment of revenue and costs needs to occur. The initial results of this work are expected to be available in 2015-16. The forward estimates below are estimates only and are based on the anticipated results of the ABC project and will be reviewed and adjusted through consultation with industry.

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 (recall, product tampering). Depreciation is also accumulated for the replacement of assets. The Government expects the TGA group to manage within its cost recovery resources and therefore investment, such as the Business Improvement Programme, 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 we expect our reserves to remain above that target.

Estimated revenue and expenses
2014-15 Estimated outcome $m 2015-16 Forecast $m 2016-17 Forward estimate $m 2017-18 Forward estimate $m
Expenses 2.2 2.4 2.4 2.5
Revenue 3.6 3.3 3.3 3.4
Balance 1.4 0.9 0.9 0.9

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