Financial Framework (Supplementary Powers) Amendment (Health Measures No. 9) Regulations 2021

EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Finance

Financial Framework (Supplementary Powers) Act 1997

Financial Framework (Supplementary Powers) Amendment

(Health Measures No. 9) Regulations 2021

The Financial Framework (Supplementary Powers) Act 1997 (the FF(SP) Act) confers on the Commonwealth, in certain circumstances, powers to make arrangements under which money can be spent; or to make grants of financial assistance; and to form, or otherwise be involved in, companies. The arrangements, grants, programs and companies (or classes of arrangements or grants in relation to which the powers are conferred) are specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the Principal Regulations). The powers in the FF(SP) Act to make, vary or administer arrangements or grants may be exercised on behalf of the Commonwealth by Ministers and the accountable authorities of non‑corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

Section 65 of the FF(SP) Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

Section 32B of the FF(SP) Act authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Principal Regulations. Section 32B also authorises the Commonwealth to make, vary and administer arrangements for the purposes of programs specified in the Principal Regulations. Schedule 1AA and Schedule 1AB to the Principal Regulations specify the arrangements, grants and programs.

The Financial Framework (Supplementary Powers) Amendment (Health Measures No. 9) Regulations 2021 (the Regulations) amend Schedule 1AB to the Principal Regulations to establish legislative authority for government spending on the development and maintenance of Australia’s onshore capability to manufacture mRNA (Messenger Ribonucleic Acid) products.

The capability will be initially founded through a partnership with one or more suppliers. The partnership is expected to be underpinned by agreements commencing in 2021-22 that would establish a population-scale mRNA manufacturing capability and guarantee the supply of locally manufactured mRNA vaccines, including COVID-19 vaccines, as well as provide future pandemic readiness. The cost of the agreements will depend on the outcome of ongoing commercial negotiations, the timeframe for completing an mRNA manufacturing facility in Australia by one or more suppliers, the number of mRNA products to be manufactured, and domestic requirements for COVID-19 vaccines and any other mRNA products.

At this stage, the Commonwealth’s final funding commitment is subject to ongoing commercial-in-confidence negotiations with one or more suppliers and potential state government funding partners. The Regulations will enable the Commonwealth to enter into agreements with one or more suppliers (including any other suppliers of locally manufactured mRNA products) within the total funding commitment, subject to future decisions by the Government.

Vaccines and therapeutics that use mRNA technology have been identified as a key growth opportunity in the Medical Products National Manufacturing Priority road map under the Government’s Modern Manufacturing Strategy. The mRNA technology underpins the highly effective Pfizer-BioNTech and Moderna COVID-19 vaccines which have been embraced by Australians, accelerating the country’s recovery from the pandemic. This technology could deliver step-change improvements in vaccine efficacy and individualised treatments for cancer and other diseases.

The Department of Health will be the head agency for establishing the partnership and providing the ongoing contract management and supplier engagement.

Details of the Regulations are set out at Attachment A. A Statement of Compatibility with Human Rights is at Attachment B.

The Regulations are a legislative instrument for the purposes of the Legislation Act 2003. The Regulations commence on the day after the instrument is registered on the Federal Register of Legislation.

Consultation

In accordance with section 17 of the Legislation Act 2003, consultation has taken place with the Department of Health.

A regulation impact statement is not required as the Regulations only apply to non‑corporate Commonwealth entities and do not adversely affect the private sector.

Details of the Financial Framework (Supplementary Powers) Amendment

(Health Measures No. 9) Regulations 2021

Section 1 – Name

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Health Measures No. 9) Regulations 2021.

Section 2 – Commencement

This section provides that the Regulations commence on the day after the instrument is registered on the Federal Register of Legislation.

Section 3 – Authority

This section provides that the Regulations are made under the Financial Framework (Supplementary Powers) Act 1997.

Section 4 – Schedules

This section provides that the Financial Framework (Supplementary Powers) Regulations 1997 are amended as set out in the Schedule to the Regulations.

Schedule 1 – Amendments

Financial Framework (Supplementary Powers) Regulations 1997

Item 1 – In the appropriate position in Part 4 of Schedule 1AB (table)

This item adds a new table item to Part 4 of Schedule 1AB to establish legislative authority for government spending on an activity that will be administered by the Department of Health (the department).

New table item 531 establishes legislative authority for government spending on the development and maintenance of Australia’s onshore capability to manufacture mRNA (Messenger Ribonucleic Acid) products.

Vaccines and therapeutics that use mRNA technology have been identified as a key growth opportunity in the Medical Products National Manufacturing Priority road map under the Government’s Modern Manufacturing Strategy. The mRNA technology underpins the highly effective Pfizer-BioNTech and Moderna COVID-19 vaccines which have been embraced by Australians, accelerating the country’s recovery from the pandemic. This technology could deliver step-change improvements in vaccine efficacy and individualised treatments for cancer and other diseases.

Establishing onshore mRNA vaccine manufacturing capability would provide priority access to breakthrough vaccines and treatments, strengthen Australia’s preparedness for future pandemics, accelerate growth in Australia’s mRNA research and commercialisation ecosystem, and position Australia as the regional hub for this emerging, high-potential technology.

The partnership is expected to be underpinned by agreements commencing in 2021-22 that would establish a population-scale mRNA manufacturing capability and guarantee the supply of locally manufactured mRNA vaccines, including COVID-19 vaccines, as well as provide future pandemic readiness. The construction of a facility is estimated to be completed by 2024, with the capacity to manufacture and supply up to 100 million doses per annum in a future pandemic.

Under final agreements, the Commonwealth is expected to:

• provide a financial contribution to keep the facility pandemic‑ready such that it is capable of rapid manufacture at a population scale; and
• purchase mRNA vaccines (including COVID-19 vaccines) from the facility.

At this stage, the Commonwealth’s final funding commitment is subject to ongoing commercial-in-confidence negotiations with one or more suppliers and potential state government funding partners. Some state governments have indicated their interest in co‑investing in the onshore mRNA capability, including for the fill and finish aspects of the capability, as well as contributing to a research and development fund and a workforce and supply chain initiative.

Building on the success of breakthrough COVID-19 mRNA vaccines, the Government recognises that mRNA technology is part of the next generation in advanced health care. Onshore production of mRNA vaccines will strengthen Australia’s capacity against COVID‑19 and its variants, as well as future pandemics and other diseases. Once established, an onshore manufacturing facility for mRNA vaccines would provide Australia with priority access to existing and pipeline mRNA products, rather than relying on delivery from offshore.

The COVID-19 Vaccines and Treatments for Australia – Science and Industry Technical Advisory Group (SITAG) has also maintained support for onshore manufacturing, emphasising the importance of investing in onshore mRNA manufacturing capabilities to ensure Australia has ongoing access to a diverse vaccine portfolio and at a magnitude that provides above population coverage. The SITAG provides advice to the Government on the purchasing and manufacturing of COVID-19 vaccines and treatments.

A 2020 audit of Australia’s manufacturing capability, followed by a March 2021 business case, identified a need for Australia to undertake onshore mRNA manufacturing. In the 2021‑22 Budget, the Government provided funding to the Department of Industry, Science, Energy and Resources (DISER) to work with the department to develop an onshore mRNA vaccine manufacturing capability in Australia. On 21 May 2021, the then Minister for Industry, Science and Technology, the Hon Christian Porter MP, and the Minister for Health and Aged Care, the Hon Greg Hunt MP, jointly announced in a media release that the Government is developing a pathway to establish Australia’s own sovereign manufacturing capability for mRNA vaccines. The media release is available at https://www.minister.industry.gov.au/ministers/porter/media-releases/australia-develop-onshore-mrna-manufacturing.

In establishing an onshore mRNA manufacturing capability in Australia, the Government’s objectives are to:

• ensure priority access to, and reliable delivery of, safe and effective prospective mRNA vaccines and any mRNA therapeutics to the Australian population as soon as they are available, on an ongoing basis;
• provide security of vaccine supply to address pandemics and other health emergencies into the future; and
• strengthen Australia’s biopharmaceuticals sector, including through enabling potential translation and commercialisation paths for Australian-based research and development.

The overarching requirements in the development and maintenance of a sovereign mRNA manufacturing capability include:

• an end-to-end onshore manufacturing solution for the production and supply of mRNA pandemic and non-pandemic vaccines for the Australian population; and
• participation in the broader mRNA ecosystem, including contribution to research and development.

It is expected that the department will be the head agency for entering into agreements and providing ongoing contract management and supplier engagement. The department will also work closely with DISER, which will provide policy support in relation to the research and development ecosystem and regional hub elements.

It is proposed that the department would provide ongoing funding to deliver the mRNA manufacturing capability in accordance with applicable legislative requirements and the Commonwealth resource management framework, including the Public Governance, Performance and Accountability Act 2013 (PGPA Act), the Commonwealth Procurement Rules (CPRs) and the department’s Accountable Authority Instructions.

The expenditure is expected to be provided through an approved process, including but not limited to a procurement process. In this regard, the Secretary of the department (as the relevant Accountable Authority) has made a determination under paragraph 2.6 of the CPRs to disapply Divisions 1 and 2 of the CPRs to the proposed procurement of onshore mRNA manufacturing capability and supply of mRNA vaccines and treatments for both pandemic and non-pandemic purposes and all incidental or related matters (the procurement) on the basis that it is necessary to protect human health. Accordingly, the requirement to publish the details of the proposed procurement on AusTender as set out in the CPRs will not apply. However, the department will be required to table details relating to the proposed procurement, in accordance with the Senate Procedural Orders of Continuing Effect No. 12 (Production of Indexed Lists of Departmental and Agency Files).

Irrespective of the exemption given under paragraph 2.6 of CPRs, any procurement decisions will nevertheless be based on value for money, including capability and capacity to deliver, and price and risk considerations. Provisional expenditure and supplier decisions were made by the Government, with the associated financial commitment for the relevant agreements to be approved by the Secretary of the department or an appropriate financial delegate at the SES level who has responsibility for the oversight of the procurement.  

To ensure administrative accountability in relation to the procurement, the department will:

• execute and manage all procurement contracts for the term of the agreements;
• work collaboratively with DISER and the supplier(s) to meaningfully engage in ecosystem requirements to strengthen mRNA capability in Australia;
• report publicly on the performance and progress of the mRNA capability, including in its annual report; and
• monitor expenditure on the mRNA capability.

Decisions made in connection with the procurement are not considered suitable for independent merits review, as those decisions would relate to the allocation of a finite resource, from which all potential claims for a share of the resource could not be met. In addition, any funding that had already been allocated would be affected if the original decision was overturned. The Administrative Review Council (ARC) has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of the guide, What decisions should be subject to merit review?).

The remaking of a procurement decision after entry into a contractual arrangement with a successful provider is legally complex, impractical, and could result in delays in ensuring onshore mRNA manufacturing capability in Australia.

Furthermore, the procurement of onshore mRNA manufacturing capability and supply of mRNA vaccines and treatments is a financial decision with a significant public interest element. This measure is a response to the ongoing COVID-19 pandemic and would enhance sovereign capability and readiness for future pandemics. Arrangements are required to be entered into rapidly to uphold public confidence in the health system and the national vaccination programs. The ARC has acknowledged that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraph 4.34 of the guide, What decisions should be subject to merit review?). While it is acknowledged that reliance on this justification for the exclusion of merits review is rare, the context of a global pandemic is an extremely rare event.

The project work to develop an onshore mRNA manufacturing capability, including negotiations with existing manufacturers and approach to the Australian market, was conducted by a joint taskforce which comprised the department and DISER. During the project phase in 2020 and 2021 and up to the execution of agreements, the following governing bodies and agencies were consulted:

• Therapeutic Goods Administration (TGA);
• Department of Finance;
• Department of the Prime Minister and Cabinet;
• Department of Foreign Affairs and Trade;
• Australian Government Solicitor;
• Australian Technical Advisory Group on Immunisation (ATAGI);
• Pharmaceutical Benefits Advisory Committee (PBAC);
• SITAG;
• state governments; and
• an expert advisory group advising on the procurement process and supplier proposals.

Beyond the implementation phase to the end of agreements, consultation will continue with:

• DISER;
• TGA;
• ATAGI;
• state governments;
• relevant industries; and
• the biotechnology research sector, particularly with regard to the development of the research and development ecosystem.

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the following powers in the Constitution:

• the external affairs power (section 51(xxix));
• the social welfare power (section 51(xxiiiA)); and
• the express incidental power and the executive power (sections 51(xxxix) and 61), including the nationhood aspect.

External affairs power

Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to ‘external affairs’. The external affairs power supports legislation implementing Australia’s international obligations under treaties to which it is a party.

Article 2 of the International Covenant on Economic, Social and Cultural Rights [1976] ATS 5 (ICESCR), which Australia is a party to, provides that each State Party undertakes to take steps to the maximum of its available resources with a view to achieving progressively the full realisation of the rights recognised in the Covenant, by all appropriate means.

Article 12(1) of the ICESCR recognises the ‘right of everyone to the enjoyment of the highest attainable standard of physical and mental health’. Article 12(2)(c) relevantly requires Australia to take steps necessary for ‘the prevention, treatment and control of epidemic, endemic, occupational and other diseases’, and Article 12(2)(d) requires Australia to take steps necessary for ‘the creation of conditions which would assure to all medical service and medical attention in the event of sickness’.

The proposed measure would fund Australia’s onshore mRNA manufacturing capability and the supply of mNRA vaccines and treatments for both non-pandemic and future pandemic purposes. The proposed measure would protect human health by ensuring the Commonwealth is able to act efficiently and effectively in the interests of public health to prioritise access in Australia to mNRA vaccines and treatments. This would strengthen Australia’s capacity to address future pandemics and other communicable diseases.

The proposal would significantly enhance timely access to cutting-edge and promising vaccines and treatments in the event of a future pandemic with continued pandemic readiness being necessary for the protection of human health in Australia. 

Social welfare power

The social welfare power in section 51(xxiiiA) of the Constitution empowers the Parliament to make laws with respect to the provision of pharmaceutical benefits, sickness benefits and medical services.

The proposed measure relates to the provision of pharmaceutical benefits in order to prevent and treat diseases and medical conditions using mRNA technology.

Executive power and express incidental power, including the nationhood aspect

The express incidental power in section 51(xxxix) of the Constitution empowers the Parliament to make laws with respect to matters incidental to the execution of any power vested in the Parliament, the executive or the courts by the Constitution. Section 61 of the Constitution supports activities that are peculiarly adapted to the government of a nation and cannot be carried out for the benefit of the nation otherwise than by the Commonwealth.

The proposed measure relates to the onshore production of mRNA vaccines and treatments, in order to enhance Australia’s immunisation programs. The proposal would establish a domestic capacity to produce mRNA vaccines and treatments to support Australia’s pandemic readiness and responses, including for the current COVID-19 pandemic, and enabling the national supply and availability of such vaccines and treatments are important matters of national significance.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Financial Framework (Supplementary Powers) Amendment (Health Measures No. 9) Regulations 2021

This disallowable legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the legislative instrument

Section 32B of the Financial Framework (Supplementary Powers) Act 1997 (the FF(SP) Act) authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the FF(SP) Regulations) and to make, vary and administer arrangements and grants for the purposes of programs specified in the Regulations. Schedule 1AA and Schedule 1AB to the FF(SP) Regulations specify the arrangements, grants and programs. The powers in the FF(SP) Act to make, vary or administer arrangements or grants may be exercised on behalf of the Commonwealth by Ministers and the accountable authorities of non‑corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

The Financial Framework (Supplementary Powers) Amendment (Health Measures No. 9) Regulations 2021 amend Schedule 1AB to the FF(SP) Regulations to establish legislative authority for government spending on the development and maintenance of Australia’s onshore capability to manufacture mRNA (Messenger Ribonucleic Acid) products.

The capability will be initially founded through a partnership with one or more suppliers. The partnership is expected to be underpinned by agreements commencing in 2021-22 that would establish a population-scale mRNA manufacturing capability and guarantee the supply of locally manufactured mRNA vaccines, including COVID-19 vaccines, as well as provide future pandemic readiness. This disallowable legislative instrument will enable the Commonwealth to enter into agreements with one or more suppliers (including any other suppliers of locally manufactured mRNA products) within the total funding commitment, subject to future decisions by the Government.

Vaccines and therapeutics that use mRNA technology have been identified as a key growth opportunity in the Medical Products National Manufacturing Priority road map under the Government’s Modern Manufacturing Strategy. The mRNA technology underpins the highly effective Pfizer-BioNTech and Moderna COVID-19 vaccines which have been embraced by Australians, accelerating the country’s recovery from the pandemic. This technology could deliver step-change improvements in vaccine efficacy and individualised treatments for cancer and other diseases.

In establishing an onshore mRNA manufacturing capability in Australia, the Government’s objectives are to:

• ensure priority access to, and reliable delivery of, safe and effective prospective mRNA vaccines and any mRNA therapeutics to the Australian population as soon as they are available, on an ongoing basis;
• provide security of vaccine supply to address pandemics and other health emergencies into the future; and
• strengthen Australia’s biopharmaceuticals sector, including through enabling potential translation and commercialisation paths for Australian-based research and development.

The overarching requirements in the development and maintenance of a sovereign mRNA manufacturing capability include:

• an end-to-end onshore manufacturing solution for the production and supply of mRNA pandemic and non-pandemic vaccines for the Australian population; and
• participation in the broader mRNA ecosystem, including contribution to research and development.

The Department of Health will be the head agency for entering into agreements and providing ongoing contract management and supplier engagement.

Human rights implications

This disallowable legislative instrument engages the following right:

• the right of everyone to the enjoyment of the highest attainable standard of physical and mental health – Article 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), read with Article 2.

Article 2(1) of the ICESCR requires each State Party to ‘take steps…to the maximum of its available resources, with a view to achieving progressively the full realization’ of the rights recognised in the ICESCR ‘by all appropriate means, including particularly the adoption of legislative measures’.

Article 12(1) of the ICESCR recognises the ‘right of everyone to the enjoyment of the highest attainable standard of physical and mental health’. Article 12(2)(c) requires Australia to take steps necessary for ‘the prevention, treatment and control of epidemic, endemic, occupational and other diseases’, and Article 12(2)(d) requires Australia to take steps necessary for ‘the creation of conditions which would assure to all medical service and medical attention in the event of sickness’.

The proposed measure would fund Australia’s onshore mRNA manufacturing capability, which would enable Australia to implement and enhance its immunisation/vaccination programs. The mRNA technology is currently used to prevent COVID-19 and also has the potential to treat a range of other medical conditions such as influenza, cancer and human immunodeficiency virus.

The proposed measure would promote the right to health by ensuring that Australia is well prepared to prevent, treat and control diseases and other medical conditions using mRNA technology. Having mRNA manufacturing capability onshore would also ensure that Australia is not subject to potential supply and delivery issues of facilities located offshore.

Overall, this measure would support the right of individuals to the enjoyment of the highest standard of health and further contribute to overall community health through the prevention, treatment and control of epidemic, endemic, occupational and other diseases.

Conclusion

This disallowable legislative instrument is compatible with human rights because it promotes the protection of human rights.

Senator the Hon Simon Birmingham

Minister for Finance