AU’s research institutes face financial decay as costs outrun grants

Average annual real funding growth over the past decade stood at just 1.4%.

Australia's independent research institutes are warning that they are becoming financially unsustainable as the indirect costs of conducting research continue to outstrip the block grants designed to cover them.

This is according to the country's first-ever National Health and Medical Research Strategy 2026 to 2036 by the Department of Health, Disability and Ageing.

In 2023 to 24, Australia spent an estimated US$5.3b (AUD7.6b) on health and medical research. The federal government contributed US$4.1b (AUD5.9b), representing 77.2% of the total, whilst state and territory governments contributed an estimated US$839m (AUD1.2b) (15.4%) and the non-government sector US$419m (AUD600m) (7.4%).

Average annual real funding growth over the past decade was just 1.4% — barely above the rate of inflation and well below the rising cost curve of modern research.

The strategy notes that grant success rates are declining, driving job insecurity and workforce attrition, particularly among early- and mid-career researchers — the cohort on which the country's next generation of scientific output depends.

To address the crisis, the strategy proposes the establishment of a dedicated Commonwealth funding stream for high-risk, high-reward discovery research using a fail-fast approach with short timeframes and targeted budgets.

The second is implementing a consistent approach to supporting indirect research costs across the two major Commonwealth funding vehicles, the Medical Research Endowment Account (MREA) and the Medical Research Future Fund (MRFF), with an initial uplift proposed for MRFF-funded grants.

The strategy also identifies a governance gap as the MREA and MRFF currently operate across separate portfolio areas with limited strategic coordination, generating inefficiencies, duplication and gaps in funding coverage.

A unified executive agency overseeing both funds with coordinated but separate governance to preserve each fund's distinct purpose — is proposed as a longer-term structural fix.

The strategy will now be subject to government consideration, with the Implementation Roadmap proposing a phased rollout.