FHRI Fund Act 2012

The Future Health Research and Innovation (FHRI) Fund is a sovereign wealth fund. A sovereign wealth fund is a State-owned fund consisting of a pool of money set aside from the State’s normal accounts to achieve a particular purpose. In the case of the FHRI Fund, this purpose is to improve, through research and innovation, the health and prosperity of Western Australians, the sustainability of the health system and to advance the State’s standing as a leader in research and innovation.

The FHRI Fund was created by repurposing the WA Future Fund and its enabling legislation, the Western Australian Future Fund Act 2012. The WA Future Fund was established in 2012 with seed capital from the Royalties for Regions Fund with the purpose of setting aside and accumulating a portion of the State’s mining royalties for use by future generations of Western Australians.
The amendments to the WA Future Fund legislation included renaming the Act to reflect the new purpose described above, resulting in the Western Australian Future Health Research and Innovation Fund Act 2012 (the Act). The Act, which received the Royal Assent on 27 May 2020, can be accessed on the Western Australian Legislation website here.

 

Part 1 contains the provisions such as when the Act commences, definitions for key terms and the object of the Act. Some of the terms defined are important for understanding how the Future Health Research and Innovation (FHRI) Fund will work:

Arrangement refers to mechanisms that will be used to allow FHRI Fund moneys to flow to research- and innovation-related activities. Arrangements could include contracts, grants, programmes and schemes. The FHRI Fund Governance Framework refers to arrangements as Programs and Initiatives. The definition of arrangement is essential for understanding how moneys in the FHRI Account may be applied (as set out in Part 2 of the Act).

Qualifying activities refers to research and innovation activities. See the Research and Innovation pages for how these terms are defined for the purposes of the FHRI Fund. It is important to note that the definition in the Act is limited to human research and innovation. The definition for qualifying activities is important for understanding the Object of the Act (see below) and the purpose of the FHRI Account (described in Part 2 of the Act).

The Object of the Act is quoted below.

The object of this Act is to provide a secure source of funding to support qualifying activities that contribute (directly or indirectly) to 1 or more of the following –

(a) improving the financial sustainability of Western Australia’s health system;
(b) improving the health and wellbeing of Western Australians;
(c) improving Western Australia’s economic prosperity;
(d) advancing Western Australia to being, or maintaining Western Australia’s position as, a national or international leader in qualifying activities.

The secure source of funding in the Object above refers to the FHRI Fund that is established under Part 3 of Act. The FHRI Fund is the capital-holding account, which is invested by the Treasurer. The income from this investment provides the financing stream for qualifying activities, while the capital is preserved in perpetuity.


Part 2 of the Act is about the operational account (the Future Health Research and Innovation (FHRI) Account), including how it is credited with investment income from the FHRI Fund and how it may be applied. Part 2 also provides for the establishment of an advisory group for the FHRI Fund, called the Advisory Council, and the roles and responsibilities of this group.

The purpose of the FHRI Account is to support qualifying activities that contribute to one of the four components of the Object of the Act above. In effect, moneys in the FHRI Account may only be applied to research and innovation activities that contribute to improving the financial sustainability of the WA health system, and/or the health and wellbeing of Western Australians, and/or the prosperity of the State, and/or advancing WA as a leader in research and innovation. Part 2 of the Act provides examples for the types of arrangements that may be made, but these are not exclusive.

Part 2 of the Act also includes a provision that allows research and innovation related to human coronaviruses with pandemic potential (such as the virus that causes the COVID-19 disease) to be prioritised for funding in the 2020/21 financial year.

The FHRI Account is credited annually with the forecast of the investment income from the FHRI Fund. The forecast, rather than actual, investment income is transferred because this will be known when the State Budget is approved, giving greater certainty regarding the amount of money that will be available and ensuring the money will be available from the start of the financial year. The FHRI Account may also be credited with other moneys lawfully made available, such as appropriations from the State Government and contributions from the corporate sector.

Taken together, Parts 2 and 3 of the Act set up a closed financial system. Moneys enter this system in three ways: crediting of one per cent of the State’s royalty income to the FHRI Fund (see Part 3), the investment income credited to the FHRI Fund and any other lawful contributions (for example, additional moneys from the State Government or corporate funds). Moneys may only leave the system via the FHRI Account, in accordance with the purpose of supporting qualifying activities, as described above. Within this system, the forecast investment income flows from the FHRI Fund to the FHRI Account annually and moneys can flow from the FHRI Account to the FHRI Fund if the Minister for Health and Treasurer both agree in writing that this should occur.

The members and functions of the Advisory Council are also set out in Part 2. The Advisory Council's primary role is to provide advice regarding how moneys from the FHRI Account should be applied. The FHRI Fund governance page provides further detail about the Advisory Council and its role in the governance of the FHRI Fund.

Part 3 of the Act is about the establishment and management of the Future Health Research and Innovation (FHRI) Fund. The Treasurer is responsible for this part of the Act, whereas the Minister for Health is responsible for the other three parts. The purpose of the FHRI Fund is to fund the FHRI Account.

Part 4 of the Act deals with three matters: restrictions on the requirements for amending the Act; a legislative requirement for there to be a governance framework for the FHRI Fund; and the making of regulations.

The manner and form provision in Part 4 introduces a higher threshold for amending or repealing certain provisions in the Act. Normally, an Act can be amended if the majority of Members of Parliament present at the time vote in favour of the amendment. The manner and form provision requires that a majority of all Members of Parliament eligible to vote, not just those present at the time the vote is held, must vote in favour of the amendment. The manner and form provision applies until 2032.

Part 4 of the Act provides that the Minister for Health must prepare and maintain a Governance Framework for the FHRI Fund. The Act specifies that the Governance Framework should provide for a strategy and priorities for the FHRI Fund, and for how arrangements are made and administered. The FHRI Fund governance page provides further detail about the Governance Framework for the FHRI Fund. Part 4 of the Act also provides that the Minister for Health must table in Parliament the Governance Framework, Strategy, Priorities, arrangements made and other relevant strategic documents. The Director General of the Department of Health is responsible for making these documents available online.

Last Updated: 01/06/2021