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a) Financial performance
| Details | 2016–17 Actual $'m | 2017-18 Actual $'m | 2018-19 Actual $'m | 2019-20 Actual $'m | 2020-21 Actual $'m |
|---|---|---|---|---|---|
| Revenue from Government | 2.57 | 2.44 | 2.26 | 8.53 | 13.76 |
| Sale of goods and services | 139.04 | 152.91 | 159.00 | 168.04 | 169.49 |
| Other revenue and gains | 0.1 | 0.00 | 0.05 | - | 1.49 |
| Total A | 141.62 | 155.35 | 161.31 | 176.58 | 184.74 |
| Employee expenses | 78.78 | 75.80 | 93.62 | 86.73 | 88.08 |
| Suppliers | 61.69 | 62.84 | 57.56 | 74.84 | 84.37 |
| Depreciation and amortisation | 4.29 | 6.85 | 7.52 | 8.00 | 9.97 |
| Write-down and impairment of assets | 1.96 | 2.90 | 1.45 | 1.60 | 0.00 |
| Total B | 146.7284 | 148.38 | 160.14 | 171.16 | 182.43 |
| Surplus (deficit) | (5.092) | 6.97 | 1.16 | 5.42 | 2.32 |
| Retained surplus | 43.59 | 50.55 | 51.72 | 47.68 | 50.00 |
| % of Retained surplus to TGA budget | 31% | 33% | 32% | 27% | 27% |
Until 2018-19, the TGA's activities were primarily cost recovered from industry except for the cost of the medicines and chemicals scheduling function for which an appropriation is provided by the Government. In addition, the TGA continued to receive appropriation funding in the form of an interest equivalency payment for funds held in the TGA special account (reserves). From 2019-20 onwards, an additional funding was approved by the Government for activities that are not appropriate for cost recovery from the industry.
In 2020-21 the TGA had a surplus of $2.32 million. Revenue was above budget by $5.29 million primarily due to increases in medical device applications, and appropriation revenue. Expenses were above budget by $1.81 million due to increases in corporate expenditure by $0.88 million and supplier expenditure by $1.09, offset by a reduction in employee expenses of $0.16 million. The appropriation funding for 2020-21 included $3.60 million for the opioids campaign and $6.57 million for fee free services.
TGA's financial performance is discussed with industry representative bodies at bilateral meetings held each year.
The 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 (recalls, product tampering). The target for the reserve balance is set at around 25% of operating budget. While until 2014-15 accumulated reserves remained within the target level, since 2015–16 these have remained above that target although reduced in 2016-17 as a result of the costs of implementing the 2016-17 Budget measure "Improving the Regulation of Therapeutic Goods in Australia" which involves expenditure of $20.4 million from TGA reserves over four years. The surplus in 2017-18 allowed the TGA to recoup earlier than planned a part of the $20.4 million drawn from its reserves.
In view of the 2020-21 Budget decisions to make investments of $19.7 million in the TGA business systems and Unique Device Identifier system, retained surplus would drop in coming years.
Depreciation is accumulated in cash reserves for the replacement of assets. The Government expects the TGA to manage within its cost recovery resources and therefore investment in new, or replacement of existing, business systems, must come from the responsible management of cash reserves.
| Financial Estimates | 2022-23 Budget $'m | 2023-24 Estimate $'m | 2024-25 Estimate $'m | 2025–26 Estimate 'm |
|---|---|---|---|---|
| Revenue from Cost Recovered activities | 173.80 | 173.41 | 175.21 | 175.21 |
| Government Appropriation | 15.70 | 15.68 | 15.80 | 15.91 |
| Expenses | 190.93 | 189.57 | 191.02 | 191.12 |
| Surplus(Deficit) | (1.43) | (0.48) | 0.00 | 0.00 |
* Revenue from Government includes the current government appropriation for Scheduling function and interest appropriation for TGA Special Account along with the 2019-20 MYEFO funding provided by the Government.
Financial performance by industry sector group is included in Appendix 1.
b) Non-financial performance
Each year we provide information about our regulatory performance through the TGA Annual Performance Statistics Report and the Half Yearly Performance Snapshot. We also report annually on our performance against the Regulator Performance Framework through the TGA Self-Assessment (Key Performance Indicators) Report.
The statistics contained within this report cover the period 1 July 2020 to 30 June 2021, and contribute to annual publications that track our progress against the priorities we have established for the financial year.
Risk assessment
A cost recovery risk assessment for the annual increases to fees and charges was undertaken in April 2020 resulting in an overall low risk rating for TGA's cost recovery arrangements. The cost recovery risk rating of low is based on assessment of the criteria using the Charging Risk Assessment (CRA) template. The key medium to high risks for cost recovery are that the amount to cost recover exceeds $20 million and the source of recovery is through fees and levies. All other risk factors render a low risk rating.
The most likely risks identified for any ongoing changes to cost recovery arrangements were:
- cost recovery fees creating a disincentive to products entering the market;
- inherent risks in implementing diverse cost recovery arrangements; and
- potential for misunderstanding of how fees and charges are calculated.
These risks are addressed by:
- continued improvements in regulatory and administrative functions;
- implementing best practice in ABC methodology;
- working closely with stakeholders and industry representatives to mitigate the cost impact to business; and
- ensuring charging practices are aligned to our services and are transparent and defensible.
From a regulatory perspective risk management is applied to regulating therapeutic goods by:
- identifying, assessing, and evaluating the risks posed by therapeutic goods before they can be approved for use in Australia (pre-market assessment or evaluation);
- identifying, assessing, and evaluating the risks posed by manufacturing processes before a manufacturer is issued with a licence to manufacture therapeutic goods (licensing of manufacturers); and
- identifying, assessing, and evaluating the risks that may arise following approval of the product and licensing of the manufacturer (post-market surveillance).