The Commonwealth Government’s current policy on cost recovery for the new scheme is that it be 100 per cent cost recovered from the first day of operation, which is anticipated to be 3 January 2001.

During consultations to date, we have heard strong views on this issue:

  • researchers were concerned that cost recovery would further stretch already limited budgets and inhibit “blue skies” research;
  • small biotechnology companies indicated that cost recovery would provide large multinationals with a competitive advantage and disadvantage fledgling companies;
  • large companies expressed concern that they would cross-subsidise others;
  • consumer groups expressed concern that full cost recovery may make the GTR a “captive” of industry; and
  • others emphasised the strong public interest in ensuring the safety of all GMOs, and therefore it would be appropriate for Australian Governments to pay at least part of the costs of the regulatory system.
The issue of cost recovery will be considered by Governments shortly. In the meantime, the legislation has been drafted in a way which will enable fees and charges to be levied in a range of ways:
  • Certain fees for services are described in the Gene Technology Bill 2000 – for example, application fees and fees for certification of facilities to a certain containment level. These fees will be detailed in regulations to be made under the Gene Technology Bill once it becomes law.
  • Other charges - such as annual charges - will be described in a separate bill, the Gene Technology (Licence Charges) Bill. This Bill is a very short one which simply sets up the capacity for the GTR to charge annual fees. The fees themselves will be set out in regulations under the Bill.

When will the fees and charges be determined?

In late May and early June 2000, the IOGTR undertook a competitive selection process to contract a consulting firm to cost the proposed regulatory system. The consulting firm KPMG was the successful tenderer, and the firm has already commenced an independent analysis of the costs associated with the regulatory system. This study is being conducted in a number of stages.

Stage 1 – involves an evaluation of the fees and charges regimes of existing regulators (such as the National Registration Authority and the Therapeutic Goods Administration) and a comprehensive assessment of the estimated costs of each of the components of the proposed regulatory scheme for GMOs and GM products, as reflected in the Gene Technology Bill 2000 and the Gene Technology (Consequential Amendments) Bill 2000.

Stage 2 – involves the development of a costing model (based on Activity Based Costing) which will identify the ‘cost drivers’ (that is, all of the components of the regulatory system which have costs associated with them) and the expected ‘throughput’ of the regulatory system during the first five year period. The number of applications received by the GTR will be critical in many ways, because it will help to shape the type of administrative and scientific unit the Office of the GTR will become.

Stage 3 – Once KPMG have identified the likely costs of the regulatory scheme, extensive consultation will be undertaken in each jurisdiction with relevant Commonwealth and State/Territory Government agencies, industry stakeholders (including biotechnology companies, universities and other organisations undertaking research) and other non-government stakeholders. This consultation period will rigorously test the accuracy of the costing model developed.

Stage 4 – Following the consultations, and any revisions to the costing model which are required as a result, KPMG will present a number of options for the modeling of fees and charges.

Governments will consider these options, and regulations will then be developed which reflect the proposed fees and charges regime. Further consultation will then be undertaken on the proposed regulations with a view to finalising the fees and charges regime by November 2000.