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Health Research Council
of New Zealand
__________________________________
Statement of
Performance
Expectations
2015
www.hrc.govt.nz
Phone: +64 9 303 5200
Fax: +64 9 377 9988
Level 3, 110 Stanley Street, Auckland 1010
PO Box 5541, Wellesley Street, Auckland 1141
www.hrc.govt.nz
ISSN 2382-0586 (Print)
ISSN 2382-0594 (Online)
Crown copyright ©. This copyright work is licensed under the Creative Commons Attribution 3.0
New Zealand licence. In essence, you are free to copy, distribute and adapt the work, as long as you
attribute the work to the Health Research Council of New Zealand and abide by
the other licence terms.
www.hrc.govt.nz
Table of Contents
Foreword .............................................................................................................................................. 1
Introduction ......................................................................................................................................... 2
Statement of Performance Expectations ................................................................................... 5
Output 1: Health research contracts........................................................................................................... 6
Scope .............................................................................................................................................................. 6
Annual Funding Round ................................................................................................................................... 6 Vision Mātauranga Capability Crown Fund .......................................................................................... 7 Performance indicators .......................................................................................................................... 8
Output 2: Career development contracts .............................................................................................. 10
Scope of the output ................................................................................................................................ 10
Performance indicators ....................................................................................................................... 11
Output 3: Co-funding relationships ......................................................................................................... 12
Scope of the Output ............................................................................................................................... 12
The Partnership Programme .................................................................................................................... 12 International Relationships Fund ........................................................................................................... 13 Health Innovation Partnership................................................................................................................. 13 Performance indicators ....................................................................................................................... 13
Output 4: Contribution to policy, regulatory and ethical frameworks ...................................... 15
Scope of the Output ............................................................................................................................... 15
Performance indicators ....................................................................................................................... 16
Forecast Statement of Comprehensive Revenue and Expense ............................................ 17
Forecast Statement of Financial Position ............................................................................................ 18 Forecast Statement of Cash Flow ............................................................................................................ 19 Notes to the Financial Statements .......................................................................................................... 20
Information on the Organisation ............................................................................................... 32
Appendix 1: Key focus of the HRC’s Research Investment Streams and their
relationship to the performance framework .................................................................... 33
Glossary of Abbreviations and Terms ...................................................................................... 34
HRC Statement of Performance Expectations 2015 1
Foreword
IN 2015, WE WILL SUPPORT HIGH QUALITY AND INNOVATIVE HEALTH
RESEARCH THAT IMPROVES THE HEALTH OF NEW ZEALANDERS. WE
WILL CONTRIBUTE TO A STRONG AND SUSTAINABLE ECONOMY
THROUGH THE DEVELOPMENT OF NEW KNOWLEDGE, MEDICAL
TECHNOLOGIES AND PRODUCTS, AND A HEALTHY, PRODUCTIVE
POPULATION
We will do this by supporting the best health
research that is done in New Zealand,
identified by our internationally recognised,
best-practice processes. We will work closely
with the Ministry of Health and the Ministry
of Business and Innovation (MBIE) to ensure
that the research we support meets our
needs as a nation, supports our economic
growth and attracts and fosters the expertise
and skills that New Zealand needs to prepare
for the challenges of the future as well as
those we face today.
In January, we welcomed our new Chief
Executive, Professor Kathryn McPherson, and
are excited by the skills, expertise and
research experience that she brings to the
organisation. We look forward to a fresh
approach to our business and exploring ways
in which we can deliver even more value and
utility to our stakeholders.
The strategic refresh of our functions and
operating environment in 2015 gives us the
perfect opportunity to further engage, evolve
and excel as an organisation and ensure that
we are well aligned with our stakeholders
and positioned to deliver maximum impact
and value. This year we invested in a
revamped electronic application system,
Gateway, to create an improved and seamless
process for our researchers.
The growing burden of non-communicable
diseases on the health sector is a long-
standing concern and we will continue to
contribute knowledge and innovations that
will reduce the impact of diabetes,
cardiovascular disease and obesity in our
population. Our long-term investment in
understanding the antecedents of these
conditions in utero and early childhood forms
an excellent base on which to build more
effective interventions for at-risk children
and their families.
The link between non-communicable
diseases, mental health and general well-
being is an important one. We understand
that effective interventions require research
that delivers advances in all of these areas.
The HRC has a strong record for keeping
costs down and operating well within the
guidelines set for operational expenditure.
We have reduced costs considerably over the
last five years and continue to look for ways
to do so whilst retaining our current high
standards of performance and service.
Sir Robert Stewart KNZM
Chair
16 June 2015
Professor Richard Beasley CNZM
Deputy Chair
16 June 2015
2 HRC Statement of Performance Expectations 2015
Introduction
This Statement of Performance Expectations sets out the four Outputs
that the HRC will deliver in the 2015/16 financial year, with funding
from Vote Science and Innovation ($82.71 million) and Vote Health
($0.29 million)
The HRC's Statement of Intent 2014–18 (SoI)
provides the basis for our SPE, outlining the
strategic directions for the HRC for the next
three years, and defining the performance
framework and outcomes that we are aiming
to achieve.
The HRC is the principal government funder
of health research, owned by the Minister of
Health, and primarily funded by the Minister
of Science and Innovation.
Our major activity is investing in health
research; some proposed by health
researchers themselves (investigator-led),
some sought through directed requests for
proposals on specified topics (mission-led),
and some through training and development
support for the research workforce in areas
where greater capacity is needed (career
development).
We provide internationally recognised best-
practice processes to ensure that only high-
quality research is supported that will deliver
important health, social and economic
outcomes. This principle underpins our work,
as poorly designed or conducted research is a
waste of precious public resources.
Our investment makes a difference to the
health, wellbeing and productivity of New
Zealanders – through research that generates
new knowledge, solutions and innovations,
and improves the quality and cost-
effectiveness of the healthcare system. By
keeping New Zealanders healthy and
productive, we support economic growth. We
also support innovative research that results
in new products and processes with
commercial value – this can take years to
achieve.
To make all this happen we have to balance
our investment so that we can deliver
knowledge and solutions that will impact
immediately, but also seed the ideas and
support the exploration that will produce the
innovations of the future.
In 2015/16, the HRC plans to spend
approximately $82 million in delivering the
following four Outputs funded primarily
through Vote Science and Innovation:
Output 1: Health Research Contracts;
Output 2: Career Development Contracts;
Output 3: Co-Funding Relationships, and
Key facts about the HRC
Crown Agent (established HRC Act 1990)
Mission: Benefiting New Zealand through health research
Vision: Improved health and quality of life for all
Principle statutory functions:
advise the Minister of Health on national health research policy
advise on health research priorities for New Zealand
initiate and support health research
foster the recruitment, training and retention of health researchers in New Zealand
Our Outcomes: New knowledge, solutions & innovations
improve health
The healthcare system is improved through research evidence & innovation
The best clinicians & health researchers are supported & retained in New Zealand
The impact, responsiveness & uptake of health research is increased
HRC Statement of Performance Expectations 2015 3
Output 4: Contribution to Policy,
Regulatory and Ethical Frameworks.
The majority of HRC research investment is
mapped to four Research Investment Streams
(RIS) that have been designed to cover all
areas of human health and development. A
summary of the four RIS and the health and
economic benefits that arise from the
research supported is provided in
Appendix 1, p33.
As of 1 July 2015, we expect to have forward
commitments of between $190 and
$210 million to health research contracts,
being undertaken in more than 30 different
research organisations, and supporting a
research workforce of 2751 positions (1721
salaried), equivalent to 850 full-time posts.
Our SoI 2014–18 provides detail on how we
are addressing our Minister’s expectations. In
the coming year, we will also be focusing on
priorities identified by Government and the
Minister of Health, which include supporting
vulnerable children, improving prevention of
disease, injury and disability, lifting the
quality, safety and accessibility of health
services and supporting the health of older
people.
Our work will also make an important
contribution to the Minister of Science and
Innovation’s priority – ‘Increasing the
economic contribution of the skills, science
and innovation systems’. Much of the health
research the HRC funds has an economic
impact, either directly or indirectly, and we
look forward to exploring an increased role in
realising the economic outcomes arising from
the cutting-edge research we support.
The HRC will work closely with MBIE to align
investment with the National Science
Challenges and maximise opportunities for
success in the health-related fields.
Discussions are on-going as to how we can
best work together to co-ordinate investment
and leverage the greatest value for New
Zealand.
The HRC has a ten-member Board appointed
by the Minister of Health (see Information on
the Organisation, p32) with a range of
expertise, as defined by our Act. Members of
the Board chair three of the HRC’s four
Statutory Committees, which provide advice
to the Board on research funding, policy and
training. Some standing committees also have
an important role to play in advising the
Minister of Health on the ethics and safety of
research and new technologies.
Another way we add value is through our
Partnership Programme. We bring
stakeholders together across sectors to
commission research. Sharing the cost,
resources and expertise that each partner
brings to the table raises both the scale and
value of the resulting project.
The HRC has set four high level Outcomes for
the investment, which are shown in the
following schematic of our performance
framework.
HRC committees
Statutory committees
Biomedical Research Committee
Māori Health Committee
Public Health Research Committee
Ethics Committee
Standing committees
Pacific Health Research Committee
Grant Approval Committee
Risk Management Committee
Standing Committee on Therapeutic Trials (SCOTT)
Gene Technology Advisory Committee (GTAC)
4 HRC Statement of Performance Expectations 2015
The HRC’s Performance Framework
HRC Mission: Benefiting New Zealand through health research; HRC Vision: Improved health & quality of life for all
Outcomes
New knowledge, solutions & innovations improve health
The healthcare system is improved through research evidence & innovation
The best clinicians & health researchers are supported & retained in NZ
The impact, responsiveness & uptake of health research is increased
Research Impacts System Impacts
Building Research Capacity & Capability
Sustainable career pathways enhance the skills of researchers & clinicians
Research opportunities for frontline clinicians are delivered
Research is easily accessed, understood & applied by end-users
Research continues to respect the rights of participants
The ethical framework for reviewing new technologies & trials is sound
NZ has a high-quality & consistent system of ethical review
NZ has access to well-informed & independent ethical advice
NZ has the research capacity to address the needs of our unique population
The HRC works in partnership to ensure NZ’s investment in health research meets sector needs & represents best value
Strong leadership identifies enduring priorities & provides clear direction
Knowledge transfer pathways ensure relevant research is adopted by the health & disability sector
Strategic partnerships engage end-users, leverage benefit, & improve research uptake
Researchers are encouraged to focus on improving health & health equity
NZ has the ability to respond to urgent or emerging issues
High-quality, high-impact, original research is conducted
International advances are adapted for NZ conditions
High-quality research improves health & health equity
More front-line clinicians are engaged in health research
Promising emerging researchers gain valuable research experience
NZ research contributes to national & international advances International advances are adapted to NZ conditions Encourage risk-taking by research teams Support unique & distinctive opportunities
A strong research focus on keeping New Zealanders healthy & productive
Innovative health technologies & therapies develop HRC-funded research contributes to building & sustaining the body of Māori health knowledge & research expertise
HRC research contributes to earlier diagnosis & better treatments for New Zealanders living with serious conditions
Research that improves the quality, cost-effectiveness & sustainability of NZ's health system is prioritised
HRC’s Research Investment Streams HRC Systems
Health & Wellbeing in NZ
Keeping people healthy & independent throughout life
Improving Outcomes for Acute & Chronic Conditions in NZ
Improving the understanding & management of disease & disability in NZ
New Zealand Health Delivery
Strengthening the use of evidence to inform decision-making in health practice or improve the health system
Rangahau Hauora Māori
Contributing to Māori health gains through Māori research that upholds rangatiratanga, & utilises & advances Māori knowledge, resources & people
These impacts are achieved through other HRC initiatives & the work of the HRC’s Statutory & Standing Committees, including the HRC Ethics Committee, the Gene Technology Advisory Committee & the Standing Committee on Therapeutic Trials. The HRC’s Partnership Programme research contracts are included in the investment reported by Research Investment Stream, but investment occurs throughout the year, as do continuous efforts to forge new national & international partnerships & maximise the returns on investment.
HRC Statement of Performance Expectations 2015 5
Statement of Performance Expectations
WE DESCRIBE IN DETAIL THE FOUR OUTPUTS THAT THE HRC WILL
DELIVER IN 2015/16, OUR PERFORMANCE MEASURES AND TARGETS
The links between the HRC’s outputs and our funding streams are shown in the table below.
HRC Output Funding Sources Vote Output Expense
1. Health Research Contracts Vote Science & Innovation Bequests & donations Cost-sharing arrangements Interest
Health & Society Vision Mātauranga
Capability Fund
2. Career Development Contracts
Vote Science & Innovation Interest
Health & Society
3. Co-funding Relationships a) Partnership Programme b) International Collaborations
Vote Science & Innovation Third-party management
fees Interest
a) Health & Society b) International Relationships
Fund
4. Contribution to Policy, Regulatory & Ethical Frameworks
Vote Health Vote Health
6 HRC Statement of Performance Expectations 2015
Output 1: Health research contracts
THE HRC INVESTS IN HEALTH RESEARCH CONTRACTS THROUGH
CONTESTABLE FUNDING ROUNDS AND CO-FUNDING PARTNERSHIPS
Cost 2015/16 $ 000’s
Prospective revenue: refer to Financial Statements: $73,985
Prospective cost: refer to Financial Statements:
Deficit funded from reserves:
$74,442
($437)
Scope
This output covers research contracted
through the annual funding round and
Request for Proposals (RFP) processes.
Research contracts funded in this output are
supported by funds from the Health and
Society and Vision Mātauranga Capability
Crown Funds. In the period ending June 2015,
there will be 240 active health research
contracts, some of which were initiated up to
five years previously.
Annual Funding Round
The annual funding round is our major
opportunity to support research that has
been proposed by the research community.
Through this process, we see the work that
researchers are really passionate about and
the areas where they feel that they can make
the biggest contribution. It is also an
opportunity to fund ideas and innovations
that the broader health and science sector
have not yet conceived of, as well as support
links with international teams that have been
forged independently of our processes.
Ensuring that peer-review assessment and
contracting is equitable, free from conflict of
interest, and identifies the best ideas is a
major part of the work of the HRC. The
process of assessment, ending in funding
decisions, takes about nine months in total
and will involve approximately 240 expert
committee members and a further 450-500
specialist reviewers. All research receiving
funding demonstrates a combination of high
scientific merit and a high likelihood of
making a significant contribution towards
improving health, social and economic
outcomes for New Zealand. We invest time
and effort into ensuring that we are picking
the best teams and ideas.
The HRC will support four different types of
contract through the annual funding round,
and Explorer Grants through a separate
funding process. Our Explorer Grants were
introduced in 2012 to provide researchers
with seed support for transformative ideas
that are untested or at an early stage of
Expected HRC support for contracts
in 2015/16
25-30 new Projects (Each up to 3 years, $1.2M)
5 new Programmes (Each up to 5 years, $5.0M max)
6-7 new Feasibility Studies (Each up to 1 year, $150K max)
10 new Emerging Researcher First Grants (Each up to 3 years, $150K max)
3-4 Explorer Grants (Each up to 2 years, $150K max)
HRC Statement of Performance Expectations 2015 7
development. This investment is all in
addition to the support for the research
contracts still active from previous years.
All new contracts will be selected using the
HRC’s method of peer review (using expert
researchers in the same field to assess the
proposal). All our research contracts will be
monitored to ensure delivery of contracted
objectives.
All investment in this Output is mapped to
one of our four Research Investment Streams
(RIS). These represent broad priority areas
for the HRC’s research investment. They
reflect our drive to deliver greater value for
money by ensuring that investment is
directed to areas of greatest research need
and opportunity. The four RIS, and the
indicative proportion of new investment, are
described in the highlighted text (left). More
information on how the RIS map to the
outcomes and impacts in our Performance
Framework (p 4), taken from the HRC's
Statement of Intent 2014–2018, are set out in
Appendix 1.
The focus on keeping people well, productive
and independent, alongside concerted efforts
to combat chronic conditions and improve
the quality and sustainability of our
healthcare system is driven both by
international trends and by the needs of our
stakeholders and end-users.
We also recognise that New Zealand has a
unique opportunity to support distinctive
approaches to addressing the health needs
and aspirations of Māori, and to build the
capacity needed to work with our indigenous
population in order to improve health
outcomes and achieve health equity.
Vision Mātauranga Capability Crown Fund
The Vision Mātauranga Capability fund
supports contracts to the value of
$1.98 million that progress the goals of the
Vision Mātauranga strategy. The aim of the
strategy is to unlock the science and
innovation potential of Māori knowledge,
resources and people for the environmental,
economic, social and cultural benefit of New
Zealand. In 2015/16, the Vision Mātauranga
Crown Research Fund will support one or
more research projects submitted through
the annual funding round that addresses the
goals of Vision Mātauranga. The fund also
supports Ngā Kanohi Kitea research
contracts, which provide support for iwi,
hapū and Māori community groups to focus
on a community-identified health need. An
important goal for this fund is development
of the capacity to engage in research.
Our four Investment Streams
Health and Wellbeing in New Zealand (approximately 30-35%)
Preventing illness and injury and reducing the burden on our health system.
Keeping New Zealanders healthy and independent for longer is the major focus, but highly innovative research on how the human body functions is also supported. This often provides knowledge needed to create new diagnostics and identify drug targets or medical technologies.
Improving Outcomes for Acute and Chronic Conditions in New Zealand (approximately 35-40%)
Understanding, prevention, diagnosis and management of acute and chronic conditions.
New Zealand Health Delivery (approximately 20%)
Research impacting on the health system and service delivery in the short term
Research will impact on the health system and service delivery within 3-5 years, to contribute to services being delivered more effectively.
Rangahau Hauora Māori (approximately 10%)
Improving Māori health outcomes and quality of life.
8 HRC Statement of Performance Expectations 2015
Performance indicators
The performance indicators for this output
relate to the quality, priority focus and
timeliness of HRC-funding processes, as well
as the role our funding plays in sustaining a
fit-for-purpose health research workforce.
The performance indicators, baselines and
targets are listed on the following page.
Performance Indicators for Output 1: Health research contracts
Annual performance indicator Baseline 2014/15
Actual 2015/16
Target
Outcome: New knowledge, solutions and innovations improve health
Average number of expert reviewers engaged in assessing each research proposal for the Annual Funding Round
New measure 3.7 3-5
One of the key tenets of the HRC's approach to commissioning research is ensuring that the applications are reviewed by experts in the field with the appropriate expertise to judge if the research will make an original and valuable contribution to existing knowledge in an area. Many funders are struggling to maintain a rigorous peer-review process due to the numerous competing demands on health research experts. We are proud of our ability to maintain our high standards in this area.
Time between receipt of Expressions of Interest to invitation to proceed to full proposal
New measure 2.5 months 2-3 months
The HRC runs a two-stage process, starting with receipt of Expressions of Interest. Timeliness in making funding decisions is critical. Applicants need to know as early in the process as possible if they are not likely to be supported, so they can make alternative arrangements to resource their research. Similarly, those who will be invited to submit a full application need to know as soon as possible so that they can plan and have an indication of when funding is likely to commence. Even Expressions of Interest are subjected to a peer-review process. Consequently, we must maintain a tight schedule for external and internal assessment and announcement of results.
.
Alignment with HRC’s
performance framework
Health research contracted through this output delivers to these outcomes (see Performance Framework, p4).
Outcome 1: New knowledge, solutions and innovations improve health.
Outcome 2: The healthcare system is improved through research evidence and innovation.
Outcome 3: The best clinicians and health researchers are supported and retained in New Zealand.
HRC Statement of Performance Expectations 2015 9
Annual performance indicator Baseline 2014/15
Actual 2015/16
Target
Outcome: The best clinicians & health researchers are supported & retained in NZ
Number of salaried research positions on HRC contracts
1988 2012/13
1721 2013/14
1500-1800
The HRC has a critical role in supporting and building the health research workforce in New Zealand. Our goal is to support approximately 2000 positions on contracts at any given time. In 2013/14, HRC contracts included a further 1030 research positions in 2013/14 for which no salary was requested, taking the total to 2571. On the basis of this, we have set a range for our target for salaried positions that is lower than in the past, knowing that there is significant additional capacity for which no salary is claimed.
Outcome: The impact, responsiveness and uptake of research is increased
Percentage of Māori experts on the committee reviewing research proposals that are led by Māori
New measure
100% 80-100%
If we are to generate research findings that are accepted and taken up by the Māori community, we must maintain specialised funding processes that incorporate Māori values, knowledge and expertise. We do this by tailoring our peer-review process specifically to Māori research, so that applicants know that the cultural importance and relevance of their methodologies and ideas will be understood and appreciated. The number of Māori reviewers involved in this process is a good measure of how successfully we are doing this.
10 HRC Statement of Performance Expectations 2015
Output 2: Career development contracts
THE HRC WILL OFFER A PROGRAMME OF CAREER DEVELOPMENT
AWARDS, EACH AIMED AT ADDRESSING A GAP IN THE HEALTH
RESEARCH WORKFORCE AND BUILDING VITAL CAPACITY.
Cost 2015/16 $ 000’s
Prospective revenue: refer to Financial Statements: $6,165
Prospective cost: refer to Financial Statements:
Surplus:
$6,104
$61
Scope of the output
Our career development awards focus on
supporting our most promising emerging
researchers, engaging front-line clinicians in
research, and addressing critical gaps in the
workforce so that New Zealand has the health
research capacity to deal with current and
future health and healthcare-delivery
challenges.
Around 30 awards will be offered in the areas
of Māori, Pacific and clinical research, to
support a mixture of Masters, PhD and post-
doctoral researchers. We have been
successful in building capacity and capability
through our Māori and Pacific awards, and
this will remain a focus.
Three prestigious Sir Charles Hercus Health
Research Fellowships will also be offered.
These fellowships aim to build future
capability to conduct world-leading research
in New Zealand. These advanced post-
doctoral awards support an outstanding
emerging researcher (4–8 years post PhD)
who wishes to establish a career in health
research in New Zealand – this includes those
returning to New Zealand from overseas.
The HRC continues to support opportunities
for front-line clinicians to be involved in
meaningful clinical research, and in 2012
introduced the Clinical Practitioner Research
Fellowship. This opportunity enables
experienced, practicing clinicians to
undertake a programme of research and also
supports the integration of the research
findings into clinical practice.
All career development awards are chosen on
the basis of expert review of the proposed
research and the potential and track-record
of the applicant. The progress of all career
development awardees is monitored through
review of annual reports and periodic
outcome evaluations. Progress reflects
several factors, including an effective
recipient selection process, good recipient
performance and an appropriately
supportive training environment.
Alignment with HRC’s performance
framework
Health research contracted through this output delivers to these outcomes (see Performance Framework, p4).
Outcome 1: New knowledge, solutions and innovations improve health.
Outcome 2: The healthcare system is improved through research evidence and innovation.
Outcome 3: The best clinicians and health researchers are attracted, supported and retained in New Zealand.
HRC Statement of Performance Expectations 2015 11
Performance indicators
The performance indicators for this output
measure HRC’s success in addressing gaps in
the health research workforce, and whether
the career development opportunities the
HRC offers are creating an effective career
pathway that results in successful retention
of good researchers.
Performance Indicators for Output 2: Career development contracts
Annual performance indicator Baseline 2014/15
Actual 2015/16
Target
Outcome: The best clinicians & health researchers are supported & retained in NZ
Average number of HRC Project or Programme contracts awarded to Sir Charles Hercus Postdoctoral Fellowship (SCHPF) award recipients
4 Jan 2014
4 May 2015
2-5
The SCHPF is awarded to future research leaders, some repatriated from overseas. Once we have identified these individuals, we track their research careers to see if they remain in health research (see performance indicators for Outcome 3, HRC's Statement of Intent 2014–2018). One measure of whether we have correctly identified strong candidates is whether they are able to successfully compete in future HRC funding rounds. The award has been offered for 13 years, and so the number of previous awardees is relatively small (19 in 2015). The analysis is performed annually at the beginning of the year, and so the baseline does not correspond to a financial year.
Number of Pacific Health Research Scholarships awarded in 2014 (including, Masters, PhD and postdoctoral awards)
New measure 6 4-8
Statistical projections show that Pacific peoples will collectively form the majority of the New Zealand population by 2050, whilst current health statistics confront us with increasing disparities in the health of Pacific populations compared with other New Zealanders. If this is to be meaningfully addressed, we need to build the capacity and capability for Pacific people to build the body of knowledge required to find solutions that work within their community. Currently, this capacity is worryingly low.
Number of Māori Health Research Scholarships awarded in 2014 (including, Masters, PhD and postdoctoral awards)
New measure 9 6-10
The HRC has ring-fenced funding for Maori health research for well over a decade, whilst simultaneously offering a broad spectrum of career development awards to Māori researchers to ensure that they have the skills and experience to compete for this funding. Maintaining this capacity is critical to what we are trying to achieve.
12 HRC Statement of Performance Expectations 2015
Output 3: Co-funding relationships
THROUGH PARTNERING WITH OTHER FUNDERS WE MAKE EFFICIENT
USE OF SCARCE RESOURCES AND FORGE VALUABLE LINKS BETWEEN
GOVERNMENT MINISTRIES, THE HEALTH SECTOR NGOS AND
RESEARCHERS
Cost 2015/16 $ 000’s
Prospective revenue: refer to Financial Statements: $4,009
Prospective cost: refer to Financial Statements:
Deficit funded from reserves:
$4,870
$(861)
Scope of the Output
By using Vote Science and Innovation funding
to leverage additional investment from other
agencies (both public and private sector), not
only can more significant pieces of research
be funded than the individual agencies alone
could support, but there is increased co-
ordination of research across agencies and
less duplication of resources and effort.
Additionally, co-funding is a useful tool to
promote the ownership of health research
outcomes by other agencies, thereby
increasing the likelihood that there will be
translation into tangible change in policy or
practice.
The HRC invests in co-funding relationships
through the Partnership Programme and the
International Relationships Fund.
In 2015, the HRC and partners will support
research in the areas of rheumatic fever,
pertussis, breast and prostate cancer, the
efficacy and cost-effectiveness of various
health technologies, community-based
primary care and studies focusing on the
Better, Sooner, More Convenient Primary
Health Care initiative. We will also support
research focusing on other areas of New
Zealand healthcare delivery.
The Partnership Programme
The HRC established the Partnership
Programme in 2000 to deliver research that
more effectively meets the knowledge and
evidence needs of policy-makers, planners
and those involved in healthcare delivery.
The HRC partners with government and non-
government agencies to purchase targeted,
mission-led research and utilises a funding
leverage model to pool and grow the
investment by sharing the cost across
partners.
Since the inception of the programme, the
HRC has entered into funding agreements
with a wide range of partners. One of the key
features of the Partnership Programme is
that it often brings together agencies that
have not traditionally worked together to
focus on problems that cannot be solved by
one sector alone. Use of the HRC’s expertise
and processes for commissioning research is
a prerequisite in all funding agreements. We
also commission health research on behalf of
other funders who wish to take advantage of
these processes, but do not require co-
funding from the HRC.
HRC Statement of Performance Expectations 2015 13
International Relationships Fund
The HRC also invests in co-funding
relationships through the International
Relationships Fund. The International
Relationships Fund focuses on the
development of international collaborations.
In December 2012, the HRC signed an
overarching agreement identifying how the
funds would be utilised to progress
international collaboration. The agreement is
to undertake collaborative research with the
United States, the European Union and China,
with a focus on non-communicable diseases
(NCDs). Following on from this agreement,
the HRC has released an RFP seeking
Expressions of Interest from New Zealand-
based researchers with demonstrated
linkages and working collaborations with
United States-based researchers, and is
committed to jointly funding research that
will lead to effective interventions for NCDs.
The HRC has also become a member
organisation of e-Asia and in 2015 is jointly
funding an internationally collaborative
health research project in partnership with e-
Asia country members. The International
Relationships Fund also provides funds to
support costs associated with engaging with
the Human Frontier Science Program – an
international funding opportunity offering
grants and fellowships for world-leading life
sciences research and researchers.
Health Innovation Partnership
This joint venture between the HRC and the
National Health Committee (NHC) will
channel a joint investment of $8.75 million
into critical research for health technology
assessment. In 2015, research will focus on
the cost-effectiveness and prioritization of
new and existing technologies in the area of
chronic obstructive pulmonary disease and
ischaemic heart disease. Due to fiscal
constraints the Ministry of Health has
withdrawn $3 million from the annual budget
for the Partnership. However, the NHC and
the HRC are committed to continuing this
important venture and a no-cost extension
has been approved to continue this important
work.
Performance indicators
The performance indicators for this output
relate to our ability to develop strategic
partnerships with other agencies in the
health research sector.
Alignment with HRC’s performance
framework
Health research contracted through this output delivers to these outcomes (see Performance Framework, p4).
Outcome 1: New knowledge, solutions and innovations improve health.
Outcome 2: The healthcare system is improved through research evidence and innovation.
Outcome 4: The impact, responsiveness and uptake of health research is increased.
14 HRC Statement of Performance Expectations 2015
Performance indicators for Output 3: Co-funding relationships
Annual Performance Indicator Baseline 2014/15
Actual 2015/16
Target
Outcome: The healthcare system is improved through research evidence & innovation
Number of Research Partnerships for NZ Health Delivery (RPNZHD) contracts awarded
8 2013/14
4 4
These partnerships deliver research that is needed by the health sector for planning, service delivery or patient care. Researchers team with health-sector stakeholders to increase the utility of the research. These projects are a key part of our strategy to achieve this outcome and so we will continue to fund four new projects per year. In the first year, HRC ran two rounds in 2013/14, one with the Annual Funding Round, and one 6 months later to provide out-of-cycle funding opportunities. From 2014/15 onwards, only the out-of-cycle round will be offered. Consequently, the baseline has dropped from 8 contracts to 4.
Number of new contracts supported through the Health Innovation Partnership fund
2 2013/14
2 2
This partnership provides much needed evidence on the utility and cost-effectiveness of health technologies.
HRC Statement of Performance Expectations 2015 15
Output 4: Contribution to policy,
regulatory and ethical frameworks
OUR COMMITTEES ARE A KEY NATIONAL RESOURCE, PROVIDING
ADVICE ON RESEARCH ETHICS, MONITORING AND REGULATION
Cost 2015/16 $ 000’s
Prospective revenue: refer to Financial Statements: $0,292
Prospective cost: refer to Financial Statements:
Deficit funded from reserves:
$0,300
$(0,008)
Scope of the Output
The HRC undertakes regulatory activities and
safety monitoring, and provides strategic
advice on health research issues. The extent
to which some of these services are needed
depends on the nature of the research
applications submitted and varies from year
to year. These activities are provided
primarily through the work of several HRC
committees, which are listed below with their
key functions.
HRC Ethics Committee: Provides
independent ethical advice on health
research of national importance or great
complexity, approves health and
disability and institutional ethics
committees in New Zealand, considers
appeals on disputed decisions for
research involving human participants
and on the ethics of introducing
innovative practices, and produces
guidelines on ethical research conduct.
The Ethics Committee also administers
the Data Monitoring Core Committee.
Data Monitoring Core Committee
(DMCC): Provides objective, independent
monitoring of clinical trials in New
Zealand. These are primarily, large-scale
clinical trials initiated by New Zealand
researchers relating to life-threatening
diseases, or diseases which cause
irreversible morbidity or where there are
special concerns regarding patient safety,
where the study investigators are
inexperienced, or where study integrity
could be enhanced by the independence
of the DMCC.
Gene Technology Advisory Committee
(GTAC): Assesses the scientific merit of
New Zealand applications to produce
new medical therapies through the
transfer of genes from another species to
humans, and between species. If
necessary, GTAC will advise the Minister
of Health that such trials should not be
allowed to proceed.
Standing Committee on Therapeutic
Trials (SCOTT): When requested by the
HRC Board, SCOTT will assess whether or
not a proposed clinical trial of a medicine
will provide clinically and scientifically
useful information, particularly in
relation to the safety and efficacy of the
agent.
Part of the HRC’s contribution to an ethical
health research environment is ensuring that
health research in New Zealand is conducted
in a way that is culturally appropriate and
responsive to the needs of our diverse
population. To this end, the HRC provides
guidelines on the conduct of Māori health
research and Pacific health research and
16 HRC Statement of Performance Expectations 2015
requires that applicants formally address
responsiveness to Māori in research
proposals.
Following the Report of the Health
Committee on its Inquiry into ‘Improving
New Zealand’s Environment to Support
Innovation through Clinical Trials’ in June
2011, the Government responded by
recommending improvements be made with
respect to the efficiency, consistency and
transparency of the Health and Disability
Ethics Committees (HDECs). The HRC’s role
in supporting this process of improvement is
to continue to review HDECs and approve
them when they meet the international
standard for ethical review.
Performance indicators
The performance indicators relate to the
HRC’s regular communication of ethics issues
to the research community, timeliness in
relation to the ethics appeals process, and our
continued support of the ethical review and
approval of New Zealand’s Health and
Disability Ethics Committees (HDECs).
Performance indicators for Output 4: Contribution to policy, regulatory and ethical
frameworks
Alignment with HRC’s performance
framework
Activities funded through this output deliver to these outcomes (see Performance Framework, p4). Outcome 4: The impact, responsiveness and uptake of health research is increased.
Annual performance indicator Baseline 2014/15
Actual 2015/16
Target
Outcome: Health research in NZ is ethical and safe
Number of Ethics Notes published to inform researchers of issues on ethics in health research
3 2013/14
2 1-3
These notes are an important tool for reaching the health research community and so we have used their publication as a metric for disseminating key information and advice. We are planning to reduce this to an annual publication, as there is insufficient content to justify two.
Percentage of appeals resolved within the target timeframe of 6 weeks from acceptance of the appeal
New measure No appeals 100%
Timeliness is key for responding to appeals on the decision of an HDEC because researchers cannot proceed with their work until a resolution is obtained, funders cannot release the funds, and the HDEC cannot close the case. Although we get few appeals (there has not been one since 2013), this is an important function for the HRC.
Number of HDECs reviewed & approved by HRC annually
4 2013/14
4 4
To create greater efficiency in the ethical review system, the Government implemented a recommendation to reduce the number of HDECs from seven to four in 2012. Approving HDECs is an important role for the HRC and so we continue to set targets.
HRC Statement of Performance Expectations 2015 17
Forecast Statement of Comprehensive Revenue and Expense
for the year ended 30 June
Note
Actual
2013/14 $(000)
Forecast 2014/15
$(000)
Budget
2015/16 $(000)
Plan
2016/17 $(000)
Plan
2017/18 $(000)
Revenue Funding from the Crown 2 82,827 82,992 83,142 83,142 82,992 Interest Revenue 700 919 578 532 532 Other 3 1,101 587 731 687 695 Total Revenue 84,628 84,498 84,451 84,361 84,219 Expenditure Research Grant costs 4 75,411 81,870 81,000 81,000 81,000 Assessment and Council Committee costs 5 848 901 908 926 944 Secretariat costs Personnel costs 6 2,678 2,474 2,691 2,745 2,800 Depreciation and amortisation expense 28 28 39 45 50 Other 7 988 786 1,059 973 965
3,694 3,288 3,789 3,763 3,815
Total Expenses 79,953 86,060 85,696 85,688 85,759
Surplus/(Deficit) for period 4,675 (1,561) (1,245) (1,328) (1,540) Other Comprehensive Income (expense)
Total Comprehensive Income 4,675 (1,561) (1,245) (1,328) (1,540)
Statement of Changes in Equity
for the year ended 30 June
Actual 2013/14
$(000)
Forecast 2014/15
$(000)
Budget 2015/16
$(000)
Budget 2016/17
$(000)
Budget 2017/18
$(000)
Equity at the beginning of the year 12 9,825 14,572 13,094 11,954 10,731 Total comprehensive revenue and expense for the year 4,675 (1,561) (1,245) (1,328) (1,540) Other Comprehensive Income/(expense) Interest net charges on Foxley Reserve Fund 72 83 105 105 105
Equity at the end of the year 14,572 13,094 11,954 10,731 9,296
Represented By Public Equity 12,796 11,235 9,990 8,662 7,122 Foxley Reserve Fund 1,777 1,859 1,964 2,069 2,174
Total Equity at 30 June 14,572 13,094 11,954 10,731 9,296
The accompanying accounting policies and notes form part of these financial statements
18 HRC Statement of Performance Expectations 2015
Forecast Statement of Financial Position as at 30 June
Note Actual 2013/14
$(000)
Forecast 2014/15
$(000)
Budget 2015/16
$(000)
Plan 2015/16
$(000)
Plan 2015/16
$(000)
Cash at Bank 607 650 650 650 650 Short Term Deposits 8 15,357 13,168 11,812 10,430 8,841 Funds held on behalf of – Other Agencies 21,813 17,552 17,773 17,417 17,052 Funds held on behalf of – Foxley Estate 1,777 1,862 1,967 2,072 2,177 Receivables 9 327 361 361 361 361
Total Current Assets 39,881 33,593 32,563 30,930 29,081 Non-Current Assets Property Plant and Equipment 11 53 154 232 297 358
Total Assets 39,934 33,747 32,795 31,227 29,439
Current Liabilities Payables 10 797 423 417 426 434 Contract Retentions 2,470 2,456 2,430 2,428 2,430 Employee Entitlements 282 133 133 136 139 Unearned Management Fees 544 544 544 544 544 Funds held on behalf of other agencies 6,813 2,641 2,861 2,506 2,140
Total Current Liabilities 10,906 6,197 6,385 6,040 5,687 Non-Current Liabilities Funds held on behalf of other agencies 14,456 14,456 14,456 14,456 14,456
Total Non-Current Liabilities 14,456 14,456 14,456 14,456 14,456
Total Liabilities 25,362 20,653 20,841 20,496 20,143
Net Assets 14,572 13,094 11,954 10,731 9,296
Equity Public Equity 12,796 11,235 9,990 8,662 7,122 Foxley Estate Reserve Fund 1,777 1,859 1,964 2,069 2,174
Total Equity 12 14,572 13,094 11,954 10,731 9,296
The accompanying accounting policies and notes form part of these financial statements
HRC Statement of Performance Expectations 2015 19
Forecast Statement of Cash Flow for the year ended 30 June
Actual 2013/14
$(000)
Forecast 2014/15
$(000)
Budget 2015/16
$(000)
Plan 2016/17
$(000)
Plan 2017/18
$(000)
Cash flows from operating activities Cash was provided from Receipts from the Crown 82,858 82,992 83,142 83,142 82,992 Interest 630 901 578 532 532 Other Revenue 1,102 557 731 687 695
84,590 84,450 84,451 84,361 84,219 Cash was applied to Payments to suppliers (76,083) (83,959) (83,034) (82,927) (82,938) Payments to employees (2,671) (2,625) (2,691) (2,742) (2,797) GST 0 31 36 36 37
(78,754) (86,553) (86,689) (86,633) (86,698)
Net cash flow from operating activities 13 5,836 (2,103) (1,238) (1,272) (1,479) Cash flows from Investing activities Cash was provided from Funds held on behalf of other agencies 8,378 4,185 7,070 7,434 7,572 Maturing Term Deposits 87,734 109,274 110,828 104,543 104,759 Sale of Assets 0 0 0 0 0
96,112 113,459 117,898 111,977 112,331 Cash was applied to Funds paid on behalf of other agencies (6,887) (8,357) (6,825) (7,790) (7,937) Reinvestment of Term Deposits (95,189) (102,910) (109,822) (102,910) (102,910) Purchase of Property Plant & Equipment (18) (132) (118) (110) (110)
(102,094) (111,399) (116,765) (110,810) (110,957)
Net cash flow from (applied to) investing activities (5,982) 2,060 1,133 1,167 1,374 Cash flows from investing activities Cash was provided from Net interest reserve fund 71 86 105 105 105
Net cash flow from investing activities 71 86 105 105 105
Net increase (decrease) in cash held (75) 43 0 0 0 Cash at Bank beginning of year 682 607 650 650 650
Cash at Bank end of year 607 650 650 650 650
20 HRC Statement of Performance Expectations 2015
Notes to the Financial Statements Note 1 - Statement of accounting policies Reporting Entity Health Research Council of New Zealand (HRC) is a Crown entity as defined by the Crown Entities Act 2004 and is domiciled and operates in New Zealand. The relevant legislation governing HRC’s operations includes the Crown Entities Act 2004 and the Crown Service Enterprise Act 2002. HRC’s ultimate parent is the New Zealand Crown. HRC’s primary objective is to benefit New Zealand through health research. HRC does not operate to make a financial return. HRC has designated itself as a public benefit entity (PBE) for financial reporting purposes. Basis of preparation The financial statements have been prepared on a going concern basis, and the accounting policies have been applied consistently throughout the period. Statement of compliance The financial statements of HRC have been prepared in accordance with the requirements of the Crown Entities Act 2004, which includes the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP). The financial statements have been prepared in accordance with Tier 1 PBE accounting standards. These financial statements comply with PBE accounting standards. These financial statements are the first financial statements presented in accordance with the new PBE accounting standards. Presentation currency and rounding The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). Standards issued and not yet effective and not early adopted In May 2013, the External Reporting Board issued a new suite of PBE accounting standards for application by public sector entities for reporting periods beginning on or after 1 July 2014. HRC will apply these standards in preparing the June 2015 financial statements. In October 2014, the PBE suite of accounting standards was updated to incorporate requirements and guidance for the not-for-profit sector. These updated standards apply to PBEs with reporting periods beginning on or after 1 April 2015. HRC will apply these updated standards in preparing its 30 June 2016 financial statements. HRC expects there will be minimal or no change in applying these updated accounting standards.
The GST component of operating activities reflects the net GST paid and received with the Inland Revenue Department. The GST component has been presented on a net basis, as the gross amounts do not provide meaningful information for financial statement purposes. The accompanying accounting policies and notes form part of these financial statements.
HRC Statement of Performance Expectations 2015 21
Summary of Significant Accounting Policies
Revenue The specific accounting policies for significant revenue items are explained below: Funding from the Crown HRC is primarily funded from the Crown. This funding is restricted in its use for the purpose of HRC meeting the objectives specified in its founding legislation and the scope of the relevant appropriations of the funder. HRC considers there are no conditions attached to the funding and it is recognised as revenue at the point of entitlement. The fair value of revenue from the Crown has been determined to be equivalent to the amounts due in the funding arrangements. Interest Income Interest income is recognised using the effective interest method. Provision of services Services provided to third parties on commercial terms are exchange transactions. Revenue from these services is recognised in proportion to the stage of completion at balance date. Donated assets Where a physical asset is gifted to or acquired by the HRC for nil or at a subsidised cost, the asset is recognised at fair value and the difference between the consideration provided and fair value of the asset is recognised as revenue. The fair value of donated assets is determined as follows: For new assets, fair value is usually determined by reference to the retail price of the same or similar assets at the time the asset was received. For used assets, fair value is usually determined by reference to the market information for assets of a similar type, condit ion and age. Such assets are recognised as income when control over the asset is obtained. Capital Charge The Capital Charge is recognised as an expense in the financial year which the capital charge relates to. Grant expenditure Discretionary grants are those grants where HRC has no obligation to award on receipt of the grant application and are recognised as expenditure when approved by the Grants Approval Committee and the approval has been communicated to the applicant. Leases Operating leases An operating lease is a lease that does not transfer substantially all the risk and rewards incidental to ownership of an ass et to the lessee. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term.
22 HRC Statement of Performance Expectations 2015
Lease incentives received are recognised in the surplus or deficit as a reduction of rental expense over the lease term . Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held on call with banks, and other short-term highly liquid investments with original maturities of three months or less. Receivables Short-term receivables are recorded at their face value, less any provision for impairment. A receivable is considered impaired when there is evidence that HRC will not be able to collect the amount due. The amount of the impairment is the difference between the carrying amount of the receivable and the present value of the amounts expected to be collected. Property, plant and equipment Property, plant and equipment consists of the following asset classes’: leasehold improvements, furniture, office and computer equipment. Additions The cost of an item of property, plant and equipment is recognised as an asset only when it is probable that future economic benefits or service potential associated with the item will flow to HRC and the cost of the item can be measured reliably. Work in progress is recognised at cost less impairment and is not depreciated. In most instances, an item of property, plant and equipment is initially recognised at its cost. Where an asset is acquired through a non-exchange transaction, it is recognised at its fair value as at the date of acquisition. Disposals Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are reported net in the surplus or deficit. When revalued assets are sold, the amounts included in revaluation reserves in respect of those assets are transferred to general funds. Subsequent costs Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to HRC and the cost of the item can be measured reliably. The costs of day-to-day servicing of property, plant and equipment are recognised in the surplus or deficit as they are incurred.
HRC Statement of Performance Expectations 2015 23
Depreciation Depreciation is provided on a straight-line basis on all property, plant and equipment other than land, at rates that will write-off the cost (or valuation) of the assets to their estimated residual values over their useful lives. The useful lives and associated depreciation rates of major classes of property, plant and equipment have been estimated as follows: Office and computer equipment 3 to 5 years 20 – 30% Leasehold improvements 5 years 20% Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is the shorter. The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year end. Intangible assets Software acquisition and development Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Costs that are directly associated with the development of software for internal use are recognised as an intangible asset. Direct costs include software development employee costs and an appropriate portion of relevant overheads. Staff training costs are recognised as an expense when incurred. Costs associated with maintaining computer software are recognised as an expense when incurred. Costs associated with development and maintenance of HRC’s website are recognised as an expense when incurred. The carrying value of an intangible asset with a finite life is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date that the asset is derecognised. The amortisation charge for each financial year is recognised in the surplus or deficit. The useful lives and associated amortisation rates of major classes of intangible assets have been estimated as follows:
Acquired computer software 3 years 33.3% Developed computer software 5 years 20%
Impairment of property, plant and equipment and intangible assets HRC does not hold any cash-generating assets. Assets are considered cash-generating where their primary objective is to generate a commercial return. Non-cash-generating assets Property, plant and equipment and intangible assets held at cost that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable service amount. The recoverable service amount is the higher of an asset’s fair value less costs to sell and value in use.
24 HRC Statement of Performance Expectations 2015
Value in use is determined using an approach based on either a depreciated replacement cost approach, restoration cost approach, or a service units approach. The most appropriate approach used to measure value in use depends on the nature of the impairment and availability of information. If an asset’s carrying amount exceeds its recoverable service amount, the asset is regarded as impaired and the carrying amount is written-down to the recoverable amount. The total impairment loss is recognised in the surplus or deficit. Payables Short-term payables are recorded at their face value. Employee entitlements Short-term employee entitlements Employee benefits that are due to be settled within 12 months after the end of the period in which the employee renders the related service are measured based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned to but not yet taken at balance date, and sick leave. Superannuation schemes Defined contribution schemes Obligations for contributions to KiwiSaver and the Government Superannuation Fund are accounted for as defined contribution superannuation schemes and are recognised as an expense in the surplus or deficit as incurred. Equity Equity is measured as the difference between total assets and total liabilities. Equity is disaggregated and classified into the following components. Accumulated surplus/(deficit); Fair value through other comprehensive revenue and expense reserves. Goods and services tax All items in the financial statements are presented exclusive of GST, except for receivables and payables, which are presented on a GST-inclusive basis. Where GST is not recoverable as input tax, it is recognised as part of the related asset or expense. The net amount of GST recoverable from, or payable to, the Inland Revenue Department (IRD) is included as part of receivables or payables in the statement of financial position. The net GST paid to, or received from, the IRD, including GST relating to investing and financing activities, is classified as a net operating cash flow in the statement of cash flows.
Commitments and contingencies are disclosed exclusive of GST. Income Tax HRC is a public authority and consequently is exempt from the payment of income tax. Accordingly, no provision has been made for income tax.
HRC Statement of Performance Expectations 2015 25
Cost allocation HRC has determined the cost of outputs using the cost allocation system outlined below. Direct costs are those costs directly attributed to an output. Indirect costs are those costs that cannot be identified in an economically feasible manner with a specific output. Direct costs are charged directly to outputs. Indirect costs are charged to outputs based on cost drivers and related activity or usage information. Depreciation is charged on the basis of asset utilisation. Personnel costs are charged on the basis of actual time incurred. Property and other premises costs, such as maintenance, are charged on the basis of floor area occupied for the production of each output. Other indirect costs are assigned to outputs based on the proportion of direct staff costs for each output. There have been no changes to the cost allocation methodology since the date of the last audited financial statements. Critical accounting estimates and assumptions In preparing these financial statements, HRC has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Critical judgements in applying accounting policies Management has exercised the following critical judgments in applying accounting policies: Leases classification Determining whether a lease agreement is a finance or an operating lease requires judgement as to whether the agreement transfers substantially all the risks and rewards of ownership to the HRC. Judgement is required on various aspects that include, but are not limited to, the fair value of the leased asset, the economic life of the leased asset, whether or not to include renewal options in the lease term and determining an appropriate discount rate to calculate the present value of the minimum lease payments. Classification as a finance lease means the asset is recognised in the statement of financial position as property, plant and equipment whereas for an operating lease no such asset is recognised. The HRC has exercised its judgement on the appropriate classifications of leases and have determined no lease arrangements are finance leases.
26 HRC Statement of Performance Expectations 2015
Actual 2013/14
$(000)
Forecast 2014/15
$(000)
Budget 2015/16
$(000)
Plan 2016/17
$(000)
Plan 2017/18
$(000)
Note 2 - Revenue from the Crown
Ministry of Business, Innovation and Employment (MBIE) 82,541 82,707 82,857 82,857 82,707 Ministry of Health (MoH) 285 285 285 285 285
82,826 82,992 83,142 83,142 83,992
In the absence of formal confirmation, HRC has assumed that the funding detailed about will be received from MBIE and MOH. The HRC has been provided with funding from the Crown for the specific purposes of the HRC as set out in its Output Agreement with MBIE and MoH. Apart from these general restrictions, there are no unfulfilled conditions or contingencies attached to government funding. Note 3 - Other Income Actual
2013/14 $(000)
Forecast 2014/15
$(000)
Budget 2015/16
$(000)
Plan 2016/17
$(000)
Plan 2017/18
$(000)
Bequests and Donations received 106 0 20 20 20 Other (Management Fees) 995 587 711 667 675
1,101 587 731 687 695
Note 4- Research Grant Costs Health Research Contracts 64,184 73,202 69,527 68,470 68,470 Co-funding Relationships 2,845 640 3,213 3,691 3,760 Career Development Contracts 6,274 6,406 5,800 6,181 6,233 Vision Matauranga 1,886 1,342 1,954 2,108 2,131 International Relationships 222 280 506 550 406
75,411 81,870 81,000 81,000 81,000
Note 5 - Assessment and Council Committee Costs Meetings & Committee Costs 652 719 723 737 752 Council Costs 196 182 185 189 192
848 901 908 926 944
Note 6 - Secretariat Personnel Costs
Salaries 2,420 2,234 2,451 2,500 2,550 Contributions to defined contribution plans 258 240 240 245 250
Total Personnel Costs 2,678 2,474 2,691 2,745 2,800
HRC Statement of Performance Expectations 2015 27
Note 7 - Secretariat Other Costs Actual 2013/14
$(000)
Forecast 2014/15
$(000)
Budget 2015/16
$(000)
Plan 2016/17
$(000)
Plan 2017/18
$(000)
Property Costs 298 291 300 301 305 Fees to Audit New Zealand for audit of financial statements 59 59 61 62 63 Other 631 436 698 610 596
988 786 1,059 973 965
Note 8 - Cash and Short term deposits Cash at Bank 607 650 650 650 650
Short Term Deposits Term deposits 15,357 13,168 11,812 10,430 8,841 Term deposits held on behalf of other agencies* 21,813 17,552 17,773 17,417 17,052 Term deposits Foxley Estate fund 1,777 1,862 1,967 2,072 2,177
38,947 32,582 31,563 29,912 28,070
Total Cash and Short Term Deposits 39,554 33,232 32,213 30,569 28,720
Interest rates on deposited funds in outer years are assumed to earn interest in a range from 4.00% pa to 4.50% pa. (2015 4.00% pa to 4.47% pa). *Funds are held on behalf of the other agencies pending the release of those funds to research projects that will be approved jointly by HRC and the partner.
Note 9 – Receivables
Interest Accrued 250 269 269 269 269 Prepayments 1 1 1 1 1 Other Receivables 76 91 91 91 91
327 361 361 361 361
Receivables from the sale of goods and services (exchange transactions) 327 361 361 361 361 Receivables from grants (non-exchange transactions) 0 0 0 0 0
28 HRC Statement of Performance Expectations 2015
Actual 2013/14
$(000)
Forecast 2014/15
$(000)
Budget 2015/16
$(000)
Plan 2016/17
$(000)
Plan 2017/18
$(000)
Note 10 – Payables Current
Cost Shares paid in advance 416 283 283 289 295 Accrued costs 66 70 70 72 73 GST 132 (30) (36) (37) (38) Other Payables 183 100 100 102 104
797 423 417 426 434
Non – Current Funds held on behalf of other agencies Payables under exchange transactions
14,456
797
14,456
594
14,456
594
14,456
594
14,456
594 Receivables from non-exchange transactions 0 0 0 0 0 Funds held on behalf of other agencies are interest bearing. Where funds have been committed to research contracts, payment terms are
dependent on the individual underlying contracts. Uncommitted funds are held with no payment terms.
HRC Statement of Performance Expectations 2015 29
Note 11 - Property, Plant and Equipment Office & Computer
Equipment $’000
Leasehold Improvements
$’000
Total
$’000
Cost Balance at 1 July 2013 327 111 438 Additions 18 0 18 Disposals 0 0 0 Less Scrapped/off register (18) 0 (18)
Balance at 30 June 2014 327 111 438
Balance at 1 July 2014 327 111 438 Additions 132 0 132 Disposals 0 0 0 Less Scrapped/off register 0 0 0
Balance at 30 June 2015 459 111 570
Balance at 1 July 2015 459 111 570 Additions 108 10 118 Disposals 0 0 0 Less Scrapped/off register 0 0 0
Balance at 30 June 2016 567 121 688
Balance at 1 July 2016 567 121 688 Additions 100 10 110 Disposals 0 0 0 Less Scrapped/off register 0 0 0
Balance at 30 June 2017 667 131 798
Balance at 1 July 2017 667 131 798 Additions 100 10 110 Disposals 0 0 0 Less Scrapped/off register 0 0 0
Balance at 30 June 2018 767 141 908
30 HRC Statement of Performance Expectations 2015
Accumulated Depreciation Balance at 1 July 2013 (268) (109) (377) Additions (27) 0 (27) Disposals 0 0 0 Less Scrapped/off register 18 0 18
Balance at 30 June 2014 (277) (109) (386)
Balance at 1 July 2014 (277) (109) (386) Additions (30) (1) (31) Disposals 0 0 0 Less Scrapped/off register 0 0 0
Balance at 30 June 2015 (307) (110) (417)
Balance at 1 July 2015 (307) (110) (417) Additions (37) (1) (38) Disposals 0 0 0 Less Scrapped/off register 0 0 0
Balance at 30 June 2016 (344) (111) (455)
Balance at 1 July 2016 (344) (111) (456) Additions (45) (1) (46) Disposals 0 0 0 Less Scrapped/off register 0 0 0
Balance at 30 June 2017 (389) (112) (501)
Balance at 1 July 2017 (389) (112) (501) Additions (49) (0) (49) Disposals 0 0 0 Less Scrapped/off register 0 0 0
Balance at 30 June 2018 (438) (112) (550)
Carrying Value At 30 June 2014 50 3 53
At 30 June 2015 152 2 154
At 30 June 2016 223 9 232
At 30 June 2017 278 19 297
At 30 June 2018 329 29 358
HRC Statement of Performance Expectations 2015 31
Note 12 – Equity
Actual
2013/14
$(000)
Forecast
2014/15
$(000)
Budget
2015/16
$(000)
Plan
2016/17
$(000)
Plan
2017/18
$(000)
Accumulated surplus/deficit
Balance 1 July 8,121 12,796 11,235 9,990 8,662
Surplus/(deficit) for the year 4,675 (1,561) (1,245) (1,328) (1,540)
Balance 30 June 12,796 11,235 9,990 8,662 7,122
Foxley Reserve Fund
Balance 1 July 1,706 1,777 1,859 1,964 2,069
Surplus/(deficit) for the year 72 83 105 105 105
Balance 30 June 1,777 1,859 1,964 2,069 2,175
Total Equity at 30 June 14,572 13,096 11,954 10,731 9,296
The Foxley Reserve fund is a bequest received by the Council in 1998. The Council resolved to hold the bequest funds as the “Foxley Reserve Fund” and to support
the Foxley Fellowship from the interest earned by the fund.
Note 13 - Reconciliation of Operating surplus(deficit) to net cash flow
from operating activities
Actual
2013/14
$(000)
Forecast
2014/15
$(000)
Budget
2015/16
$(000)
Plan
2016/17
$(000)
Plan
2017/18
$(000)
Surplus/(deficit) for year 4,675 (1,561) (1,245) (1,328) (1,540)
Add non-cash items
Depreciation 28 31 39 45 50
Add/(Deduct) movements in working capital items
Receivable (increase/decrease) (9) (34) 0 0 0
Payables increase/(decrease) 1142 (539) (32) 11 11
Net cash flow from operating activities 5,836 (2,103) (1,238) (1,272) (1,479)
32 HRC Statement of Performance Expectations 2014
Information on the Organisation
Council membership
The Board of the Health Research Council meets between nine and 11 times per year. Membership of the
Board is set out in the Health Research Council Amendment Act 1991, and comprises five persons who are
or have been actively engaged in health research, and five persons who have skills and experience in areas
such as community affairs, health administration, law or management, or knowledge of health issues from a
consumer perspective.
Board Member1 Occupation
Sir Robert Stewart KNZM
Chair
Manufacturer, Christchurch
Professor Richard Beasley CNZM
Deputy Chair
Director, Medical Research Institute of New Zealand,
Wellington
Dr Matire Harwood Clinical Director, Tamaki Healthcare, Auckland
Ms Elspeth Ludemann Partner in a pastoral farming business, Oamaru
Professor Lesley McCowan ONZM Head of Department of Obstetrics and Gynaecology,
University of Auckland School of Medicine and
Subspecialist in Maternal Fetal Medicine, Auckland City
Hospital, Auckland
Professor Andrew Mercer Director of the Virus Research Unit, Department of
Microbiology and Immunology, University of Otago,
Dunedin
Dr Conway Powell Health Sector Consultant, Dunedin
Professor Ann Richardson QSO Professor of Cancer Epidemiology, Department of
Health Sciences, University of Canterbury, Christchurch
Ms Suzanne Snively ONZM Managing Director, MoreMedia Enterprises, Wellington
Professor Linda Tuhiwai Smith
CNZM
Pro-Vice Chancellor Māori, Waikato University,
Hamilton
1 Professors Ann Richardson and Linda Tuhiwai Smith have completed their term of appointment on the
Board and two new members are currently being sought.
HRC Statement of Performance Expectations 2015 33
Appendix 1: Key focus of the HRC’s Research Investment
Streams and their relationship to the performance framework
Research Investment
Stream Key Impacts Outcomes
Health & Wellbeing in
New Zealand:
Understanding the human
body and preventing
disease
A strong research focus on keeping
New Zealanders healthy & productive
High-impact, original research is
conducted & translated across the
research pipeline
Expertise is harnessed to create local
solutions to global health challenges
NZ research contributes to
international advances
1. New knowledge, solutions &
innovations for health are
created
2. The healthcare system is
improved through research
evidence & innovation
Improving Outcomes for
Acute and Chronic
Conditions in New
Zealand:
Better diagnosis,
treatment and end-of-life
care
High-impact, original research is
conducted & translated across the
research pipeline
Expertise is harnessed to create local
solutions to global health challenges
NZ research contributes to
international advances
Innovative health technologies &
therapies develop
1. New knowledge, solutions &
innovations for health are
created
2. The healthcare system is
improved through research
evidence & innovation
New Zealand Health
Delivery:
Building a better, more
efficient & cost-effective
health system through
research evidence
More front-line clinicians are engaged
in health research
Research is easily accessed,
understood & applied by end-users
Research increasingly guides policy &
informs decisions
Overseas research is adapted for NZ
conditions
New Zealanders have access to new
treatments, technologies & improved
services that meet their needs
The cost-effectiveness & sustainability
of NZ's health system is improved
through research
1. New knowledge, solutions
& innovations for health are
created
2. The healthcare system is
improved through research
evidence & innovation
3. The impact responsiveness
& uptake of health research
is increased
Rangahau Hauora
Māori:
Addressing Māori health
issues & building the
capacity & capability of
the Māori workforce
High-impact, original research is
conducted & translated across the
research pipeline
NZ has the research capacity to
address the needs of our unique
population
Promising emerging researchers gain
valuable research experience
Sustainable career pathways enhance
the skills of researchers & clinicians
1. New knowledge, solutions
& innovations for health are
created
3. The impact responsiveness
& uptake of health research
is increased
34 HRC Statement of Performance Expectations 2015
Glossary of Abbreviations and Terms
Bibliometrics: The study of the influence that scientific publications have in a given field. A number
of measures are used that include the relative impact factors of scientific journals, the number of
times an article is cited in other publications and the expected number of citations, based on the
world average for a particular discipline. Comparisons are made across countries and institutional
funders, but never across disciplines.
DHB: District Health Board.
HWNZ: Health and Wellbeing in New Zealand Research Investment Stream.
HRC: The Health Research Council of New Zealand.
Impacts: These are the impacts of our activities under our various Outputs, against which we have
designed performance indicators to measure our progress towards our stated Outcomes.
IOACC: Improving Outcomes for Acute and Chronic Conditions Research Investment Stream.
MBIE: Ministry of Business, Innovation and Employment.
MoH: Ministry of Health.
NZHD: New Zealand Health Delivery Research Investment Stream.
Outcomes: The benefits that our Impacts will ultimately bring for New Zealand society. These are
not directly measurable and so we track our progress through surrogate measures against our
Impacts.
Outputs: The principal services that we provide and the functions we fulfil, through which we will
achieve our impacts.
Peer review: Assessment by experts in the field in question - literally, the scientific ‘peers’ of the
applicant.
Peer-reviewed publications: Articles published in journals that employ a peer-review process for
selection, meaning that the article is thoroughly checked and challenged by scientists in the same
field (peers) before publication. There is great competition for publications space in most peer-
reviewed journals and only the best research is published. Consequently, peer-reviewed
publications are a good metric for research quality.
PHO: Public Health Organisation
Public health intervention: A programme that has been designed to improve public health, and
shown to be effective by sound research evidence. Examples include programmes to help people
stop smoking, or those aimed at preventing youth suicide.
RHM: Rangahau Hauora Māori Research Investment Stream.
Research Investment Streams (RIS): We have four RIS that collectively reflect the full spectrum of
possible health research activities in New Zealand that the HRC may support. We use these streams
to signal our priorities to the research community.
RIS: Research Investment Stream(s).
RPNZHD: Research Partnerships for New Zealand Health Delivery.
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