Before the Budget: The MRFF Underspend and Why It Matters
Author: Matthew McLean
The Medical Research Future Fund (MRFF) was designed to be a $1 billion-a-year engine for Australian health and medical research. Right now, it’s running at about half that. Despite growing to nearly $24.83 billion in total capital, the government has maintained a hard $650 million annual spending cap, leaving over $1 billion in unspent earnings accumulating in the fund while the health and medical research sector faces the most difficult funding environment in years.
The 2026-27 Federal Budget, to be handed down on 12 May, is shaping up as a possible decision point for the MRFF. Whether the government moves to lift the cap will determine not just how much funding flows into health and medical research over the next several years, but whether Australia seizes or squanders a genuine opportunity to lead in a moment when the global research funding landscape is being redrawn. [i]
We have written in more detail about MRFF success rates and where company applications have had the most traction here.
The spending cap and its consequences
The MRFF design is straightforward: the fund’s capital is invested by the Future Fund Board, and earnings from that investment are disbursed annually as research grants. Established in 2015, the fund now holds nearly $24.83 billion in capital, generating well in excess of $650 million per year, which means the spending cap is actively holding money back rather than reflecting any genuine constraint on what the fund can sustainably release. Financial modelling cited by the Association of Australian Medical Research Institutes (AAMRI) confirms that the MRFF can safely distribute $1 billion per year without eroding the underlying capital or affecting the budget bottom line. [ii]
The consequences of the underspend are working their way through the sector in tangible ways. The AAMRI has described 2026 as a ‘defining moment’ for health and medical research, with the sector under significant financial, workforce and cultural pressure, pointing to low grant success rates and researchers leaving the system while a substantial proportion of the fund’s capital remains undistributed[iii]. The Australian Society for Medical Research (ASMR) has gone further, describing recent low NHMRC success rates as a systemic failure, saying Australia is ‘failing its researchers and, by extension, failing to translate discoveries into health outcomes for its citizens.’ [iv]
The campaign to change it
The pressure to lift the cap has reached a level of urgency. AAMRI has launched a national campaign - ‘Half the Funding, Half the Future’ - calling for the government to unlock up to $1 billion a year from the fund [v]. Research Australia, the Group of Eight universities, and ASMR have all lodged pre-budget submissions making the same call [vi].
The argument from every corner of the sector is the same: this is not a request for new money. The funds already exist, were raised for this specific purpose, and their non-deployment represents a broken promise to the researchers, institutions and ultimately patients that the MRFF was created to serve. Research Australia has been explicit that releasing available MRFF funds would not constitute new spending, and that every $1 invested in medical research returns nearly $4 to Australia’s economy [vii]. AAMRI CEO Dr Saraid Billiards has put it plainly: ‘This isn’t about asking for more - it’s about using the money that’s already there for the purpose it was created.’[viii]
The American context is being cited increasingly in these conversations. Trump’s deep cuts to essential health and medical research funding are being held up as a warning for Australia showing how quickly a nation’s research capability can be eroded when investment is withdrawn. Several pre-budget submissions have pointed out that Australia has a narrow window to position itself as a stable, well-capitalised destination for health and medical research, and to attract internationally mobile clinical trial activity and displaced research talent. A constrained MRFF makes that harder to argue. [ix]
Is MRFF funding accessible to companies?
Companies can and do participate in MRFF-funded projects as lead applicants and partners in university-led bids, and some programs have seen meaningful company participation. Having said this, MRFF funding has primarily been directed to universities and medical research institutes. Companies that access it as lead applicants are the exception rather than the rule with corporation-led applications accounting for around 4% of all awarded grants (though they receive around 15% of total funding).
What this means for applicants right now
The practical effect of the underspend for industry is that the rounds which are open are more competitive than they ought to be given the size of the fund, and the pipeline of forecast opportunities is thinner than it should be [x]. But for well-prepared applicants, the current environment is not as bleak as it appears. The instinct to hold off applying because rounds feel too competitive may start to reduce application volumes, which means that genuinely strong, well-structured applications will stand out more.
The more consequential question is what happens if and when the government does move on the spending cap. New rounds would be announced relatively quickly after any such decision, and the applicants that are already positioned with eligible project structures, identified collaborative partners and application-ready documentation will have a meaningful head start on those starting from scratch. The time to build MRFF (and any grant) capability is before the rounds open, not after.
For companies with health and medical research programs, the practical takeaway is straightforward: the MRFF is one of Australia’s most significant sources of research funding, it is being deliberately constrained below its design intent, and that constraint will eventually be corrected. The question is not whether more funding will flow, it is whether your business will be positioned to access it when it does.
Talk to our team
If you want to understand whether the MRFF represents an opportunity for your business, and how to structure your funding stack ahead of any new rounds, we’d welcome a conversation. Intellect Labs has supported successful MRFF applications for industry clients and can help you work through eligibility, academic partnership requirements, and co-contribution structuring.
[i] Department of Health, Disability and Ageing, Medical Research Future Fund, https://www.health.gov.au/our-work/mrff (accessed April 2026).
[ii] Association of Australian Medical Research Institutes (AAMRI), 'Half the Funding, Half the Future' campaign, financial modelling cited by HMRI, November 2025, https://hmri.org.au/news-and-stories/half-the-funding-half-the-future/
[iii] AAMRI, pre-budget submission 2026, cited in Research Professional News, 'Health research bodies demand funding boost in May budget', February 2026.
[iv] Australian Society for Medical Research, pre-budget submission 2026, cited in Research Professional News, February 2026.
[v] AAMRI, 'Half the Funding, Half the Future' national campaign, November 2025, https://hmri.org.au/news-and-stories/half-the-funding-half-the-future/
[vi] Research Australia, 2026-27 pre-budget submission, cited in Research Professional News, February 2026.
[vii] Hunter Medical Research Institute (HMRI), citing return-on-investment modelling, November 2025, https://hmri.org.au/news-and-stories/half-the-funding-half-the-future/
[viii] Dr Saraid Billiards, AAMRI CEO, quoted in HMRI press release, November 2025.
[ix] HMRI press release, citing impact of Trump administration NIH cuts as warning for Australia, November 2025.
[x] Department of Health, Disability and Ageing, MRFF Grant Opportunities Calendar https://www.health.gov.au/our-work/mrff/grant-opportunities-calendar (accessed April 2026)