By Mark Watson
From 1 July 2014, the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act) replaced the Financial Management and Accountability Act 1997 (Cth) (FMA Act) and the Commonwealth Authorities and Companies Act 1997 (Cth) (CAC Act). The PGPA Act consolidates the governance, performance and accountability requirements of the Commonwealth into a single piece of legislation. It also creates a new framework for governance, performance and accountability for Commonwealth bodies. The new framework will lead to many changes in how the Commonwealth does business including changes in terminology relating to Commonwealth bodies, a set of uniform duties for members of those bodies and new planning and reporting requirements.
Commonwealth bodies now fall into two broad categories: corporate and non-corporate. Corporate Commonwealth entities include most of the former CAC Act authorities. They are bodies corporate established by Commonwealth law which have a separate legal personality from the Commonwealth. There are some 65 corporate Commonwealth entities including the Australian Broadcasting Commission (ABC), Special Broadcasting Service (SBS), Tourism Australia, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Reserve Bank of Australia (RBA). Non-corporate Commonwealth entities, on the other hand, have no separate legal existence from the Commonwealth and include most of the former FMA Act agencies. There are over 100 non-corporate Commonwealth entities and they include Government Departments such as Prime Minister and Cabinet and agencies such as the Australian National Audit Office.
Each Commonwealth entity has an accountable authority. For a corporate entity, the group of persons responsible for governing the entity (e.g. the board) is the accountable authority. For a non-corporate entity, the accountable authority will be the head of the entity, e.g. the Secretary. Accountable authorities have a set of uniform duties including:
- the duty to govern the entity (s. 15);
- the duty to establish and maintain systems relating to risk and control (s. 16);
- the duty to encourage cooperation with others (s. 17);
- the duty in relation to requirements imposed on others including reducing where possible the burdens of compliance and red tape (s. 18); and
- the duty to keep the responsible Minister and the Minister for Finance informed (s. 19).
A set of uniform duties will also apply to ‘officials’. The latter include accountable authorities, Australian Public Service employees and Australian Defence Force members. These duties are:
- the duty of care and diligence (s. 25);
- the duty to act in good faith and for a proper purpose (s. 26);
- the duty in relation to use of position (s. 27);
- the duty in relation to information (s. 28); and
- the duty to disclose interests (s. 29).
The PGPA Act also seeks to strengthen the Commonwealth performance framework by making Commonwealth entities accountable for demonstrating how their plans and the resources they receive lead to results. For example, from 1 July 2015 all Commonwealth entities will be required to develop four year rolling corporate plans which align to the four year Budget and Forward Estimates period. The corporate plans will include the strategies and policies the entity will follow to achieve its purposes and provide measures of performance. Corporate plans will also include an analysis of key risks facing the entity and associated mitigation strategies. At the end of the financial year, when entities produce their annual reports, they will be required to produce an annual performance statement which provides a clear line of sight to the performance information contained in its corporate plan.
In conclusion, the PGPA Act aims to significantly improve the governance arrangements of Commonwealth entities, codifies the duties of accountable authorities and strengthen how the Commonwealth measures and reports on its performance.