Introduction to the Independent Review

It is over three years since the Public Governance, Performance and Accountability Act 2013 (PGPA Act) took effect. With it, a new resource management framework was introduced for the Commonwealth, replacing the former Financial Management and Accountability Act 1997 (FMA Act) and Commonwealth Authorities and Companies Act 1997 (CAC Act). The scheme that is built around the PGPA Act is the third financial framework in the history of the Commonwealth.

In accordance with section 112 of the PGPA Act, a review is now due to be conducted of the Act and the accompanying Public Governance, Performance and Accountability Rule 2014 (PGPA Rule).

It is proposed that the review gathers perspectives from the Parliament, Commonwealth entities and companies, and other stakeholders – including from industry, the third sector, other levels of government and academe – on the operation of the PGPA Act and Rule. It should assess whether benefits have been realised, in line with the objects of the PGPA Act, and may make recommendations about what could be done in the future, including recommendations on refining the PGPA Act and Rule themselves.

At its core, the PGPA Act signified a shift from a dual system of public sector management and accountability, where compliance and process was much the focus, to a single, principles-based framework within which all Commonwealth entities have the flexibility to develop their own systems and processes to support their operations.

The public management reforms contained in the PGPA Act were expected to take several years to implement, mature and fully integrate into the practices and processes of Commonwealth entities. After three years, it is apparent that the practice in relation to individual aspects of the Act has matured differentially. There are variations between entities and in relation to different areas of practice. The enhanced Commonwealth performance framework is one example of a practice area that is still maturing.

Independent Reviewers

The review will be undertaken by two independent reviewers.

Ms Elizabeth Alexander AM

Elizabeth Alexander is Chairman of Medibank Private Limited, she is Chairman of the Nomination Committee and a member of the Audit Committee and the Risk Management Committee.

As a former partner at PricewaterhouseCoopers (1977–2002), Elizabeth specialised in the area of risk management and corporate governance. Elizabeth was previously Chairman of CSL Limited and a director of Boral Limited and Amcor Limited. She is a former Chair of the Australian Prudential Regulation Authority’s Risk and Audit Committee. Elizabeth is also a former National President of CPA Australia and the Australian Institute of Company Directors, and a former member of the Takeovers Panel. She is a former Chancellor of the University of Melbourne and Chair of its Finance Committee.

Elizabeth is currently Chairman of DEXUS Wholesale Property Limited and a director of DEXUS Funds Management Limited as part of the DEXUS Property Group (since January 2005), and a director of the IOOF Foundation and the Victorian Registration and Qualifications Authority.

Mr David I Thodey AO

David Thodey is a global business leader focused on technology and telecommunications with more than 30 years of experience creating brand and shareholder value.

He is currently Chairman of Australia’s national scientific research agency, the Commonwealth Scientific and Industrial Research Organisation (CSIRO), Chairman of JobsNSW focused on job creation in NSW, and on the Advisory Boards of SquargePeg Capital and UHG. He also had a successful career as CEO of Telstra, Australia’s leading telecommunications and information services company.

Mr Thodey holds a Bachelor of Arts in Anthropology and English from Victoria University, Wellington, New Zealand. He attended the Kellogg School of Management postgraduate General Management Program at Northwestern University in Chicago, USA.

PGPA Act and Rule Independent Review - Terms of Reference

Context

The Public Governance, Performance and Accountability Act 2013 (PGPA Act), subsection 112(2), requires that an independent review (review) of the operation of the PGPA Act and Rule be conducted as soon as practicable after 1 July 2017. The Explanatory Memorandum to the Act explains that this will be a post-implementation review of how the PGPA Act and Rule have worked and whether improvements could be made.

The requirement for the review was included in the PGPA Act on the recommendation of the Joint Committee of Public Accounts and Audit (JCPAA)[1].

The development of the PGPA Act and Rule was guided by the following principles:

  1. Government should operate as a coherent whole;
  2. A uniform set of duties should apply to all resources handled by Commonwealth entities;
  3. Performance of the public sector is more than financial;
  4. Engaging with risk is a necessary step in improving performance; and
  5. The financial framework, including the rules and supporting policy and guidance, should support the legitimate requirements of the Government and the Parliament in discharging their respective responsibilities[2].

The PGPA Act has the following objects (section 5):

a) to establish a coherent system of governance and accountability across Commonwealth entities; 

b) to establish a performance framework across Commonwealth entities; 

c) to require the Commonwealth and Commonwealth entities:

(i) to meet high standards of governance, performance and accountability; 
(ii) to provide meaningful information to the parliament and the public; 
(iii)  to use and manage public resources properly; 
(iv)  to work, cooperatively with others to achieve common objectives, where practicable; and

d) to require Commonwealth companies to meet high standards of governance, performance and accountability.

Objective

  1. To examine whether the operation of the PGPA Act and Rule is achieving the objects of the PGPA Act in a manner consistent with the guiding principles.
  2. To identify legislative, policy or other changes or initiatives, to enhance public sector productivity, governance, performance and accountability arrangements covered by the PGPA Act.
  3. To examine whether policy owners’ implementation of the PGPA Act and Rule has appropriately supported their operation in Commonwealth entities.

Scope

The Review will consider the broad scope of operations and functions under the PGPA Act and Rule, including, for example: policy and strategic initiatives, and procedural requirements.

In addition to the general consideration of the implementation and operation to the PGPA Act and Rule the review will give consideration to issues such as: 

  • The impact of the new legislative framework including:
    • Consideration of the impact on small entities and previous Commonwealth Authorities and Companies Act 1997 bodies, how these entities are managing under the new framework and whether adjustments should be made for smaller entities;
    • Examination of how Commonwealth entities work cooperatively with others (in ‘joined up’ government), as emphasised by the PGPA Act principles and objects;
  •  Accountability and Governance, including examination of the:
    • Timely and transparent advice provided to Parliament:
      • reporting on contracts and consultancies in annual reports; 
      • the reporting of senior executive remuneration and changes to accounting standards while balancing parliamentary accountability;
      • whether there would be benefit in bringing forward and potentially legislating an earlier annual report delivery and tabling date;
      • Requirements for and the role played by entity audit committees;
  • The Commonwealth Risk Management Policy, including:
    • Risk maturity in entities, the Commonwealth, executive government and the Parliament;
  • The enhanced Commonwealth performance framework, including: 
    • Ongoing monitoring and public reporting of whole-of-government results for the framework; 
    • Timely and transparent, meaningful information to the Parliament and the public, including clear read across portfolio budget statements, corporate plan, annual performance statements and annual reports;
  • Support provided to Commonwealth entities including:
    • Review of the PGPA Act and Rule guidance issued by the Department of Finance and others, including the Attorney-General’s Department;  
    • Consideration of other communication strategies such as Communities of Practice, utilised to support entities.

The list above is intended to be illustrative and should not be considered exhaustive.

The Review will not examine the:

  • Commonwealth Procurement Rules (CPRs); and 
  • Commonwealth Grant Rules and Guidelines (CGRGs).

The CGRGs and the CPRs are subject to current and ongoing review by the Australian National Audit Office (ANAO) and the JCPAA and other parliamentary committees[3]. Each change to these instruments has implications not only for the public sector, but also for external stakeholders in the private and not-for-profit sectors.

Governance

Independent reviewers appointed by the Finance Minister, in consultation with the JCPAA, will lead the review, and will report to the Finance Minister.

Methodology 

The independent reviewers will consult with other parties and stakeholders, including the JCPAA, the ANAO and the Department of Finance, to gather sufficient evidence to meet the review objectives and to make sound recommendations. This may include interviews with Commonwealth entities and Commonwealth companies and key staff (such as Accountable Authorities, Chief Operating Officers and Chief Financial Officers). The independent reviewers will also seek written submissions. 

A team within the Department of Finance will support the independent reviewer’s conduct of the review.

Deliverables

The independent reviewers will provide a progress report to the Finance Minister. A written report of the review will be provided to the Finance Minister in early 2018. The Finance Minister will cause copies of the final report to be tabled in Parliament within 15 sitting days.

Footnotes

[1] JCPAA: Report 438 – Advisory Report on the Public Governance, Performance and Accountability Bill 2013

[2] The fifth principle was included in response to JCPAA: Report 441 – Inquiry into Public Governance, Performance and Accountability Act 2013 Rules Development.

[3] The CPRs, including the new rules that came into effect on 1 March 2017, are subject to an inquiry by theJoint Select Committee on Government Procurement. The Inquiry is to report by 31 May 2017. Since their introduction in mid-2009, the CGRGs have been reviewed and updated three times.
The Commonwealth Grants Guidelines were issued in June 2009. They were reviewed and updated in December 2012 and again August 2013. They were then replaced with the Commonwealth Grants Rules and Guidelines in June 2014, following a further review and update. The CGRGs are currently being updated following recent policy decisions and stakeholder consultations, including reflecting responses to recommendations in JCPAA reports 449, 452 and 454. This process is expected to be finalised in mid-2017.

Written Submissions

The Independent Reviewers are seeking public input to the review of the PGPA Act and Rule in the form of written submissions. In responding, you may wish to consider the above points or you can set out your issues as you see them.

All information (including name and address details) contained in submissions will be made available on the Department of Finance website unless you indicate that you would like all or part of your submission to remain in confidence. Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment. Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.

Written submissions can be sent by e-mail to: PGPAActReview@finance.gov.au, or posted to:

PGPA Act Review
Attention: Review Secretary
Department of Finance
One Canberra Avenue
FORREST ACT 2603

Submissions should not be lengthy and are due by 10 November 2017. Submissions to the Review are now closed.

Submissions received by the Independent Review

Only submissions where the author has given permission to be published are listed below.

Submitter Download
Aboriginal Hostels LimitedPDF 
Airservices AustraliaPDF 
Attorney-General’s DepartmentPDF 
Australasian Evaluation SocietyPDF  | Word 
Australia PostPDF 
Australian Broadcasting CorporationPDF 
Australian Bureau of StatisticsPDF 
Australian Commission for Law Enforcement IntegrityPDF 
Australian Commission on Safety and Quality in Health CarePDF 
Australian Communications and Media AuthorityPDF  | Word 
Australian Criminal Intelligence CommissionPDF 
Australian Financial Security AuthorityPDF 
Australian Fisheries Management AuthorityPDF  | Word 
Australian Institute of Aboriginal and Torres Strait Islander StudiesPDF 
Australian Institute of Marine SciencePDF 
Australian Maritime Safety AuthorityPDF 
Australian National Audit OfficePDF 
Australian Nuclear Science and Technology OrganisationPDF  | Word 
Australian Public Service CommissionPDF  | Word 
Australian Reinsurance Pool CorporationPDF 
Australian Renewable Energy AgencyPDF 
Australian Sports CommissionPDF  | Word 
Australian Taxation OfficePDF 
Australian War MemorialPDF  | Word 
Cancer AustraliaPDF 
Clean Energy Finance CorporationPDF 
Clean Energy RegulatorPDF 
Commonwealth Scientific and Industrial Research OrganisationPDF 
Cotton Research and Development CorporationPDF 
CPA AustraliaPDF  | Word 
Department of Agriculture and Water ResourcesPDF 
Department of DefencePDF 
Department of Education and TrainingPDF 
Department of EmploymentPDF 
Department of FinancePDF  | Word 
Department of Foreign Affairs and TradePDF 
Department of HealthPDF 
Department of Human ServicesPDF 
Department of Immigration and Border ProtectionPDF 
Department of Industry, Innovation and SciencePDF  | Word 
Department of the Environment and EnergyPDF 
Department of the House of RepresentativesPDF 
Department of the Prime Minister and CabinetPDF  | Word 
Department of Veterans’ AffairsPDF 
Emeritus Professor John HalliganPDF  | Word 
Fisheries Research and Development CorporationPDF 
Grains Research and Development CorporationPDF 
Great Barrier Reef Marine Park AuthorityPDF 
Indigenous Business AustraliaPDF 
Indigenous Land CorporationPDF 
IP AustraliaPDF 
Mr Dominic WildPDF  | Word 
Mr Graham SmithPDF  | Word 
Murray-Darling Basin AuthorityPDF 
National Health and Medical Research CouncilPDF 
National Transport CommissionPDF 
Northern Land CouncilPDF 
Professor John Wanna and Honorary Professor Andrew Podger
   Includes: “Chapter Six: Making ‘Accountability for Results’ Really Work?” by Professor Podger
PDF  | Word 
PDF  | Word 
Reserve Bank of AustraliaPDF 
Royal Australian Navy Central Canteens BoardPDF 
Special Broadcasting Service CorporationPDF 
Sydney Harbour Federation TrustPDF 
Tax Practitioners BoardPDF 
Tertiary Education Quality and Standards AgencyPDF 
The Institute of Internal AuditorsPDF  | Word 
Tourism AustraliaPDF 

Contact

PGPA Act Review
Review Secretariat
Department of Finance
One Canberra Avenue
Forrest ACT 2609

Email: PGPAActReview@finance.gov.au

 

 

Copyright

© Commonwealth of Australia 2017