Financial Legislation and Regulation
DOFA's target in improving the financial legislation and regulation
of Government operations was to achieve best practice operation
by Commonwealth agencies and authorities. DOFA achieved this target;
this is supported by the findings of the Joint Committee of Public
Accounts and Audit inquiry on this issue, and by the readiness of
all agencies for the New Tax System on 1 July 2000.
Flexible and Robust Legal Governance Framework
Under the new financial management legislative framework, agencies
can deliver their services in line with commercial business practices.
The Joint Committee on Public Accounts and Audit confirmed the effectiveness
of this framework in its inquiry into the Financial Management and
Accountability Act 1997 (FMA Act) and Commonwealth Authorities and
Companies Act 1997 (CAC Act) (Report 374). Australian National Audit
Office Reports 10, 14 and 21 and DOFA's own review of the legislation
showed that the integrity of the framework was very high.
DOFA played a major role in preparing the financial framework
for introducing the New Tax System. This included developing new
appropriation arrangements for Commonwealth monies through amending
the FMA Act. Additional regulations also ensured the respective
Commonwealth superannuation funds and their trustee boards would
be subject to the New Tax System legislation, bringing them in line
with other superannuation and trustee boards.
DOFA also established a GST Unit to assist Commonwealth agencies
in preparing for the New Tax System. By the end of June 2000, the
Chief Executive Officers of all Commonwealth (non-government business
enterprise) agencies were able to report that their agency was fully
prepared for the New Tax System on 1 July 2000. The GST Unit contributed
to this success by assisting agencies with advice on policy and
operational matters, through a GST manual, seminars, an outsourced
help desk, an Internet site and a panel of accredited consultants.
The unit also worked with agencies and systems suppliers to ensure
readiness of agencies' systems.
DOFA is helping to set new national accounting standards through
its membership of the recently established Financial Reporting Council.
The Financial Reporting Council is the peak body responsible for
overseeing the process of setting accounting standards for the private,
public and non-profit sectors.
In November 1999, the Parliamentary Secretary, the Hon Peter Slipper,
launched new financial accounting and reporting requirements for
all Commonwealth agencies and authorities. This is the first time
that a simple set of accounting policies, applying to both FMA and
CAC entities, have been consolidated.
DOFA reinforced its commitment to developing financial expertise
by establishing the DOFA Chapter of Certified Practising Accountants
Australia in November 1999. The chapter has 90 members and ran six
professional development sessions.
Public Sector Superannuation Advice
DOFA's public sector superannuation advice focused on improving
the accountability and transparency of the Commonwealth's civilian
superannuation arrangements. At 30 June 2000, the unfunded liability
for the Commonwealth Superannuation Scheme (CSS) and the Public
Sector Superannuation Scheme (PSS) was just over $47 billion. However,
costs are decreasing as a percentage of gross domestic product,
with predictions that they will continue to decline.
DOFA achieved the majority of its targets for the year for public
sector superannuation advice. Total (employer) cost of superannuation
was examined during the year in the triennial actuarial long term
cost review for the CSS and PSS. The review found that the employer
cost of the CSS was 21.9 per cent of superannuation salaries and
14.2 per cent of superannuation salaries for the PSS. The target
of ensuring both superannuation schemes were compliant with legislative
requirements was met with the issue of an actuarial benefit certificate
indicating the compliance of the schemes and the Superannuation
Guarantee requirements. The target of easily adapting superannuation
arrangements to meet Government policy also was met through legislative
changes made to accommodate the New Tax System.
Management of Discretionary Payments
Equity in Assistance, Governance and Accountability
DOFA advises the Minister for Finance and Administration on his
responsibilities for Natural Disaster Relief Arrangements. Over
the last five years, the Commonwealth has provided $253 million
in Natural Disaster Relief Arrangements assistance to the states
and territories. In 1999-2000, it provided $105 million in Natural
Disaster Relief Arrangements assistance for natural disasters that
included severe storms and flooding in the Wollongong area, and
Cyclones Elaine and Vance in Western Australia.
Ex-gratia assistance also was provided directly to farmers and
flood victims. As part of a regional assistance package for farmers
in north-east South Australia, 187 eligible farmers received fortnightly
income support payments for up to three months, totaling just under
$321,500. Communities affected by extensive flooding in Queensland
and New South Wales received $100,000 to put in trust funds to assist
In line with DOFA's target, the aggregate level of discretionary
payments did not exceed the growth in population during 1999-2000,
with payments falling markedly from $1,308 million in 1998-99 to
$153 million in 1999-2000.
DOFA formalised the Natural Disaster Risk Management Studies Program
during the year. The program funds studies to identify, assess and
address the risks natural disasters present. Commonwealth funding
under the program is up to $3 million per year, providing up to
one third funding for each project; with the balance funded by state
and local governments. The Government approved funding for forty
four national projects, totaling $1.25 million.
Secretariat Support for Remuneration Tribunal
Performance Focus and Transparency in Remuneration
The Remuneration Tribunal, which is supported by a secretariat within
DOFA, initiated reforms to public office holder remuneration. In
December 1999, a broad banded remuneration framework, known as a
Principal Executive Office structure, was put in place. Under the
Principal Executive Office structure, performance is a key factor
in determining remuneration levels, and remuneration packaging is
more flexible. Public office holder remuneration is now consistent
with the Government's overall workplace reform programme and with
the accountability provisions in the FMA Act, the CAC Act and the
Public Service Act 1999. Ms Janet Grieve was appointed to the Tribunal
and is the first woman to sit on the Remuneration Tribunal in its
26 year history. DOFA achieved its target of supporting the Remuneration
Tribunal, ensuring that reports and determinations complied with
legislation and government policy.
Competitive Tendering and Contracting
Improving Performance through Contestability
On 1 July 1999, the transactional banking services provided to the
Commonwealth by the Reserve Bank were opened to private sector competition.
The banking industry showed a strong interest, actively promoting
their services to agencies and responding to tender offerings. At
the end of 1999-2000, 14 agencies had tested the market, with 12
agencies choosing a provider other than the Reserve Bank. DOFA is
assisting market testing and reducing costs by developing a model
contract and implementing a pre-qualification scheme for banks.
In November 1999, the Government announced its competitive tendering
and contracting initiative, reaffirming its whole-of-government
commitment to applying Competitive Tendering and Contracting Principles
across the public sector. All agencies must test relevant activities
in a competitive market, starting with the corporate services function.
DOFA and the Office of Asset Sales and Information Technology Outsourcing
have joint responsibility for the initiative. Several agencies are
currently undertaking activities for market testing.
The proposed target set in the Portfolio Budget Statement for
overall competitive tendering and contracting activity by agencies
of 2 per cent during 1999-2000 was surpassed. The actual increase
was 4 per cent, and DOFA aims to continue this rate of increase
Service Charters Advice
Meeting Client Needs
The Government introduced service charters in 1997, as part of the
Prime Minister's More Time for Business statement. Its aim was to
support a more client focused, open and accountable culture in the
Commonwealth public sector. DOFA has responsibility for coordinating
this initiative. During 1999-2000, 79 per cent of service charters
resulted in improved service delivery, a good indicator of achievement.
In October 1999, the Special Minister of State, Senator the Hon
Chris Ellison, released a report, Serving the Australian Community.
It is the first whole-of-government report on the service charter
initiative, covering July 1997 to June 1999, when 125 service charters
were put in place. The report documents that the initiative is a
success, with 98 per cent of agencies specifying standards for service
delivery in their charter and 91 per cent using customer feedback
to improve their service delivery.
DOFA released the new Client Service Charter Principles in June
2000. The principles are a simple guide to developing, monitoring
and reviewing service charters. Agencies also are asked to consider
the needs of diverse client groups when reviewing their charters,
including clients who live in rural, remote and regional Australia,
clients with disabilities, and clients who speak languages other