PUBLIC SECTOR FINANCIAL MANAGEMENT

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.

Driving Accountability
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 flood victims.

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 Advice

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 in 2000-01.

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 than English.