Governance policy

The Commonwealth governance structures policy (governance policy) identifies efficient and fit-for-purpose governance arrangements for activities undertaken by the Australian Government. Fit-for-purpose governance arrangements will ensure the body undertaking the activity can operate efficiently and to a high standard. The guidance below provides assistance to officials tasked with establishing or reviewing governance structures for new or existing activities.

Mandatory requirements - The governance policy establishes some mandatory requirements that apply to creating a new body or reviewing the ongoing need for an existing body. The policy is given effect through two key processes:

  • deciding whether the government can or should conduct an activity itself and, if so;
  • establishing the appropriate governance arrangements for conducting that activity.

Core governance principles - The governance policy establishes four core principles for the design of a governance structure for an activity. These core principles are:

  • clarity of purpose
  • accountability to the Parliament
  • transparency to the public
  • optimisation of efficiency and performance.

The core principles are given practical effect through a three-stage gateway test, which addresses:

  • whether the Commonwealth has the constitutional power to undertake an activity;
  • whether the Commonwealth is best placed to undertake the activity and, if so;
  • whether the activity can be conducted by an existing Commonwealth body.

Three-stage gateway test - Guidance to help work through the three-stage gateway test, including the
attached governance assessment template [word document - 40 KB].

Considering governance structures - Guidance that identifies the matters to be considered when establishing or reviewing bodies.

Types of governance structures - The term body is broad in nature and includes any department, listed entity, executive agency, statutory agency, statutory authority, statutory office holder, company, association, cooperative, partnership, trust or departmental function with distinct branding.  The term entity in this guidance refers to a Commonwealth entity or a Commonwealth company that is subject to the PGPA Act. Many bodies are entities within their own right or operate within an entity.

Reviewing existing Commonwealth bodies - It is important that the governance structures of existing bodies remain efficient and effective over time. Accordingly, the policy requires periodic reviews of bodies’ governance structures, including identifying future review or sunset dates for them.

Reporting of Commonwealth bodies – The governance policy requires responsible entities to report new bodies when they are created or where their governance arrangements vary.

Checklist for abolishing or merging Commonwealth entities - This provides a broad checklist of the key things to consider when closing down a body.

Glossary - Provides a comprehensive glossary of other governance terms.

For further information, contact pmra@finance.gov.au.

Last updated: 05 January 2017