Differential Regulation

Finance is currently exploring a differential approach to regulation (previously referred to as earned autonomy) as part of Stage 2 of the Public Management Reform Agenda (PMRA).

One of the common complaints about the previous resource management framework (under the Financial Management and Accountability Act 1997 and Commonwealth Authorities and Companies Act 1997) was the one-size-fits-all approach to regulating Commonwealth entities, imposing requirements and prescribed processes across all entities, regardless of size or risk. This approach created barriers to productivity and innovation and came with significant compliance costs.

The Public Governance, Performance and Accountability Act 2013 (PGPA Act) provides the framework for a more risk-based approach in regulation and policy setting, to contribute to more effective governance, monitoring and oversight arrangements. It does this in two ways. The first is to provide Accountable Authorities (entity heads) with greater autonomy, and indeed a requirement, to establish and maintain appropriate systems of internal control within their entities, taking into account entity risk. The second is to allow the Finance Minister to apply some PGPA Act requirements differentially.

The aim of both statutory mechanisms is to improve accountability and performance through considered and appropriate risk management practices at the entity level, rather than through centrally imposed detailed controls and oversight requirements.

In June 2016 the Taskforce sought comments from the PMRA Reference Group on a range of options for differential regulation. The key themes that emerged from this consultation are being incorporated into the approach for future implementation.

Further information will be disseminated on this website as the agenda progresses, including what this may mean in practice for Commonwealth entities. Alternatively, please contact pmra@finance.gov.au.