Commonwealth
Government Business Enterprises

 

Introduction

This guide has been prepared by the Department of Finance (Finance), in consultation with portfolio departments and GBEs, as a guide for GBE Directors (Directors) of Commonwealth Government Business Enterprises (GBEs).

This guide is intended to assist Directors in familiarising themselves with GBE governance requirements by:

  • identifying the features of a GBE that make it unique from private sector organisations and
  • highlighting the key features of the GBE governance framework

This guide is not a comprehensive statement of all governance arrangements that apply to GBEs and is intended as a starting point to understanding a Director's key roles and responsibilities.

Guidance on operational matters would be available from the GBE's executive.

This guide does not constitute legal advice and Directors should seek appropriate advice in relation to particular issues that may arise, if needed.

Further information on Australian Government boards is available on the AusGovBoards website at www.AusGovBoards.gov.au 

Key Concepts

Role of a GBE and its Directors

A GBE is a commercially-focussed government owned business that is established to fulfil a Commonwealth Government purpose.

GBEs make a substantial contribution to the Australian economy by supporting productivity, job creation and Government policy objectives.

Effective governance and stewardship frameworks are essential to ensure that GBEs make a positive contribution to economic efficiency, sector competitiveness and the delivery of services to the community.

The Board of Directors provides stewardship, strategic leadership, governance and oversight of GBEs, while also acting as a bridge between Commonwealth policy-making and operational implementation by GBEs.

The Board of Directors of a GBE has ultimate fiduciary responsibility for the performance of the GBE, and are fully accountable to Shareholder Ministers.

GBE Accountability and Governance

A GBE as a government-owned entity has high levels of scrutiny, sensitivity and accountability.

Whether a GBE utilises public resources or resources held in its own name, the operations and performance of a GBE, as a government-owned entity, can attract significant scrutiny within government and externally.

A GBE has a Shareholder Minister or Ministers who are accountable to the Parliament.

Shareholder Ministers have an oversight role which extends beyond that of a private sector company shareholder.

The key requirements for the governance, reporting and accountability for a GBE (and other Commonwealth entities), and the proper use and management of public resources is set out in the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The PGPA Act defines both a Director’s core fiduciary (general) obligations as well as a number of GBE-specific duties.

The broader governance regime for a GBE includes other legislation, and a number of policy instruments, such as orders, guidance materials, memorandums of understanding and agreements.

A GBE has specific Commonwealth reporting and disclosure of information requirements and is subject to legislation that places various additional obligations on it in relation to information management.

Key Sources of Regulation for GBE Governance

The core features of the GBE governance regime are:

  • PGPA Act – sets a government-wide approach to governance and stewardship
  • PGPA Rule – expands on the provisions of the PGPA Act in respect of specific issues, including for ‘listed’ entities
  • GBE Company Constitution – establishes the framework for the operation of a Commonwealth Company under the Corporations Act
  • Enabling Legislation – a key source of policy guidance in ascertaining the ‘purpose’ of a Corporate Commonwealth Entity
  • Resource Management Guides – these provide guidance to GBEs, Directors and Officials on the application of PGPA Act and other machinery of government legislation including RMG No. 126 (RMG-126) Commonwealth GBE governance and oversight guidelines
  • General Policy Orders – while none currently exist, these are notifications by the Finance Minister to one or more GBEs as to the application of an aspect of Australian Government Policy and
  • Commercial Freedoms Framework / Funding Agreements / Statements of Expectations – where applicable, these provide guidance to Directors as to actions that can be taken without prior notification and/or approval of Shareholder Ministers.