Portfolio Charging Reviews

The Accountable Authority for the Portfolio Department should plan the review, allowing enough time to coordinate across all portfolio entities and for the responsible Minister and the Finance Minister to consider the report before the relevant Budget. This will allow time for the Government to consider the review outcomes and/or recommendations, where necessary.

The timeframe for the PCR will depend on:

• the number of entities in the portfolio
• the number and complexity of the entities’ existing activities in scope of the Charging Policy
• internal processes involved in the preparation, approval and submission of the review report to the responsible Minister and the Finance Minister.

For each Portfolio Department, the Terms of Reference for the PCR is agreed between the responsible Minister and the Finance Minister to assist in appropriate focus and timely delivery. Finance will support entity staff of the Portfolio Department in developing the Terms of Reference.

The PCR should look at current and potential charging arrangements. It is an opportunity to:

• assess the extent of activities currently charged for across the portfolio
• compare and analyse different charges
• evaluate the performance of charging
• identify potential for new and existing charging
• identify opportunities to amend or discontinue specific charging
• identify where charging models exist, how changes in cost (such as indexation) are accounted for within the model
• identify whether benchmarking for specific charging or cost components of an activity that is charged for can be undertaken
• assess the effectiveness of stakeholder engagement strategies and opportunities for improvement.

Accountable Authority for the Portfolio Department must ensure the Portfolio Department collects information from each portfolio entity to inform the PCR. Most of the information for the PCR should be readily available through entities’ regular monitoring and evaluation of the performance of their charging.

Stakeholder feedback is a valuable source of information about the performance of charging arrangements.

Stakeholder consultation for the PCR may not be required if portfolio entities have regularly engaged with stakeholders. However, portfolio entities may decide to consult, particularly if consultation has not occurred recently. In such circumstances, consultation should occur in time to provide the necessary information to the department.

At the request of the Accountable Authority of the Portfolio Department, the Accountable Authority of each portfolio entity must provide the following information as part of the review:

• a list of all the entity’s existing activities in scope of the Charging Policy, including a description of who is charged and what they are charged for
• the types of charges used for each activity
• the policy approval to charge (for example, accountable authority, Cabinet)
• the legal source of the authority to charge
• the rationale for charging for each activity
• the amount of revenue raised each year and the rates of charges
• an analysis of any policy, legal and operational issues and risks identified during the implementation of each activity
• a summary of ongoing stakeholder feedback for each activity
• an evaluation of the effectiveness of stakeholder engagement
• an assessment of whether amendments need to be made to each activity and whether charging should continue and on what basis (for example, regulatory charges, commercial charges, taxation).

For each regulatory activity that is charged for, the following additional information must be included in PCR:

• the Government policy approval to charge for the regulatory activity
• the statutory authority to impose regulatory charges
• data on expenses, revenue and any cumulative balance for the activity over the past 5 years (or another period for which data is available if the activity has been in place for less than 5 years)
• a website link to the RCS for the activity
• an evaluation of performance of the activity.

In addition to the stocktake and analysis of existing charging, the Accountable Authority for the Portfolio Department must ensure an assessment of the potential to charge for existing and/or new activities in scope of the Charging Policy, including pricing to recover part or all the costs of the activity. This may include charging for activities that have previously been provided free of charge or for activities that have not previously been provided.

Stage 1 of the Charging Lifecycle contains 9-steps policy design and rationale for charging that may assists in determining whether an existing activity has the potential to be charged for.

Entities should give consideration to whether a charging arrangement that is classified as taxation remains the most appropriate form of charging and whether the level of the charge is the appropriate level.

Information sources for the Portfolio Charging Review

For regulatory charging, most of the information for the PCR should be available as part of the day-to-day implementation of the activity.

For example, the RCS already reports on financial and non-financial performance on a regular basis.

For non-regulatory activities, most of the information for the PCR should be available in internal documentation.

For example, contracts or leases used for reporting in the annual report.

In addition, portfolio entities may use information from a variety of sources, including internal and external enquiries, audits and other reviews of operations or specific activities. This information may relate to regulatory and non-
regulatory (commercial or resource) activity but should be recent (that is, produced in the preceding 2 or 3 years).

The published schedule for Portfolio Departments does not prevent entities from seek to undertake a PCR process at other times.  

The Accountable Authority for the Portfolio Department is responsible for preparing the PCR report.
The report must:

• briefly describe all existing activities of the Portfolio that are in-scope of the Charging Policy across the portfolio (whether charged for or not).
• for each activity in-scope of the Charging Policy that is charged for:
  1. assess the performance of charging by activity, with respect to the Government’s agreed policy for the level of the charging for that activity.
  2. evaluate the relevance of existing charging for each activity and its consistency with the Australian Government’s policy intent.
  3. identify by activity better charging practices and potential for the application of such practices.
  4. outline by activity any historical policy, legal and operational issues and risks related to existing charging.
  5. a summary of stakeholder feedback for each regulatory activity that is charged for.
  6. assess the effectiveness of stakeholder engagement across the portfolio
  7. state by activity, consistent with the current policy, legal and operational situation, whether changes to any charges or charging arrangements are needed and why.

OR

state by activity whether the charging should continue and on what basis.

• for each activity in-scope of the Charging Policy and that is not charged for:
  1. outline by activity, the stated historical policy, legal, operational issues and risks for NOT charging.
  2. consistent with the current policy, legal, operational situation, state by activity whether charging should now commence and on what basis.
• provide an appendix by in-scope activity against the criteria in Table 2.
• draw portfolio-wide conclusions and conclusions by activity on the administration and outcomes of charging, with respect to the Charging Policy or other policies of Government that are impacted by charging.
  • make recommendations for the Portfolio and the responsible Ministers on issues and opportunities to improve charging outcomes and operational arrangements for charging

The Accountable Authority for the Portfolio Department must ensure  the PCR report is submitted to both the Portfolio Minister, and the Minister for Finance.

The Accountable Authority for the Portfolio Department must ensure the PCR report is submitted to the Portfolio Minister in time for policy proposals to implement recommendations, if any, to be brought forward for Government consideration in the relevant Budget context.

The staff responsible for the PCR development may consult with Finance during the preparation of the PCR report. Early engagement, particularly during the planning and conduct of the review, will assist in finalising the review. There may also be a further need for the department to liaise with portfolio entities to clarify provided information, assure its accuracy and quality, or seek additional information. Finance has developed PCR Information Sheet and Templates, available under Tools and templates in the right hand menu, to assist entities complete PCR reports.
 

Where a PCR identifies additional charging that requires Government agreement, new policy proposals may be brought forward as part of relevant Portfolio Budget Submissions for Cabinet consideration during the Budget process, without the Portfolio Minister being required to seek further policy authority.

For more tools and resources on Portfolio Charging Reviews refer to the PCR Information Sheet and Templates available under Tools and templates in the right hand menu and the Portfolio Charging Reviews schedule.