Portfolio Charging Reviews

Departments of State must examine all activities in-scope of the Charging Framework within their portfolio at least every 5 years, in accordance with the published schedule of portfolio charging reviews or at other times agreed by the Finance Minister.

The Portfolio Charging Review (PCR) should be based on existing information and the report must be submitted to the responsible Minister, and the responsible Minister must provide a copy to the Finance Minister. 

Key points

Departments of State must conduct reviews of all existing and potential charging activities within their portfolios at least every 5 years. The schedule for Department of State participation in PCR is released by the Finance Minister, and updated from time to time, in consultation with the responsible Minister.

Planning for the Portfolio Charging Review

The Department of State 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 charging activities
  • internal processes involved in the preparation, approval and submission of the review report to the responsible Minister and the Finance Minister.

For each Department of State, 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 Department of State 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 charging activities
  • evaluate the performance of charging activities
  • identify potential for new and existing charging activities
  • identify opportunities to amend or discontinue specific charging activities
  • identify where charging models exist, how changes in cost (such as indexation) are accounted for within the model
  • identify whether benchmarking for specific charging activities, or components of charging activities can be undertaken
  • assess the effectiveness of stakeholder engagement strategies and opportunities for improvement.

Stocktake and analysis of existing regulatory and non-regulatory activities

The Department of State should collect 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 activities.

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 Department of State, the Accountable Authority of each portfolio entity should provide the following information as part of the review:

  • a list of all the entity’s existing charging activities, 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, general taxation).

For each regulatory charging activity, the following additional information should 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 CRIS for the activity
  • an evaluation of performance of the activity.

Potential to charge for new or existing activities

In addition to the stocktake and analysis of existing charging activities, portfolio entities should assess the potential to charge for existing and/or new activities, 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 general 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 activities, most of the information for the PCR should be available as part of the day-to-day implementation of the activity.

For example, the CRIS 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) charging activities but should be recent (that is, produced in the preceding 2 or 3 years).

The published schedule for Departments of State does not prevent entities from undertaking operational reviews of their charging activities at other times. 

Preparing the Portfolio Charging Review report

The Department of State is responsible for preparing the PCR report.

The report should:
  • briefly describe all existing charging activities across the portfolio
  • assess the performance of all existing charging activities
  • identify better practices and their potential for application to other activities
  • outline any policy, legal and operational issues and risks related to existing charging activities
  • provide a summary of stakeholder feedback
  • assess the effectiveness of stakeholder engagement across the portfolio
  • evaluate the relevance of existing charging activities and their consistency with the Government’s planned policy outcomes
  • assess the potential to charge for new or existing activities undertaken by portfolio entities, and price to recover all or part costs or another basis
  • state whether changes to charging activities are needed
  • state whether charging should continue for existing charging activities, and on what basis
  • draw portfolio-wide conclusions and make relevant recommendations.

The portfolio entity must submit the PCR report to the responsible Minister, and the responsible Minister for approval and must provide a copy to the Finance Minister.

The PCR report should be submitted to the responsible Minister in time for policy proposals to implement recommendations, if any, to be brought forward for Government consideration in the relevant Budget context.

The entity should 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.

Authority for charging proposals

Where a PCR identifies an additional charging activity 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. 

Schedule of Portfolio Charging Reviews

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.

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