The Australian Government Charging Framework (the Charging Framework) builds on the 2014 Cost Recovery Guidelines. It encourages a common approach to planning, implementing and reviewing government charging, which should lead to improved and consistent government charging. The Framework supports the Australian Government’s role in delivering quality public programmes to Australian citizens, communities and the economy more broadly, by assisting to improve programme funding decisions.
Charging for government activities can:
- promote equity, whereby the recipients who create the need for a government activity, rather than the general public, bear its costs
- influence demand for government activities
- improve the efficiency, productivity and responsiveness of government activities and accountability for those activities
- increase cost consciousness for all stakeholders by raising awareness of how much a government activity costs.
For each charging activity, government entities should consider:
- whether policy approval is required from the Australian Government, noting that it is necessary for all regulatory charging and may be required for other material or sensitive charging activities
- what statutory authority is required, which is a requirement for regulatory charging activities
- whether there is a need to align expenses and revenue, which is a requirement for regulatory charging activities
- maintaining appropriate up-to-date records, including the level of publicly available documentation and reporting.
The Charging Framework is a policy of the Australian Government, under the Public Governance, Performance and Accountability Act 2013, Section 21 states:
‘The accountable authority of a non-corporate Commonwealth entity must govern the entity in accordance with paragraph 15(1)(a) in a way that is not inconsistent with the policies of the Australian Government.’
Note: Paragraph 15(1)(a) is about promoting the proper use and management of public resources for which the accountable authority is responsible.
Applying the Charging Framework would ensure that the accountable authority is meeting this requirement.
Charging Policy Statement
Charging decisions are made by the Australian Government. Based on the type of activity, policy outcomes sought and relevant public interest considerations, the Government may decide to charge for an activity, taking into account the Government's charging policy statement, below.
"Where specific demand for a government activity is created by identifiable individuals or groups, they should be charged for it unless the government has decided to fund that activity. Where it is appropriate for the Australian Government to participate in an activity, it should fully utilise and maintain public resources, through appropriate charging. The application of charging should not, however, adversely impact disadvantaged Australians."
Charging should only occur where it is cost effective and efficient.
There are a number of considerations in determining whether it may be appropriate to charge for a government activity. These include:
- broad policy considerations, such as the effect of charging on the policy problem and proposed solution, whether the government should be involved in the activity, and whether it is appropriate to charge for the activity (It might not be appropriate to charge for some activities, for example defence or national security activities)
- specific considerations, such as whether charging is the most efficient and effective source of funding for an activity and, if so, use of an appropriate pricing model depending on the type of activity.
The principles guide all processes involved in charging for a government activity, from planning and design to review and evaluation. There are six charging principles:
- transparency –making available key information about the activity, such as the authority to charge, charging rates, and, where relevant, the basis of the charges
- efficiency –delivering activities at least cost, while achieving the policy objectives and meeting the legislative requirements of the Australian Government
- performance – which relates to effectiveness, risk mitigation, sustainability and responsiveness. Engagement with stakeholders is a key element of managing and achieving performance. Entities must regularly review and evaluate charges in consultation with stakeholders to assess their impact and whether they are contributing to government outcomes
- equity – where specific demand for a government activity is created by identifiable individuals or groups they should be charged for it, unless the Government has decided to fund that activity. Equity is also achieved through the Government’s social safety net, to ensure that vulnerable citizens are not further disadvantaged through the imposition of a charge
- simplicity – whereby charges should be straightforward, practical, easy to understand and collect
- policy consistency – charges must be consistent with Australian Government priorities and policies, including entity purpose and outcomes. Australian Government agreement may be required for the introduction of new charges and/or changes to charges.