Creating a new government body

The Commonwealth Governance Structures Policy (the Governance Policy) helps decision-makers determine the most fit-for-purpose governance structure to undertake a new government activity.

A governance assessment helps decision-makers reach an informed decision on whether a new government body should be created or governance structure of an existing government body should be changed to undertake the new activity in an efficient and effective manner.

The Department of Finance assists entities by advising on the Governance Policy and providing sign-off on governance assessments for certain proposals requiring Government approval’. Finance encourages early engagement to assist in designing better and more sustainable governance solutions.

A template to assist you complete a governance assessment is available under Tools and templates.
 

Key steps to create or change a government body

The diagram below summarises the key steps to create or change a government body to undertake a new activity.

Additional steps are involved to implement a government decision to create or change a government body, particularly where legislation is required.

This webpage focuses primarily on Step 3, completing a governance assessment.
 

What is a governance assessment?

A governance assessment assists Cabinet or the Prime Minister (or other decision-makers) decide whether to change an existing body or create a new body to undertake a new government activity. A governance assessment is also a practical tool for you to use when deciding whether a proposal to change an existing body or create a new body requires government approval.

The Governance Policy requires a governance assessment to provide decision-makers with consistent information on governance structures. The governance assessment demonstrates how the proposal to create or change a government body follows the principles and requirements of the Governance Policy.

A governance assessment for a new activity contains:

  • a preliminary 3 stage test - to decide whether the government can or should undertake the activity
  • consideration of governance factors - to determine the appropriate governance structure for undertaking the activity

If a new (or change to an existing) primary or secondary statutory body is proposed:

  • an analysis of the risks, costs and benefits of at least 3 alternative governance structure options that support the activity.
     

When is a governance assessment required? 

A governance assessment has different requirements depending on the proposed governance structure.

A governance assessment must be included when seeking government approval for a new or changed primary or secondary statutory body. For example, in a Cabinet Submission or correspondence with the Prime Minister.

A governance assessment for a new or changed primary or secondary statutory body must include an analysis of the risks, costs and benefits of at least 3 alternative governance structure options that support the activity.

There are different types of governance structures used by Australian Government bodies.

  • Primary bodies that are part of the Commonwealth or have a separate legal status
  • Secondary statutory structures that are established within a primary body by legislation
  • Secondary non-statutory structures that are established administratively within a primary body
  • Other governance relationships where the Commonwealth has an involvement or relationship, generally arising from membership or investment.

More information about governance structures for Australian Government can be found at Types of Australian Government bodies.

The table below summarises the Governance Policy and governance assessment requirements for different governance structures.
 

Governance Policy at a Glance


How do I do a governance assessment?

Finance has developed a template, with guidance included, to assist you to complete a governance assessment and is available under Tools and templates.

The template will prompt you to complete the mandatory parts of a governance assessment. The guidance will assist you complete a governance assessment even if you choose not to use the template.

A governance assessment proposing a new or change to an existing primary or secondary statutory body must be signed-off by Finance for consistency with the Governance Policy requirements.
 

What do I need to know before doing a governance assessment?

Know the purpose of the activity

Be clear about the purpose of the new government activity. The more you know about the activity, the easier it will be to determine the right governance structure.

Know the guiding principles of the Governance Policy

There are 4 guiding principles when considering a fit-for-purpose governance structure for a new or existing government activity.

The guiding principles apply to all types of Australian Government bodies.

  1. Clarity of purpose
  2. Minimise the role of government
  3. Maximise efficiency by using existing structures
  4. Accountability to the Parliament and public 

More information about the guiding principles can be found at Governance Policy.

Know the different governance structures for Australian Government bodies

Since you may need to provide viable governance structure options for the activity, it is useful to know what governance structures exist.

More information about governance structures for Australian Government bodies can be found at Types of Australian Government bodies.

Advise Finance at the earliest opportunity if you are likely to propose a new or change to an existing primary body or secondary statutory body

Finance can help to ensure your governance assessment is consistent with the requirements of the Governance Policy.
 

Who approves a governance structure?

The approval required depends on the governance structure proposed.

Primary body or secondary statutory body

Approval from the Cabinet or the Prime Minister is required to:

  • create a new or change governance structure of an existing primary or secondary statutory body
  • publicly announce a new primary or secondary statutory body

A completed governance assessment must be included when seeking the Cabinet or the Prime Minister’s approval.

Secondary non-statutory body

The responsible minister, accountable authority, or a governing board of a primary government body may approve the proposal to create a new secondary non-statutory body.

Governance relationships

A proposal to form or participate in a governance relationship is approved according to the framework or process that governs the establishment of those relationships.

For example, inter-jurisdictional bodies are established in accordance with the Council of Australian Governments (COAG) framework.
 

What happens after a new government body is approved?

Establishing a new government body may involve a machinery-of-government change. More information is available on the Machinery-of-Government Changes is available in RMG-100 under Tools and templates

Finance is developing a list of actions which may be involved in establishing a new Commonwealth entity.
 

What reporting do I need to do?

Commonwealth entities and companies must, through their portfolio departments, provide information on new or change to an existing bodies to Finance to include on the Australian Government Organisations Register (AGOR).

AGOR provides information on the function, composition, origin and other details of Australian Government bodies.
 

What is a periodic review?

Proposals to establish a new government body must include an end or review date for the body within 10 years to review whether it is still required and remains fit-for-purpose.

Where a new activity has a clear finishing point, like implementation of a new policy strategy, processes to end the governance structure must be included in the proposal.

Where a new activity has a short to medium term, an end or review date for the governance structure within 5 years must be included in the proposal.

Guidance on how to review a government body against the requirements of the Governance Policy can be found on Reviewing an Existing Government Body.


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