The Commonwealth Governance Structures Policy (the Governance Policy) facilitates the ongoing review of government bodies and their governance structures to ensure they remain fit-for-purpose.
A governance assessment helps decision-makers reach an informed decision on whether:
- an existing activity should be limited, phased down or ceased with a government body wound up or sunset
- the governance structure of a government body should be changed to continue undertaking the 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 review a government body
The diagram below summarises the key steps to review a primary or secondary statutory body.
This page focuses primarily on Step 3, completing a governance assessment. Entities are required to complete all or selected parts of a governance assessment depending on the governance structure of the body.
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 structure can be found at Types of Australian Government bodies.
Who is subject to periodic review?
New government bodies
Proposals to establish a new government body must include a sunset or review date for the body of no greater than 10 years. The review allows for the opportunity to confirm if the body is still required and remains fit-for-purpose.
Where the task of a new body has a clear finishing point, like implementation of a new policy strategy, sunsetting processes for the body must be included in the proposal.
Where a new body seeks to address short to medium term policy problems, a sunset or review date for the body of no greater than 5 years must be included in the proposal.
Existing government bodies
Existing government bodies that are not subject to sunsetting must be periodically reviewed to assess whether they are achieving their original purpose and whether that purpose remains valid.
Review dates outside legislation are set as a matter of policy. The frequency of reviews should be proportionate with the size of a government body.
For example, bodies that employ more than 500 people and do not have a sunset or review date should be reviewed at least every 10 years, and other bodies should be reviewed at least every 5 years.
Departments of state do not require review or sunset dates as their ongoing existence is determined as part of the Administrative Arrangements Order process.
Other governance relationships should be reviewed in accordance with their relevant framework. For example, the governance structures created by the Council of Australian Governments are reviewed in accordance with the Department of the Prime Minister and Cabinet guidance.
Who conducts periodic reviews?
Portfolio departments are responsible for reviewing or coordinating reviews of governance structures in their portfolios. The resources used should be proportionate with the type of governance structure.
Although stand-alone reviews may be conducted, existing review processes (such as functional reviews) may also provide an appropriate opportunity to review governance structures against the Governance Policy requirements.
What is a governance assessment?
A governance assessment assists Cabinet or the Prime Minister (or other decision-makers) decide whether to change an existing government body or activity. A governance assessment is also a practical tool for you to use when deciding whether the proposed change requires Government approval.
A governance assessment for the review of an existing government body or activity contains:
- a preliminary 3 stage test - to decide whether the government can or should continue to undertake the activity
- consideration of governance factors – to assess the performance of the activity to date
If a change to an existing or new primary or secondary statutory body is proposed:
- an analysis of the risks, costs and benefits of at least 3* alternative governance structure options that could support the activity.
* The existing government body can be an option if it is still fit-for-purpose.
When is a governance assessment required?
Entities are required to complete all or selected parts of a governance assessment depending on the governance structure of an existing body and the proposed change.
A full governance assessment (preliminary 3 stage test, consideration of governance factors, and options analysis) must be completed where changes to an existing primary or secondary statutory body are required. The governance assessment must be included with a proposal when seeking Government approval for changes to an existing primary or secondary statutory body. Government approval may be sought from Cabinet or the Prime Minister.
If a preliminary 3 stage test determines the activity and the body that undertakes it should cease, there is no need to undertake the rest of the governance assessment. Government approval is still required to cease a primary or a secondary statutory body.
The table below summarises the governance assessment and other Governance Policy requirements for different types of government bodies. More information about the policy can be found at Governance Policy.
Governance Policy at a Glance
How do I do a governance assessment?
Finance has developed a template to assist you to complete a governance assessment 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 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 existing 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.
- Clarity of purpose
- Minimise the role of government
- Maximise efficiency by using existing structures
- 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 change to an existing primary or secondary statutory body.
Finance can help to ensure your governance assessment is consistent with the requirements of the Governance Policy.
Who approves changes to a governance structure?
The approval required depends on the change to 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.
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 change an existing secondary non-statutory body.
A proposal to change participation 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 framework.
What reporting do I need to do?
Commonwealth entities and companies must, through their portfolio departments, provide information on changes to existing bodies to Finance for inclusion on the Australian Government Organisations Register (AGOR).
AGOR provides information on the function, composition, origins and other details of Australian Government bodies.