This guide is relevant to officers of Commonwealth companies (including chief financial officers, chief operating officers and their units in Commonwealth companies) with responsibility for assisting directors in preparing corporate plans.
The guide is also intended to support officers who manage the activities (as described in the corporate plan) of a company.
This guide provides information on:
- the obligations on directors under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) to prepare corporate plans for companies.
- the requirements, as prescribed by the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) in sections 16E and 27A, for corporate plans published by companies.
- The directors of a Commonwealth company must prepare a corporate plan for the company at least once each reporting period.
- The corporate plan must be published on the company’s website by the last day of the second month of the reporting period for which the plan is prepared.
Commonwealth companies that report on a financial year basis must publish their updated corporate plans on their website by 31 August each year. Companies that report on a calendar year basis must publish a corporate plan by the end of February each year.
- A copy of the company’s corporate plan must be provided to the responsible Minister and the Finance Minister as soon as practicable after it is prepared and before it is published on the company’s website.
It is not necessary for companies to send copies of their corporate plans to the Office of the Finance Minister directly - companies will meet the requirement to provide a copy of their corporate plan to the Finance Minister by emailing a copy of their corporate plan to the Department of Finance at:email@example.com
- Commonwealth companies must prepare their corporate plans in accordance with the requirements of section 27A of the PGPA Rule.
- The guide recognises that it is the directors of companies who are responsible for developing and tailoring their corporate plans to suit their company’s particular circumstances.
- Companies do not have to structure their corporate plan in the same order as the requirements of the PGPA Rule. Companies are encouraged to present their corporate plans in a manner that best demonstrates how they intend to achieve their purposes over the period covered by the plan.
- Where appropriate, each requirement is illustrated in this guide by examples of how it has been addressed by particular Commonwealth companies.
Effect of amendments made by Public Governance, Performance and Accountability Amendment (2020 Measures No. 1) Rules 2020
This guidance incorporates the amendments to sections 16E and 27A made by the Public Governance, Performance and Accountability Amendment (2020 Measures No. 1) Rules 2020.
The amendments apply in relation to a corporate plan that is prepared for a reporting period that begins on or after 1 July 2020.
For companies with reporting periods that align with financial years, this means that the amendments will apply from their corporate plan prepared for the 1 July 2020 to 30 June 2021 reporting period.
For companies with reporting periods aligned to calendar years, this means that the amendments will apply from their corporate plan prepared for the 1 January 2021 to 31 December 2021 reporting period.
What is a corporate plan?
- Corporate plans are the primary planning document published by companies. A corporate plan sets out the company’s purposes, its operating context, the key activities it intends to pursue, and how performance will be measured and assessed over at least four reporting periods.
- The nature and complexity of a company determines the scope and complexity of its internal planning processes and, by extension, the content of its corporate plan.
- Each company needs to decide how its internal planning processes will inform the development of its corporate plan. This will involve determining what aspects of its internal planning give the best insight into its purposes, key activities and intended results.
The role of corporate plans in the Commonwealth performance framework
- The corporate plan is published at the beginning of the reporting cycle and sets out a company’s key activities and how performance will be measured and assessed.
- For any companies that receive appropriation funding, the Portfolio Budget Statements set out the appropriation for the company and how the impact of that expenditure will be measured.
- Unlike Commonwealth entities, Commonwealth companies are not required to prepare annual performance statements. However, Commonwealth companies’ annual reports are required to report the results of the measurement and assessment of the company’s performance for the period. This includes the results of the measurement and assessment of the company’s performance against any performance measures and any targets included in the company’s corporate plan.
What is a reporting period?
- A corporate plan must be prepared at least once each reporting period. As a reporting period is usually a financial year, this usually means that the corporate plan must be prepared each financial year.
Period of the corporate plan
- The corporate plan must cover at least four reporting periods, commencing from the reporting period for which the corporate plan is prepared under paragraph 95(1)(a) of the PGPA Act. This does not preclude a company from producing a corporate plan that covers a longer period if that best addresses the company’s particular requirements.
- For example, a corporate plan prepared for the 2020-21 financial year would be titled as that ‘company’s 2020-21 corporate plan’ and would cover a minimum of four reporting periods (in this example, 2020–21 to 2023-24; Figure 1).
Figure 1: Period of corporate plan
2. How should the corporate plan be structured?
- Companies are not obliged to follow the structure of the PGPA Rule when they are developing their corporate plan.
- Companies have the flexibility to structure their corporate plan in a way that best communicates the company’s purposes and how it proposes to achieve them over the period of the plan.
- Rather than addressing the requirements of the corporate plan in separate sections, some companies structure their corporate plans in a way that addresses these requirements under key activities or themes. This approach can result in the corporate plan presenting information that assists a reader to understand how these elements collectively assist in the achievement of a company’s purposes.
3. Requirements for government business enterprises
- Section 5 of the PGPA Rule identifies those Commonwealth entities and Commonwealth companies that are government business enterprises (GBEs) for the purposes of the PGPA Act.
- GBEs are required to prepare corporate plans in accordance with the requirements set out in section 16E and 27A of the PGPA Rule, together with any additional requirements specified in Resource Management Guide No. 126: Commonwealth Government Business Enterprise (the GBE Guidelines).
- For further information on the GBE Guidelines, contact: GBO@finance.gov.au.
- GBEs that comply with the GBE Guidelines (with specific reference to the corporate planning requirements contaned therein) will meet the requirements for corporate plans under the PGPA Act and Rule.
4. What are the content requirements of the corporate plan?
- Subsection 16E(2) of the PGPA Rule outlines four requirements that must be addressed in the corporate plan of Commonwealth companies. These are:
- key activities; and
- operating context (addressing environment, capabilities, risk oversight and management, cooperation, and subsidiaries).
- In addition, subsection 27A(3) of the PGPA Rule requires companies to include a summary of:
- how the company will achieve its purposes; and
- how the company’s performance in achieving the company’s purposes will be measured and assessed, including any performance measures and any targets that will be used in the measurement and assessment.
- Companies are encouraged to use these requirements as a basis for the presentation of meaningful information to the Parliament and the public.
- Companies also have discretion to include any additional information that assists in demonstrating how the company intends to achieve its purposes.
- The requirements for corporate plans are designed to allow each company to present planning information in the way it considers will best inform the reader of the results the company intends to achieve over the period of the plan. Taking into account the needs of various stakeholders, the corporate plan should attempt to strike a balance between conciseness and providing sufficient information to enable a reader to be informed about the activities and plans the company intends to pursue in achieving its purposes over the period of the plan.
- Companies are encouraged to make a clear use of headings throughout their corporate plan. In addition to their usefulness for demonstrating adherence with the requirements of the PGPA Rule, headings can assist a reader’s navigation from one element to another and facilitate comparability between companies.
- Consistent with the practice adopted in preparing annual reports, companies could also include a List of Requirements in their corporate plans (see Appendix for a template).
4.1 Introduction (statement of preparation and period of coverage)
- The corporate plan must include an introductory statement that:
- states that the plan has been prepared for subsection 95(1) of the PGPA Act. The statement may also refer to any other legislation applicable to the preparation of the plan;
- specifies the reporting period for which the plan is prepared (this would usually be the first reporting period of the minimum four-year period covered by the plan); and,
- specifies the reporting periods covered by the plan (this would usually be the minimum four-year period covered by the plan; for example, 2020-21 to 2023-24).
- An example statement of preparation for Commonwealth companies is set out below:
Example statement of preparation
I/We, the directors of [company name], present the [year for which the plan is prepared] [company name] corporate plan, which covers the periods of [minimum four-year period], as required under subsection 95(1) of the Public Governance, Performance and Accountability Act 2013 and [reference to sections of other applicable legislation].
- The corporate plan must include the purpose(s) of the company.The purposes of a company include the objectives, functions or role of the company. In other words, the purposes of a company are the strategic objectives that the company intends to pursue, or make a significant contribution to achieving, over the reporting period.
- When constructing purpose statements, companies are encouraged to consider a variety of sources, such as:
- any key government priorities and objectives (statements made under section 34 of the PGPA Act);
- any relevant legislation;
- other sources (e.g. partnership agreements and company constitutions).
- Purpose statements are most effective where they are clear and succinct, clearly labelled as the company’s purposes, and stated upfront in the document. In this way, a company’s purposes can be used as the anchor point for the structure of its corporate plan.
- Well-expressed purpose statements make it clear who benefits from a company’s activities, how they benefit and what is achieved when a company successfully delivers on its purposes.
- As companies must report their performance in achieving their purposes in the annual report, companies should ensure that their purpose statement is sufficiently specific to allow for the measurement and assessment of its performance against its purposes.
- The purpose statement should be relevant for the medium to long term rather than reflect a number of short-term goals.
- A company’s purposes can be supported by a vision and/or mission statement in recognition that the corporate plan will often be a document that ‘speaks’ to both internal and external stakeholders. However, vision and/or mission statements should not be included as a substitute for a clear statement of a company’s purposes.
4.3 Key activities
- The corporate plan must identify the key activities that a company will undertake during the entire period of the corporate plan in order to achieve the purposes of the company.
- Companies do not need to specify the relevant activities to be undertaken in each reporting period. The corporate plan should provide a discussion of the key activities over the entire four year period.
- A key activity is a distinct significant program or area of work undertaken by a company to assist in achieving the company’s purposes.
- The corporate plan does not need to describe everything a company does to deliver its purposes. The focus of the corporate plan is on those activities that make a significant contribution to the achievement of the purposes by the company.
- Companies may consider outlining their strategies for achieving the intended results for each key activity.
- Companies could also indicate the timeframe for achievement of the objectives of its key activities and its intended results, many of which in government have longer-term timeframes. Companies may also wish to include details of actual and planned progress to demonstrate how the objective is being implemented.
- The corporate plan could include information on key activities and milestones that the company intends to achieve in meeting its purposes over the life of the plan. It is good practice for a company’s internal reporting arrangements to involve periodic reporting on the achievement against such key activities and milestones.
4.4 Operating context
- Operating context
- Purposes are pursued and achieved within a company’s operating context. There are five elements that must be included in the discussion of a company’s operating context:
- the environment in which the company will operate;
- the capability required to undertake the company’s key activities and to achieve its purposes;
- the risk oversight and management systems, the key risks the company will manage and how those risks will be managed;
- how a company cooperates with others to achieve its purposes; and
- how any subsidiaries will contribute to achieving the company’s purposes.
- Corporate plans must include a discussion of the five elements over the entire period covered by the plan. This does not mean that each element should be discussed for each individual reporting period. Rather, this requires that companies recognise the potential for change in the environment and its operations over the entire period of the plan and provide a forward-looking discussion of these elements.
- The five elements of the operating context should provide the reader with a clear understanding of how, individually and collectively, these elements contribute to a company achieving its purposes.
- The corporate plan must include a discussion of the environment in which the company will operate across the entire period covered by the plan.
- In addressing this requirement, companies should include a discussion of the nature and characteristics of the environment in which the company operates that may impact on the achievement of the company’s purposes. This could include a discussion of various factors, such as:
- macroeconomic and microeconomic factors (such as global and regional economic conditions);
- the regulatory landscape (such as legislative factors, policy factors, or changes in regulatory regimes);
- technological factors (such as technological advances and automation); and/or
- social factors (such as changes in the expectations and demographics of the population).
- In discussing the environmental factors impacting the achievement of a company’s purposes, companies could outline the main factors that are both in the control and beyond the control of the company and the way the company proposes to respond to these factors. In this way, a reader is better informed about the environmental factors that may impact the company’s operations and performance.
Good practice example 1 – environment
- The corporate plan must address a company's capability, including the key strategies and plans the company will implement over the entire period covered by the plan to achieve the company’s purposes.
- Companies should describe their current capability and assess how their capability needs may change over the period of the corporate plan. The corporate plan should outline the strategies and plans a company expects to put in place to build the capability it expects to require in the future in areas, such as workforce, infrastructure or information communications and technology (ICT). In this way, good practice discussions of capability will provide the reader with a good appreciation of why and how a company intends to have the capability it requires to achieve its purposes over the life of the plan. Companies may also outline the strategies they will put in place to build the capability they need in areas such as (but not limited to) workforce, infrastructure or ICT.
- Good practice capability sections go beyond identifying workforce strategies and take an integrated approach to outlining how the company will develop capability according to its purposes, operating context, risks, anticipated changes in the environment and technology.
Good practice example 2 – capability
- The corporate plan must include a summary of the risk oversight and management systems of the company, the key risks that the company will manage and how those risks will be managed.
- Companies should discuss their current systems of risk oversight and management and any plans they may have to improve their risk oversight and management systems during the entire period of the corporate plan.
- In addition to describing the company’s risk oversight and management systems, the corporate plan must also identify the company’s key risks and how those risks will be managed and mitigated.
- For example, key risks may include:
- loss of skills required for specific key activities;
- damage to systems or infrastructure caused by external parties;
- equipment failure/damage that impacts service delivery; and
- service delivery outages that could significantly impact customer confidence and a company’s reputation.
- The corporate plan must also explain how the key risks identified in the corporate plan will be managed. Companies can meet this requirement by outlining the general mitigation strategies and controls they have in place or the strategies and controls for each of the company’s key risks. Companies could also discuss any risks that are likely emerge over the period of the plan and the company’s approach to monitoring these emerging risks.
Good practice example 3 – risk oversight and management and key risks
The WSA Co Ltd (WSA) 2019-20 Corporate Plan provides a discussion of risk oversight and management, including discussing WSA’s governance arrangements and outlining its risk management framework and system (p 17). The corporate plan also includes a list of a number of key risk areas identified by WSA which have the potential to impact the performance of the organisation (extract below). This assists the reader to understand the risk environment within WSA.
Good practice example 4 – risk oversight and management and key risks
The Aboriginal Hostels Ltd (AHL) 2019-20 Corporate Plan provides a discussion of risk oversight and management, including discussing AHL’s governance arrangements and outlining its risk management framework and system (pp 15-16). The corporate plan also includes a section on AHL’s key enterprise risks being managed during the period of the plan, and recognises the potential effect on AHL if the risks are unmitigated. This assists the reader to understand the risk environment within AHL.
- Corporate plans must include a discussion of any organisations or bodies with which the company cooperates that make a significant contribution to achieving the company’s purposes. The intention of this requirement is for companies to demonstrate that in undertaking their key activities, companies are cooperating with others to achieve their purposes. Cooperation across the Commonwealth takes many forms and can be described in a number of ways, such as partnering, relationships and collaborating.
- Organisations and bodies could, for example, include federal, state and local government bodies, private sector organisations, not-for-profit bodies, peak industry bodies and international jurisdictions.
- In meeting this requirement, a company could discuss its cooperation with individual organisations or bodies that make a significant contribution to the company’s purposes. Alternatively, a company’s discussion of cooperation could refer to the kinds or types of organisations or bodies that the company cooperates with, where the cooperation that assists in achieving a company’s purposes is best characterised as being collective in nature, or is with large numbers of organisations of a similar kind and it is impractical to identify all such organisations in the corporate plan. This may be appropriate, for instance, where a company cooperates with state and territory governments or a number of similar stakeholders within a particular industry.
- It is not necessary or intended that a company would detail all of its cooperative relationships in the corporate plan. Companies should focus on the cooperation that makes a significant or substantial contribution to the company’s purposes. Possible indicators that a relationship with another organisation or body is significant in nature may include where:
- a cross-organisational agreement is in place (such as a Memorandum of Understanding) to outline the roles and responsibilities of each party;
- there is a high frequency of interaction;
- joint governance arrangements are established to govern cooperative activities, such as steering committees; and
- the organisation or body has a significant degree of influence on the performance of the company in achieving its purposes.
- The discussion on cooperation is not intended to include details of commercial arrangements that companies have with service providers or other organisations to assist in the delivery of services or assist in achieving their key activities or purposes. The requirement also does not encompass arrangements that can be broadly characterised as customer or client relationships that involve the provision of services or funding to organisations or individuals.
Good practice example 5 – cooperation
- If a company has subsidiaries, the corporate plan must cover both the company and its subsidiaries. The matters to be included in relation to each subsidiary are those prescribed by the PGPA Rule, so far as they are applicable.
- Where a company has subsidiaries, the corporate plan must include a summary of how any subsidiary will contribute to achieving the company’s purposes.
- The PGPA Act provides a definition of subsidiary that incorporates the concepts of control outlined in AASB 10 Consolidated Financial Statements and the Corporations Act 2001.
- Companies do not need to list all their subsidiaries in their corporate plan. Rather, corporate plans should provide sufficient information to enable a reader to understand how the subsidiaries are expected to contribute to the achievement of the company’s purposes (for example, through linking the functions of the subsidiaries to the purposes of the company).
Good practice example 6 – discussion of subsidiaries
MIC is a GBE, wholly owned by the Australian Government through the shareholding of the Minister for Population, Cities and Urban Infrastructure and the Minister for Finance. MIC has two wholly owned subsidiary trusts:
The subsidiaries were created to facilitate the delivery of MIC’s obligations and to allow potential divestment by the Commonwealth of its financial interest in the development.
MIC is governed by a board of eight non-executive directors appointed by the Shareholder Ministers. Each subsidiary is governed by a board of two directors, who are also directors of MIC.
- The corporate plan must include a summary of:
- how the company will achieve its purposes; and
- how the company’s performance in achieving the company’s purposes will be measured and assessed, including any performance measures and any targets that will be used in the measurement and assessment.
- The corporate plan must include performance information, including any performance measures and targets, for each reporting period covered by the plan. For example, for a corporate plan covering four reporting periods, the corporate plan must explicitly outline the performance information, including any performance measures and targets, which relate to each of the four reporting periods.
- Companies should develop performance measures to measure and assess their performance in achieving their purposes.
- Companies are not required to comply with the requirements in section 16EA of the PGPA Rule (which sets out the requirements for performance measures for Commonwealth entities). However, in developing performance measures, companies may wish to consider the principles discussed in Resource Management Guide No. 131: Developing good performance information and Resource Management Guide No. 131A: Developing performance measures as a matter of good practice.
- The performance measures included in the corporate plan and Portfolio Budget Statements, as appropriate, should also be reported in a company’s annual report at the end of the reporting period. As such, it is important that the performance measures across the documents are consistent and work together to enable a coherent set of performance results to be included in the annual report (that is, enable a ‘clear read’).
- Performance information is more informative if current performance can be compared qualitatively or quantitatively against particular performance levels. Therefore, companies are encouraged to provide targets for each performance measure where practicable.
- Where possible, targets for performance measures should be specific, measurable, time-bound and reportable. They should also be challenging but achievable.
- Circumstances where it may not be practicable to set a target could be where a baseline is being developed or where a methodology for measuring performance is yet to be finalised. Where targets are not provided, the corporate plan should include an explanation of why.
- Companies may use a combination of methods to establish targets for performance measures, such as:
- current performance;
- current performance plus/minus a percentage improvement change;
- averaged performance; and/or
- quality specifications or benchmarks.
- Companies should take care that targets do not promote adverse results, such as where a company focuses on improving efficiency to a point where the quality of goods and services is substantially decreased. To ensure that targets are not unrealistic or create perverse incentives:
- targets should be set through company planning processes;
- proposed targets should be trialled in parallel to existing targets;
- targets should be presented in the context of the service being delivered.
- Where targets are included, companies should include a description of a company’s rationale for setting particular targets. Companies are encouraged to consider how incremental improvement could be demonstrated over time. Where a target has historically been exceeded, or is static for a period of time, companies should review the target or explain why the target has been maintained at a certain level.
Good practice example 7 – Appropriateness of targets
The WSA Co Ltd (WSA) 2019-20 Corporate Plan includes targets for each measure (p 18). The targets are separately identified. The targets for “safety record” are based on industry benchmarking. The targets for “infrastructure delivery” refer to ‘completing infrastructure delivery priorities within the indicated timeframe’. The infrastructure delivery outlook is discussed on p 10 (not shown), which assists the reader in understanding the operation of the infrastructure delivery targets.
Selecting and structuring performance information
- It is a matter for each company how it structures and presents the planned performance information it intends to include in its corporate plan.
Good practice example 8 – structuring of performance information
The WSA Co Ltd (WSA) 2019-20 Corporate Plan (see good practice example 7 above) sets out performance measures in a table. The table provides “performance outcomes” which provide context for the measure, and clearly-identified targets for each of the reporting periods over the entire period of the corporate plan. The corporate plan also notes that the performance measures are expected to evolve as WSA moves closer to operations in 2026. The corporate plan could be enhanced by noting the methodology and data source.
5. What are the corporate plan publication requirements?
- Companies must publish their corporate plans on their websites by the last day of the second month of the reporting period for which the plan is prepared. This is generally 31 August each year.
- Directors are required to provide a copy of the corporate plan to their responsible Minister and the Minister for Finance as soon as practicable after the plan is prepared and before it is published on their company’s website.
It is not necessary for companies to send copies of their corporate plan to the Office of the Finance Minister directly – companies should forward a copy of their updated plans to the Department of Finance by email to: firstname.lastname@example.org. This will satisfy the requirements of the PGPA Rule to provide a copy to the Finance Minister.
- As a general rule, corporate plans will be public documents. In some circumstances plans will contain commercially sensitive information and may necessitate the publication of a modified corporate plan.
- If directors consider that the company’s corporate plan contains confidential or commercially confidential or sensitive information, a supplementary corporate plan may be prepared for publication on the company’s website that excludes such matters.
- Information may be considered for omission from the publicly available corporate plan if:
- release of the information would cause competitive detriment to a company;
- the information is not and should not be in the public domain as it could prejudice the national interest; or
- another law of the Commonwealth, a state or a territory requires information not to be disclosed.
- The existing practice of GBEs preparing and publishing a statement of corporate intent in place of a full corporate plan, in the interest of not disclosing commercially sensitive information, remains a valid approach for GBEs under subsection
16E(4) of the PGPA Rule.
6. Variations to corporate plans
- A corporate plan can be varied during a reporting period if the directors consider it appropriate.
- For example, a corporate plan could be varied to recognise:
- significant changes in a company’s operating environment (such as significant changes in economic conditions);
- significant changes to a company’s operations; or
- significant changes to the way a company intends to measure or assess its performance.
- If the corporate plan is varied during the reporting period for which the plan is prepared, and the directors consider that the variation is significant, a copy of the revised plan must be provided to the responsible Minister and the Minister for Finance before being published on the company’s website.
- The contents of the varied plan must comply with the PGPA Rule in the same manner as a plan otherwise would for the relevant reporting periods.
7. Key priorities and objectives of the Australian Government
- Where the Australian Government has published a statement of its priorities and objectives under section 34 of the PGPA Act, the corporate plan must explain how a company’s activities contribute to achieving those priorities and objectives.This requirement only applies if the purpose(s) of the company relate to the priorities and objectives published in the statement of priorities and objectives.
List of requirements template
- This template list of requirements is aimed at assisting companies in demonstrating adherence with the requirements of the PGPA Rule. Companies may choose to develop their own approach or use all or part of this template.
The corporate plan has been prepared in accordance with the requirements of:
- subsection 95(1) of the PGPA Act; and
- the PGPA Rule 2014.
The table details the requirements met by the [company’s name] corporate plan and the page reference(s) for each requirement.
– Statement of preparation
– The reporting period for which the plan is prepared
– The reporting periods covered by the plan
– Risk oversight and management
– Subsidiaries (where applicable)