Posted 25/06/2014 by Philip Hamilton
Background
On 1 July 2014, the Public Governance, Performance and Accountability Act 2013 (the PGPA Act) will implement a new financial management framework for the Commonwealth and Commonwealth entities by replacing the Financial Management and Accountability Act 1997 (the FMA Act) and the Commonwealth Authorities and Companies Act 1997 (the CAC Act).
The Department of Finance foreshadowed that implementation of the PGPA framework would require the enactment in June of five Bills for the purposes of minor amendments, transitional and consequential provisions, and appropriation modifications. The first of these, the PGPA Amendment Bill 2014, dealt mainly with technical and policy issues identified in consultations over the past 12 months, and was passed on 19 June 2014. The remaining four Bills were introduced on 24 June and passed by the House of Representatives on 25 June.
Bill for consequential and transitional provisions
As outlined in the Explanatory Memorandum, the PGPA (Consequential & Transitional Provisions) Bill 2014 (the C&T Bill) is intended to deal with a number of aspects that are mechanical or technical:
- replace references to the FMA and CAC Acts with the equivalent provisions in the PGPA Act;
- repeal the CAC Act;
- repeal the majority of the FMA Act’s provisions, and amend the title of the FMA Act to the Financial Framework (Supplementary Powers) Act 1997 (FFSP Act) (see below);
- simplify enabling legislation, where provisions of the PGPA Act cover a matter previously dealt with in enabling legislation; and
- where entities currently have additional obligations over and above those imposed by the PGPA Act, amend enabling legislation to clarify which matters are covered by the PGPA Act and which are covered by enabling legislation.
Financial Framework (Supplementary Powers) Act 1997 (FFSP Act)
In response to the High Court’s decision in Williams v Commonwealth (No.1) (2012) 248 CLR 156, section 32B and the associated schedules 1AA and 1AB were added to the FMA Act to establish legislative authority for the Government to make, vary and administer arrangements and grants for the purposes of specified programs. The proposed retitled FFSP Act would retain this legislative authority, with some minor amendments. The supplementary powers to form companies in section 39B of the FMA Act will also be retained in the FFSP Act. All other provisions of the FMA Act will be repealed.
Bills for consequential modifications of Appropriation Acts
The final three PGPA Bills are appropriation modification bills. The Appropriation Bills presented to Parliament in relation to 2014–15 (and the Acts for 2012–13 and 2013–14) have been prepared on the basis that the FMA and CAC Acts are still in force, and rely on features of those Acts in terms of the operation of appropriation arrangements. As both of those Acts are being repealed, the Appropriation Bills and Acts must be amended to ensure that entities have access to the amounts appropriated by Parliament.
Three Bills are proposed to cover appropriations for these financial years; however, for constitutional reasons, they must be presented according to the type of appropriation.
After 1 July 2014
The establishment of the new framework on 1 July 2014 represents the conclusion of the first stage of a three-stage reform process. The Department of Finance has outlined that:
- Stage two (through to 1 July 2015) will focus on improving the quality of planning, performance information and evaluation within government to improve accountability to Ministers, the Parliament and the public; and
- Stage three (thereafter) will focus on improving how the Commonwealth engages with external parties to deliver its public policy outcomes.
As noted in a previous Bills Digest, the PGPA Act sets out the essential structure and principles of the proposed framework, but regulatory detail will be contained in rules issued by the Finance Minister. Consistent with the stages outlined above, there is a staged implementation of PGPA rules. Some rules will be required for implementation on 1 July 2014; other rules will be introduced during the course of 2014–15. Some rules are disallowable instruments; others are not.
Following on from its recent inquiry into stage one rules, the JCPAA has foreshadowed that it intends to conduct inquiries into stages two and three, with a scope that is likely to include ‘all elements of the reform agenda, not just the PGPA rules development,’ and also ‘the effectiveness and comprehensiveness of Finance’s ongoing consultation.’