Bills Digest no. 133 2006–07
Tourism Australia
Amendment Bill 2007
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Financial implications
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Tourism Australia
Amendment Bill 2007
Date introduced:
14 February 2007
House: House of Representatives
Portfolio: Industry, Tourism and
Resources
Commencement:
The day after it receives
Royal Assent
The purpose of the Bill is to provide for amendments
to the Tourism Australia Act 2004 so as
to enhance the governance arrangements for Tourism Australia,
consistent with the recommendations generated by a review of
corporate governance structure and practices of Tourism Australia
conducted by the Minister for Small Business and Tourism. The
review and proposed amendments represent part of the Government s
response to Mr John Uhrig s Review of Corporate Governance of
Statutory Authorities and Office Holders (the Uhrig Review)
conducted in 2003. (1)
The amendments designed to deliver these
outcomes are:(2)
- the removal of the position of Government member from the
Board
- a broadening of Ministerial power to terminate the appointment
of Board members
- the replacement of the process of Ministerial approval of the
corporate plan and operational plan with one of endorsement, while
maintaining that the plans do not come into force until Ministerial
endorsement is received
- a reduction of the threshold for Ministerial approval of
contracts from $5 million to $3 million.
The Coalition had
flagged its intention to examine statutory authorities and office
holders in its 2001 election platform. On 14 November 2002, the
Prime Minister, the Hon. John Howard, appointed Mr John Uhrig AC to
review the governance practices of statutory authorities and office
holders, particularly those agencies which impact on the business
community.
The objective of the review was to identify
issues concerning existing governance arrangements and to provide
policy options for Government to gain the best from statutory
authorities and office holders and their accountability
frameworks.(3)
The Prime Minister received the Uhrig Review
in June 2003, and it was released by the Minister for Finance and
Administration on 12 August 2004.
The Uhrig Report
concluded that there was no universally agreed definition of
corporate governance, but employed the following definition for the
purposes of the review:
in general terms, corporate governance encompasses
the arrangements by which the powers of those who implement the
strategy and the direction of an organisation are delegated and
limited to ensure the organisation s success, taking into account
the environment in which the organisation is
operating.(4)
The Report recommended that two templates
should apply to ensure good governance of statutory authorities:
agencies should either be managed by a Chief Executive Officer
(CEO) or by a board structure. Both templates detail measures for
ensuring the boundaries of responsibilities are better understood
and the relationship between Australian government authorities,
Ministers and portfolio departments are made
clear.(5)
Uhrig recommended
that the selection of the management template and financial
frameworks to be applied should be based on the governance
characteristics of a statutory authority.(6)
Nearly all government bodies fall under the
Financial Management and Accountability Act 1997 (the FMA
Act) or the Commonwealth Authorities and Companies Act
1997 (the CAC Act).
The FMA Act should be applied to statutory
authorities where it is appropriate they be legally and financially
part of the Commonwealth and do not need to own assets. The FMA Act
applies to budget-funded authorities managed by a CEO. The FMA Act
establishes various management and reporting responsibilities for
the CEO (sections 44 46, 49 and 51), as well as allowing the
Minister to give guidelines to the CEO (s. 64). Furthermore, the
FMA Act provides an accountability framework for CEOs to manage
agency resources.
The CAC Act should
be applied to statutory authorities where it is appropriate that
they be legally and financially separate from the Commonwealth. The
CAC Act applies to authorities that are corporate entities managed
by a board. It requires the head of the board to report to the
responsible Minister (sections 15 16), and to ensure that the
authority s activities comply with government policies (s. 28). A
board structure is favoured if there is a strong commercial focus
to the organisation, or if the agency is intergovernmental.
As at 31 January 2007, there were 94 FMA Act
agencies and 99 CAC Act agencies.(7) The Department of
Finance and Administration publication Governance
Arrangements for Australian Government Bodies (August
2005) provides further explanation on the FMA Act and CAC Act and a
comparison between the two pieces of legislation.
Tourism Australia and other Australian
Government Agencies governed under the Commonwealth Authorities
and Companies Act 1997 have been assessed using principles
outlined in the Uhrig Review. According to the Tourism
Australia website,
An outcome of the review was that the Minister for
Small Business and Tourism, the Hon Fran Bailey MP would provide
Tourism Australia with a Statement of Expectations and that Tourism
Australia would respond with a Statement of Intent in order to
clarify the purpose, functions and objectives of the
organisation.
The Government's expectations of Tourism Australia
are conveyed in the associated Statement of Expectations.
Tourism Australia's response is articulated in the
Statement of Intent and Annexure.
This Bill is designed to bring Tourism
Australia s governance structure into line with the relevant
recommendations made by the Uhrig Review. More specifically, the
proposed legislative changes will aim to enhance Tourism
Australia's financial accountability and provide the organisation
with a much more strategic, commercial focus designed to strengthen
its commercial footing.(8) A number of similar Acts have
been passed by Parliament incorporating Uhrig Review
recommendations.
The Tourism Australia
Act 2004 establishes Tourism Australia(9) which
is a Commonwealth authority under the CAC Act. Tourism Australia is
responsible for raising the awareness of potential domestic and
international travellers of Australia as a place to travel,
communicating the valuable contribution made by tourism to the
Australian economy, society and environment, and conducting
research into, and analysis of, international and domestic
travel.(10) The Tourism Australia
Act 2004 is responsible for defining the objectives,
governance and management framework for the organisation.
The Explanatory Memorandum states that there
is no financial impact.
The appointment of an Australian Government
Director to the Board is being discontinued, in order to remove any
potential for conflict of interest for the government member, and
to reduce the number of Board members to nine, which is within the
optimum range identified by Uhrig. The proposed
amendments made under the following items listed below
accordingly and correspondingly delete the various references to
government member
- Item 2 Paragraph 12 (c)
- Item 4 Subsection 14(1)
- Item 5 subsections 14(2) and (3)
- Item 6 Subsection 15(1)
- Item 7 Subsection 15(2)
- Item 8 Subsection 16(2)
- Item 9 Subsection 20(1)
- Item 10 Subsection 20(2) and (3)
Robust accountability
mechanisms are pivotal to the effective governance of an
organisation. The Australian Government invests significant
resources into Tourism Australia.
Over the past five years, the Howard Government
has increased tourism funding by 60 per cent. The Tourism Australia
Board will have to comply with increased financial accountability,
which is appropriate given that 80 per cent of its funding is from
Australian taxpayers. (11)
The Board of Tourism Australia plays a key
role in the organisation s success. Enabling the Minister to
terminate the appointment of a Board member in appropriate
circumstances ensures that Board members are accountable for the
performance of Tourism Australia .(12)
Section 20 of the current Act
lists the grounds under which the Minister may terminate the
appointment of a Board member.
The proposed
subsection 20(A)(1) supplements the terms of those
grounds by adding that the Minister may terminate the appointment
of a Board member if;(13)
(a) the Board has agreed that the member's
appointment should be terminated;
(b) the Board has convened a special meeting to
discuss the termination of the member, and has passed a resolution
at this meeting that the member's appointment to the Board be
terminated; and
(c) the resolution has been passed by a minimum
two-thirds of the Board members present, excluding the member whose
termination of appointment is being considered.
Subsection
20A(2)
This proposed
subsection 20A(2) gives the Minister the capacity
to terminate the appointment of a Board member if the Minister is
satisfied:
(a) that it is not in the best interests of
Tourism Australia that the appointed member continue in office;
or
(b) the performance of the member has been
unsatisfactory for a significant period.
Item 13
repeals and replaces section 35.
The Uhrig report suggested that in a number of
cases statutory authorities would benefit from the Minister
providing broad strategic direction and greater clarity in the
definition of current objectives relevant to the authority and any
expectations the Government may have on how the authority should
conduct its operations. Of course such statements would need to be
framed very carefully, respecting the areas of necessary
independence provided for in the statutory authority s enabling
legislation.(14) There are various possible mechanisms
for achieving this, including the development of a Statement of
Expectations, and Ministerial endorsement of the corporate and
annual operational plan.
The Bill therefore provides that the current
Section 35 be substituted with the following.
Proposed section 35(1): The
Board is required to give the corporate plan to the Minister for
endorsement.
Proposed subsection 35(2):
The Minister may ask the Board, in writing, for a copy of the
corporate plan, in a format and by a date specified by the
Minister. The Board must comply with this request.
Proposed subsection 35(3):
The Minister may ask the Board, in writing, in a format and by a
date specified by the Minister for:
(a) further information or explanation on items in
the corporate plan; and
(b) further information or explanation on items
that may not be included in the plan but are relevant to the
corporate plan.
Proposed subsection 35(4): The Board;
(a) must comply with a request from the Minister
for further information or explanation on the plan; and
(b) if during this process, the annual operational
plan has been amended the Board may provide the Minister with a
replacement corporate plan for endorsement.
Proposed subsection 35(5):
When deciding whether or not to endorse the corporate plan, the
Minister must consider if it is inconsistent with government
policy. The Minister may write to the Board notifying them of any
inconsistencies before deciding whether or not to endorse the
plan.
Proposed subsection 35(6):
This amendment inserts a requirement that the minister write to the
Board advising them of his decision to endorse or not endorse the
corporate plan.
Proposed Subsection 35(7):
This amendment provides that the corporate plan comes into force on
the day on which the Board receives written notification of the
Minister s endorsement.
Item 14 Proposed paragraph
36(1)(b)
Section 36 of the Tourism Australia Act deals
with the Operational Plan. The current section 36 provides
that:
When the Board is preparing or revising a
corporate plan, the Board must:
(a) prepare an annual operational plan for the
first financial year to which the corporate plan or revised
corporate plan will relate; and
(b) give the plan to the Minister for his or her
approval.
The proposed amendment removes
approval and replaces it with the word and
requirement for endorsement .
Item 15
Proposed subsection 36(5)
This amendment removes
approval and replaces it with
endorsement .
Item 16
- Proposed section 37 Minister s response to
annual operational plan
In keeping with amendments under section 35,
the Minister is required to endorse the annual
operational plan rather than approve it. This item
therefore repeals section 37 and replaces it with the
following.
Proposed subsection
37(1)
After receiving the annual operational plan, the
Minister can ask the Board, in writing, in a format and by a date
specified by the Minister for:
(a) further explanation about the matters included
in the annual operational plan; and
(b) further explanation on other matters specified
in the request and related to the plan.
Proposed subsection 37(2)
The Board:
(a) must comply with a request from the Minister
for further information or explanation on the corporate plan;
and
(b) if during this process, the corporate plan has
been amended the Board may provide the Minister with a replacement
corporate plan for endorsement.
Proposed subsection 37(3)
When deciding whether or not to endorse the
annual operational plan, the Minister must consider if it is
inconsistent with the corporate plan and government policy. The
Minister may write to the Board advising them of any
inconsistencies before deciding whether or not to endorse the
plan
Proposed section 37(4)
This amendment inserts a requirement that the
minister write to the Board advising them of his decision to
endorse or not endorse the annual operational plan.
Proposed section 37(5)
The annual operational plan comes into force once
the Board has been notified in writing of the Minister s
endorsement.(15)
Item 18 proposed
paragraph 59(1)(a) Threshold for Ministerial Approval of
contracts
This item reduces the threshold for
Ministerial approval of contracts from $5 million to $3 million.
Notwithstanding the existing requirement and compliance by Tourism
Australia with Australian Government Procurement Guidelines, this
item further strengthens accountability corresponding with the high
level of Australian Government funding of the organisation.
Transitional Items
Item 17 provides that Part 4
of the Tourism Australia Act 2004 shall
continue to apply to a corporate plan or revised corporate plan, or
annual operational plan or revised operational plan, given to the
Minister before the enactment of the Tourism Australia Amendment
Bill 2007.
Item 19 - Proposed
subsection 60(3) Note
This item is a minor technical amendment
sub-sequential to the enactment of the Legislative Instruments
Act 2003. The Acts Interpretation Act 1901 (AIA) has
been replaced with the Legislative Instruments Act 2003
(LIA).
Concluding comments
As already noted, this Bill is one of series
introduced by the government designed to make relevant and
appropriate reforms in response to observations and conclusions
made by the Uhrig Report.
- J. A. Uhrig, AC,
Review of Corporate Governance of Statutory Authorities and Office
Holders, June 2003.
http://www.finance.gov.au/GovernanceStructures/docs/The_Uhrig_Report_July_2003.pdf.
- Explanatory
Memorandum, p. 1.
- Sen. the Hon. N.
Minchin (Minister for Finance and Administration), Australian
Government Response to Uhrig Report, Media Release, 12
August 2004, http://www.finance.gov.au/scripts/Media.asp?Table=MFA&Id=550.
- ibid. p. 17.
- Sen. the
Hon. N. Minchin (Minister for Finance and Administration),
Australian Government Response to Uhrig Report, Media
Release, 12 August 2004, http://www.finance.gov.au/scripts/Media.asp?Table=MFA&Id=550.
- Uhrig, op. cit., p.
12, point 6.
- Department of
Finance and Administration, Chart of FMA Act and CAC Act
agencies, available at: http://www.finance.gov.au/publications/docs/fma_cacflipchart.pdf,
accessed 6 April 2007.
- The Hon. Fran
Bailey,
Tourism Australia Legislation, Media Release, 15
February 2007.
- Tourism Australia
was established on 1 July 2004 as a key recommendation of the
Tourism White Paper 2003, it represented the pooling of skills
and knowledge of four separate organisations: the Australian
Tourist Commission; See Australia; the Bureau of Tourism Research
and Tourism Forecasting Council.
- Tourism
Australia Act 2004, s.6.
- The Hon. Fran
Bailey,
Tourism Australia Legislation, Media Release, 15
February 2007.
- Explanatory
Memorandum, p. 3.
- Tourism Australia
Amendment Bill, p. 3.
- The Uhrig Report, p.
7.
- Tourism Australia
Amendment Bill 2007, p. 6.
Juli Tomaras
4 May 2007
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