Bills Digest no. 160 2006–07
Australian Centre for International Agricultural Research 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
Australian
Centre for International Agricultural Research Amendment Bill 2007
Date introduced:
10 May 2007
House:
House of Representatives
Portfolio:
Foreign Affairs
Commencement:
1 July 2007
The purpose of the Bill is to amend
the Australian Centre for International Agricultural Research Act 1982
(the ACIAR Act) – which establishes the Australian Centre for International
Agricultural Research (ACIAR) and is the legislative basis for regulating
its administration. The key amendments contained in the Bill are:
- the abolition of a Board of Management of the Centre along with the
office of Director.
- the establishment of a seven-member expert Commission for International
Agricultural Research (the Commission).
- amendment of the ACIAR Act so as to avoid duplication in the membership
of the proposed Commission and the current Policy Advisory Council.
- creation of a new position of Chief Executive Officer (in place of
the current Director) who will be directly accountable to the Minister
for administrative and financial purposes under the Financial Management
and Accountability Act 1997.
- removal of body-corporate status from ACIAR.(1)
The amendments in the Bill respond to the relevant findings
of the Review of the Corporate Governance of Statutory Authorities
and Office Holders (the Uhrig Review) conducted by Mr John Uhrig AC
in 2003. They also follow an internal review by the Australian Centre
for International Agricultural Research.
As part of its 2001 election platform, the Coalition
Government signalled its intention to examine the efficacy of the governance
arrangements of statutory authorities and office-holders.
In November 2002, the Government announced a review of
the governance practices of statutory authorities and office-holders,
with special focus on those agencies which impact on the business community.
The Prime Minister, the Hon. John Howard,
appointed Mr John Uhrig, AC, to head
the review. The objective of the review was to examine and evaluate governance
arrangements and practices and ‘provide options for the Government to
improve the performance and get the best from statutory authorities, their
office holders and their accountability frameworks’.(2) In
doing so, the Government noted the impact that the performance of statutory
authorities and office-holders has on business and the overall health
of the Australian economy. In particular, the review was to focus on the
areas where businesses have the right to expect the highest levels of
efficiency, fairness and transparency in their dealings with government.
A key task was to develop a broad template of governance
principles that, subject to consideration by government, might be extended
to all statutory authorities and office holders.
As
part of the process of developing a broad template, the review was asked
to consider the governance structures of a number of statutory authorities
and office holders with critical relationships with business and to
consider best practice corporate governance structures in both the public
and private sectors.(3)
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 is made clear.(4)
However, as Uhrig explained, the purpose of the template is ‘to
serve as a reference point’ for the development of governance arrangements
and so it is ‘expressed as an ideal’.(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)
For a summary of the responses and debate that followed
the release of the review, please refer to Dr. Richard
Grant, ‘The
Uhrig Review and the future of statutory authorities’, Research
Note, no. 50, Parliamentary Library, 2004–05.
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 focuses primarily on the obligations and
responsibilities of Chief Executives and the way officials handle public
money, public property and other resources of the Commonwealth. The FMA
Act applies to budget-funded authorities managed by a CEO, and 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 (section 64). Furthermore, the FMA Act provides an accountability
framework for CEOs to manage agency resources.
The CAC Act, on the other hand, requires directors and
officers to exercise their powers and duties in the best interests of
the body and for a proper purpose. Directors’ duties apply to help ensure
that prudent decisions are made on the resources that, as a matter of
law, the body holds in its own right. 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
(section 28). A board structure is favoured if there is a strong commercial
focus to the organisation, or if the agency is intergovernmental.
As at 15 May
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.
On the basis of the findings of the Uhrig Review, Ministers
and their Departments have been undertaking an assessment of their portfolio
agencies against the governance templates.(8) The Minister
for Finance and Administration has assumed a coordinating role in these
reviews.(9) Thus, a number of similar Acts have been passed
by Parliament incorporating Uhrig Review recommendations.
ACIAR was established to play a special role as part
of the Australian Government’s development cooperation programs. ACIAR’s
mandate is to encourage, commission and support research for the purpose
of identifying or finding solutions to agricultural problems facing developing
countries. The research projects funded by ACIAR are formulated within
a framework reflecting ‘the priorities of Australia’s
aid program and national research strengths, together with the agricultural
research and development priorities of partner countries’.(10)
The Explanatory Memorandum states that there is no financial
impact.
Main provisions
It is proposed that the Board of Management of the Centre
along with the office of Director be abolished and replaced by a Commission
for International Agricultural Research and a new position of CEO. Items
2–8 repeal some definitions and insert others so as to reflect these
revised governance arrangements incorporating an executive management
structure.
The governance review of ACIAR concluded that, as a budget-funded
prescribed agency under the FMA Act, which does not need to own assets
in its own right, ACIAR no longer needed body corporate status. Item
9 repeals the subsections establishing the status of ACIAR as a body
corporate and replaces them with a proposed subsection 2 which states
that the Centre will be composed of a CEO and the staff of the Centre
referred to in section 30 of the Act.
Item 10 inserts a new section 4A which
establishes the statutory office of CEO. Items 11–14 and 16 are
consequential amendments designed to reflect the fact that the functions
currently performed by the Centre will be vested in the CEO as part of
the new governance arrangements.
Item 15 proposes a new section 5A which
permits the Minister to give the CEO written directions ‘with respect
to the performance of the CEO’s functions under this Act (including in
relation to the appropriate strategic direction the CEO should take in
performing his or her functions)’.
The Explanatory Memorandum states that this amendment
is similar to the terms upon which the Minister is able to give directions
to the Board under the current Act. However, it is noteworthy that under
the existing Act, such direction by the Minister to the Board
contains a couple of checks which seem to be absent in the amendment
proposed by item 15.
Under section 16 of the current Act, in
giving a direction such as that proposed by item 15, the Minister is required
to have regard to any relevant advice that he may have received from the
Policy Advisory Council under section 18.(11) Furthermore,
the annual report of the Centre shall set out all directions given by
the Minister under this section. These checks on ministerial power
have not been added to the proposed section 5A.
Item 17 repeals Part III of the current Act—which
established the Board of Management of the Centre—and replaces it with
new provisions for the establishment of a Commission for International
Agricultural Research. The Explanatory Memorandum states that these
amendments are designed to give effect to the executive management model
proposed by the Uhrig Review. However, the Commission is to retain a capacity
for collective decision-making and the provision of expert advice to the
Minister on particular aspects of the Centre’s operations.
Division 1, proposed section 8: the Commission
will consist of a Chair and six other Commissioners.
Division 1, proposed section 9: specifies the
functions of the Commission. These functions are: the provision of expert
advice in relation to the formulation and funding of specific programs,
the setting of priorities, and any other matter relating to the Act as
requested by the Minister. The explicit articulation and separation of
roles between the Commission and the CEO is deliberately designed to reflect
the new governance and accountability arrangements.
Division 2, proposed section 10: the Commissioner
is to be appointed by the Governor-General and enjoy a period of office
of not more than three years. A person cannot be appointed as both a Commissioner
and a member of the Policy Advisory Council.
Division 2, proposed section 11: Commissioners
will hold office on a part-time basis.
Division 2, proposed section 14: Acting Commissioners
may be appointed by the Minister in certain circumstances.
Division 2, proposed section 16: A Commissioner
may resign his or her appointment by giving the Governor-General notice
in writing.
Division 2, proposed section 16A: A Commissioner’s
appointment may be terminated by the Governor-General for misbehaviour
or physical or mental incapacity.
A Commissioner’s appointment must be terminated
by the Governor-General if:
- the Commissioner becomes bankrupt; or
- the Commissioner applies to take the benefit of any law for the relief
of bankrupt or insolvent debtors; or
- the Commissioner compounds with his or her creditors; or
- the Commissioner makes an assignment of his or her remuneration for
the benefit of his or her creditors; or
- the Commissioner is absent, except on leave of absence, from three
consecutive meetings of the Commission; or
- the Commissioner fails, without reasonable excuse to comply with
the requirement that he or she disclose personal interests (see proposed
section 16B).
Division 2, proposed section 16B: Proposed subsection
(1) mandates that a Commissioner must ‘give written notice to the
Minister of any direct or indirect pecuniary interest that the Commissioner
has or acquires and that conflicts or could conflict with the proper performance
of the Commissioner’s functions’.
Proposed subsection (2) mandates that ‘a Commissioner
who has a direct or indirect pecuniary interest in a matter being considered
or about to be considered by the Commission must disclose the nature
of the interest to a meeting of the Commission’. This disclosure
must be made as soon as possible after the relevant facts have come to
the Commissioner’s knowledge and must be recorded in the minutes of the
meeting. The Commissioner must not be present or take part in any deliberation
by the Commission on any such matter.
The proposed provisions under Division 3 establish
the arrangements regarding meetings of the Commission. These requirements
are similar to those currently in force for meetings of the Board.
Proposed Part III, Division 4, section 16J allows
the Commission, by resolution, to delegate all or any of its functions
or powers under the Act to a Commissioner. Explicit checks and balances
are provided in relation to this delegation.
Proposed Part III, Division 5, section 16K enables
the Minister to give written directions to the Commission in regards to
the performance of the Commission’s functions under the Act. In doing
so, the Minister is required to have regard to any relevant advice that
he or she may have received from the Policy Advisory Council under section
18. The minister is obliged to give a copy of the written direction
to the CEO. The Explanatory Memorandum states that this arrangement is
designed to enable the Minister to direct the Commission to perform its
functions under the Act in a particular way. No further clarification
of this point is provided.
Item 25 repeals Part V of the ACIAR Act—which
established the office of Director—and substitutes it with a new
Part V, which establishes the statutory office of CEO, in keeping
with an executive management structure.
Proposed section 24 deals with the appointment
of the CEO. The CEO is to be appointed by the Governor-General and holds
office for a specified period which must not exceed seven years. The Explanatory
Memorandum makes it clear that the operation of this section is not meant
to limit the operation of the Acts Interpretation Act 1901, which
provides that the power to appoint includes the power to re-appoint.(12)
Proposed subsection 24(3) provides that a CEO
may be appointed as both the CEO and a Commissioner (including the
Chair). The Explanatory Memorandum states that ‘it is intended that the
CEO will be a member of the Commission, thereby ensuring consistency in
advice to the Minister’.(13) It is even envisaged that the
Chair of the Commission may also be appointed as the CEO.
Proposed section 25 provides that the CEO will
hold office on a full-time basis. Where the CEO is also a Commissioner,
the position of Commissioner will be held on a part-time basis.
The appointment of the CEO may be terminated on almost
the same conditions as the appointment of a Commissioner (proposed
section 29C). Possible additional reasons for termination are that
the CEO:
- is absent, except on leave of absence, for 14 consecutive days or
28 days in 12 months; or
- engages, except with the Minister’s approval, in paid employment
outside the duties of his or her office; or
- fails, without reasonable excuse, to comply with the requirement
that he or she disclose personal interests (see proposed section
29D).
Proposed section 29D mandates that the CEO must
‘give written notice to the Minister of any direct or indirect
pecuniary interest that the CEO has or acquires and that conflicts or
could conflict with the proper performance of the CEO’s functions’.
Proposed section 29E is designed to clarify that
the CEO is not subject to direction by the Commission in regard to the
CEO’s performance of functions or exercise of powers under the FMA Act
or the Public Service Act 1999, in relation to ACIAR.
Item 41 provides that the Minister may, by writing,
delegate to any person all or any of the Minister’s functions or powers
under this Act.
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. It also responds to a recent assessment of the ACIAR.
The specific amendments are designed to improve and strengthen the governance
arrangements of the ACIAR.
- Hon.
Greg Hunt, MP, Parliamentary Secretary to the Minister
for Foreign Affairs, ‘Second reading speech: Australian Centre for International
Agricultural Research Amendment Bill 2007’, House of Representatives,
Debates, 10 May 2007, p. 6.
- Senator the Hon. N.
Minchin, Australian
Government Response to Uhrig Report, media release, 12 August
2004.
- J. A. Uhrig, AC, Review
of the Corporate Governance of Statutory Authorities and Office
Holders, Canberra, June
2003, p. 15.
- Senator the Hon. N.
Minchin, op. cit.
- Uhrig, op. cit., p.
79.
- ibid., p. 12, point
6.
- Department of Finance
and Administration, ‘Chart of 94 Agencies under the Financial Management
and Accountability Act 1997 (FMA Act), Chart of 99 bodies under the
Commonwealth Authorities and Companies Act 1997 (CAC Act)’, http://www.finance.gov.au/Publications/docs/FMA_CACFlipchart.pdf,
accessed on 22 May 2007.
- ‘More than 160 Australian
Government Agencies are being assessed against the Uhrig Report principles
and templates’. Sussan Ley, MP, Parliamentary Secretary to the Minister
for Agriculture, Fisheries and Forestry, ‘Second reading speech: Primary
Industries and Energy Research and Development Amendment Bill 2007’,
House of Representatives, Debates, 1 March 2007, p. 10.
- ibid.
- Australian Centre for
International Agricultural Research, ‘About us’, http://www.aciar.gov.au/web.nsf/doc/acia-5kj3ex,
accessed on 18 May 2007.
- Section 18 defines the
functions of the Policy Advisory Council.
- Explanatory Memorandum,
p. 9.
- ibid.
Juli Tomaras
23 May 2007
Law and Bills Digest Section
Parliamentary Library
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