Chapter 4 The Bill – areas of impact
Over the course of the inquiry there were a number of more specific
matters raised. This chapter examines the areas of:
n Risk and
monitoring, reporting and evaluation
n Interaction with the Public
Service Act 1999
The Explanatory Memorandum outlines that the Commonwealth Financial
Accountability Review (CFAR) reforms aim to increase ‘strategic coherence and coordination’;
it also acknowledges the importance of appropriate operational independence.
Under the existing framework, there are both FMA and CAC Act bodies operating
with significant statutory independence.
The Explanatory Memorandum further states that the ‘Bill will not seek
to alter the operational independence of entities as set out in their enabling
Throughout the CFAR process quite a number of submissions reviewed
raised concerns about operational independence. Responding to these in its
initial submission to the Committee’s inquiry, Finance laid out the following
statements responding to concerns raised regarding the PGPA Bill’s potential impingement
on entity independence:
n it does not affect
the purposes for which entities have been established;
n it does not change
the ability for corporate Commonwealth entities to ‘hold money on their own
n the requirement for
corporate plans to detail how they comply with Australian Government priorities
is limited where this would conflict with enabling legislation;
n the process of
applying Government policy to Commonwealth entities and companies remains the
same as under the FMA and CAC Acts; and
n information to be
provided to Ministers relates to the activities of entities with an administrative
focus. It does not, for example, extend to judicial activity or parliamentary
Finance’s Submission also explained that during the Bill’s drafting
process adjustments were made to ‘ensure the level of operational independence
determined by Parliament is assured’. Supporting this in his
opening statement to the Committee, the Finance Secretary again reiterated the
view that the Bill has ‘no effect on the independence of entities’.
As noted above, entities that appeared before the Committee acknowledged
the consultative approach Finance has taken throughout the process, and
particularly in regard to addressing concerns regarding independence.
The ABC noted its appreciation that its concerns had been addressed
through explicit statements in the Explanatory Memorandum, and Finance’s
assurance that consequential amendments to the ABC Act ‘will be passed before
the commencement of the relevant provision of the Bill.
The SBS agreed that like the ABC most of its concerns had been
addressed. However, the SBS noted that the process had since highlighted a
discrepancy in the ABC’s and SBS’s respective enabling legislation with regard
to independence. The SBS has requested that this matter be addressed through
the consequential amendment process.
In a submission to the Committee, the Department of the House of
Representatives queried the implications of clause 19 , which amongst other
things, requires that the Commonwealth entity ‘give the responsible Minister or
the Finance Minister any reports, documents and information in relation to
those activities as that Minister requires’.
Responding, Finance advised that this was an existing provision within
the CAC Act and as such should not present any concerns to existing FMA Act
agencies on establishment of the PGPA Act. However, Finance also suggested that
amendments could be made to further clarify the scope of this clause.
In a supplementary submission to the Committee, Finance reiterated that
the Explanatory Memorandum to the Bill contains a commitment that ‘consequential
amendments to enabling legislation will be made as necessary to protect
Further, Finance advised that they had received legal advice on the
process for addressing conflicts or inconsistencies between an enabling Act and
this Act (once passed). Finance summarised that,
while not always being able to conclude that the enabling Act
will prevail, it is reasonable to assume that, where there is a direct
inconsistency between enabling legislation and the Bill, the enabling
legislation is likely to prevail in the absence of a clear indication in the
Bill that a particular provision of that Bill is to prevail over enabling
Finance also indicated that, in recognition that consequential
amendments are unlikely to have occurred before the passage of this Bill, the
Australian Government Solicitor (AGS) has provided options to address remaining
concerns regarding the maintenance of independence. These include:
n amendments to the
clause 19 (keeping Ministers informed) to make it clear that it only operates
to the extent that it is not inconsistent with the enabling legislation of a Commonwealth
entity established by legislation;
Þ …to make
clear the Government’s intention that, in the event that a bill containing
consequential amendments would not commence on 1 July 2014, the Government
would put a Bill before Parliament to delay the commencement of clauses 6 to
110 of the PGPA [Act]
Þ [to] indicate clearly the government's intention to ensure that the
concerns of particular Commonwealth entities (including, for example, the broadcasters,
the cultural institutions, the Reserve Bank and the Australian National Audit
Office) will be addressed.
n amendment to clause 2
of the Bill so as to provide that:
Þ Clauses 6
to 110 of the PGPA Bill would commence on the same day as a bill containing
consequential amendments on the Bill, or
Þ Clauses 6
to 110 of the PGPA Bill would not commence unless and until such a consequential
amendment bill commenced.
Concerns around independence have been raised repeatedly, both
throughout the CFAR consultation period and during the Committee’s inquiry.
This is despite references to maintenance of independence in the Explanatory
Memorandum and Finance’s assurances that there is no intent to expand the
Finance Minister’s powers to impede on independence. As such, the Committee is
of the view that tangible action is required, and recommends that changes to
the Explanatory Memorandum as outlined by the AGS are progressed. The Committee
has made a recommendation to this effect in Chapter 5.
A new approach to risk
The Explanatory Memorandum to the Bill describes ‘earned autonomy’ as a targeted
approach to financial framework regulation where the nature and extent of
oversight and regulatory intervention depends on an entity’s risk profile and
performance. In the second reading speech the Minister noted that this approach
is ‘akin to world leading practices in regulation and compliance adopted by
APRA, ASIC and the ATO’. Some examples of
potential applications are also provided in the Explanatory Memorandum:
Consistent with earned autonomy, well governed entities may
have capacity to commit a greater percentage of forward budget relative to
another entity where there is scope to improve governance.
For example, the Expenditure Review Principles could be
mandated for entities that exhibit continuous shortcomings in the quality of
While the term ‘earned autonomy’ does not appear in the Bill itself, the
Finance minister is empowered to differentiate between entities in setting out
the rules to the Bill:
The rules may:
(a) prescribe matters in relation to a particular
Commonwealth entity, or a class of Commonwealth entities; or
(b) make different provision in relation to different
Commonwealth entities, or classes of Commonwealth entities. (Subclause 101(2))
During the public hearing, Finance stated that the development of the
rules in relation to earned autonomy will be a consultative process, involving
the Auditor-General, the Australian Accounting Standards Board, the relevant
Commonwealth entities and others. Finance expects this process will be time
Our intention is to have the initial set of rules in place by
1 July 2014…The rules in relation to earned autonomy will probably take another
year to develop and fully implement, because it is quite a different approach.
We are moving from a one-size-fits-all regulatory framework to a very nuanced
approach that is based on the risk maturity of entities. Just gathering the
information on which to form that sort of assessment will take time.
Stakeholders and experts in the field were very supportive of earned
autonomy in principle but several concerns were expressed in relation to its
n A lack of clear
distinction between ‘differential reporting’ which should be based on the
nature and size of an entity and ‘differential oversight’ which should be based
on its risk profile.
n The complexity of comparing
Commonwealth entities which serve vastly different purposes:
…you can tell whether school A is producing better results
than school B with the same money—whereas it is a lot harder with the diversity
of Commonwealth agencies.
n That the approach may
give the Finance Minister undue power:
rules, we have not yet seen, and they are to be set by government, not by the
parliament. … The bill will allow the Minister for Finance and Deregulation to
create multiple frameworks and then decide who applies to which body.
Þ If earned
autonomy is reliant on the subjective judgment of advisers to the Finance
Minister delivered with no scrutiny or oversight, then it opens up the
possibility of capricious and unfair treatment of different agencies. Earned
autonomy will only work if the criteria are transparent, discussed openly, and
the basis for judgements revealed. The Bill provides for different rules for
different agencies (s101 (2) (b)) but is silent on how this rule making power
will be exercised. Before endorsing an earned autonomy approach, the JCPAA
should seek information on the criteria on which it will be based.
However, there are also those who consider that not moving toward a
system of earned autonomy and the related streamlined reporting requirements
would be a lost opportunity. In its submission, the CPA expressed its support for
the proposals outlined in the Explanatory Memorandum to ‘explore options to
streamline financial reporting requirements for Commonwealth entities,
including through the introduction of tiered or differential financial
reporting arrangements that are appropriately calibrated’.
CPA Australia believes it is important that this work is
commenced earlier rather than later and that it is at the very least informed
by the Australian Accounting Standards Board's mandated differential reporting
framework and the outcomes of the ongoing discussions around the functionality
of the reporting entity concept.
Achieving better outcomes through cooperation
As highlighted by the Finance Secretary, joined-up government is ‘a
constant theme of the way governments operate in Australia—and around the
One of the key objectives of the Bill is to facilitate cooperation
between Commonwealth entities (subclause 5(c)(iv)). This is achieved in the
n Clause 17— which
requires accountable authorities to encourage officials to cooperate with
others to achieve common objectives, where practicable; and
n Clause 18— which
requires accountable authorities to consider the risks involved and the effects
of imposing requirements on others in relation to the use or management of
The Explanatory Memorandum outlines the importance of doing so as
Effective collaboration between Commonwealth entities, with
other levels of government, and with the private and not-for-profit sectors, is
critical to the achievement of the government‘s priorities and national goals.
Beyond clauses 17 and 18, there are several clauses in the Bill that
facilitate improved cooperation between levels of government— in particular, clauses
82, 83 and 87. When asked about partnering between levels of government,
Finance stated the Bill would allow:
… for information-sharing on joint Commonwealth, state and
territory bodies. It also allows for state auditors-general to audit the moneys
that are in the hands of those joint bodies. There is clause 87 as well, which
allows models of bodies to be established in the rules, and we hope that those
models will be templates, if you like, for how the Commonwealth joins up so
there is a ready-made way for the Commonwealth to engage with others.
The House of Representatives Selection Committee asked the
JCPAA to ensure that combining the two Acts into a single Act would not impose
additional and unnecessary reporting requirements on bodies subject to the Act.
In addition to considering the impact on Commonwealth entities, the Committee
also sought input from external service providers on the potential effect of
the Bill, including issues related to reporting to those entities.
Impact on the third sector
In responding to a question from the Committee on work in relation to
understanding how the financial framework is impacting on governance relationships
with the third sector and remote area services, Finance advised that they were
very conscious of the issues in grants administration.
In relation to Indigenous issues, Finance explained that they had
consulted with various Indigenous bodies to gain further understanding of
current frustrations. Finance also flagged their intention to continue the
dialogue on issues that are ‘unique and nuanced’.
The National Congress of Australia’s First Peoples, a peak
representative body for Aboriginal and Torres Strait Islander Australians,
provided a submission to the Committee reiterating comments made during a
recent JCPAA inquiry about the problems faced with the administration of
grants, including the burden of reporting and compliance mechanisms, and the
need for stronger governance structures.
National Congress suggested that
If these are the sorts of changes envisaged by the current
reform agenda and this Bill, then they will certainly improve the experience of
Aboriginal and Torres Strait Islander community organisations and service
providers in their interaction with Government agencies.
However, the National Congress noted that despite the long pre-bill
consultation period, time to reflect on the actual Bill was very short. The
National Congress is still seeking further clarity on the implications of
clause 18, suggesting that the existing very broad wording may lead to
UnitingCare Australia expressed its support for clauses 17 and 18,
citing their potential to reduce the compliance and reporting obligations it
faces when sourcing funds from Commonwealth entities. UnitingCare pools funds
from multiple entities because its funding programs tend to span several
portfolio areas. For example:
… long-term unemployment is not simply about a lack of access
to the job market; it can be linked to learning disabilities, physical and
mental health issues, family and relationship problems, lack of transport,
homelessness and other contributing factors. These contributing factors are
often being addressed in a number of other portfolios and jurisdictions, which
presents us with a number of challenges when trying to deliver holistic
UnitingCare stated that an excessive compliance burden is created
because in pooling funds from multiple areas it must meet the specific
requirements of each entity. This can involve reporting the same information in
different formats. UnitingCare expect that this burden will reduce if
cooperation between Commonwealth entities increased.
While supporting increased cooperation between Commonwealth entities,
UnitingCare noted that:
… the bill could be strengthened if the term 'others' in
clauses 5 and 17 were made more overt to identify the types of entities
Further, praising the consultation process undertaken by Finance on the
CFAR review, UnitingCare cautioned that:
… the pace and manner in which this bill is implemented will
be critical to realising its full potential and thus its importance to our
sector. We think it is vital that the government include key stakeholders in
the implementation process.
Finance noted that they had not specifically consulted the third sector
on the relevant clauses in the Bill, but that they had been inserted in
recognition that ‘the Commonwealth in its internal regulation imposes costs on
others and those burdens need to be taken into account’.
Referring back to comments made in relation to the third sector, Finance
at this stage government could do better on all those fronts.
So part of the objective of this legislation is to make way for better
joining-up between the Commonwealth and other partners not only by removing
some of the impediments that exist in relation to that in the financial framework
but also by signalling to government and government officials that joining up
is part of how they are expected to discharge their public duty, and that, in
joining up, they have to be mindful of the needs of others and of the impacts
they have on the others that they join up with. This is a long-term piece of
reform, but the beginnings are in this legislation, and this legislation, I
believe, sends some very important signals as to how the government should
operate in the future.
In recent years, the JCPAA has been largely focused on ensuring that the
Commonwealth achieves the best possible outcomes with its limited resources.
The Committee has made a number of recommendations in reports to improve
amongst other things: relationships between agencies; cross-agency reporting;
interaction with the third sector; and following the money across the
In regard to cooperation between levels of government, the committee
welcomes any moves toward more effective partnering to achieve national
outcomes. The committee does, however, suggest that all governments need to
give consideration to the possible ‘accountability gaps’ and remedies for these
gaps suggested in correspondence from the Australasian Council of Auditors-General.
The committee would be concerned if new jurisdictional bodies were in
any way distanced from oversight bodies or parliaments; but believes that the
intent expressed in the Bill provides an opportunity to enhance these critical
partnership arrangements while also improving oversight elements.
While the committee strongly endorses all efforts being made to improve
cooperation across government, jurisdictions and other stakeholders; it was
particularly pleased to hear that Finance is working closely with the third
sector to improve outcomes and efficiency.
On a related matter, part of effective cooperation is effective
communication. On a number of occasions the JCPAA has raised the importance of
citizen engagement and accessibility through the use of plain English.
Following this theme, the Committee suggested that the Explanatory Memorandum
was complicated by the use of anomalous words such as ‘bifurcated’. Therefore
the committee appreciates Finance has undertaken to revisit the Explanatory
Memorandum with a view to improving readability.
The Committee has also made a recommendation to this effect in Chapter 5.
Performance monitoring, reporting and evaluation
Clauses 37 to 40 of the Bill require entities to measure and assess
their performance in achieving their purposes, keep records of their
performance, and produce annual performance statements for inclusion in annual
reports which may be examined and reported on by the Auditor-General. These
elements of the Bill are intended to introduce ‘a framework for measuring and
assessing performance, including requiring effective monitoring and evaluation’.
The Explanatory Memorandum states that the requirements for measuring
performance would be outlined in the rules, which would focus on:
… exchanging the quality and integration of performance
information required by Government and the Parliament to assess actual against
planned results. The rules may also provide the capacity to mandate particular
requirements that are currently voluntary, consistent with the concept of
The submission from Finance added that the clauses requiring entities to
monitor and report on their performance sought to ‘parallel performance
reporting with financial reporting by recognising the inherent value of quality
performance reporting’. The clauses would also:
… build on the JCPAA’s findings in Report 419, Inquiry
into the Auditor-General Act 1997, which recommended that the
Auditor-General’s mandate be enhanced to give explicit authority to undertake
audits of entities’ key performance indicators and the reporting by entities
against those indicators.
Participants in the inquiry expressed general support for the inclusion
of explicit obligations for performance monitoring and reporting. For example,
the submission from CPA Australia indicated its support for audited annual
performance statements. The submission noted that financial performance and
position allowed for only a partial evaluation of an entity’s success, and that
audited quantitative and qualitative performance information about services
provided was ‘critical’ in this context.
The Auditor-General’s submission similarly expressed strong support for
the Bill’s provisions dealing with the obligation of accountable authorities to
measure, assess and report on performance. It noted the shortcomings in the
existing performance framework that had previously been highlighted by both the
ANAO and the Committee. The submission added that:
A strong ongoing commitment to developing and implementing an
appropriate performance framework that underpins these provisions will be
essential if the intended benefits are to be realised.
However, the Auditor-General also suggested that the wording of
subclause 38(1)—‘[t]he accountable authority of a Commonwealth entity must measure
and assess the performance of the entity in achieving its purposes’—could be
interpreted narrowly. He considered that:
… this wording could be reviewed to give greater confidence
that assessment of performance relates to the impact or effectiveness of
government programs and activities for which the entity carries administrative
responsibility, including those that involve multiple entities and other
Finance responded to the Auditor-General’s concerns in a supplementary
submission as follows:
It is not clear how ‘purposes’, which appears to be the
relevant part of the phrase, could be interpreted narrowly. For a government
department, its purposes could include its functions under the Administrative
Arrangements Order and the programs as set out in its corporate plan. This
would address the issue that the ANAO raises.
For the avoidance of doubt, the rules under subclause 38(2)
could include that measurement and assessment must be done of the effectiveness
Mr Stephen Bartos raised similar concerns in his submission that the
intent of subclause 38(1) was unclear. The submission expressed support for the
Explanatory Memorandum’s reference to ‘effective monitoring and evaluation’,
but noted that there was no clear reference to evaluation in the Bill. Mr
Bartos suggested that the Bill could include a requirement for periodic
independent evaluations of program and agency performance, with the results to
The Committee strongly supports the intent of the Bill to provide for a
stronger framework for monitoring and reporting on performance. As the
Auditor-General has pointed out in his submission, deficiencies in the
implementation of the current framework have been an area of longstanding
concern by this Committee, expressed in a wide range of reports covering many
programs over many years. While the detail of how the revised performance
framework will be implemented will not be known until the rules are developed,
it appears that the Bill provides a suitable basis for a renewed focus on
entity performance against outcomes, in support of the Auditor-General’s new
While it is clear that the intent of these provisions is well-supported,
the Committee notes that some inquiry participants—notably including the
Auditor-General—have suggested that there is room for more clarity in wording
of subclause 38(1). To remove doubt, the Committee suggests that Finance, in
consultation with the Auditor-General, should ensure the wording of the associated
rules provides emphasis on the need for evaluation of programs.
In addition, the Committee notes that there is no explicit provision in
the Bill for a post-implementation evaluation of the new financial framework
itself. The Committee suggests that, within three years of the Bill’s
implementation, an independent evaluation of the revised framework should take
place to consider its success in achieving its aims and the need for any
further refinements. The Committee considers there would be value in this
requirement being included in the Bill.
This evaluation should be complemented by a wide-ranging inquiry into
the Act by a parliamentary committee, along similar lines to the JCPAA’s 2000
review of the Financial Management and Accountability Act 1997 and the Commonwealth
Authorities and Companies Act 1997. A recommendation to this effect has
been included in Chapter 5.
Further supporting the view of the Australian Information Commissioner
on increased transparency, results of all evaluations should be made public.
Interaction with the Public Service Act 1999
Uniform duties of officials
Clauses 25 to 29 of the Bill impose a series of duties on officials.
These duties, broadly aligned to the duties in the CAC Act and the Corporations
Act 2001, are:
of care and diligence
to act in good faith and for proper purpose
in relation to use of position
n Duty in relation to
use of information
n Duty to disclose
In its submission to the Committee, Finance explained that this
alignment of duties was intended to provide consistency across the private,
public and not-for-profit sectors. It added that the major difference between
the duties in the Bill and those in the CAC and Corporations Acts was that they
applied to all officials, with no distinction between leaders or entities and
Finance further outlined the aims of the uniform duties as follows:
This is designed to help government to join up with other
sectors and will help with recruiting experienced directors for government
boards, recognising that most of the members of boards of CAC Act authorities
are members of boards in the private sector. It will facilitate more effective
corporate governance if those directors can confidently draw on their knowledge
and experience gained in the private sector knowing that they are working
within a familiar legal structure. It can also create an overarching culture
and environment of better practice corporate governance.
Finance noted that ‘some of the duties in the Bill are similar to some
of the requirements of the APS Code of Conduct’, contained within section 13 of
the Public Service Act 1999 (PS Act). However, Finance also pointed out
that only around 50 per cent of Commonwealth public sector officials were
covered by the PS Act, and that having ‘consistent rules around behaviours to
those who manage and use public resources’ was ‘highly desirable’ and ‘at the
heart of this Bill’.
At the Committee’s public hearing, the Australian Public Service
Commissioner (the Commissioner) provided the Committee with a table outlining
the differences between section 13 of the PS Act and the duties of officials
contained in the Bill. The Commissioner raised
his concern that the duties contained in the Bill, although not inconsistent,
were expressed differently to those contained in the PS Act:
So what we actually have are two expressions of the duties of
officials and two expressions of the duties of secretaries in two different
pieces of legislation … It seems to us to be a pity to pass up the opportunity
to simplify things by making it clear that if you are a public servant under
the Public Service Act that the Public Service Act has got the clear and
consistent statement of the code of conduct, the values and the ethical
framework in which public servants are accountable.
The Commissioner argued that the obligations in the Bill were more
limited than those in the APS Code of Conduct, and that a preferable outcome would
be for the Bill to refer to the PS Act as the single statement of duties for
people employed under the PS Act:
It will not be the end of the world, frankly, if they stay
the way they are but it would seem to us a lot simpler and a lot easier to
explain if this act could rely on the Public Service Act.
… if it is possible to say that, in the case of a
Commonwealth company, your duties and obligations are specified in the
Corporations Act, which is what it does, then why can't you say that for those
others who are employed under the Public Service Act their duties and
responsibilities are specified in the Public Service Act and then the material
that is here covers the rest? It is as simple as that.
Responding to the issue raised by the Commissioner, Finance explained
that while there were nuanced differences between the duties in the Bill and
those in the PS Act, these differences were not material.
It described the complexities of combining a unified set of obligations to
cover people operating under a range of frameworks:
The way we have tried to tackle that is by focusing on the
CAC Act obligations, because they are the ones that really come from the
Corporations Law, and trying to bring them as close as we can in a practical
way to the Public Service Act language. But why we have not been able to get
100 per cent there is that the Public Service Act covers a range of people
whereas the combined CAC and FMA legislation covers a different group of people
who have slightly different arrangements in place. The intent has been to get
everything as close as possible; the issue is whether you can get everything to
line up so that there is not a bit of space in between the duties in the Public
Service Act, this piece of legislation and the Corporations Law.
Finance added to its comments in a written submission to the Committee
after the hearing, indicating that, as the duties in the Bill and in the PS Act
were ‘not inconsistent’, there ‘should be no issues of compliance by public
servants’. It highlighted that
placing uniform duties and obligations on all officials was a desirable part of
the CFAR principle of ‘government as a whole’:
Officials managing public resources should be able to look in
one place to determine their duties in relation to those resources. Consistent
with the Corporations Act 2001, the duties are fiduciary in nature and
it is appropriate to include them in the Bill.
Finance also pointed out that some of the duties in the Bill were
‘scalable and recognise materiality to a different degree compared to the PS
Act’, particularly the duties relating to care and diligence and conflicts of
Enforcement of duties and termination provisions
The Committee was interested to learn about the procedures for
investigating potential breaches of the duties of officials contained within
The Australian Public Service Commissioner explained that, under the PS
Act, it was the responsibility of the agency head to investigate allegations
within their agency. Allegations concerning agency heads would be investigated
by the Commissioner, and any individuals dissatisfied with the process could
make a whistleblowing report to either the Commissioner or the Merit Protection
Commissioner. Finance indicated that
allegations involving non-PS Act employees would be likely to similarly be the
responsibility of the head of the entity, subject the individual rules
governing each organisation.
Clause 30 of the Bill provides for the person who appoints a director,
or equivalent official, of a corporate Commonwealth entity to terminate an
appointee for contravening one of the general duties of officials outlined
Finance stated at the public hearing that these provisions ‘sit
alongside the termination provisions in the enabling legislation of various
statutory bodies’. Finance explained that, for people employed or appointed
under the PS Act, the provisions of that Act would continue to apply, but for
others, it would be a ‘supplementary power’. 
The termination provisions would replace criminal provisions and civil
provisions in the current CAC Act—such as fines and imprisonment—with specific
provisions for issues to be managed as part of the employment relationship:
So we have done away with the regime of fines and civil
penalties, largely because they have never been successfully used and the
advice that we have been given from the Attorney-General's Department is that
the Criminal Code is sufficient to deal with criminal provisions … We thought
the employment relationship is the best way for matters of misbehaviour and
failure to meet duties to be dealt with, and that is universal … If they do not
meet their duties or they do not properly manage public resources, that issue
is dealt with between them and their employer as a matter of their employment.
Finance indicated that it expected clause 30 of the Bill would be used
‘from time to time but rarely’, because issues relating to the performance of a
director currently came up ‘every few years’.
Finance undertook to obtain for the Committee the number of senior
appointment terminations that had taken place over the last three to five
years. In a written response,
Any attempts to dismiss a director of a board of a
Commonwealth authority would have been actioned under the engagement arrangements
for that director. There are no explicit provisions for termination of a board
member under the CAC Act for breaching their general duties.’
Finance’s response added that, since 1999, there had been only one
prosecution of a Commonwealth authority official under the criminal provision
of the CAC Act, and that it would ‘not anticipate many terminations of
employment given the standing and integrity of persons appointed as directors
Asked about the rules of evidence that would apply to potential breaches
of duties, Finance explained at the hearing that clause 30 of the Bill included
a natural justice requirement and a requirement for a copy of a notice
outlining the reasons for any termination to be tabled before each house of the
Parliament within 15 sitting days. Finance also highlighted that there were
options other than termination for managing breaches, including counselling and
mechanisms outlined in the enabling legislation of individual entities.
The Committee understands the concerns raised by the Australian Public
Service Commissioner that, if the Bill is passed in its current form, the
duties of Australian Public Service officials will be contained in two separate
pieces of legislation and expressed in different terms. It is a legitimate
concern that this duplication may lead to confusion amongst officials as to
which legislation contains the authoritative statement of duties. However, the
Committee understands that this is a situation which already applies to
entities operating under the CAC Act that employ officials under the PS Act.
While expressed differently and with a different focus, the duties in
the Bill appear to be broadly consistent with those in the PS Act. As the
employment framework for Australian Public Service employees, the PS Act will
continue to provide a clear statement of the duties and performance standards
expected of individuals employed under that Act. However, with regard to the distinct
matter of financial management that this Bill addresses, the Committee accepts
Finance’s proposition that it is desirable to have a uniform statement of
duties that covers all officials with responsibility for managing public
resources—whether or not they fall under the PS Act.
The Committee also notes that the duties in the Bill have been modelled
on the duties in the Corporations Act 2001, and will therefore provide a
more consistent statement of duties for the management of resources across the private
and public sectors. The Committee considers that the benefits of having a
consistent set of financial management duties applied across all Commonwealth
entities outweighs concerns about the complexity of PS Act employees having two
sets of duties to work under.
The Committee accepts that the termination clauses in the Bill, which
will in practice apply to the directors of corporate entities and operate
alongside other legislative provisions, provide an appropriate ‘last resort’
for managing breaches of the duties contained in the Bill. The Committee agrees
with Finance’s view that it is more appropriate for issues of breach of duties
to be managed as part of the employment relationship rather than through the
civil and criminal provisions of the existing CAC Act, and notes that the
Criminal Code will still be applicable for dealing with serious breaches.