Chapter 5 Committee Conclusion
How public money and resources are used by governments has direct
consequences for Australia’s wellbeing. This goes further than just the policy
priorities of the government of the day. The principles, controls and culture
surrounding officials who spend public money are also critical factors.
The significance of the financial framework should not be
underestimated. The current financial framework, with the FMA and CAC Acts at
its heart, was world leading when introduced and has served Australia well over
the last 15 years. Almost 200 organisations are operating under this framework
and the associated rules, which largely set the controls for spending of around
$400 billion per year.
It flows that any improvement in the efficiency and effectiveness of the
financial structure will have major on-the-ground benefits. The JCPAA, perhaps
more than any other parliamentary committee, knows that improvements to
government administration remain to be realised. Therefore, the Committee
commends the renewed focus and fresh thinking brought by Finance in an aim of
modernising Australia’s financial framework.
The Committee strongly supports the broad objectives of the CFAR process
and the Bill, as do most stakeholders. Attempts to bring additional coherence
to the system, including through improving the planning, performance and
accountability processes, are welcome. Specifically, the Committee supports the
introduction of: more mature approaches to risk management; the concept of
earned autonomy; positive obligations to cooperate and partner with others;
better recognition of the resource management cycle of planning through to
evaluation; and the intent of improved performance reporting and transparency
to the Parliament and the public.
The Committee recognises that there has been significant consultation
efforts to date through the CFAR policy development process, and highly
commends Finance in this regard. It is obvious they have taken a genuinely open
and collaborative approach to this significant task and this should be given
due acknowledgement. The months of effort and consultation on the options and
position papers has allowed a high level of engagement from stakeholders at the
Due to the significance of the financial framework to how money is spent
and how the public sector is organised, the Committee believes that care is
warranted as we move from concept, to a piece of legislation based on
principles, to rules. Stakeholders, from the public through to key officials
such as the Auditor‑General, need to be convinced of the virtue of the
objectives and that the practical implications have been well considered.
Maintaining stakeholder support from concept through to the detailed
rules stage is critical when a principle-based approach to legislative change
is followed. Despite principle-based approaches being considered best practice,
if stakeholders are not provided with comfort on how they will be impacted from
day to day they are understandably hesitant. Although some stakeholders may
argue that the rules should be available for scrutiny at the same time as the
legislation, the Committee understands this is often impractical and sometimes
As noted above, there has been extensive consultation during the
conceptual stage, including the Committee receiving regular updates from
Finance during the CFAR process. In addition, Finance has made efforts to
consult broadly on the draft Bill, but the Committee retains questions about
whether this consultation has allowed enough time for full and proper
consideration by the many stakeholders involved. There is a clear need,
however, for ongoing open engagement on development of the rules, as many
agencies seem to be reserving judgement on the entire process until the rules
Regarding consultation on development of the rules, the Committee is
pleased that the Finance Minister has made a series of undertakings to consult
publicly and also formally with the Committee. Finance’s additional
clarification that the more complex new rules, such as those for earned
autonomy, will be developed over a longer period provides further assurance.
At the outset, the Committee’s intention was to take a high level
approach to scrutiny of the Bill —focusing on its intent and longer term
benefits to the public sector and to Australia. The inquiry process gave a
voice to many stakeholder views and allowed important additional information to
be made public.
The Committee found that the intent and potential benefits of the Bill
were supported by almost all stakeholders. The Committee therefore strongly
supports the broad intent of the CFAR process and objectives of the Bill. At
the same time the Committee heard that many stakeholders wanted time to digest
the impacts of the changes before implementation commenced.
Ultimately the issue of timing of the Bill’s passage is one for the
responsible Minister and the Parliament, not one for this committee. However
the Committee does acknowledge that if the Bill is not passed during this Parliament,
it is highly likely that commencement will be delayed until 1 July 2015. This
will mean the Bill’s potentially significant benefits will also be delayed.
If the Minister and the Parliament make the decision to pass the Bill
now, it is critical that the undertakings made by Finance and the Minister are
followed. Thorough public and parliamentary consultation must be completed
before the rules are tabled in parliament as disallowable instruments.
As an alternative course, if a decision is made to delay passage of the
Bill, the Committee strongly recommends that consideration be given to the Bill
early in the next Parliament. Additionally, if passage is delayed, the
opportunity should also be taken to bring on board concerned stakeholders,
including providing further assurance on how the clauses of the Bill will be
articulated in potential rules. The same opportunity should be taken regarding
the extent and form of necessary consequential amendments.
With the above considerations in mind the Committee commends the Bill to
the House for further debate and makes the following recommendations:
||That the objectives of the Bill be supported, but the timing
of its passage be a matter for the broader Parliament to determine.
||That the issues highlighted in the referral from the
Selection Committee have been examined and do not, at this stage, look to be
reasons for rejection of the Bill.
That the Committee supports the introduction of additional
coherence to the system — including through improving the planning,
performance and accountability processes —and specifically supports the
mature approaches to risk management;
concept of earned autonomy;
obligations to cooperate and partner with others;
recognition of the resource management cycle of planning through to
intent of improved performance reporting and transparency to the Parliament
and the public.
||That, if the Bill is passed during this Parliament, that the
process outlined by the Finance Minister regarding public and parliamentary consultation
be closely followed.
That, if a decision is made to delay passage of the Bill,
priority should be given to its consideration within the first six months of
the next parliament; and that the opportunity should be taken to consult
stakeholders and progress work on the rules with a view to providing:
into what they look like and contain; and
confidence to agencies and the Parliament as to their impact.
||That consequential amendments will be required to the
enabling legislation of entities to ensure their independence is not
||That the options developed by the Australian Government
Solicitor for amendment to the Explanatory Memorandum to clarify maintenance
of independence, as outlined in Supplementary Submission 9.2 from the
Department of Finance and Deregulation to the Joint Committee of Public
Accounts and Audit, be accepted and included in a revised Explanatory
requirements for the overall financial framework be explicitly included in
the Bill and Explanatory Memorandum; and
Parliament, through the Joint Committee of Public Accounts and Audit, conduct
a detailed inquiry into the financial framework following the completion of
||That a statement on greater transparency is included in the
Explanatory Memorandum, as per the Australian Information Commissioner’s
evidence to the Joint Committee of Public Accounts and Audit’s inquiry into
||That all relevant documents are prepared in plain English
and in language consistent with other relevant legislation, where
||That other suggested amendments highlighted during the
inquiry be further considered and changes made as appropriate.
Rob Oakeshott MP