BILLS DIGEST NO. 17, 2017–18              14 August 2017

Public Governance and Resources Legislation Amendment Bill (No. 1) 2017

Cathy Madden
Politics and Public Administration Section 

Date introduced:  22 June 2017

House:  House of Representatives

Portfolio:  Finance

Commencement: On Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at August 2017.

Purpose of the Bill

The purpose of the Public Governance and Resources Legislation Amendment Bill (No.1) 2017 (the Bill) is to amend thirteen Acts to harmonise relevant provisions with the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The Bill also makes minor amendments to relevant legislation as a consequence of the sale of Medibank Private.

Structure of the Bill

This Bill has four Schedules:

•       Schedule 1 makes amendments to consistently prescribe Commonwealth entities for the purpose of the PGPA Act within the entities’ enabling legislation

•       Schedule 2 repeals provisions in enabling Acts that cover issues provided for in the PGPA Act; updates provisions changing references from the previous Financial Management and Accountability Act 1997 (FMA Act) and the Commonwealth Authorities and Companies Act 1997 (CAC Act) to the PGPA Act

•       Schedule 3 makes amendments to three Acts resulting from the sale of Medibank Private

•       Schedule 4 contains transitional and consequential provisions.

Background

On 1 July 2014, the PGPA Act implemented a new financial management framework for the Commonwealth and Commonwealth entities by replacing the FMA Act and the CAC Act. The PGPA Act takes a 'principles-based' approach by establishing a core set of obligations that apply to all officials within Commonwealth entities rather than prescribing detailed requirements.

Since the introduction of the PGPA Act there has been further legislation enacted (the Public Governance Performance and Accountability (Consequential and Transitional Provisions) Act 2014 and the Public Governance and Resources Legislation Amendment Act (No. 1) 2015[1]) for the purposes of making minor amendments and including transitional and consequential provisions, and appropriation modifications.

The Bill is part of a broader Public Management Reform Agenda and represents the next stage in the Government's approach towards transitional arrangements and consequential amendments to other Commonwealth legislation streamlining and simplifying resource management and governance arrangements across the Commonwealth.[2]

The majority of the amendments that are contained in the Bill are housekeeping items of a technical nature and are uncontroversial. Some of the proposed changes relate to amendments that, for various reasons, were unable to be made at the time that the PGPA Act took effect on 1 July 2014. As a result of further consultation with the relevant entities, these amendments are being made to the relevant legislation to ensure that they interact properly with the new financial framework.[3]

Committee consideration

Selection of Bill Committee

On 9 August 2017, the Senate Standing Committee for the Selection of Bills deferred its consideration of the Bill to its next meeting.[4]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills expressed concern about the operation of item 4 in Schedule 4 to the Bill. As set out above, Schedule 4 contains transitional and application provisions. Item 4 of that Schedule provides:

that despite subsections 12(2) and (3) of the Legislation Act 2003 (which restricts the retrospective application of legislative instruments), legislative instruments that amend another legislative instrument as a consequence of amendments or repeals made by the Bill may be expressed to have taken effect from a date before the amending instrument is registered.[5]

The Committee reiterated its ‘long-standing scrutiny concern about provisions which facilitate the retrospective application of the law’ and accordingly sought the Minister’s advice:

as to why it is considered necessary to authorise the making of retrospective legislative instruments in this instance, including examples of circumstances where such a power may be used, whether any persons are likely to be adversely affected and the extent to which their interests are likely to be affected.[6]

At the time of writing this Digest, the Committee had not published the Minister’s response. This issue is discussed further under Key issues and provisions, below.

Policy position of non-government parties/independents

At the time of writing this Bills Digest neither members of non-government parties nor independents had commented on the Bill.

Position of major interest groups

The Explanatory Memorandum states that the Bill was prepared in consultation with affected Commonwealth entities and that many of the amendments included in the Bill were identified in earlier consultation on the Public Governance Performance and Accountability (Consequential and Transitional Provisions) Act 2014.[7]

Financial implications

According to the Explanatory Memorandum to the Bill, it will have no financial impact. However, the Explanatory Memorandum notes that the harmonisation of the regulatory requirements will contribute to efficiencies in governance, transparency and accountability arrangements for Commonwealth entities.[8]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[9]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights considers that the Bill does not raise human rights concerns.[10]

Key issues and provisions

Schedule 1—Listed entities

Schedule 1 (items 1 to 3) prescribes two entities as ‘listed entities’ under the PGPA Act within their enabling legislation. The provisions name each of those entities, specify who the accountable authority and officials of the entity are, and set out what the purposes of the entity include. Both entities are currently listed entities under the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) but this Bill will transfer the listing to primary legislation.[11] The Explanatory Memorandum states that this is ‘consistent with preferred drafting conventions’.[12]

A body or agency that is defined as a ‘listed entity’ under the PGPA Act comes within the definition of ‘Commonwealth entity’ and is therefore subject to the requirements of that Act. Each Commonwealth entity has an ‘accountable authority’ (such as the Secretary of a department or the Chief Executive Officer (CEO) of a statutory agency). An accountable authority has a number of duties and functions under the PGPA Act, such as the duty to properly govern the entity and establish and maintain appropriate risk management systems.[13] Each Commonwealth entity also has ‘officials’. For listed entities, officials are prescribed by an Act or in the PGPA Rules.[14] There are general duties that apply to all officials under the PGPA Act, including a duty to exercise their powers with due care and diligence; and to act honestly, in good faith and for a proper purpose.[15]

Item 1 amends the Anti-Money Laundering and Counter-Terrorism Act 2006 to make the Australian Transaction Reports and Analysis Centre (AUSTRAC) a listed entity, its CEO an accountable authority and specified persons officials of AUSTRAC for the purposes of the PGPA Act. Likewise item 2 amends the Competition and Consumer Act 2010 to make the National Competition Council a listed entity, the President of the Council an accountable authority and certain persons officials of the Council for the purposes of the PGPA Act.

Schedule 2—Amendments relating to the Public Governance, Performance and Accountability Act 2013

Schedule 2 Part 1 (items 1 to 88) amends nine Acts, including the Australian Renewable Energy Agency Act 2011, the Building and Construction Industry (Improving Productivity) Act 2016, Competition and Consumer Act and the Clean Energy Finance Corporation Act 2012 to align and harmonise the enabling legislation with the PGPA Act to ensure that there is consistency with the new financial framework. These amendments do not change any of the policies or statutory functions contained in the legislation that is proposed to be amended.

A number of the changes are to delete references to previous legislation, the FMA Act and the CAC Act, replace references to the FMA Act and CAC Act with the equivalent provisions in the PGPA Act and to change references from ‘Commonwealth authority’ to ‘corporate Commonwealth entity’.

Schedule 2 simplifies enabling legislation where provisions of the PGPA Act cover an issue previously dealt with in enabling legislation, such as disclosure of interest arrangements and reporting arrangements. Under the PGPA Act disclosure of interest arrangements are dealt with in section 29 and annual reporting arrangements are covered under section 46. For the reader’s convenience sections 29 and 46 of the PGPA Act are set out below and the following paragraphs provide examples of how the Bill proposes amendments to enabling legislation that harmonise with these provisions.

Section 29 of the PGPA Act: disclosure of interests requirements

29 Duty to disclose interests

1)       An official of a Commonwealth entity who has a material personal interest that relates to the affairs of the entity must disclose details of the interest.

2)       The rules may do the following:

a)        prescribe circumstances in which subsection (1) does not apply;

b)       prescribe how and when an interest must be disclosed;

c)        prescribe the consequences of disclosing an interest (for example, that the official must not participate at a meeting about a matter or vote on the matter).

Items 1, 2 and 3 respectively, would repeal section 218 and amend paragraph 219(2)(d) and subsection 219(3) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to align the provisions with section 29 of the PGPA Act.

Item 7, 9, 10, 12 and 13 amend the Australian Renewable Energy Agency Act 2011: item 7 repeals section 36 and substitutes a new section referencing the PGPA Act for Board members’ disclosure of interests requirements; item 12 repeals and substitutes a new section 57 referencing the PGPA Act for the CEO’s disclosure requirements.

Items 20, 21 and 22 amend the Building and Construction Industry (Consequential and Transitional Provisions) Act 2016 to change terminology to be consistent with the PGPA Act such as item 20 substituting in subitem 3(1) of Schedule 2 of the Act the words ‘report under’ with ‘report referred to in’.

Items 36 and 37 propose to repeal and substitute new section 26 and new paragraph 28(2)(d) respectively of the Building and Construction Industry (Improving Productivity) Act to reference section 29 of the PGPA Act for disclosure of interests by the Australian Building and Construction Commissioner or a Deputy Commissioner.

Item 57 proposes the repeal and substitution of a new section 39 of the Clean Energy Finance Corporation Act to reference section 29 of the PGPA Act for disclosure of interests by the CEO of the Corporation.

Items 70, 72, 73, 74, 75 and 79 amend the Competition and Consumer Act to align the provisions with section 29 of the PGPA Act.

Section 46 of the PGPA Act: Reporting requirements

46  Annual report for Commonwealth entities

1)       After the end of each reporting period for a Commonwealth entity, the accountable authority of the entity must prepare and give an annual report to the entity’s responsible Minister, for presentation to the Parliament, on the entity’s activities during the period.

Note: A Commonwealth entity’s annual report must include the entity’s annual performance statements and annual financial statements (see paragraph 39(1)(b) and subsection 43(4)).

2)       The annual report must be given to the responsible Minister by:

a)        the 15th day of the fourth month after the end of the reporting period for the entity; or

b)       the end of any further period granted under subsection 34C(5) of the Acts Interpretation Act 1901.

3)       The annual report must comply with any requirements prescribed by the rules.

4)       Before rules are made for the purposes of subsection (3), the rules must be approved on behalf of the Parliament by the Joint Committee of Public Accounts and Audit.

Item 4 proposes to repeal Division 5 of Part 16 of the Anti-Money Laundering and Counter-Terrorism Financing Act which relates to reports and information such as annual reporting. The Division is redundant as reporting requirements are set out in section 46 of the PGPA Act.

Items 16, 17, 18 and 19 propose to amend section 70 of the Australian Renewable Energy Agency Act to reference section 46 of the PGPA Act and substitute the term ‘periods’ for ‘years’ for consistent terminology with the PGPA Act.

Items 28 to 35 propose to amend the Building and Construction Industry (Improving Productivity) Act (the Act) to align reporting requirements and terminology with the PGPA Act. Item 28 clarifies that the Commissioner has to provide a quarterly report under subsection 20(1A) of the Act. The quarterly reports are separate from the annual report. Item 29 repeals subsection 20(1) of the Act relating to annual reporting requirements and item 30 amends subsection 20(2) to provide for annual reports to be prepared and provided under section 46 of the PGPA Act.

Items 64, 65 and 66 propose to amend section 74 of the Clean Energy Finance Corporation Act to reference the annual report prepared under section 46 of the PGPA Act and omit references to ‘financial year’ and substitute ‘period’ for consistency in terminology with the PGPA Act.

Items 77, 78, 81 and 82 propose to amend the Competition and Consumer Act in regard to reporting requirements. Item 77 repeals subsection 29O(1) of the Act relating to annual reporting requirements of the National Competition Council and item 78 substitutes a proposed subsection 29O(2) that provides for an annual report to be provided under section 46 of the PGPA Act.

Item 83 proposes to amend the Public Service Act 1999 to separate the reporting requirements for the State of the Service report from the annual reporting requirements of the Australian Public Service (APS) Commissioner. Item 83 substitutes a new section 44 which relates to the requirements for an annual state of the APS report. Section 46 of the PGPA Act would provide for the annual report of the APS Commissioner. Items 85 to 87 repeal provisions relating to the requirements for annual reports from the Merit Protection Commissioner and secretaries of executive departments. The reporting requirements at section 46 of the PGPA will apply instead.

Other provisions

Schedule 2 to the Bill also proposes amendments to a series of Acts, which are minor, technical in nature and uncontroversial, such as amendments to align terminology with the PGPA Act or remove obsolete references. For example item 50 would amend the note to subsection 22CG(2) of the Classification (Publications, Films and Computer Games) Act 1995 to omit the words ‘or a Commonwealth authority or agency’ and substitute ‘or a Commonwealth entity’. Item 88 would amend paragraph 155A(a) of the Tertiary Education Quality and Standards Agency Act 2011 to omit an obsolete reference to the FMA Act and substitute a reference to the PGPA Act.

Schedule 3—Amendments consequential to the sale of Medibank Private

Schedule 3 proposes amendments to three Acts consequential to the sale of Medibank Private and its subsidiary Health Services Australia (HSA) Ltd in 2014. Items 1 to 4 amend the Health Insurance Commission (Reform and Separation of Functions) Act 1997 to omit references to the redundant section 45. Section 45 had been repealed by the Medibank Private Sale Act 2006.

Items 5 to 10 propose amendments to the Privacy Act 1988 to omit references to AGHS[16] or the ‘nominated AGHS company’. As HSA Ltd had been declared the nominated AGHS company under section 5 of the Hearing Services and AGHS Reform Act 1997, but with the sale of Medibank Private it is no longer appropriate for HSA to be prescribed as the nominated AGHS company.[17] Item 11 would remove the reference to the Managing Director of HSA Ltd from subsection 3(1) of the Remuneration Tribunal Act 1973. With the sale of Medibank and its subsidiary HSA Ltd the reference to the Managing Director is no longer appropriate.

Schedule 4—Transitional and application provisions

Schedule 4 sets out transitional provisions for entities and persons affected by the changes set out in the Bill.

Item 1 provides that the amendments in Schedule 2 that relate to annual reporting apply in relation to reporting periods that commence on or after 1 July 2016.

Item 2 provides that a person who had already disclosed interests under the requirements of an existing Act before the changes set out in Schedule 2 come into force, is deemed to have made the disclosure in accordance with section 29 of the PGPA Act.

Item 3 relates to instruments made under Acts proposed to be amended by Schedule 2, providing that an instrument (whether or not a legislative instrument) made under a provision that is amended, or repealed and substituted, under Schedule 2 to the Bill, which is in force immediately before the Bill commences will continue in force, provided that the new provision still allows the making of such an instrument. Item 3 also provides that an instrument made under a provision that is repealed and substituted by Schedule 2 will, after the Bill commences, be taken to have been made under the new provision.

Section 12 of the Legislation Act 2003 sets out when legislative instruments commence. Subsection 12(2) provides that a provision of a legislative instrument does not apply to a person (other than the Commonwealth or a Commonwealth authority) if the provision commences before the day the instrument is registered on the Federal Register of Legislation, to the extent that it would affect the person’s rights so as to disadvantage them or impose liabilities on them. Subject to this limitation, subsection 12(3) provides that a legislative instrument can provide that a provision commences prior to its registration. Item 4 of Schedule 4 provides that subsections 12(2) and (3) of the Legislation Act do not prevent a legislative instrument that amends another legislative instrument made under the same Act, where the amendment is consequential on the Bill, from taking effect prior to the amending instrument’s registration. That is, the instrument will have retrospective effect on a person whether or not it disadvantages or imposes liability on them. As discussed above, the Senate Standing Committee for the Scrutiny of Bills has expressed concern with this provision and sought further details from the Minister.[18]

Item 5 provides for the making of rules required or permitted by the Bill.

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[1].              For further detail about the passage of this legislation, see: Parliament of Australia, ‘Public Governance, Performance and Accountability (Consequential and Transitional Provisions) Bill 2014 homepage’, Australian Parliament website; and Parliament of Australia, ‘Public Governance and Resources Legislation Amendment Bill (No. 1) 2015 homepage’, Australian Parliament website.

[2].              See Department of Finance (DoF), ‘Public Management Reform Agenda (PMRA)’, DoF website.

[3].              Explanatory Memorandum, Public Governance and Resources Legislation Amendment Bill (No. 1) 2017, pp. 5–6.

[4].              Senate Standing Committee for the Selection of Bills, Report, 8, 2017, The Senate, Canberra, 9 August 2017.

[5].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 8, 2017, The Senate, Canberra, 9 August 2017, p. 18. See also: Legislation Act 2003.

[6].              Ibid., pp. 18–19.

[7].              Explanatory Memorandum, op. cit., pp. 5–6.

[8].              Ibid., p. 7.

[9].              The Statement of Compatibility with Human Rights can be found at page 21 of the Explanatory Memorandum to the Bill.

[10].              Parliamentary Joint Committee on Human Rights, Report, 7, 2017, The Senate, Canberra, 8 August 2017, p. 36.

[11].              Public Governance, Performance and Accountability Rule 2014, Schedule 1, item 3 and item 14. Upon passage of the Bill, the Rule would be amended to remove the listing of the two entities.

[12].              Explanatory Memorandum, op. cit., p. 9.

[13].              Public Governance, Performance and Accountability Act 2013 (PGPA Act), Part 2-2.

[14].              PGPA Act, subsection 13(5).

[15].              PGPA Act, sections 25 to 29.

[16].              AGHS stands for the Australian Government Health Service.

[17].              Explanatory Memorandum, op. cit., p. 18.

[18].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 8, 2017, op. cit., pp. 18–19.