15 December 2022
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Philip
Hamilton
Politics and Public Administration
To deliver a service or execute a
function, governments may decide that a suitable entity already exists, or that
a new entity may need to be created. There may be various reasons for establishing
a specialist entity rather than administering the program through an existing
department or agency. Options include, but are not limited to, establishing a new
department, a committee, a company, or a statutory agency (established by or
under an Act of Parliament, with a name that may include ‘commission’ or
‘corporation’). In making these choices, key issues to be considered could
include:
- Should the entity have a degree of independence from Government? This
is often appropriate for regulatory or service delivery functions.
- Is there a role for a committee or board? For advisory roles,
some form of committee may be sufficient. On the other hand, a board that has
governance or oversight responsibilities needs a different set of skills, and
organisational arrangements.
- Does the role require consultation or collaboration with State or
Territory functions or entities?
The Department of Finance (Finance) provides guidance on some
of these issues, and classifies Commonwealth entities into 13 categories.[1]
Intended as a convenient ‘cheat-sheet’ based on Finance guidance, Table 1 outlines
the 13 categories and provides examples of each category.[2]
A Finance
webpage provides a more detailed discussion of the key characteristics of
each category.[3]
Information about specific entities, and about how many
entities are in each category, is available from:
Variance, evolution, and switching categories
Within each category, there can be considerable variance between
entities due to differing policy and legislative drafting approaches over time,
and evolution in the arrangements for entities and statutory offices. Entities
may also change categories.
For example, the National Collecting
Institutions Legislation Amendment Act 2021 reduced the degree of
variance between six like entities in category 1.2 Corporate Commonwealth
Entities (CCEs).[4]
The Act standardised provisions across six national collecting institutions’ enabling
Acts, relating to: ministerial approvals, directions and delegations; length of
tenure on governing bodies; financial thresholds; planning and reporting; and
other provisions.[5]
However, uniformity is not always considered appropriate.
For example, when the National
Housing Finance and Investment Corporation (NHFIC) was established in 2018
it resembled the already-extant Export
Finance Australia (EFA) and the Northern
Australia Infrastructure Facility (NAIF), to the extent that they provide
financial assistance, are governed by boards, and are in category 1.2
Corporate Commonwealth Entities (CCEs). The NHFIC differs, however, in that
the NHFIC Act requires
a Commonwealth officer to attend board meetings as an observer.[6]
The Parliamentary Library’s Bills
Digest for the National Housing Finance and Investment Corporation Bill
2018 and National Housing Finance and Investment Corporation (Consequential
Amendments and Transitional Provisions) Bill 2018 noted that the practice of
having an observer attend board meetings was likely to have been in place
informally in a number of portfolios.[7]
However, the NHFIC was likely to be the first time an observer role had been
formalised in Commonwealth legislation.[8]
Category 2.2 Statutory office holders, offices and
committees provides an example of evolution. When Centrelink and
Medicare integrated into the Department of Human Services (DHS) in 2011,
the Revised
Explanatory Memorandum to the implementing Bill stated:
the intention … is to prevent one person holding more than
one of the positions of Chief Executive Medicare [CEM], Chief Executive
Centrelink [CEC] and Child Support Registrar [CSR] at the same time (p. 57).
In 2020, the Services Australia
Governance Amendment Act 2020 reversed this policy to require the CEO
of Services Australia to be simultaneously CEM, CEC and CSR. The Minister’s Second
Reading speech contended that ‘having the [Services Australia] CEO fill
those [three] key statutory offices will sharpen the service delivery focus of
Services Australia and simplify lines of accountability’.[9]
As an example of evolution in category 1.1 Non-corporate
Commonwealth Entities (NCEs), DHS was renamed
Services Australia in May 2019. It was abolished and replaced when an Executive Agency,
also named Services Australia, was established on 1 February 2020.
Infrastructure Australia (IA) is an example of an entity
switching from category 1.1 Non-corporate Commonwealth Entities (NCEs) to
category 1.2 Corporate Commonwealth Entities (CCEs). Established in July
2008 under the Infrastructure Australia Act 2008 (link to the
original IA Act), from 2008 to 2014 IA was an NCE and legally part of the
Department of Infrastructure and Regional Development. The amended IA Act
came into effect on 1 September 2014, and IA moved to category 1.2 Corporate
Commonwealth Entities (CCEs). Intended changes announced by the Minister in
response to a
recent review are likely to see IA evolve while remaining in category 1.2.[10]
Other categories of bodies
Although demonstrating a range of complexity, the above
examples also illustrate that arrangements for Primary/Principal and some
Secondary entities are relatively well-documented, relying as they do to a
large extent on authorities under legislation.
Arrangements in other categories can be either less
well-known or less well-documented, with implications for transparency and
accountability. This line of inquiry was explored by Professor Cheryl Saunders in
a Senate
lecture series presentation on interjurisdictional bodies.[11]
It is not always necessary to establish a new entity (or
abolish an existing one) to achieve the policy goals of the Commonwealth.
Ultimately, a government’s choice of entity to deliver a service or execute a
function will depend on a range of factors, including the policy and political
demands of the day. The Commonwealth
Governance Structures Policy hosted by the Department of Finance provides
guidance on the decision-making process. Based on Finance guidance, Table 1
outlines available options.
Table 1: Department of
Finance classification of Commonwealth entities into thirteen categories,
with examples
1. PRIMARY
(or Principal) bodies
may be part of
the Commonwealth, or have a separate legal status
|
2. SECONDARY
bodies
are established within a Primary body
|
3. OTHER
bodies
are established
by Commonwealth involvement
through membership or investment
|
|
Secondary statutory structures:
Established by legislation
|
|
1.1 Non-corporate Commonwealth Entities (NCEs)
NCEs are legally and financially part of the
Commonwealth, and include:
Examples of listed entities currently
prescribed by Schedule 1 of the PGPA Rule include:
Executive Agencies Some NCEs are designated, in an executive order made by the
Governor-General-in-Council under s.65 of the Public Service Act 1999, as separate from a department, for staffing and
accountability and reporting purposes, eg Bureau of Meteorology.
|
Secondary statutory
structures:
Established by legislation
2.1 Statutory advisory structures
Majority of members are likely to be external to the
Australian Government.
2.2 Statutory office holders,
offices and committees
Usually do not incur expenditure on their own account
nor prepare separate accounts. Instead, where expenditure is incurred, it is
accounted for through the accounts of a parent body.
|
3.1 Ministerial Councils and related bodies
Ministerial Councils provide a forum for
Commonwealth, State and Territory Ministers to discuss national policy
issues.
3.2 National law bodies
These bodies are established under consistent laws
enacted in every State and Territory, usually the result of some form of
intergovernmental agreement. They may be incorporated.
|
|
Secondary non-statutory structures:
Established without legislation
|
|
1.2 Corporate Commonwealth Entities (CCEs)
A CCE is a body corporate that has a separate legal
personality from the Commonwealth, and can act in its own right
exercising certain legal rights such as entering into contracts and owning
property. Most CCEs are financially separate from the Commonwealth.
Some CCEs are Government Business Enterprises (GBEs), eg the Australian Postal Corporation (Australia Post).
1.3 Commonwealth companies
A company established under the Corporations Act 2001 that the Commonwealth controls.
A Commonwealth company is legally and financially
separate from the Commonwealth.
Some Commonwealth companies are Government Business Enterprises (GBEs), eg NBN Co Ltd.
|
2.3 Non-statutory advisory structures
Majority of members are likely to be external to the
Australian Government.
2.4 Non-statutory functions
with separate branding
Often responsible for the delivery of services to the
public and/or to government.
|
3.3 Interjurisdictional and international bodies
Bodies established by the Australian Government as a
result of treaty obligations or negotiated agreements with individual
or a number of governments (State, Territory or international).
3.4 Structures linked to the
Australian Government through statutory contracts, agreements and delegations
These bodies are owned and operated by the private
sector, but have been recognised in legislation or a legislative instrument,
or are party to a statutory contract/funding agreement to deliver services on
the Government’s behalf.
3.5 Joint ventures,
partnerships and interests in other companies
3.6 Subsidiaries of CCEs and
Commonwealth companies
|
Source: This table has been compiled by the Parliamentary
Library using information from the following sources: Australian
Government Organisations Register; Public Governance,
Performance and Accountability Rule 2014; Department of Finance (DoF), Australian
Government Organisations Register - Types of Bodies, (Canberra: DoF, 20
July 2018); ‘Types
of Australian Government Bodies’, DoF, 11 February 2021; ‘PGPA glossary’,
DoF.
[1].
The Australian
Government Organisations Register (AGOR), a database of entities operated
by Finance, acknowledges some challenges with the categories: ‘Australian
Government bodies are diverse, which means classification is not always
straightforward. The following table provides guidance on the main types of
Australian Government bodies. Bodies may possess some but not all of the
features listed. Where a government body could be classified under more than
one body type, the most relevant classification has been chosen.’
Notwithstanding this caveat, the classification system is a useful guide to the
options available when establishing a new agency. Note that AGOR uses 12
categories, whereas a more recent Finance
webpage has 13 categories.
[2].
Focusing on corporate structures, Table 1 does not address resource
management and accountability arrangements (most of which arise from the Public Governance,
Performance and Accountability Act 2013), or staffing arrangements
(which, for many but not all entities, arise from the Public Service Act
1999).
[3].
‘Types
of Australian Government Bodies’, DoF, 11 February 2021.
[4].
The six were: the Australian National Maritime Museum (ANMM); the National
Film and Sound Archive of Australia (NFSA); the National Gallery of Australia
(NGA); the National Library of Australia (NLA); the National Museum of
Australia (NMA); and the National Portrait Gallery of Australia (NPGA).
[5].
P Hamilton, National
Collecting Institutions Legislation Amendment Bill 2020, Bills digest,
50, 2020–21, Parliamentary Library, Canberra, 2021, p. 3.
[6].
P Hamilton, ‘Commonwealth
officer as observer at NHFIC board meetings’, Flagpost, 13 December
2018.
[7].
P Pyburne, National
Housing Finance and Investment Corporation Bill 2018 [and] National Housing
Finance and Investment Corporation (Consequential Amendments and Transitional
Provisions) Bill 2018, Bills digest, 132, 2017-18, 25 June 2018, p. 21. A
statutory review of the NHFIC in 2021 suggested that the Observer ‘should not
be an ongoing role and it will be desirable to return to a standard governance
model at the earliest opportunity’, but the Review did not make a specific
recommendation on this point. Australian Government, Statutory
review of the operation of the National Housing Finance and Investment
Corporation Act 2018, The Treasury, August 2021, p. 60.
[8].
Ibid.
[9].
P Hamilton, ‘Services
Australia Governance Amendment Bill 2020’, Flagpost, 16 June 2020.
[10].
C King (Minister for Infrastructure, Transport, Regional Development and Local
Government), Renewing
Infrastructure Australia, media release, 8 December 2022.
[11].
C Saunders, ‘Accountability
for cross-jurisdictional bodies’, Senate
lecture series, Department of the Senate, 20 May 2022.
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