PGPA era: the reform agenda under Abbott government

By Stephen Easton

November 3, 2014

Stein Helgeby
Stein Helgeby

The public management reform agenda started by former finance minister Penny Wong has been integrated into the Coalition government’s overall vision of the public service, an Australian Institute of Company Directors forum heard last week.

Dr Stein Helgeby, deputy secretary of the Department of Finance’s governance and resource management group, told the audience he thought that under Labor, the new Public Governance, Performance and Accountability Act would have been considered important, and even “foundational, but would not necessarily have been seen as directly connected to a broader narrative or discussion about government”.

He said the new act should, this year, be seen as a “set of enablers where the outcome is smaller government, nimble government, government that works differently with business, that works differently with the community, and will work differently over time with states and territories as well”.

In Helgeby’s view, the three-stage, multi-year process had been “advanced, and advanced very significantly” under Finance Minister Mathias Cormann, whose scheduled address to the forum was given by parliamentary secretary to the Treasurer, Steve Ciobo.

The PGPA Act was passed at the end of June, 2013 but the Public Governance Performance and Accountability Rule 2014 did not enable it until June 28 this year, a few days before the act took effect. “Perhaps it had a little more excitement about it in terms of timeframes than would have been desirable,” noted Helgeby.

Speaking later about a PMRA consultation process involving 45 agencies, he said there were clear concerns expressed about the process being “unnecessarily rushed” and this meant “a lot of people took a minimalist approach, as in they would do what they needed to do to be up to speed and compliant with the arrangements but they did not necessarily take the opportunities for streamlining of reform which were there”.

But, he added: “That wasn’t universal. There were a number of entities which went much further than that, and at least one significant entity I can think of where they actually made quite significant changes to their internal arrangements, in order to be ready for the first of July and as part of a broader change program.”

“One of the things that came out quite clearly in the consultation is people now want the good stuff.”

The more cautious agencies told Finance they wanted to work collaboratively to revisit the potential for more changes to their systems, structures and processes. “One of the key concepts that is coming out of the consultations we’ve had around implementation has been really the idea of us supporting communities of practice to enable people to better learn from each other and to better adapt their processes to new ideas they might find somewhere else,” Helgeby said. “One of the things that came out quite clearly in the consultation is people now want the good stuff.”

In his speech, Ciobo noted that one aim of the PGPA Act was to bring bodies formerly governed by the Commonwealth Authorities and Companies Act into a “coherent whole” with the departments and agencies defined previously by the more rigid Financial Management Act.

He said that in consultations, the less prescriptive approach of the CAC Act was preferred, but “there were some qualms about the perception that some [CAC Act] bodies, due to their separate legal status from the legal entity of the Commonwealth, considered themselves independent from the Australian government”.

Delivering what government expects

Helgeby told the AICD crowd that the uniform fiduciary duties for all government entities established by the PGPA Act were seen as fundamental to the governance of the public sector. He suggested it was possible that an entity could be “well functioning and efficient, but ineffective” and said the new act also contained a clear requirement for all public organisations to “actually deliver what government expects of them”. It also enshrines a focus on risk management in legislation for the first time.

“One of the things that was quite striking about the system as it existed prior to the passage of the PGPA is you could look high, you could look low, you could turn the FMA inside out, you would never have found the word ‘risk’ in it. And yet, the concept of risk as a fundamental part of … management, I think, is well established. It just wasn’t well established in the systems underpinning the public sector,” he said.

“Another key area here is that duties are imposed, not just on CEOs, not just on boards, they are imposed on everyone. If you are an Army reservist, if you are someone who is doing filing in an organisation, whether you are a member of the board, whether you are a CEO, the duties apply to you.”

A theme running through the presentation was that the PGPA Act‘s requirements are nothing dramatic or even particularly new. It aims to bring the public sector into line with governance in other organisations, and focus on re-establishing a robust management cycle: planning, resource allocation, implementation and monitoring, evaluation and reporting.

“It’s really rediscovery — strangely enough it had to be rediscovered — of the basic management cycle, which has been part of management theory for donkey’s years, in much more sophisticated forms than this. And in fact, in public sector discourse, for about 30 or 40 years, and yet somehow dropped off the radar along the way,” Helgeby said.

Emphasis has been put on the various stages of the cycle over the years — evaluation was almost a “growth industry” in the 1990s, said Helgeby, but connections between the interrelated functions became “very poor”, in his opinion.

“Links between planning and resource allocation are always difficult to establish, but again one of the key purposes of the PGPA Act was to try and make it clear that people have to come back and revisit these things. You have to be good at planning, you have to be good at articulating what you’re trying to do, you have to be good at setting things out; setting out a direction. So one of the things we’re trying to achieve here is to make sure that emphasis is spread around the cycle and that the links are drawn around the cycle.”

Finance’s performance framework

Finance’s discussion paper on improving the performance framework got more feedback than anticipated, with 67 of 73 responses coming from public servants. The department is negotiating with the Joint Committee of Public Accounts and Audit to push back the development of draft performance rules later this year, due to the quantity of useful feedback received.

Key themes highlight a need for a clearer, more cohesive system of performance reporting, unambiguous requirements for corporate planning, and clarification about the role of portfolio budget statements. Released in May, Helgeby described them as “rather an odd beast in the scheme of things”, with little connection to financial year cycles.

“We need to streamline portfolio budget statements, but to be honest, make them more coherent … They’ve pretty much grown up as a collection of bits and pieces — bits of budget, bits of technical appropriation stuff, bits of performance, bits of descriptive stuff, bits of future-looking, and bits of ex-post,” he said.

The reform agenda also calls for greater collaboration with states and territories, private organisations, not-for-profits and foreign governments, particularly New Zealand. But Helgeby warned that, in the past, the governance of Commonwealth-state entities had been a “horrendous” business, “where people would essentially decide what kind of entity they wanted to have in order to achieve a particular management goal, rather than what kind of policy purposes they wanted to achieve together”.

Finance is starting work with the Department of Prime Minister and Cabinet to improve both portfolio budget statements and annual reports, and make them part of the more coherent management cycle expected to emerge under the PGPA Act. More guidance on the concept of “earned autonomy” is expected before Christmas.

“[Earned autonomy is] essentially a view about differential regulation,” the deputy secretary explained. “It’s about the ability to shift away from one-size-fits-all regulation and to recognise the peculiarities, and recognise the abilities and capabilities that different entities in different parts of government might have. So, it’s one of the more challenging parts of the reform program, but it’s also, I think, one of the ones which has got the greatest potential to value-add.”

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