PGPA review draft: reforms aren't finished by a long shot

By Stephen Easton

May 31, 2018

A statutory review of the relatively new financial management and accountability rules that apply to the Commonwealth public sector has released 46 draft recommendations for further consultation.

The respective chairpersons of the Medibank Private and CSIRO boards, Elizabeth Alexander and David Thodey, observe that “the art of good governance is inherently difficult” in the opening lines of their draft report, out today.

“This is true for all organisations in all sectors, especially in our world of fast-changing technology, greater public scrutiny and general volatility. Setting measurable and well-articulated objectives, defining clear strategy, and implementing strong governance and accountability structures can be a long and difficult journey.

“The challenge for public sector organisations is more acute because of multiple stakeholders, intense public and political scrutiny, and the growing expectations of citizens.”

There have already been a long list of submissions to their review of the Public Governance, Performance and Accountability Act, which was built into the act to cap off the transition from two separate pieces of governance legislation, which respectively covered what are now called non-corporate and corporate entities.

It is mainly the bodies that are not independent of government — the public service, essentially — that need to improve their governance standards, transparency and co-operation, according to the report. Corporate bodies in the federal public sector have generally found life under the PGPA Act pretty similar to how it was before.

Alexander and Thodey believe performance reporting needs to improve in quality, and make nine recommendations to that end.

“Risk management and engagement remains immature across Commonwealth entities, particularly non-corporate entities,” their draft report adds, introducing five proposed prescriptions to turn this around.

Eight recommendations go to making audit committees more effective, and again this especially applies to the “non-corporate entities” which include the whole APS.

Reduce the ‘reporting burden’

The review has also identified a need to reduce “the reporting burden” by clearing up the requirements; six recommendations go towards this piece. “The linkages between the reporting requirements of portfolio budget statements, corporate plans and annual reports need to be clarified and requirements for corporate plans strengthened,” states the draft report.

“Current annual reporting arrangements “do not ensure they receive adequate scrutiny by the Parliament” in the view of Thodey and Alexander, who make three recommendations in this regard.

They think annual reports should be published by September 30 each year, in time for the Senate’s  supplementary round of Budget estimates, and suggest the Senate should amend its standing orders to ensure the reports are referred to the committees for examination.

“The Parliament and Finance should continue to implement a fully digital reporting platform and reporting process for annual reports and other relevant reporting requirements, with a view to entities phasing out hard copy reporting by 2019–20,” the report adds.

Two recommendations aim to improve cross-government co-operation, and another two would demand more transparency around executive remuneration, more in line with companies listed on the stock exchange.

Lack of transparency around spending on contracts

Thodey and Alexander also believe there is a lack of transparency around spending on contracts and consultancies, and make two proposals to clear up the resulting confusion.

They applaud the Department of Finance for supporting the transition process, but say it will need to continue helping public service agencies “mature” into the future.

The final eight recommendations are presented as ways to “streamline the application of the resource management framework, remove ambiguity, and strengthen coherence, clarity and consistency” and address “technical and other matters” raised in the many submissions to the review.

Comment on the draft report will be accepted by the review team up until June 22.

As the tightly focused review reaches its final stages, Thodey will no doubt be able to draw on what he has learned from the process as he gets to work leading a much bigger one, hyped by the Prime Minister as the biggest public service shake-up since the Coombs royal commission.

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