Performance reporting progress ‘too slow’, PGPA Act review finds

By David Donaldson

Friday September 21, 2018

Close up pen on paperwork and woman hand calculate finance.

Commonwealth entities are improving their performance reporting but leadership is required to make sure they go beyond mere compliance, argues the final report of the PGPA Act review.

Although there has been a shift in recent years away from judging agency performance primarily on financial inputs and towards measuring policy outcomes, it is still a work in progress.

Ensuring agencies report the right information is part of the challenge.

Progress has been made on performance reporting, but there’s still a long way to go, finds the independent review of the Public Governance, Performance and Accountability Act, which published its final report on Wednesday. When introduced in 2013, the PGPA Act provided a new resource management framework for Commonwealth entities.

The review, conducted by businesspeople Elizabeth Alexander and David Thodey, looked at how the PGPA Act has performed in the four years since it was introduced. Thodey is currently also leading the review of the Australian Public Service.

The report makes 52 recommendations covering a wide range of topics including:

  • Driving change through leadership
  • Improving performance reporting
  • Better managing and engaging with risk
  • Enhancing the effectiveness of audit committees
  • Clarifying reporting requirements and reducing the reporting burden
  • Improving annual report arrangements and increasing parliamentary scrutiny
  • Enhancing cross-government cooperation
  • More transparent reporting of executive remuneration
  • Improving the reporting of contracts and consultancies
  • Enhancing Department of Finance support
  • Technical and other matters

Thodey and Alexander are careful to note the principles-based approach of the PGPA Act, saying they don’t want to add unnecessarily to agencies’ reporting burden.

They appear concerned some authorities have not embraced the principles of high performance, however.

“Optimal outcomes will not be achieved if entities and individuals simply comply with the letter rather than the spirit of the PGPA Act and Rule and do not take advantage of the flexibility available to meet high standards of governance, performance and accountability and simply comply with minimum requirements,” the reviewers argue.

Performance reporting progress too slow

The PGPA Act provides a good basis for improving on performance reporting, Alexander and Thodey argue.

“We recognise that the business of government is complex,” the report reads.

“The challenges faced in designing and delivering public programs and services can be many and varied. For every relationship that can be leveraged, there is some dependency that cannot be budged; for every enabler, there is some inhibitor. Often a number of parties are involved in achieving an outcome, and measuring the contribution of each party can be difficult.

“Despite this complexity, we have heard that the PGPA Act’s performance framework has had an overall positive impact on the quality of performance reporting. At the four-year mark, it is generally well regarded and understood by entities.

“We are told the performance framework provides a good platform to drive improved planning and performance measurement, shifts the focus from accounting for outputs to measuring outcomes, and that it should deliver better information to the parliament.”

Despite the many challenges, agencies need to do better, say the reviewers.

“We are also told that it takes time and effort to develop good-quality performance information and that practice is still maturing and the pace of improvement is too slow.”

The key bodies involved in Commonwealth performance reporting — Finance, the Auditor General and the parliamentary Joint Committee of Public Accounts and Audit — “agree that the overall quality of published performance information is better than it was before the framework was introduced, but that progress has been uneven, and in some cases modest,” says the report.

Currently the PGPA performance framework does not include formal criteria for reporting performance information. Clearer guidance to agencies would help improve the system, the reviewers believe. Wider use of policy evaluation would also help, with some academics suggesting the use of independent evaluation had dropped off since the 1990s.

Other jurisdictions have tried various approaches to appraising the quality and effectiveness of government output, such as New Zealand’s performance budgeting framework, which includes reporting publicly against a clear set of national outcome goals.

The United Kingdom has a public value framework for assessing how value is maximised across four pillars — pursuing goals, managing inputs, engaging users and citizens, and developing system capacity.

Tone set ‘at the top’

Leadership is key to ensuring the success of the many changes recommended in the report.

“In the Commonwealth, a well-articulated governance framework is critical for good performance and accountability,” Alexander and Thodey argue.

“But of itself, the framework is not enough to bring about improvement and change. The key to success is leadership. Leadership at all levels must be actively involved. Ministers, secretaries and all accountable authorities need to set the tone at the top.

“A values-led culture of transparency, trust and aligned purpose underpins and is essential for driving sustained improvement in governance, performance and accountability, and leads to improved performance and better quality of information being provided to the parliament.

” … The Joint Committee of Public Accounts and Audit, successive Auditors-General and Finance have all observed that strong and sustained leadership on improving performance monitoring, reporting and evaluation regimes is needed to improve performance reporting in entities.

“The international jurisdictions we spoke to noted that strong political and public sector leadership was a critical successful factor in gaining traction on measuring the effectiveness of government. Where it is absent, reform fails. The Commonwealth is no different.”

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