Andrew Southcott (Boothby, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Joint Committee of Public Accounts and Audit, I present the committee's report No. 441, entitled Inquiry into Public Governance Performance and Accountability Act 2013 rules development.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—I present the report from the Joint Committee of Public Accounts and Audit entitled Inquiry into the Public Governance Performance and Accountability Act 2013 rules development. The PGPA act and its accompanying rules will establish a new resource management framework for all Commonwealth bodies, replacing the Financial Management And Accountability Act 1997, otherwise known as the FMA Act and the Commonwealth Authorities and Companies Act 1997, otherwise known as the CAC Act. The PGPA rules as disallowable instruments need to be developed and tabled in parliament before the substantive provisions of the PGPA act come into effect on 1 July 2014.

The terms of reference for the committee's inquiry were to consider the process for the development of the rules, and the impact and purpose of the rules, in the context of the broader Public Management Reform Agenda. As set out in the report, the committee believes that stage 1 of the reform agenda, comprising the PGPA Act and the implementation of the first set of PGPA rules, establishes a solid foundation for efficiencies and the framework for cultural change in Commonwealth resource management in future years.

The committee has made several recommendations in its report, to assist implementation of the rules and further progress the Public Management Reform Agenda. Chapter 1 of the committee's report provides an overview of the significance of the PGPA Act and associated rules in the context of the reform agenda. Chapter 2 of the report examines the consultation process for the rules development and the guidance and training being set in place to prepare agencies for the transition on 1 July 2014.

The committee commends the initial consultation process undertaken by Finance for the development of the first set of PGPA rules, and Finance's commitment to continue this process for the rules to be implemented post 1 July. However, the committee has recommended that Finance review the guidance material for the rules, to improve consistency.

In chapter 3 of the report, the committee noted general support from inquiry participants for the majority of draft rules required for 1 July 2014 commencement of the PGPA Act. Some 19 rules were considered by the committee as part of the inquiry.

The committee has made a number of recommendations in response to some specific issues raised by stakeholders. Noting the concerns raised by the Auditor-General regarding the PGPA rule on 'approving commitments of relevant money', the committee has recommended this rule be amended to explicitly place an obligation on all individual officials to consider 'proper use' of public resources before approving commitments of relevant money, with this issue to also be included in the first independent review of the PGPA Act in three years time. The committee further recommended that the draft guidance material supporting this rule be amended to include discussion of the risks involved in officials approving aggregate expenditure proposals.

The committee also noted concerns raised by a number of stakeholders about the draft rule on audit committees—in particular, regarding the exclusion of an organisation's chair from being a member of its audit committee. On balance, the committee did not recommend any change to this rule but rather that Finance amend the draft guidance supporting the rule to emphasise that the chair of a Commonwealth body can attend audit committee meetings as an observer.

In terms of more general issues concerning the PGPA rules development, the committee noted the concerns raised by the Australian Public Service Commission about dual coverage of the PGPA Act and the Public Service Act 1999. In response, the committee has recommended that Finance and the Public Service Commission work together to draft the necessary amendments to the PGPA Act and/or Public Service Act to reduce potential confusion from this dual coverage, with amendment proposals to be put to the parliament as soon as practicable.

In support of a proposal made by the Australian National Audit Office, the committee has also recommended that an additional guiding principle emphasising the parliament's role be applied in developing the remaining elements of the Public Management Reform Agenda. The committee further recommended that Finance work to ensure that any necessary amendments are made to the Auditor-General's Act 1997 to ensure the ANAO retains the audit powers under the new arrangements that the parliament would expect, including the power to audit the full planning, performance and accountability framework under the PGPA Act.

Chapter 4 of the report focuses on post-1 July 2014 issues concerning the rules development for the PGPA Act. The committee has recommended that Finance continue its consultation with stakeholders on the rules required for post-July. It has also recommended that Finance prepare a plan clearly outlining the anticipated dates for development of all future rules, to ensure there is sufficient time for public consultation and a committee inquiry before tabling in parliament and implementation.

In terms of the development of future rules under the PGPA Act and other elements of the reform agenda, the committee has noted in the report that it intends to conduct inquiries into both stages 2 and 3 of these proposed reforms. Key priority areas for stages 2 and 3 include a new risk framework, better facilitation of 'joined-up' government and partnership arrangements, and an improved performance framework, with new PGPA rules for corporate plans, annual performance statements and annual reporting requirements. The rules relating to the performance framework are of particular interest, given the many recommendations of past ANAO audits and committee inquiries concerning performance reporting by Commonwealth agencies.

In conclusion, if the benefits of this new framework are fully captured this will modernise public sector financial management, making Australia once again world leading in this area and positioning us well for the decades ahead. I commend Finance for its leadership in driving this significant reform process. I commend the report to the House.

Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

by leave—As Deputy Chair of the Joint Standing Committee on Public Accounts and Audit, I am pleased to join with my colleague the member for Boothby in commending the report into Public Governance, Performance and Accountability Act 2013 rules development to the House. The report recognises that there has been significant consultation with relevant stakeholders regarding the development of the rules, and this is welcomed by the committee.

I will not go into too much detail on the report as the chair has ably covered this off. However, I do want to cover two recommendations, the first around approving commitments of 'relevant money'. The report analysed the draft rule in relation to approving commitments of relevant money. The Australian National Audit Office noted that the draft rule was a substantive departure from existing obligations that explicitly require an approver to be satisfied, after making reasonable inquiries, that giving effect to the spending proposal would be a proper use of Commonwealth resources. The ANAO concluded that it did not consider the proposed rule would provide the government and the parliament with sufficient confidence that officials, in approving the commitment of relevant money, will be required in all cases to form a judgement that it represents the proper use of such money. Consequently, the committee was of the view that the draft rule should be amended to explicitly place an obligation on all individual officials to consider proper use before approving a commitment of relevant money, and recommendation 5 in chapter 3 addresses this.

The second issue I would like to cover is the dual coverage of PGPA Act and Public Service Act. This was highlighted by several submissions, most notably the Public Service Commission, which stated that the dual coverage of the two acts, with each of them setting out alternative statements seeking to regulate the behaviour and professional standards of public servants in the APS, adds complexity and the potential for confusion for APS employees. To address this potential confusion the committee proposed that the PGPA Act be amended to specify that the provisions of the act relating to the general duties of officials do not apply to those employed under the Public Service Act. In response to these concerns, the Department of Finance has indicated that they will continue to work with the Public Service Commission to ensure clarity around the way in which the two acts interact, and the committee recommended that they come back to parliament with a solution as soon as possible. I will finish by thanking the committee secretariat for their work in preparing the report, and I commend it to the House.