Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

I rise to talk today about the Public Governance, Performance and Accountability Amendment Bill 2014, but I want to start by talking about a revolution, a revolution that has been sweeping across the world for over 20 years; a revolution that has delivered us better products, better services and better lives; a revolution that has been changing the way people work, how they spend their time and the way they interact with each other; a revolution which until recently has largely passed over the public sector, particularly the last federal government. It has many names. Some call it a performance culture. Some call it performance focused management. One expert gave it the absolutely terrible name 'deliverology'. The name is not important, but the idea is simple: we can use simple management techniques to ask people to focus on what really matters and to deliver what really matters to customers and other stakeholders.

In 20 years as a management consultant, I saw the impact time and time and time again, so let me illustrate with a simple example. I was working for a small building products business which had struggled for many years to make money. The business sold plasterboard to tradesmen and builders. The chief executive of the holding company said to me and my team, 'You can't make it any worse than it is, so do what you like.' So we did. We set realistic but aggressive goals based on what really matters to customers and shareholders. We decentralised each part of the business and gave employees autonomy, the freedom to get on with the job. We signalled to the employees that there would be clear benefits to them personally if they delivered on their goals and clear consequences if they failed to deliver, but we also signalled that measured risk-taking and innovation were acceptable and encouraged. We reported on the performance across the organisation in a way that was simple and comprehensible to all. We made those performance outcomes transparent, and we clearly ranked them.

The results were stunning. The business delivered. In fact, it delivered outcomes that no-one could ever have anticipated. Customers, shareholders and, importantly, employees were all far happier. A few employees, a small number of employees, were not able to make the transition, but the success rate was far beyond expectations. Most of the employees actually loved it, because most human beings want to do good work. Most human beings want to deliver. Most want to contribute.

I hear you say: what has this got to do with public services? Everything, I say, because we have a long, long way to go on this journey in the federal government. At a time when we have to make every dollar count, when we need to deliver more with less, I cannot think of a more important issue to discuss. But the story over recent years has been sobering. Let me give you a few examples of the epic failure in the performance of the previous federal government—mess after mess after mess, as documented in the Labor's Mess 2007-2013 compendium, which is available on the internet. Let me start with education. If we apply the simple techniques that I described earlier to look at the targets we should be seeking to achieve and what we actually achieved, the story is appalling.

If we start with the quality of primary education, between 2007 and 2013 we moved from 12th to 22nd in the world. If we look at the quality of the education system, we moved from eighth in the world to 23rd in that same six-year time period. If we look at the quality of maths and science education, we moved from 24th to 37th. And, if we look at the availability of research and training services in our education system, we moved from 16th to 23rd. By any measure, this was an appalling outcome.

If we move to the NBN—and this House has heard much about the failure in delivery of the NBN—the results were similarly appalling. In the 2010 business plan, the target for 2013 for houses passed by fibre was 1.27 million. The result was 208,000, less than 20 per cent. If we look at houses with fibre service, the target was 511,000. The result was 34,000. This was an epic, epic failure in delivery.

If we look at the immigration program, the target was to avoid illegal arrivals, but the results were similarly stunning. In 2008, based on the benefit from the very good policy of the previous Howard government, there were 161 arrivals, although they were climbing fast. In 2009 there were 2,700. In 2010 there were 6,500. By 2012 there were 17,000. And then of course in 2013 there were 20,587. What an epic, epic failure of delivery.

I could go on. There is a long list. That is just the tip of the iceberg. We had six years where the federal government was not able to deliver. Given that we have many governments in Australia—state governments and local governments—and many governments around the world to compare ourselves with, surely someone else in government has already applied the approach that I described earlier. The answer is yes, they have, and some have done it well. Indeed, the Labor Party's hero in the UK, Tony Blair, focused a huge effort on government accountability and, despite the critics, the results were worthwhile.

I take the example of Her Majesty's Revenue and Customs, the equivalent of our ATO. I can go onto a website in the UK and see, in very simple form, all the indicators that the equivalent of our tax office in the UK is pursuing, laid out quarter by quarter in a very clear fashion. I can see where they are improving and where they are not. It lays out customer service indicators, looking at how satisfied people are in their dealings with their tax office. It looks at cost indicators, what the cost of collecting tax is, by different types of tax—corporate tax, income tax and so on. I can also see the tax revenue indicators. I can see exactly how they are going on collecting tax. I can see what the tax gap is. I can see exactly how much money is not being collected that could be collected. We do not have a similar set of measures.

Closer to home, we are seeing the same approach that I have just described in the UK emerging in a number of state governments. In New South Wales and South Australia we have clearly established regimes for planning and performance management. This should be bipartisan, but the last Labor federal government did next to nothing. If we had had this sort of performance focus over recent years, many of the disasters of the last government might have been avoided.

In this context, let me turn now to the Public Governance, Performance and Accountability Act. This act was enacted under the former government and will take effect from 1 July this year, to replace the Financial Management and Accountability Act and the Commonwealth Authorities and Companies Act as the primary financial legislation of the Commonwealth. The PGPA Act governs the management of public resources by government bodies and deals with internal governance. But, in keeping with the former government's usual performance, it enacted this act in haste and without undertaking adequate consultation. Subsequent work has identified several areas of incomplete or ineffective drafting, where revisions are required before the new act comes into effect on 1 July.

This bill would, if enacted, amend the original act to make several technical amendments to improve the understanding and operation of the act in line with the government's commitment to streamlining and simplifying requirements of government entities. The amendment bill that we have in front of us makes amendments to the original act, but above all it seeks to clarify the financial framework and embed the policy positions that have been agreed upon further to the consultations—which needed to be conducted—that the Department of Finance has undertaken with relevant ministers and agencies.

It is worth emphasising that, rather than prescribing detailed requirements, the act establishes a core set of obligations that apply to all officials within government entities. Under this simplified financial framework, officials within Commonwealth entities will have the flexibility and incentives to achieve diverse policy and statutory objectives effectively and efficiently. They will be held to high standards of accountability through a more explicit framework for monitoring and evaluating performance.

The overall act reflects four very important guiding principles: (1) that government should operate as a coherent whole, (2) that a uniform set of duties should apply to all resources handled by government entities, (3) that performance of the public sector is broader than financial and (4) that engaging with risk is a necessary step in improving performance. All of this of course is an important first step down the path of genuine performance management and accountability for government departments and agencies.

I want to stop for a moment just to talk about one particular aspect of this, which has come up in this House a number of times and that is the impact of this government's policies on Canberra and on the Public Service. You will hear, from time to time, Canberra based politicians arguing that we are seeing a huge problem for the future of Canberra. In reality, when we left government in 2007, 60 per cent of Canberra's economic activity was in the private sector. Under the previous government, that dropped to 50 per cent. Canberra moved in exactly the opposite direction of where it needed to go. This is important to my constituents because so many of them work here in Canberra and so many of them come to Canberra for contract work or employment, as well as for other activities. But across Australia 85 per cent of employment is in the private sector. This is what we should be aspiring for for the Canberra region. After years and years of Labor ACT governments we have seen a complete failure to activate the private sector in a city and a region that holds enormous potential. This is what we should be focusing on. It is the potential that I see for this region, which will have a huge, positive impact on my constituents. But it will require a change in mindset from the ACT government, it will require a change in mindset from Canberra politicians and it may actually require a change in who the Canberra politicians are.

Let me finish by coming back to the bill in front of the House. Now, more than ever, we need governments that can deliver on their programs. Now, more than ever, we are driving a cultural change in managing Commonwealth resources. After six years of failed programs, a number of which I have already documented, Australians have had enough. If there is one thing I have heard on the streets of my electorate in the last two years, more than anything else, it is that they want competent governments.

The performance standards that have been adopted by the private sector must be institutionalised across the federal Public Service. It must be gradual and staged reform, sensitive to our starting point. But if we are to move our country forward, to compete effectively on the global stage, the ultimate reform must be transformative. I commend this bill to the House.

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

In speaking on the Public Governance, Performance and Accountability Amendment Bill 2014, I just want to draw to the attention of the House that the Joint Committee of Public Accounts and Audit has recently completed an inquiry into the rules of the PGPA Act. In the previous parliament the committee held an inquiry into the draft bill.

The act will come into force on 1 July 2014. It replaces the CAC and FMA Acts. It has enormous breadth. It covers all government departments; research organisations, such as the GRDC, CSIRO, the Australian War Memorial; and all Commonwealth-corporate entities—all agencies that have previously been under the CAC or FMA regime.

I would, firstly, like to commend the Department of Finance on their initial consultation for the first set of rules. The feedback that the committee heard was that the consultation had been good and that was the conclusion the committee came to. We encourage the Department of Finance to continue in the same way for the next set of rules and I would also like to commend them for driving this significant reform.

In looking at the rules, the committee made 10 recommendations. The report was tabled in budget week. I am pleased to say that, in the interim, I have had contact with the office of the Minister for Finance. I would like to thank the Minister for Finance, Senator Mathias Cormann, his office, and particularly Daniel Clode, for the prompt way in which they have worked to address and accommodate the committee's recommendations. I would also like to thank the member for Riverina, Parliamentary Secretary to the Minister for Finance, for his assistance on the bill and the government amendments. There is a tight time frame for this new regime, which commences at the beginning of next month. However, the committee did receive evidence from the Auditor-General that there was little risk that agencies would be unable to comply with the requirements by 1 July. Most of them are already set up for this.

I would like to focus on several of the recommendations. The committee recommended that an additional guiding principle should be added to the public management reform agenda. It recommended the guiding principle be:

… the financial framework, including the rules and supporting policy and guidance, should support the legitimate requirements of the government and the parliament in discharging their respective responsibilities.

The committee also sought an amendment to the Auditor-General Act to confirm that the ANAO has the power to audit under the new act. There was a recommendation which sought to clarify that chairs, chief executives and chief financial officers of Commonwealth bodies can attend audit committees as an observer.

Of the 10 recommendations, there was one very substantial recommendation on which we took extensive evidence on and I want to focus on that. It is the issue of proper use. In the public hearing into the rules we took extensive evidence from both the Department of Finance and the ANAO on the draft rule regarding approving commitments of relevant money. Both those eminent bodies had differing views on this. At present, under the FMA Act an official must satisfy themselves that a proposed commitment of relevant money represents 'proper use' of money. This is not in the current proposed rule.

The issues raised by the Auditor-General regarding the controls around commitments of relevant money were regarded by the committee as concerning. The Auditor-General commented that the proposed approach is a 'substantive departure from existing obligations' for non-corporate Commonwealth entities. He continued that the requirement to explicitly consider proper use is 'not an onerous requirement but it is a requirement that has protected the interests of government and the parliament for a long period of time'.

In the committee's report they said:

On balance, and due to the significance of this issue, the committee is therefore of the opinion 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 while allowing an accountable authority the freedom to establish internal controls appropriate to its operating environment.

Of the 10 recommendations that is one that we gave a lot of consideration to and the committee in a unanimous report did feel that 'proper use' did need to be in the draft rule.

They are my comments. The committee will have an ongoing interest in this act. There is more to come on key performance indicators and a performance framework for the Public Service and there will also be reviews that will be initiated under this legislation, and so the committee will have an ongoing interest in this. I commend the bill. The committee was very supportive of the bill and the principles of reform. I commend the consultation from the Department of Finance and also commend the minister, his office and the Parliamentary Secretary for Finance for their very prompt attention in the committee's recommendations.

Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Link to this | Hansard source

I thank all members who have contributed to the debate on these amendments to the Public Governance, Performance and Accountability Amendment Bill 2014. In particular I thank the member for Boothby as well as the member for Hume for their contributions this morning. The member for Hume represents a number of public servants and he brings to this parliament a great interest in private industry and what it can do to help the public service and what it can do to help our deliberations in this place.

The bill before us if enacted would make a number of technical changes to clarify, simplify, enhance and improve the understanding and operation of the Public Governance, Performance and Accountability Act 2013, the PGPA Act, and ensure the effective implementation of the supporting PGPA rules. This bill, the PGPA Act and the broader public management reform agenda of which they are a part are based on four guiding principles. These are: government should operate as a coherent whole; a uniform set of duties should apply to all resources handled by Commonwealth entities; performance of the public sector is more than financial; and engaging with risk is a necessary step in improving performance.

The Joint Committee of Public Accounts and Audit, headed by the member for Boothby, has requested that a fifth guiding principle be added to these four, specifically that the financial framework should support the legitimate requirements of the government and parliament in discharging their respective responsibilities. We heard the member for Boothby talking about cooperation we have received from the Minister for Finance, Senator Mathias Cormann. This will be adopted by the government and will inform the implementation of the agenda going forward.

The provisions contained in the PGPA Act, and bolstered by this amending bill, seek to modernise the Commonwealth's current financial accountability, performance and reporting framework by shifting from a prescriptive compliance-based approach to a broad principles-based approach. These reforms give all Commonwealth entities an appropriate level of operational independence within a broad control framework and the tolerances set by specific enabling or general purpose legislation enacted by the parliament. These reforms encourage all Commonwealth entities to engage appropriately with risk.

The amendments contained in this bill make it clear that the accountable authority of a Commonwealth entity has the formal power to issue instructions about the operation of the PGPA Act in the context of the system of risk management and oversight that relates to the entity. This supports the considered management of risks which relate to each entity by those responsible for running the entity. It also supports effective, efficient and economical public administration and the delivery of innovative public programs and services. Traditionally, the high level of scrutiny placed on the work of the Commonwealth public sector and a low level of tolerance for failure have created a culture that limits the ability to engage positively with risk. This issue has been a frequent point of criticism from the commercial and other sectors of the economy when they find themselves joined up in some way with Commonwealth entities. These reforms acknowledge that acceptance of some risk is necessary to improve performance, allow for more effective joining-up with others beyond the Commonwealth and reduce unnecessary administrative burden. An increased focus on risk management, and better dialogue about risk within government and with the parliament, will lead to more informed strategic and operational decision-making in the public sector. In this context, the public management reform agenda should support the government's deregulation agenda. Officials who are better able to engage with risk are less likely to develop regulatory frameworks which are unnecessarily prescriptive and out of step with commercial practice. The amendments contained within this bill go to supporting a better way for the Commonwealth to do its business. I commend the bill to the House.

Question agreed to.

Bill read a second time.