Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Joint Committee of Public Accounts and Audit, I present report No. 441—'Inquiry into the Public Governance, Performance and Accountability Act 2013 Rules Development'—and move:

That the Senate take note of the report.

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 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 notes 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 the draft rules required for the 1 July 2014 commencement of the PGPA act. Some 19 rules were considered by the committee as part of this inquiry. However, 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 improving commitments of relevant money, the committee has recommended that this rule be amended to explicitly place an obligation on the 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 recommended 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 Act 1997 to ensure that the Australian National Audit Office 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 of the PGPA Act. The committee has recommended that Finance continue its consultation process 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 that 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 Australian National Audit Office reports 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 the report to the Senate.

Question agreed to.