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Australian Government response to Uhrig report.



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12th August 2004 57/04

Australian Government Response to Uhrig Report

Minister for Finance and Administration, Senator Nick Minchin today released the Government’s response to the report on the review of corporate governance of statutory authorities and office holders.

The review was carried out by Mr John Uhrig, in consultation with Ministers, statutory office holders, departments, and the wider community including business and consumer groups.

Senator Minchin said the objective of the review was to identify issues surrounding existing governance arrangements and provide options for the Government to improve the performance and get the best from statutory authorities, their office holders and their accountability frameworks.

“Mr Uhrig has delivered a valuable report examining issues affecting the governance of Australian Government authorities within a framework that recognises their statutory independence established by the Parliament.

The report recommends two templates designed to ensure good governance exists: one where governance can best be provided by ‘executive management’, and the other where it can best be provided by a ‘board’.

Both templates detail measures for ensuring the boundaries of responsibilities are better understood and that the relationship between Australian Government authorities, Ministers and portfolio departments is clear.

“The Australian Government has endorsed the governance principles and templates developed by Mr Uhrig and as a result Ministers will assess statutory authorities and other bodies within their portfolios against these principles.

“All portfolio bodies, of which there are around 170, including those which have regulatory functions, will be assessed by Ministers and any necessary improvements implemented.

“The Government will clarify its expectations of statutory authorities by issuing public Statements of Expectations and authorities will respond with Statements of Intent. These measures will give clients greater certainty in their dealings with agencies and greater confidence to raise issues of concern.

“After some consideration the Government has decided not to establish an Inspector-General of Regulation (IGR) to investigate the systems and procedures used by regulatory authorities. (Recommendation 4)

By applying the Uhrig templates to all government agencies, and thereby ensuring there are clear lines of accountability from the Minister down to the agency, the Government can implement better corporate governance in the public sector without the need for an additional layer of regulation.

Furthermore the role of an IGR would have been limited to looking at the administration of regulation, but unable to review individual cases or the underlying regulation.

The assessment of all Australian Government agencies against the templates is expected to be completed by March 2006.

(Response attached)

The report is available at: www.finance.gov.au/governancestructures.

Media Contact: Jennifer Eddy 02 6277 7400

AUSTRALIAN GOVERNMENT RESPONSE TO THE RECOMMENDATIONS OF THE REVIEW OF THE CORPORATE GOVERNANCE OF STATUTORY AUTHORITIES AND OFFICE HOLDERS

The Government will implement the governance templates recommended in the report to assist in establishing effective governance arrangements for statutory authorities and achieving clarity in roles and responsibilities. As the templates are generic in nature they will also be applied to a wide range of public sector bodies.

Ministers will assess the statutory authorities and similar bodies within their portfolios against the governance templates. Selection of the appropriate template, whether ‘executive management’ or ‘board’ will be based, as recommended in the report, on the degree to which each body has been delegated full power to act.

As noted in the report, in applying the templates, consideration will be given to any unique factors that may require an adaptation of the relevant template.

The Government’s response to the specific recommendations of the report is as follows:

Recommendation 1: The Government should clarify expectations of statutory authorities by Ministers issuing Statements of Expectations to statutory authorities; by statutory authorities responding with Statements of Intent for approval by Ministers; and by Ministers making public Statements of Expectations and Intent.

● Statements of Expectations would need to take into account the nature of the independence of each statutory authority

and may not be necessary where the existing governance framework provides for a comparable arrangement (for example, as is the case in respect of government business enterprises).

Government Response: Endorsed.

Recommendation 2: The role of portfolio departments as the principal source of advice to Ministers, should be reinforced by requiring statutory authorities and office holders to provide relevant information to portfolio secretaries in parallel to that information being provided by statutory authorities and office holders to Ministers.

Government Response: Endorsed.

Recommendation 3: Governance boards should be utilised in statutory authorities only where they can be given the full power to act.

Government Response: Endorsed.

Recommendation 4: The Government establish an Inspector-General of Regulation to investigate, where necessary, the systems and procedures used by regulatory authorities in administering regulation.

Government Response: Not endorsed. All portfolio bodies, including those having regulatory functions, are to be assessed against the governance templates and any necessary improvements implemented. In addition, there will be greater clarity about the values and standards all bodies aim to uphold in their relationships with clients as a result of public Statements of Expectation and Statements of Intent (Recommendations 1 and 7). These measures should afford clients greater certainty in their dealings with all bodies and greater confidence to raise any issues of concern. There are existing alternatives for clients to raise issues of concern, including through the relevant Minister and other independent oversight bodies.

Recommendation 5: The Government should allocate a function to a centrally located group to advise on the application of

appropriate governance and legislative structures when establishing or reviewing statutory authorities.

Government response : Endorsed.

Recommendation 6: Financial frameworks generally be applied based on the governance characteristics of a statutory authority, that is:

● The Financial Management and Accountability Act 1997 be applied to statutory authorities where it is appropriate they be

legally and financially part of the Commonwealth and do not need to own assets. (Typically, this would mean Budget-funded authorities.) ● The Commonwealth Authorities and Companies Act 1997 be applied to statutory authorities where it is appropriate they

be legally and financially separate from the Commonwealth and are best governed by a board.

Government response: Endorsed.

Recommendation 7: Statements of Expectations and Intent should include those values central to the success of the authority, including those relating to its relationships with outsiders.

Government response: Endorsed.