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Thursday, 16 May 2013
Page: 3447

Mr BRADBURY (LindsayAssistant Treasurer and Minister Assisting for Deregulation) (10:03): I move:

That this bill be now read a second time.

The Public Governance, Performance and Accountability Bill 2013 (PGPA Bill) will establish the framework necessary for a modern public sector; the framework needed for a modern government.

It would establish a Commonwealth financial framework that is simple, adds value for all and is easy to use. The bill is the cornerstone of a broader reform agenda to modernise government and create a streamlined and adaptable public sector that is able to meet Australia's changing needs into the future.

The current Commonwealth financial framework, comprising the Financial Management and Accountability Act 1997 (FMA Act)and the Commonwealth Authorities and Companies Act 1997 (CAC Act), has been in place since 1998.

These acts have served the public sector well. But in the 15 years since the current financial framework commenced the demands on the public sector and the expectations of the community have changed significantly. We have seen our financial framework slip from world's best practice over a decade ago to being adequate today.

The deficiencies with the current framework will, over time, become an increasing drag on the performance of the public sector. For example, the current FMA Act is highly prescriptive, and yet at the same time is silent on the management of risk. The existing framework is also very linear—it is focused on straight lines of vertical authority and creates significant hurdles to citizen-centric service delivery and collaborative working practices both across government and between the government and other sectors.

It is the view of this government that the Commonwealth's financial framework should underpin a productive and innovative public sector that is able to adapt to increasing community demands and changing circumstances, while still retaining robust systems of management and accountability proportionate with the relevant level of risk.

Reflecting this, and recognising the short comings in the current framework, the Minister for Finance and Deregulation announced the Commonwealth Financial Accountability Review on 8 December 2010. The review was tasked with identifying opportunities for reform in the public sector financial framework that would improve productivity, performance, accountability and risk management.

Informed by significant consultation with the public, private, not-for-profit and academic sectors, the review identified opportunities for reform that would:

raise public sector productivity;

enhance the public sector's potential for innovation;

promote high standards of stewardship and accountability;

improve public sector performance in delivering the policy outcomes sought, and deserved by Australian citizens; and

reduce red tape and the compliance burden imposed on those who partner with the government in delivering services to the public.

The PGPA Bill will provide the legislative architecture for maximising the opportunities identified by the review. The new single act would strengthen public sector capability by creating a coherent and consistent approach to governance, performance and accountability within the Commonwealth. Unlike the current two act framework, the PGPA Bill would, as far as practicable, apply a consistent principles-based framework to all Commonwealth entities.

There are several key principles that form the basis for the reforms proposed in the PGPA Bill. These principles are:

(1) Government should operate as a coherent whole.

(2) Public resources are public resources, and a common set of duties should apply to all resources handled by Commonwealth entities.

(3) Performance of the public sector is more than financial.

(4) Engaging with risk is a necessary step in improving performance.

I will briefly outline the key elements of the bill.

First, independence.

The PGPA Bill does not alter the operational independence of entities, as provided in an entity's enabling legislation. Rather, the bill emphasises the prominence of enabling legislation and seeks to create a consistent resource management framework applicable to all Commonwealth entities.

Second, uniform duties.

The new single act would introduce a common set of duties. The duties would apply to all officials who use or manage public resources. This reflects community expectations that public resources will be managed prudently and efficiently.

A number of these duties align with the fiduciary duties contained in the Corporations Law, and have also been developed drawing on requirements under the Public Service Act Code of Conduct. The benefit of drawing from these sources is to promote mobility across the private, not-for-profit and public sectors, and also facilitate greater partnering across the leadership levels of entities. The benefits of this are already evident in the context of bodies under the Commonwealth Authorities and Companies Act.This bill will ensure such benefits are achieved across the full spectrum of Commonwealth entities.

Third, planning and evaluation.

The PGPA Bill seeks to link the key elements of resource management to establish a clear operational cycle of planning, measuring, evaluating and reporting results to parliament, ministers and the public. In particular, the bill will, for the first time, explicitly recognise the value-add of rigorous planning, performance monitoring and evaluation that goes beyond financial reporting. The bill would achieve this by, among other things, requiring entities to develop a corporate plan to monitor, assess and report performance to a set of transparent standards.

Fourth, risk management.

Risk management is a key feature of modern management. The public sector deals with risk every day and at all levels, from senior managers to the front line of service delivery. Eliminating risk is not practical, and so the public sector needs to manage risk by engaging with it. Additionally, acceptance of manageable risk is a necessary element of innovation. When managers do something new, when they work out a better way to deliver a service to the public, or develop a new policy option, it will involve risk. Something untried always will. But, within the right risk framework, this is precisely the innovation we want to foster in the public sector—it is the approach that will drive performance and better outcomes.

To recognise this, the PGPA Bill seeks to place a greater focus on risk than has been the case under the current FMA Act and CAC Act framework. The bill seeks to bring about cultural change by placing a duty on entities to establish appropriate systems of risk oversight and management and by introducing the principle of earned autonomy—a model for escalating internal regulation—where appropriate. Earned autonomy involves being able to tailor regulatory approaches to individual entities, based on clear risk metrics. The approach is akin to world leading practices in regulation and compliance adopted by APRA, ASIC and the ATO.

Fifth, cooperation.

Given the increasing complexity of service delivery and the needs of the community, the PGPA Bill seeks to encourage cooperation between Commonwealth entities themselves, and partners such as the states and territories and the not-for-profit sector.

The current framework is not set up to handle arrangements spanning jurisdictions and economic sectors. The PGPA Bill seeks to enable entities to deliver services and solutions across these boundaries, in a more timely and efficient manner, by placing a positive duty on the heads of entities to encourage partnering and also to consider the effect of compliance burdens when dealing with partners. This will be particularly important for the not-for-profit sector as it plays an increasingly important role in delivering the services that many Australians rely on.

Sixth, accountability.

The PGPA Bill seeks to strengthen and simplify accountability under the Commonwealth's resource management framework through: a greater emphasis on performance reporting in the legislation; greater clarification of the relationship between ministers and Commonwealth entities; and greater clarification in annual reporting.

The PGPA Bill reform package would be implemented over several years to allow Commonwealth entities to fully integrate the new framework, and also to allow for appropriate testing and refinement.

In this regard, the government commits to submit all the rules that will support this legislation for appropriate parliamentary committee scrutiny. We believe that introducing and establishing the legislative framework is the first step in the transition to a modern government. Once the legislative framework is in place—and with the aforementioned parliamentary oversight—the government will progressively introduce the rules required to give effect to a number of provisions.

The PGPA Bill represents the first step towards modernising the Commonwealth public sector so that it continues to meet the changing needs of the community.

I commend the bill.

Debate adjourned.