Senate

Revised Explanatory Memorandum

(Circulated by authority of the Minister for Finance, Senator the Hon Mathias Cormann)

General outline

1. The Public Governance and Resources Legislation Amendment Bill (No. 1) 2015 (the Bill) would, if enacted, amend 35 Acts across the Commonwealth to address matters of a governance or resource management nature.

2. The Bill follows on from the Public Governance, Performance and Accountability (Consequential and Transitional Provisions) Act 2014 (PGPA (C & T) Act) which implemented a range of amendments to the enabling legislation of Commonwealth entities and companies to harmonise their operation with the Public Governance, Performance and Accountability Act 2013 (PGPA Act) from 1 July 2014.

3. The PGPA (C & T) Act amendments reflected the variety of governance and operational arrangements across the Commonwealth, with the nature of amendments required to individual enabling legislation varying from entity to entity. Given this, the policy approach has been to align entities' enabling legislation with the PGPA Act wherever possible, with the intention being to implement a more consistent and coherent resource management framework, while not impinging on the ability of entities to meet their statutory obligations to the parliament and to the community. This Bill continues this approach.

4. The Bill includes:

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technical amendments that would further improve the operation of the PGPA Act, including a provision to support the administration of the Goods and Services Tax (GST) obligations of non-corporate Commonwealth entities;

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amendments to provisions within the PGPA (C & T) Act that would streamline transitional arrangements supporting the implementation of the PGPA Act;

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amendments to the enabling legislation of Commonwealth entities intended for inclusion in the PGPA (C & T) Act but unable to proceed at that time; and

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amendments to improve and clarify the governance and resource management arrangements of the enabling legislation of Commonwealth entities that have been identified in consultations with those entities during, and since, the development of the PGPA (C & T) Act.

Amendments to the PGPA Act

5. The Bill proposes a number of amendments to the PGPA Act to remove ambiguities in relation to governance arrangements, provide support for the administration of entity GST obligations from 1 July 2015 and further clarify the meaning of provisions in relation to reporting periods and the description of corporate plans. The Bill also proposes amendments to section 75 of the PGPA Act regarding the transfer of functions between non-corporate Commonwealth entities to facilitate a more streamlined approach to the drafting of instruments modifying the appropriations available to entities as a result of these transfers.

Amendments to the PGPA (C & T) Act

6. The PGPA (C & T) Act contains application and transitional provisions to clarify the operation of the PGPA Act from 1 July 2014 and the finalisation of accountability arrangements for matters occurring before that date. The Bill contains amendments that would, if enacted, further clarify arrangements relating to the implementation of the resource management framework under the PGPA Act.

7. For example, the amendment to item 38 of Schedule 2 of the PGPA (C & T) Act would provide that section 77 of the PGPA Act, and not section 28 of the former Financial and Management Accountability Act 1997 (FMA Act), supports repayments by the Commonwealth for amounts received by the Commonwealth before or after 1 July 2014. The current provision provides that amounts received before 1 July 2014 would be actioned under section 28 of the FMA Act, and could lead to unnecessarily complex reporting requirements as repayment obligations emerge in future years, with entities needing to track amounts and repayments over multiple reporting periods.

Other amendments

8. A range of amendments to other Acts have been identified that will achieve greater efficiency and consistency in governance and resource management arrangements across government. Amendments primarily relate to clarifying obligations such as disclosure of interests in accordance with section 29 of the PGPA Act, clarifying roles and responsibilities such as the composition of the accountable authority for relevant entities, and the clarification of a range of financial arrangements.

Financial Impact Statement

9. The Bill would add to, amend or repeal a number of provisions in the enabling legislation of Commonwealth entities to harmonise with the PGPA Act in a way that supports entities fulfilling their regulatory responsibilities and their obligations to manage and use public resources, within the context of a modernised financial regime.

10. While the proposed amendments are typically difficult to quantify in monetary terms, it is expected that simplification of the regulatory requirements will contribute to long-term efficiencies in terms of achieving improved governance, transparency and accountability arrangements for Commonwealth entities (including both non-corporate Commonwealth entities and corporate Commonwealth entities) within the Australian Government.

The Bill in the context of broader reform activities

11. The PGPA Act was enacted to provide a strong foundation for a modern, streamlined and adaptable Commonwealth public sector. It consolidated the governance, performance and accountability requirements for the Commonwealth within one Act, replacing the FMA Act and the Commonwealth Authorities and Companies Act 1997 (CAC Act).

12. Following on from this, the PGPA (C & T) Act was enacted to support the implementation of the PGPA Act and its associated rules and instruments. However, due to the complex nature of amendments required to a broad range of enabling legislation, some matters were not able to be addressed in the PGPA (C & T) Act and have been incorporated into this Bill.

13. The Bill continues the work of the PGPA Act and the PGPA (C & T) Act to deliver amendments that would streamline public sector governance and resource management practices. Future Bills may be developed, as needed, to make amendments to further improve and streamline provisions of a governance and resource management nature, consistent with intended longer term governance and public management reforms.

Consultation

14. The PGPA Act was implemented following two years of consultation and consideration of issues. The PGPA (C & T) Act was also developed in consultation with Commonwealth entities over the course of 2013-2014, and many of the amendments included in this Bill were identified during those consultations. The period following the passage of the Acts has also provided an opportunity for reflection and consultation on the operation of the provisions of the Acts and associated rules. In this context, the Bill has been developed to take opportunities to make further improvements to the operation of the resource management framework.

15. The Bill has been prepared in consultation with affected Commonwealth entities in order to ensure that any amendment to the PGPA Act or enabling legislation will function to harmonise arrangements with the general application of the PGPA Act.

16. Following nominations for amendments from entities, draft legislative amendments were developed by the Office of Parliamentary Counsel.

17. The advice of the Australian Government Solicitor has also been sought as the drafting of the Bill has progressed, to ensure both the efficacy of proposed provisions and alignment with policy intent.

Structure of the Bill

18. The Bill is structured in the following Schedules:

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Schedule 1 - amendments to the PGPA Act;

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Schedule 2 - amendments to the PGPA (C & T) Act;

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Schedule 3 - bodies ceasing to be bodies corporate;

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Schedule 4 - listed entities;

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Schedule 5 - consequential amendments related to the PGPA Act;

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Schedule 6 - other amendments; and

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Schedule 7 - other transitional provisions.

Main features of the Bill

19. The Bill, if enacted, would:

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clarify the operation of the PGPA Act, the PGPA (C & T) Act and associated rules and instruments;

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improve alignment between the PGPA Act, the PGPA (C & T) Act and enabling legislation; and

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make amendments that are of a governance or resource management nature, separate to the PGPA Act, the PGPA (C & T) Act and associated rules and instruments.