The Public Governance, Performance and Accountability Bill 2013, introduced into the House of Representatives in May 2013, will consolidate, refine and replace the governance, performance and accountability of ‘Commonwealth entities’ under the Financial Management and Accountability Act 1997 and Commonwealth Authorities and Companies Act 1997. It will affect all Commonwealth entities, and their officials, and may affect commercial entities dealing with them.
The new law will address inconsistencies between the Financial Management and Accountability Act 1997 (Cth) (FMA Act) and Commonwealth Authorities and Companies Act 1997 (Cth) (CAC Act), by:
- establishing a uniform set of duties for ‘accountable authorities’ and ‘officials’
- establishing a comprehensive and uniform reporting framework for all Commonwealth entities, and
- clarifying the role of the Finance Minister in relation to the financial framework.
A ‘Commonwealth entity‘ will cover Departments and listed entities (the subject to the FMA Act) and Commonwealth Authorities and body corporates (the subject of the CAC Act), together with any other body corporate established by law of the Commonwealth. Due to the distinct legal status of ‘Commonwealth companies’, the governance and reporting framework for ‘Commonwealth companies’ are dealt with separately to other ‘Commonwealth entities’. The High Court of Australia and the Future Fund Board of Guardians, are exempt from the Bill‘s operation.
An ‘accountable authority’ for a ‘Commonwealth entity’ will be the person, group or entity that has responsibility for, and control over, the ‘Commonwealth entity‘s’ operations such as Secretary of the Department or Chief Executive under the FMA and governing bodies under the CAC Act. The Bill confers responsibilities and powers on ‘accountable authority’ in relation to financial management and reporting matters and requires that the ‘Commonwealth entity’ be governed in a way that promotes:
- the proper use and management of the public resources
- achievement of the entity’s purposes, and
- financial sustainability.
‘Officials’ are the individuals who are in, or who form part of, a Commonwealth entity including officers, directors, members, employees and statutory office holders. Ministers, judges, registrars performing judicial functions, consultants, independent contractors and prescribed persons are excluded from the definition of an ‘official’. The Bill confers duties on ‘officials’ including but not limited to:
- the duty of care and diligence, and
- the duty to act in good faith and for proper purpose.
The new framework, is proposed to impact upon some 195 Commonwealth entities and approximately 300,000 individuals, from 1 July 2014. While limited sanctions are stipulated in the Bill, ‘Commonwealth entities’, ‘accountable authorities’ and ‘officials’ will need to be mindful, that if enacted, sanctions may also arise through other statutory, equitable or common law duties.