1 Part I: The Resource Management Framework Resource Management and Budget Training November 2014

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Part I: The Resource Management Framework

Resource Management and Budget TrainingNovember 2014

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Resource Management and Budget Training — Part I

• Commonwealth Resource Management Framework

• The Australian system of government

• Governance arrangements• Appropriations• The PGPA Act• Rules, policy and guidance• Other legislation


Part II: Use of public resources

Part III: The Budget process

• The Budget Framework• Planning and budgeting• Implementing and

monitoring• Reporting and

evaluation

• Accountability and performance

• Risk management• Spending relevant money• Managing relevant property• Compliance reporting

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Contact and acknowledgement information

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Unless otherwise noted, all material in this publication, except the Commonwealth Coat of Arms, and any material protected by a trademark is licensed under the Creative Commons BY SA Attribution Share Alike 4.0 Australia Licence. Details of this licence are available at: http://creativecommons.org/licenses/by-sa/4.0/. Enquiries For enquiries or suggestions about this presentation, please contact [email protected]

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evaluation



Resource Management and Budget Training Overview

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evaluation



Commonwealth Resource Management Framework

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Activity: Introduction to the framework


Museum of Millennium Technology

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What are public resources?

Relevant property • property owned or held by the Commonwealth

or a corporate Commonwealth entity• includes real property, personal property

and intellectual property

Relevant money• money held as cash or in a bank account

by the Commonwealth or a corporate Commonwealth entity

Appropriations• authority to draw money from

the Consolidated Revenue Fund


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Why is a resource management framework important?

We use and manage taxpayers money – must have regard to the public interest, require a framework that supports:

• planning

• improved decision making

• improved use of resources

• mitigation of risks

• accountability


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Legislative instruments Policy

Entity internal controls

reporting and evaluation

planning objectives and strategies

budgeting and operational planning

implementing and monitoring

PUBLIC RESOURCES

accountabilitygovernance

performancerisk management

appropriations

procurement

proper use

commitments

efficiency

earned autonomy

spendinggrants management

property management transparencyaudit

cooperation with others

Appropriationacts

PGPA Act Otherlegislation

Constitution

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evaluation



The Australian system of government

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Three tiers of government

Commonwealth Government• make laws for the whole of Australia

6 state and 2 territory governments• make laws for their state or territory

Over 560 local governments• make laws (by-laws) for their region or district


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Commonwealth powers

Commonwealth powers defined in Constitution (s51)

Most other law making powers reserved for states


• trade and commerce• taxation• postal and

telecommunications services

• foreign policy • census and statistics

• weights and measures• bankruptcy and

insolvency• quarantine • lighthouses, lightships,

beacons and buoys

• fisheries• currency• copyright• marriage• immigration• defence

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Commonwealth state relations

Guided by Council of Australian Governments (COAG)• Prime Minister, state premiers and territory chief ministers• policy reforms requiring cooperation among governments

Intergovernmental Agreement on Federal Financial Relations (FFR)

• framework for policy between Australian Government and states• financial relations and payment arrangements


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Executive accountable to the Parliament

Separation of powers


Executive accountable to the Parliament

Executive administer the laws made by

Parliament

Executive appoint

the Judiciary

Judges may be removed by the vote of both Houses of Parliament on the grounds of proved misbehaviour or incapacity

Judiciary interpret the

laws

Constitution

Legislative

Legislative power to makes the laws

exercised by

• Governor General • House of

Representatives• Senate

Executive

Executive power exercised by

• Governor General

as advised by• Prime Minister• Ministers and

Parliamentary Secretaries

• officials in Commonwealth entities

Judiciary

Judicial power exercised by

• High Court of Australia

• Federal Court• Family Court and

Federal Magistrates service

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evaluation



Governance arrangements

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Governance arrangements: portfolios

Each portfolio:• at least one Department of State• other Commonwealth entities• may have Commonwealth companies


Foreign Affairs and TradeHealthImmigration and Border ProtectionIndustryInfrastructure and Regional DevelopmentPrime Minister and CabinetSocial Services (includes Human Services)Treasury

Administrative Arrangements

Order

AgricultureAttorney-GeneralsCommunicationsDefence (includes Veterans’ Affairs)EducationEmploymentEnvironmentFinance

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Governance arrangements: types of Commonwealth bodies


corporate Commonwealth

entities

Commonwealth companies

non-corporate Commonwealth

entities

Commonwealth entities

coercive or regulatory powers?

commercial focus?

requires a governing board?

?within the general government sector?

fits within existing entity or company?

partnership with others?

enabling legislation?

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Non-corporate Commonwealth entities

Part of the Commonwealth • not legally and financially separate• not a body corporate• officials employed under the Public Service Act

or the entities’ enabling legislation

Includes:• Departments of State e.g. Finance, AGD, PM&C• Parliamentary Departments established by

Parliamentary Service Act• other entities listed in legislation and in

the PGPA Rule, e.g. ANAO, AEC, APSC, ABS


100non-corporate

Commonwealthentities

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Corporate Commonwealth entities

Legally and financially separate from the Commonwealth• a body corporate established by legislation for a public purpose• officials engaged under entities’ enabling legislation or

the Public Service Act


74 corporate Commonwealth entities

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Legally and financially separate from the Commonwealth• Commonwealth controlled companies established under the

Corporations Act 2001• does not include subsidiaries


19 Commonwealth companies

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Commonwealth public sector

General government sector• most Commonwealth

entities and companies• provide non-market public

services• funded mainly through taxes

Government business enterprises (GBEs)

• public sector• provide market services • for profit


General government sector (GGS)

corporate Commonwealth entities Commonwealth companies

non-corporate Commonwealth entities


Public non-financial corporations

Public financial corporations

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Public financial corporations• trade in financial assets and

liabilities• operate in financial marketse.g. Reserve Bank of Australia

and other borrowing authorities


• provide goods and services on a commercial basis

• non-regulatory, non-financial in nature

e.g. NBN Co


General government sector (GGS)

corporate Commonwealth entities Commonwealth companies

non-corporate Commonwealth entities



Public financial corporations

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Australian Competition and Consumer Commission (ACCC) Australian Prudential Regulation Authority (APRA) Australian Securities and Investments Commission (ASIC)

Bodies corporate deemed as non-corporate

74 corporate Commonwealth entities 19 Commonwealth companies

8 government business enterprises (GBEs)

Departments of stateParliamentary departmentsListed entities

13 other Commonwealth companies

Defence Housing Authority (DHA)

63 other corporate Commonwealth entities

Airservices Australia Albury-Wodonga Development Corp Australian Hearing Services

Australian Government Solicitor (AGS)

Australian Postal Corporation

ASC Pty Ltd Australian Rail Track Corp Ltd Moorebank Intermodal Co Ltd NBN Co Ltd

Medibank Private Ltd Australian Reinsurance Pool Corp Export Finance and Insurance Corp Coal Mining Industry (Long Service

Leave Funding) Corp Reserve Bank of Australia (RBA)

Australian National University (ANU)

Australian River Co Ltd

Publ

ic

finan

cial

co

rps

Gen

eral

gov

ernm

ent

sect

or High Court of Australia

100 non-corporate Commonwealth entities

Publ

ic

non-

finan

cial

co

rps

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Flipchart


finance.gov.au/publications/flipchart/

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Activity: Australia Post


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evaluation



Appropriations

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PUBLIC RESOURCES



appropriations

procurement

proper use

commitments

efficiency

earned autonomy




Appropriationacts


Constitution

Appropriation acts

• authority to draw money from the Consolidated Revenue Fund (CRF)

• two types: annual and special

Appropriations

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The flow of money

Revenue and receipts:• ‘All revenues or moneys raised or received by

the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund’ (s. 81 Constitution)

Appropriations

Consolidated Revenue Fund

Non-tax revenue (fines and penalties,

commercial charging, cost recovery)

General taxation

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The flow of money

To access money in the CRF:• must be appropriated for the purposes

of the Commonwealth (s. 81 Constitution)• can only be spent if supported by an appropriation made by law,

i.e. relevant legislative authority (s. 83 Constitution)

Appropriations

Consolidated Revenue Fund

Other acts with special

appropriations

Annual appropriations

acts

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Annual appropriations

• departmental items• administered items

– payments to corporate entities

Appropriations

Governmentservices

Parliamentary services

e.g. Appropriation (Parliamentary Departments)

Act (No. 1) Ordinary annual services

of the government e.g. Appropriations Acts

(No 1) & (No 3)

Other Purposes

e.g. Appropriations Acts (No 2) & (No 4)

• new administered outcomes• non-operating

– capital costs & equity injections – payments to corporate entities– some payments to states,

territories and local governments

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Special appropriations

Appropriations

established by determination of the

Finance Minister e.g. Reef Trust Special Account

2014 (Environment) Finance Minister Determination 2014/01

established by legislation other than annual appropriation acts

• most are unlimited in amounte.g. aged pension, Social Security Act

• Some are limited by amounte.g. salaries for independent statutory

office holders such as High Court judges, Judges' Pensions Act

• limited by time e.g. Australian Renewable Energy Act

established by legislation

e.g. Aboriginal Benefit Account (PM&C) Aboriginal Land Rights Act 1976

Special appropriations Special accounts

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evaluation



The PGPA Act

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The PGPA Act

• primary piece of Commonwealth resource management legislation– replaced the FMA Act and the CAC Act on 1 July 2014

• establishes a coherent system of governance and accountability• greater focus on planning, performance and reporting

The PGPA Act







PUBLIC RESOURCES



appropriations

procurement

proper use

commitments

efficiency

earned autonomy




Appropriationacts


Constitution

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Key elements of the PGPA Act

• Government operates as a coherent whole

• maintain the operational independence of entities

• apply a uniform set of duties to accountable authorities and officials

• clarify the definition of public resources

The PGPA Act

• establish systems of risk management

• emphasise performance monitoring, evaluation and reporting

• cooperate and partner to achieve common objectives

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Objectives for entities and companies

• meet high standards of governance, performance and accountability

• provide meaningful information to Parliament and the public

• use and manage public resources properly• work cooperatively with others to achieve

common objectives

The PGPA Act

• meet high standards of governance, performance and accountability


entities



entities

Section

5

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PGPA Act applies to...

Accountable authorities• person or body that is the head of a

Commonwealth entity• typically secretaries and governing bodies

Officials• officers, employees or members of an entity• includes accountable authorities• excludes Ministers and judges

The PGPA Act

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Uniform duties: accountable authorities

Responsibilities and powers to promote high standards of accountability and performance:

• responsible for the financial management of the entity• meeting reporting requirements

General duties:• govern the entity• establish and maintain systems relating to risk and control • encourage cooperation and partnering• minimise red tape• keep the responsible Minister and Finance Minister

informed

Accountability

Sections

15-19

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Uniform duties: officials

PGPA Act requires officials of Commonwealth entities to meet high standards of governance, performance and accountability

Officials are required to:• act with care and diligence of a reasonable person • act honestly, in good faith and for proper purpose • not misuse position or information• disclose material personal interests

Accountability

Sections

25-29

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evaluation



Rules, policy and guidance

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Rules and instruments

PGPA Rule 2014• made by Finance Minister• apply to some or all entities and companies• can be disallowed by Parliament

Other instruments (also called rules) :• Commonwealth Procurement Rules (CPRs)• Commonwealth Grants Rules and Guidelines (CGRGs)

• made by Finance Minister• apply to non-corporate entities (and some corporate entities)• cannot be disallowed by Parliament


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PGPA Rule 2014

Establishes further accountability and control mechanisms including:• setting minimum requirements for dealing with fraud• requiring accountable authorities to pursue debts• setting how officials should disclose interests• setting minimum requirements for audit committees• requiring records of approvals to commit relevant money• requiring money received to be banked promptly• setting amounts non-corporate Commonwealth entities can retain• setting restrictions around borrowing, investment and obtaining insurance• setting the events ministers must inform Parliament about

Also lists:• GBEs, some entities (and their accountable authorities), law enforcement

agencies• corporate Commonwealth entities subject to the CPRs.


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Commonwealth Procurement Rules

Applies to:• all non-corporate Commonwealth entities• corporate Commonwealth entities prescribed

in the PGPA Rule• the entire process for procuring

goods and/or services

Combines good practice with Australia's international obligations:

• Division 1 sets the rules for all procurements• Division 2 sets out additional rules for

procurements above relevant thresholds


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Commonwealth Grants Rules and Guidelines


Applies to non-corporate Commonwealth entities and grants administration performed by:

• ministers• accountable authorities and officials in

those entities• third parties who administer grants on

behalf of the Commonwealth.

Is divided into two parts:• Part 1 sets out the mandatory requirements • Part 2 explains how accountable authorities

and officials should apply the seven principles of grants administration.

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Other legislative instruments

Determinations made by the Finance Minister:• to adjust annual appropriations to follow the transfer of

functions (not subject to disallowance)• to establish, vary or revoke special accounts (special

commencement and disallowance arrangements)

Government policy orders made by the Finance Minister:• to apply government policies to some or all corporate

Commonwealth entities or Commonwealth companies• not subject to disallowance by Parliament


Sections

78-79

Sections

22&93

Section

75

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Government policies

Non-corporate Commonwealth entities must act in a way that is not inconsistent with the policies of the Australian Government, e.g. • whole-of-government arrangements for goods and services • on-time payment policy for small business

Corporate Commonwealth entities only required to comply with policies if directed by a Finance Minister government policy order


Section

21

Section

22

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PGPA Act guidance

www.finance.gov.au/resource-management/

www.finance.gov.au/resource-management/training/


http://www.finance.gov.au/resource-management/




http://www.finance.gov.au/resource-management/training/



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evaluation



Other legislation







PUBLIC RESOURCES



appropriations

procurement

proper use

commitments

efficiency

earned autonomy




Appropriationacts


Constitution

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Other legislation: process

Budget• Charter of Budget Honesty Act 1998

Particular uses of public resources• Lands Acquisition Act 1989

• Taxation laws including A New Tax System (Goods and Services Tax) Act 1999

Other legislation

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Other legislation: pPayments tostates and territories

Other legislation

National Partnership Payments

National Specific Purpose Payments (SPPs)

• annual and ongoing payments for states for use in key service delivery sectors such as:― health― education― skills and training― disability services― affordable housing

General RevenueAssistance

• payments to states for specific purposes, to:― to support projects― facilitate major reforms ― reward jurisdictions that

deliver on nationally significant reforms

• payments to states that can be used for any purpose

e.g. GST collected by the Commonwealth and distributed to the states

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Other legislation: accountability

Audit• Auditor-General Act 1997 & Public Accounts and Audit Act 1951

Review of government decision• Ombudsman Act 1976, AAT Act 1975, ADJR Act• Judiciary Acts 1903

Management of information• Privacy Act 1988, Archives Act 1983, FOI Act 1982, secrecy laws

Penalties• Crimes Act 1914

Other legislation

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Other legislation: employment frameworks

Other legislation

• Public Service Act 1999

• enabling legislation

• Corporations Act 2001• State or territory

framework where the company is registered


entities



entities

• Public Service Act 1999

• enabling legislation

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Activity:Resource Management Millionaire

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evaluation



Wrap up







PUBLIC RESOURCES



appropriations

procurement

proper use

commitments

efficiency

earned autonomy




Appropriationacts


Constitution

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Questions and feedback

? Excellent Very good Good Average Poor

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Further information

Department of Finance• finance.gov.au

Australian Government Budget• budget.gov.au

Public management reform• pmra.finance.gov.au

Resource Management and Budget training• finance.gov.au/resource-management/training

Wrap up

http://www.finance.gov.au/

http://budget.gov.au/

http://www.pmra.finance.gov.au/

http://www.finance.gov.au/financial-framework/training/fmb-program.html

Documents

1 Part I: The Resource Management Framework Resource Management and Budget Training November 2014