Review of Commonwealth Government Business Enterprises ...

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4 • Keeping the Shareholder Minister(s) informed: - Aligning the requirements with the CAC Act; - Establishing guidance on the development of Commercial Freedoms Frameworks for each GBE; and - Providing additional guidance to GBEs in respect of business case requirements which require Shareholder Minister(s) consultation and endorsement. • Changing the title of document to ‘Commonwealth Government Business Enterprises Governance and Oversight Guidelines’: - This more accurately refects the purpose of the document and will help to avoid any potential confusion with the ‘Governance Arrangements for Australian Government Bodies’ policy document. Other changes include updating references to provisions of the CAC Act and the Corporations Act, as well as formatting changes to improve the general readability and fow of the document. The current GBE Guidelines have no legal authority and the Commonwealth relies on the GBEs and their boards to comply with the policies contained in the document. We are close to fnalising discussions/consultation on the most appropriate mechanism for embedding the application and enforcement of the revised GBE Guidelines. We will be seeking to provide for an express power to be inserted into the CAC Act to enable the Finance Minister to issue guidelines to GBEs. This will be comparable to the powers under s 64 of the FMA Act. Your comments on the proposed changes are sought by 30 June 2011. Comments can be directed to: Ms Stacie Hall Assistant Secretary - Government Businesses Advice Branch Department of Finance and Deregulation Treasury Building, Parkes Place West, Parkes CANBERRA ACT 2600 Phone: 02 6215 2727 Fax: 02 6267 3009 GBAB@fnance.gov.au Exposure Draft
Part 1 - Overview 1.1 Mandate and Objectives 1.1.1 A GBE’s mandate includes functions outlined in enabling legislation (for Commonwealth authorities) or company constitutions (for Commonwealth companies) as well as any guidance provided by: the Finance Minister where the GBE is located within the Finance and Deregulation portfolio; or the Minister with portfolio responsibility for the particular GBE and the Finance Minister (hereafter referred to as the Shareholder Minister(s) for the purposes of the GBE Guidelines). 1.1.2 The current GBE Guidelines require that GBE mandates be reviewed “about every three years”. This approach was adopted from the rationale outlined in the 1997 ‘Review of GBE Governance Arrangements’ by Mr Richard Humphry AO (the Humphry Review) which considered that mandates should be regularly reviewed to ensure that government objectives were being met and that continued government ownership remained desirable. 1 1.1.3 In practice, mandates are more regularly considered in the context of: • the corporate planning processes, where GBEs present to the Shareholder Minister(s) their proposed objectives and strategies covering a period of at least three years; • GBE business proposals, such as signifcant acquisitions that are submitted by GBEs to the Shareholder Minister(s) for consideration; and • Government policy proposals that directly or indirectly impact on GBEs. 1.1.4 During each of these processes, the Shareholder Minister(s) and their department(s) consider how the GBE’s mandate is being affected and whether the proposals are desirable from a shareholding and whole of government perspective. Accordingly, there may be merit in adopting a principle that mandates are considered annually as part of the corporate planning process and that stand-alone reviews of mandates be undertaken periodically as required. Proposed Change: 1.911 The mandate of a GBE will be considered by the Shareholder Minister(s) as part of the annual corporate planning process. In addition, the Shareholder Minister(s) will, where appropriate, periodically undertake a stand-alone review of the mandate. will be reviewed by the Government about every three years and consideration given to the rationale for continuing Commonwealth ownership of the organisation. Exposure Draft 1 Humphry AO, R. “Review of GBE Governance Arrangements”, p13 (March 1997). 5
Page 1 and 2: Australian Government Department of
Page 3 and 4: Contents Introduction 2 Part 1 - Ov
Page 5: The key topics identifed for discus
Page 9 and 10: Proposed Change: (New) 3.3 2.3 a. A
Page 11 and 12: 2.3.4 These changes aim to make GBE
Page 13 and 14: . The Chair shall write to the Shar
Page 15 and 16: 2.5.4 A similar principle operates
Page 17 and 18: 2.6.4 These issues have also previo
Page 19 and 20: Part 3 - Planning and Reporting (Pr
Page 21 and 22: Table 2: Best Practice Timetable fo
Page 23 and 24: Proposed Change: (Replaces entire 2
Page 25 and 26: 3.3 Statement of Corporate Intent (
Page 27 and 28: 3.4.7 The focus on comparing budget
Page 29 and 30: 2.11b(i) 3.14 The current disclosur
Page 31 and 32: Proposed change: (New) 3.21 Proposa
Page 33 and 34: Part 4 - Financial Governance 4.1 C
Page 35 and 36: 4.2A Weighted Average Cost of Capit
Page 37 and 38: 4.3 Managing Risks 4.3.1 The govern
Page 39 and 40: Part 5 - Other Governance Matters 5
Page 41 and 42: Appendix A: Commonwealth Government
Page 43 and 44: Part 1 - Overview Defnition 1.1 A G
Page 45 and 46: 1.9 In addition to setting a princi
Page 47 and 48: 2.6 The code of conduct may cover t
Page 49 and 50: 2.17 On an annual basis the GBE boa
Page 51 and 52: Table 2: Best Practice Timetable fo
Page 53 and 54: Measure Key Performance indicator F
Page 55 and 56: d. commentary on any emerging issue
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3.23 GBEs should allow a reasonable
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Financial Targets for GBEs 4.7 All
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Part 5 - Other Governance Matters W
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5.10 The above requirements relatin
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Governance Arrangements for Commonw
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Principles Part 1 - Overview 1.1 Th
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(c) earn at least a commercial rate
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(e) The plan also covers any other
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Keeping Shareholder Ministers Infor
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Part 4 - Financial Governance Capit
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shareholder would expect the adopti
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Partly Owned GBEs, Partly Owned Sub
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Attachment A Matters for Inclusion
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