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Reforming and Updating Public Finance Legislation: An Australian Perspective

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Kevin Riley
January 14, 2019

From my perspective there are not many topics as exciting as public finance legislation. But I also enjoy test match cricket! Here in Australia we have been through a period of reforming and updating public finance legislation. And while to many this may be as exciting as a drawn five-day test match, there are important ramifications for the practice of public administration.

On July 1, 2019 the state of New South Wales (NSW) will see the Government Sector Finance Act 2018 (GSF Act) become fully effective.

On the same date in the state of Tasmania the Financial Management Act 2016 (FM Act) will become operational.

And during 2019 the Australian Government is expected to respond to the recommendations of the independent review of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

Across these reforms and updates, there are four broadly consistent themes.

Broadening the scope of public finance legislation

Traditionally public finance legislation has focused on public money. With the use of accrual financial information across all Australian jurisdictions, the scope of public finance legislation should be broader.

The Australian government has used the reform process to achieve this outcome. While the previous Financial Management and Accountability Act 1997 focused on “public money”, the PGPA Act’s now focuses on “public resources” including money, property and appropriations.

Approvals have also been aligned to accrual principles with the PGPA Act requiring a delegate’s approval to enter a “commitment” rather than a “spending proposal.”

The NSW GSF Act includes the new definition of “government resources” meaning money and property. Tasmania’s FM Act includes requirement over the custody, control, management and accounting for all “public property.”

Clarifying and devolving duties and responsibilities

The Australian, NSW and Tasmania governments have all used the reform process to clarify and devolve responsibility to “the accountable authority” and officials or officers. In doing so there are clear duties and responsibilities for the use and management of public resources.

The PGPA Act refers to the “proper” use of resources being the “efficient, effective, economical and ethical” use and management of public resources. In addition, the PGPA Act set out general duties of officials including the duty:

  • Of care and diligence as expected of a reasonable person;
  • To act honestly, in good faith and for a proper purpose;
  • To ensure no personal benefit, gain or advantage in the use of position or information, and;
  • To disclose personal interests.

The Tasmania FM Act requires that an accountable authority manage in a manner that is consistent with principles of sound fiscal management including to:

  • Manage the state’s finances responsibly for the wellbeing of all Tasmanians and provide for the future for the next generation of Tasmanians;
  • Prepare for unexpected events by building a robust financial position;
  • Improve services to Tasmanians by building a strong economy and efficiently allocating public resources to gain the maximum community benefit; and,
  • Ensure transparency and accountability in developing, implementing and reporting on fiscal objectives.

Better balancing risk and control

While all jurisdictions have had a focus on internal control the PGPA Act and GSF Act now impose a requirement to establish and maintain systems of risk oversight and management for the entity and appropriate internal controls. Previously, the focus was on applying internal controls as established by whole of government regulations, directions or instructions.

Every agency will face different risks and necessarily will require different internal controls. By making the accountable authority responsible for determining risks and appropriate internal controls, there is an opportunity to better balance controls appropriate to the agency risks and remove unnecessary “red tape,” often the result of one size fits all control systems.

The PGPA Act is supported by the Commonwealth Risk Management Policy, which includes a requirement on the accountable authority to develop of a positive risk culture within their agency.

Enhancing performance reporting

The Australian, NSW and Tasmania governments have all used the reform process to identify that in additional to accrual financial budgets and reports, true performance reporting will require information about the effectiveness and efficiency of programs.

The independent review of the PGPA Act found that the Act provides “a sound framework for the measurement and reporting of the performance of entities across the Commonwealth, but the quality of performance reporting needs to improve.” The Department of Finance is developing guidance on managing performance.

NSW outcome based budgeting will be supported by the requirement of the GSF Act that information is kept to properly explain the performance of the agency.

The recent reforms and updates to public finance legislation in Australia have identified that good governance is not just about being a good steward of public money.

Without appropriate risk informed internal controls and governance arrangements, including full performance reporting, we will struggle to demonstrate that that public resources are being used in an efficient, effective, economical, transparent and accountable manner. Applying risk informed decision processes about the use and management of public resources will require policy makers and public officials to do more than tick boxes. Assessing the best policy options to achieve citizen and community outcomes requires skill, judgement and leadership.


Author: Kevin P Riley is the Managing Partner of GPA Partners, a Canberra based firm advising on governance, performance and accountability matters. Kevin was born in Warwick, R.I. and continues to have a significant interest in U.S. Federal and State public financial management arrangements. Kevin is a Fellow with both Chartered Accountants Australia and New Zealand and CPA Australia. He is also a Qualified Accountant with the UK based Chartered Institute of Public Finance and Accountancy. Kevin is a National Councillor and Treasurer of the Institute of Public Administration Australia. Kevin can be contacted by email at [email protected] or on Twitter at @kevinpriley.

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The American Society for Public Administration is the largest and most prominent professional association for public administration. It is dedicated to advancing the art, science, teaching and practice of public and non-profit administration.

3 Responses to Reforming and Updating Public Finance Legislation: An Australian Perspective

  1. Lyn Reply

    March 15, 2019 at 8:48 pm

    As a fellow test cricket fan, very interesting Kevin. I particularly like the framing of the Tasmanian FM Act principles, I may just use those in some internal policy.

  2. Ed Reply

    January 18, 2019 at 7:48 pm

    An informed and well presented article. Yes, well done.

  3. Al Reply

    January 14, 2019 at 6:23 pm

    Well done Kevin, a brilliantly written article.

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