Building Better Governance

Part One—What is Public Sector Governance?

Definition

Public sector governance covers:

‘…the set of responsibilities and practices, policies and procedures, exercised by an agency’s executive, to provide strategic direction, ensure objectives are achieved, manage risks and use resources responsibly and with accountability.’ ¹

It also encompasses the important role of leadership in ensuring that sound governance practices are instilled throughout the organisation and the wider responsibility of all public servants to apply governance practices and procedures in their day-to-day work.

Good governance is about both:

performance—how an agency uses governance arrangements to contribute to its overall performance and the delivery of goods, services or programmes, and
conformance—how an agency uses governance arrangements to ensure it meets the requirements of the law, regulations, published standards and community expectations of probity, accountability and openness.²

This means that, on a daily basis, governance is typically about the way public servants take decisions and implement policies.

Governance Framework

The governance framework is based on principles of public sector governance including:

accountability—being answerable for decisions and having meaningful mechanisms in place to ensure the agency adheres to all applicable standards
transparency/openness—having clear roles and responsibilities and clear procedures for making decisions and exercising power
integrity—acting impartially, ethically and in the interests of the agency, and not misusing information acquired through a position of trust
stewardship—using every opportunity to enhance the value of the public assets and institutions that have been entrusted to care
efficiency—ensuring the best use of resources to further the aims of the organisation, with a commitment to evidence-based strategies for improvement
leadership—achieving an agency-wide commitment to good governance through leadership from the top.³

Agencies need to have an approach to governance that enables them to deliver their outcomes effectively and achieve high levels of performance, in a manner consistent with applicable legal and policy obligations. These general obligations are explored in detail in Foundations of Governance in the Australian Public Service.⁴

Why is it Important?

‘Good governance is not an end in itself. The reason governance is important is that good governance helps an organisation achieve its objectives. On the other hand, poor governance can bring about the decline or even demise of an organisation.’⁵

The Public Service Commissioner has identified achieving excellence in governance as a key challenge for the Australian Public Service (APS).⁶ Quality governance processes are essential to the APS as they provide the framework within which agencies can operate effectively. They also affect public confidence in the APS’s capability and integrity, as well as its employees’ satisfaction levels.

Efficient, effective and ethical governance is a major focus for agencies, particularly in light of the:

changing nature of the public sector, with its greater focus on whole of government, delivering outcomes with and through other sectors, and greater contestability of advice and services
Government’s response to the Uhrig Review⁷, which has led to improved governance for Australian Government bodies through greater consistency in organisational design, clearer expectations, greater clarity in communication through parallel reporting, and better practice principles for governing bodies
requirements for Chief Executive Officers to complete a certificate of compliance, covering their agency’s compliance with the financial management framework, strategies for dealing with known risks, and any breaches and associated remedial strategies⁸
implications of well-publicised organisational shortcomings and their consequences (e.g. as outlined in the Palmer and Comrie reports about the former Department of Immigration and Multicultural and Indigenous Affairs⁹ and the inquiry by Commissioner Cole into the private sector body, the Australian Wheat Board¹⁰)
moves to reduce internally imposed red tape and improve the effectiveness of internal controls and regulation¹¹
need for better recordkeeping as part of improved accountability and governance arrangements as reflected in the Management Advisory Committee report on recordkeeping¹².

1 ANAO and Department of the Prime Minister and Cabinet, 2006, Implementation of Programme and Policy Initiatives: Making Implementation Matter, Better Practice Guide, Commonwealth of Australia, Canberra, p.13 <http://www.anao.gov.au/uploads/ documents/Implementation_of_Programme_and_Policy_Initiatives.pdf>

2 ANAO, 2003, Public Sector Governance, Volumes 1 & 2: Better Practice Guide, Commonwealth of Australia, Canberra, p. 6 <http://www.anao.gov.au/uploads/documents/Public_Sector_Governance.zip>

3 Ibid, Guidance Paper No.1, p.2

4 Australian Public Service Commission, 2005, Foundations of Governance in the Australian Public Service, Commonwealth of Australia, Canberra. <http://www.apsc.gov.au/foundations/>

5 Bartos, S., 2004, Public Sector Governance—Australia, Sydney, p.10–101

6 Australian Public Service Commission, 2006, State of the Service Report 2005–06, Commonwealth of Australia, Canberra, p.6 <http://www.apsc.gov.au/stateoftheservice/0506/report.pdf>

7 Uhrig, J., 2003, Review of the Corporate Governance of Statutory Authorities and Office Holders, Report to the Prime Minister and Minister for Finance and Administration, June 2003. <http://www.finance.gov.au/governancestructures/>

8 Department of Finance and Administration, 2006, Finance Circular No. 2006/08 Certificate of Compliance—FMA Act Agencies <http://www.finance.gov.au/finframework/docs/fc_2006.08.rtf >

9 Palmer, M., 2005, Inquiry into the Circumstances of the Immigration Detention of Cornelia Rau, Commonwealth of Australia, Canberra.<http://www.minister.immi.gov.au/media/media-releases/2005/palmer-report.pdf> and Comrie, N. 2005, Inquiry into the Circumstances of the Vivian Alvarez Matter, Commonwealth of Australia, Canberra. <http://www.comb.gov.au/ commonwealth/publish.nsf/AttachmentsByTitle/reports_2005_03_dimia.pdf/$FILE/alvarez_report03.pdf>

10 Cole, T., 2006, Report of the Inquiry into Certain Australian Companies in Relation to the UN Oil-for-Food Programme, Commonwealth of Australia, Canberra <http://www.offi.gov.au/agd/WWW/unoilforfoodinquiry.nsf/Page/Report>

11 Management Advisory Committee (MAC) Report, 2007, Reducing Red Tape in the Australian Public Service, Commonwealth of Australia, Canberra. <http://www.apsc.gov.au/mac/redtape.htm>

12 Management Advisory Committee (MAC) Report, 2007, A Note for File: A Report on Recordkeeping in the Australian Public Service, Commonwealth of Australia, Canberra. <http://www.apsc.gov.au/mac/noteforfile.htm>

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Building Better Governance

Part One—What is Public Sector Governance?

Definition

Governance Framework

Why is it Important?