Recent facelift for public sector governance

In the 10th year of its operation, the Public Administration Act 2004 (Act) has had a facelift.  On 1 April 2014, the Public Administration Amendment (Public Sector Improvement) Act 2014 (Amending Act) made a number of key changes to Victoria's public sector governance framework.

These changes are as follows:

1. the State Services Authority (SSA) has now been replaced by the Victorian Public Sector Commission (Commission);
2. subsidiaries of public entities are now classified as 'public entities' under the Act, bringing them within the accountability regime in Part 5 of the Act;
3. Department Heads now have a statutory obligation to oversee public entities; and
4. the Secretary of the Department of Premier and Cabinet has the power to issue administrative guidelines to public entities and their subsidiaries.

The Act also now requires the board of a public entity to assess its own performance (collectively) in addition to assessing the performance of individual board members.

1. The Commission

The Commission, like its predecessor the SSA, is tasked with improving Victoria's public sector administration and governance.

The Commission's objectives are to:

• strengthen the efficiency, effectiveness and capability of the public sector; and
• maintain and advocate for public sector professionalism and integrity.

In addition to carrying out the SSA's existing functions (such as issuing binding codes of conduct for employment standards), the Commission will conduct research and disseminate best practice information in relation to:

• public sector administration;
• governance;
• service delivery; and
• workforce management and development. 

The Commission also has a new advocacy function in respect of public sector professionalism and integrity.

2. Subsidiaries are now 'public entities' 

An important change is the expansion of what constitutes a 'public entity' to cover bodies that fall within the meaning of 'subsidiary' in the Corporations Act 2001 (Cth).  Whether a body is a 'subsidiary' of a public entity depends on the level of control the public entity has over the other body.

Subsidiaries are now regulated by Part 5 of the Act, which prescribes minimum governance standards and accountabilities for Victorian public entities and their boards, directors and chairpersons.  In addition, employees of subsidiaries are now subject to the Code of Conduct for Victorian Public Sector Employees.  These obligations are in addition to any obligations that a subsidiary may have under other Victorian Acts or the Corporations Act.

3. Department Heads to oversee public entities 

In a new development, Department Heads will have a statutory obligation to oversee, and provide guidance to, public entities (and their subsidiaries) within their Ministers' portfolios on matters relating to public administration and governance.

Department Heads will also be required to provide to the relevant Minister information about the performance of public entities that fall within that Minister's portfolio.  This information must, in turn, be provided to the Department Heads by the relevant public entity.

These changes provide an opportunity and an obligation on departments to engage proactively with their entities, including monitoring their performance.  The provisions are intended to enable public entities (and their subsidiaries that are public entities), Departments and Ministers to identify and manage governance risks.

4. Administrative guidelines

The Act now empowers the Secretary to the Department of Premier and Cabinet to issue administrative guidelines to public entities and public services bodies.  The purpose of such guidelines is to ensure that consistent standards of administration are maintained across the public sector.

The guidelines will not be binding, but if a public entity intends to operate inconsistently with them, then it must notify the Secretary and provide reasons.

If you are in the Victorian Government and would like more information about these changes, please contact:

Udara Jayasinghe
udara.jayasinghe@vgso.vic.gov.au

Carolyn Doyle
carloyn.doyle@vgso.vic.gov.au
9947 1403

Katie Miller
katie.miller@vgso.vic.gov.au
8684 0460