A financial framework for the future

The existing financial framework emphasises entity-based, vertical accountability and has been robust over the last two decades, supporting efficient and effective delivery of policies and services to citizens. The challenge is to ensure it continues to facilitate prudent financial management and effective performance, particularly as governments shift focus from services to a more strategic form of governance. This is likely to be more about influencing behaviour, being better at joining up the issues and being agile and innovative. It also may be better at forecasting and anticipating emerging issues, rather than being good at reacting to them when they are immediately apparent.[1]

When contemplating a potential financial framework for the future there are a number of elements to consider. These include the format and structure of any legislation, and the values, practices and procedures that support the financial framework.

In considering implementation of initiatives to support the proposed directions for reform, CFAR has identified three broad approaches for potential reform:

• upgrading the existing entity based framework;
• strengthening portfolio governance arrangements; and
• strengthening the whole-of-government performance framework.

These approaches are not mutually exclusive and could be undertaken progressively, taking into account implementation and transitional issues.