By Stein Helgeby

Welcome to the CFAR blog.

We originally launched the CFAR blog for the Department of Finance and Deregulation (Finance) Discussion Paper, Is Less More? Towards  Better Commonwealth Performance. Our goal in setting up the blog was to enable consultation with the community and stakeholders on the discussion paper.

The blog has proven to be a great base for CFAR communications and engagement. Following the success of the blogging platform to date, we have expanded our site to include the Position Paper, Sharpening the Focus, A Framework for Improving Commonwealth Performance.

The Position Paper was released by the Minister for Finance and Deregulation on 23 November2012.

We are seeking your views on the positions outlined in the paper.

We are also interested in your views on how we can make this blog an effective mechanism for participation and consultation.

We look forward to reading your comments.

Introduction

The Minister for Finance and Deregulation announced the Commonwealth Financial Accountability Review (CFAR) on 8 December 2010. CFAR forms an important part of the Australian Government’s Better Government agenda. This agenda is concerned with ensuring that there is an appropriate framework within which the government and the public sector can work effectively, irrespective of particular settings or policy priorities. It covers a range of activities to improve delivery of government policies and programs and upgrade the public management framework generally.

The objective of CFAR is to improve performance, accountability and risk management across government, through a framework that is simple, easy to use and valued by all stakeholders.

CFAR is examining the Australian Government’s current financial framework – including funding arrangements, governance, performance and accountability – from first principles, to identify options for reform that will support high quality resource management and performance now, and into the future.

While the government and the Australian Public Service assess performance and management structures on an ongoing basis it is rare that an opportunity, such as CFAR, comes along to fundamentally reconsider the financial framework. The last such review occurred in the early 1990s and culminated with the commencement of the Financial Management and Accountability Act 1997 and the Commonwealth Authorities and Companies Act 1997.

What the media is saying…

“…the paper is a serious and substantial work. It’s well researched and written, and it has plenty of good ideas.”
Less isn’t always more, but Wong’s right to review financial reporting, Canberra Times, 1 May 2012

“Ambitious improvements to the financial framework of the entire federal public sector are under way.”
Public sector gets financial overhaul, Australian Financial Review, 3 April 2012

“The reforms may seem rather pointy-headed for some, but they are a big deal because the financial framework governs the way your taxes are managed and spent.”
Finance on reform warpath, Australian Financial Review, 13 April 2012

“Even modest improvements to procurement practices in the contracts would provide an opportunity to achieve significant efficiency benefits for government and suppliers,” the paper says.”
Government Business Canberra Insider: Contracting contracts, Australian Financial Review, 13 April 2012

“In introducing CFAR, the Department says the discussion paper was an important part of the Better Government agenda which was concerned with ensuring an appropriate framework was in place for the APS to work effectively, irrespective of particular settings or policy priorities.”
Overhaul ordered for financial framework, PS News, 30 March 2012

The CFAR Discussion Paper was a major topic of discussion at the third CAC Act Forum held on 27 April 2012.  The Forum was well attended with 38 organisations receiving an overview of the Discussion Paper. 

After morning tea, attendees divided into groups to discuss CFAR issues of relevance to CAC Act bodies.  The CFAR Project Team was very interested to understand why there is a perception that the CAC Act is easier to work under compared to the FMA Act.

A number of reasons were given:

• the CAC Act is principles-based giving greater flexibility for individual bodies to tailor their management structures and governance;
• board members have external expertise and a broad range of skills that can embed effective risk management practices, drive performance, and focus on delivery; and
• the amount of reporting and compliance is less for CAC Act bodies compared to FMA Act agencies.

The CFAR Project Team is interested in exploring these reasons, and any others, further.  If you have any thoughts on the subject, particularly if you have experienced both the FMA and CAC Acts, send an email or leave a post.

It was great to have Senator the Hon Penny Wong, Minister for Finance and Deregulation, release our CFAR Discussion Paper at Old Parliament House on the evening of Tuesday 27 March 2012.

The Discussion Paper was released as part of the Minister’s speech on ‘Delivering Better Government’ for the APSC’s New Directions – Ministers’ views series.

The Minister encouraged everyone to get involved in the discussion on issues raised in the paper.

Below is a picture of the CFAR leaders on the night along with Finance Secretary, David Tune and Minister Wong. 

Check out the Discussion Paper and provide your views on this site or via email.

By Stein Helgeby

Welcome to the CFAR blog.

We are launching the CFAR blog for the Department of Finance and Deregulation Discussion Paper, Is Less More? Towards  Better Commonwealth Performance. Our goal in setting up this blog is to enable consultation with the community and stakeholders on the discussion paper. We are seeking your input on one, some or all the issues and propositions that are raised in the discussion paper. 

Please keep in mind that the proposals outlined have not received government approval and do not represent the views of government.

We are also interested in your views on how we can make this blog an effective mechanism for participation and consultation.

I look forward to reading your comments.

The Commonwealth Financial Accountability Review (CFAR) was announced by Minister for Finance and Deregulation on 8 December 2010.

The purpose of CFAR is to analyse the Commonwealth financial framework from first principles and consider options to ensure the framework supports high quality resource management.  

The release of the Discussion Paper Is Less More? Towards Better Commonwealth Performance is a crucial step in updating the financial management framework.

The Discussion Paper is designed to encourage broad debate and discussion. Feedback received will contribute to and inform the development of options for consideration by the government.

This is a great opportunity to address the needs of modern government, improve governance practices, risk management, accountability, and compliance as well as accommodate future changes.

We would appreciate your feedback. We are particularly interested in your insights and comments in relation to the Discussion Paper. Your input will contribute to the development of options for consideration by the government.

Comments on the Discussion Paper can be posted on the CFAR blog or emailed to cfar@finance.gov.au before 29 June 2012.

Parliament represents the interests of citizens. Fundamental to good accountability is the ability of Parliament to hold Executive government to account. This is demonstrated by the role that Parliament plays in controlling the funding of government and scrutinising its operations.

For its part, Executive government must be transparent and provide Parliament with timely, well-structured information that facilitates informed debate and allows for appropriate accountability. In this context, a substantial amount of information is presented to Parliament regarding proposed expenditure and performance. The general trend has been for this information to become more voluminous and complex. It is not clear that accountability and transparency have improved or if it is easier to judge whether government is achieving its objectives and outcomes.

How can we improve the quality of information on appropriations provided to Parliament?

Good governance is the foundation for high performance and community confidence in the public sector.  Effective governance arrangements clearly articulate the nature and extent of authority of entities and how they will be held to account by ministers and Parliament.  They must be sufficiently flexible to allow the public sector to meet the needs of citizens in an efficient, effective and coordinated way and respond to changing circumstances.

The existing financial framework model classifies Commonwealth entities as falling under either the FMA Act or the CAC Act – with distinct governance, funding, reporting and accountability arrangements. While this framework has enabled new and different organisational models to deliver the complex business outputs of government, the solutions have not always been simple, and sometimes have involved complex workarounds. It has also contributed to some fragmentation of the public management system and a loss of systemic efficiency. There is growing tension about where the boundaries lie in the spectrum of policy, legal, financial and managerial autonomy across government entities.

Public policy issues are increasingly complex and require responses that stretch across boundaries (within government and across sectors). Consequently, traditional models for delivering public services, based on vertical and hierarchical governance and accountability, need to be complemented by participative and networked arrangements. This will help make the public sector more connected and agile and better placed to address complex problems in an uncertain environment. It is not clear that the framework has adequate incentives and flexibility to efficiently accommodate all this.

What do you see as the strengths and weaknesses of the current FMA Act/CAC Act split?

Good government requires good public service performance. The public sector is judged on how well it performs and the results it achieves.

Sound resource management is fundamental to good performance. It supports effective decision making, facilitates accountability and enables entities to manage material risks, including financial, political and reputational risks. Failures in resource management can reduce public value and result in additional costs.

There is scope for a more business-like approach within the Commonwealth, to the way that resources are managed and policies and programs are developed, implemented and evaluated. Better integration of the elements that comprise the Commonwealth’s resource management cycle, including budgeting, performance management, reporting and evaluation, is an important element for improving performance.

Feedback indicates that improving the quality of performance information, making better use of benchmarking and re-establishing evaluation as an integral element of the resource management cycle would be beneficial. They are key components of a performance based system. They should not merely be viewed as a compliance exercise, to meet government or legislative requirements.

Improving the performance management system will not, of itself, improve performance. A stronger performance culture is also needed.

Is current performance information adequate for Parliament and public? What changes would you propose?

Citizens rightly expect governments to be prudent in their use of public funds – and they expect high standards of accountability from public officials. Citizens also expect a better performing public sector that delivers better outcomes at lower cost. In a complex environment this involves improvements in productivity, innovation, experimentation and the risk that something may not work out as planned.

The public sector’s challenge is to promote a high standard of risk management that fosters, rather than stifles, innovation. This can be especially challenging when operating to high standards of accountability and transparency in a politically charged environment.

An overarching Commonwealth risk framework, including supporting legislation, could help achieve greater consistency in risk practices across the Commonwealth. Among other things, it could set the context for how entities determine risk tolerances and manage their material business risks.

Employees need both the right skills and the right attitudes to handle risk effectively. They also need to be empowered to take prudent, common-sense risks to achieve better outcomes.

Does the current financial framework assist or hinder risk taking and innovation?