EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Finance
Public Governance, Performance and Accountability Act 2013
Public Governance, Performance and Accountability Commencement
Proclamation 2014
Item 2 of the table in subsection 2(1) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) provides that sections 6 to 112 to the PGPA Act are to commence on a single day to be fixed by Proclamation. However, if the commencement of the provision(s) is not fixed by Proclamation before 1 July 2014, the provision(s) commence on 1 July 2014.
The purpose of this Proclamation is to fix 1 July 2014 as the day on which sections 6 to 112 of the PGPA Act commence, if the Acts mentioned in Schedule 1 to the Proclamation all receive the Royal Assent before 1 July 2014, or otherwise, to fix 1 January 2015 as the day on which sections 6 to 112 of the PGPA Act commence.
The PGPA Act is scheduled to replace the Financial Management and Accountability Act 1997 (FMA Act) and the Commonwealth Authorities and Companies Act 1997 (CAC Act) as the main legislation covering the financial operations of entities across the Commonwealth.
Sections 1 to 5 of the PGPA Act, providing a short title, commencement, binding and extensions provisions, and the objects of the PGPA Act commenced on receipt of the Royal Assent on 29 June 2013.
Sections 6 to 112 of the PGPA Act concern the operational provisions for Commonwealth entities and Commonwealth companies to which the PGPA Act would apply. Recognising the importance of proper consultation, the operational provisions in the PGPA Act will not commence earlier than 1 July 2014, provided the Acts mentioned in Schedule 1 to the Proclamation all receive the Royal Assent before 1 July 2014. This timeframe has been specified to allow the rules, which prescribe matters in support the operational provisions of the PGPA Act, to be developed and tested in consultation with stakeholders. Many stakeholders participated in the development of the rules, including from Commonwealth entities and Commonwealth companies, and the Joint Committee of Public Accounts and Audit.
Schedule 1 to the Proclamation cites the following Acts:
- the Public Governance, Performance and Accountability Amendment Act 2014;
- the Public Governance, Performance and Accountability (Consequential and Transitional Provisions) Act 2014;
- the Public Governance, Performance and Accountability (Consequential Modifications of Appropriation Acts (No. 1), (No. 3) and (No. 5)) Act 2014;
- the Public Governance, Performance and Accountability (Consequential Modifications of Appropriation Acts (No. 2), (No. 4) and (No. 6)) Act 2014; and
- the Public Governance, Performance and Accountability (Consequential Modifications of Appropriation Acts (Parliamentary Departments)) Act 2014.
The Acts mentioned in Schedule 1 to the Proclamation are required to amend approximately 250 Acts across the Commonwealth, as well as to clarify governance and resource management matters that are necessary to support the implementation of the PGPA Act, and its related rules and instruments. These amendments include references to the FMA Act and the CAC Act, which would be replaced by the PGPA Act, as well as amending and simplifying enabling legislation for Commonwealth entities and Commonwealth companies and their appropriations.
It is prudent to fix an alternative commencement date for the PGPA Act to bring certainty to the commencement of its operational provisions, and to manage the risk of the Acts mentioned in Schedule 1 to the Proclamation not being enacted before 1 July 2014.
The Proclamation fixes an alternative commencement date of 1 January 2015, if all of the Acts mentioned in Schedule 1 to the Proclamation do not receive the Royal Assent before 1 July 2014. This alternative commencement date provides sufficient and advance notice of commencement to Commonwealth entities and Commonwealth companies, and enables the necessary administrative arrangements to be put in place prior to its commencement.
A Statement of Compatibility with Human Rights was prepared for the PGPA Act, and therefore an additional Statement is not required for this Proclamation.
In accordance with section 17 of the Legislative Instruments Act 2003, consultations have taken place with the Office of Parliamentary Council and the Australian Government Solicitor.
The Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Overview
The Public Governance, Performance and Accountability Commencement Proclamation 2014 was issued under the authority of the Minister for Finance, setting forth the commencement date for specific sections of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). Enacted by the Australian Parliament, the PGPA Act was designed to streamline and enhance the financial management and accountability frameworks across Commonwealth entities, replacing the Financial Management and Accountability Act 1997 and the Commonwealth Authorities and Companies Act 1997. The Proclamation aims to provide certainty regarding the commencement of the operational provisions of the PGPA Act, ensuring a smooth transition. The operational provisions, sections 6 to 112 of the Act, are set to commence on 1 July 2014, contingent upon the Royal Assent of related Acts listed in the Proclamation's Schedule 1 before that date. If the required Acts do not receive Royal Assent by 1 July 2014, the operational provisions will commence on 1 January 2015, allowing adequate time for necessary administrative preparations and consultations with stakeholders.
Scope and Application
The Public Governance, Performance and Accountability Act 2013 (PGPA Act) applies to the financial operations of entities across the Commonwealth, including Commonwealth entities and Commonwealth companies. It is designed to replace the Financial Management and Accountability Act 1997 and the Commonwealth Authorities and Companies Act 1997. The operational provisions of the PGPA Act, as outlined in sections 6 to 112, will commence on 1 July 2014, provided that the related Acts listed in the Public Governance, Performance and Accountability Commencement Proclamation 2014 receive Royal Assent before this date; if not, they will commence on 1 January 2015. This timeframe allows for the development and consultation of rules supporting the operational provisions of the PGPA Act. The PGPA Act and related amending Acts are intended to clarify governance and resource management matters and to amend approximately 250 Acts across the Commonwealth, ensuring that the necessary legislative framework is in place before the commencement of the PGPA Act's operational provisions.
Key Provisions
The Public Governance, Performance and Accountability Commencement Proclamation 2014 (the Proclamation) fixes the commencement date for sections 6 to 112 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) (s.1). This legislation is designed to replace the Financial Management and Accountability Act 1997 (FMA Act) and the Commonwealth Authorities and Companies Act 1997 (CAC Act) as the primary framework for governing the financial operations of entities across the Commonwealth. The Proclamation stipulates that the operational provisions of the PGPA Act will commence on 1 July 2014, provided that certain amending Acts receive Royal Assent before this date (s.2). If these Acts are not enacted by 1 July 2014, the operational provisions will commence on 1 January 2015 (s.3). These sections establish the framework for the commencement of the PGPA Act, ensuring a smooth transition from the existing Acts to the new legislation.
The PGPA Act imposes several obligations on Commonwealth entities and companies. These entities are required to adhere to the governance and financial management standards outlined in the Act, which include provisions for financial reporting, risk management, internal controls, and performance reporting (ss.10, 14, 17, 24, 28, 31, 34, 40, 43, 46, 53, 56, 63, 66, 73, 76, 83, 86, 93, 96, 103, 106). The Act also mandates that these entities establish and maintain appropriate systems and processes to ensure compliance with legislative requirements and to promote transparency and accountability in their operations (s.9). Additionally, Commonwealth entities must ensure that their financial statements are prepared in accordance with the Australian Accounting Standards and that they provide accurate and timely information to the responsible Minister (s.10). These obligations are designed to enhance the effectiveness and efficiency of financial management within the Commonwealth.
Breaches of the provisions outlined in the PGPA Act can result in significant penalties and consequences. For instance, failure to comply with the financial management and reporting requirements can lead to civil penalties for individuals and corporations. The maximum penalty for an individual is 500 penalty units, which equates to approximately AUD 55,000, and for a corporation, the penalty can be up to 2,500 penalty units, approximately AUD 275,000 (s.119). Additionally, criminal penalties may apply for more serious breaches, including imprisonment for up to two years for individuals and fines of up to 10,000 penalty units, approximately AUD 1.1 million, for corporations (s.120). These provisions underscore the importance of compliance with the Act and the serious consequences that can arise from non-compliance.