Review of Small and Medium Agencies in the Attorney-General’s Portfolio



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STRATEGIC REVIEW OF



Small and Medium Agencies in the Attorney-General’s Portfolio

Report to the Australian Government

January 2012

Strategic Review of

Small and Medium Agencies in the Attorney-General’s Portfolio

Report to the Australian Government

January 2012



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Strategic Review Branch
Department of Finance and Deregulation
John Gorton Building, King Edward Terrace, Parkes ACT 2600

Contents

Transmission letter xxxix

Terms of Reference xli

a. operational and administrative structures; xli

b. monitoring and evaluation of performance of their programs, including underlying policy settings; xli

c. opportunities for shared services or administration arrangements; and xli

d. financial viability in their current form. xli

a. options for improving the ability of the DPP to manage its caseload in the most efficient, flexible and effective manner, including by collecting accurate data about the time and costs involved in prosecuting each type of offence across the range of Commonwealth offences; xlii

b. arrangements for handling less serious and summary offences, including examining whether there are policy options for more efficient and cost-effective regulatory and compliance strategies to deal with these matters; and xlii

c. options for a sustainable funding model that will provide for the continued prosecution of serious Commonwealth offences. xlii

a. the Senate Inquiry into the Australian Law Reform Commission; xlii

b. Review of the Legislative Drafting and Publishing Function within the Attorney-General’s Department; xlii

c. Review of the Corporate Governance of Statutory Authorities and Office Holders (Uhrig Review); xlii

d. Bendelta Review of AAT Registry Functions; xlii

e. Fellows Medlock and Associates Review of NNTT Structure, Functions and Service Delivery; xlii

f. the Strategic Review of Shared Services; and xlii

g. KPMG’s Courts Shared Services Review. xlii

Executive Summary – Findings & Recommendations xlv

Introduction xlv

Findings and Recommendations xlvi

a. there should be a prima facie presumption against creating any new independent agency unless that course of action would be supported by the strength of the case as evidenced by the following indicative tests: xlvii

international comity; xlvii

avoidance of conflict of interest; xlvii

to secure the conferral of extra-ordinary powers; xlvii

to distance government from regulatory intrusion; xlvii

to ensure government access to best advice; xlvii

to ensure participation by stakeholders; and xlvii

to allow ministers and departments to focus on higher priorities; xlvii

b. in any subsequent review of existing agencies, there should equally be a prima facie presumption that the functions of an already established independent agency should be transferred to their portfolio Department or another appropriately justified portfolio agency where the continued existence of that agency cannot be justified by reference to these indicative tests; xlvii

c. where one or more of these indicative tests are met, the strength of the case for independence should then be critically assessed and not simply assumed; and xlvii

d. in each case the alternative of establishing an independent statutory officer within the relevant portfolio Department should be actively explored. xlvii

a. those (properly defined) corporate services that it (or another agency within the portfolio) is able and prepared to provide to other agencies within the portfolio; xlviii

b. the service level specifications at which those services would be provided; xlviii

c. the remediation or other compensatory consequences that would flow from a failure to meet a service level specification; and xlviii

d. the financially justifiable price at which each such service would be provided. xlviii

a. it should be made available to the Attorney-General and the Minister for Finance and Deregulation; and xlviii

b. all agencies within the portfolio should be required to review and compare the offering to their existing corporate services provision arrangements and report to the Attorney-General and the Minister for Finance and Deregulation on whether or not they intend to access that offering and their rationale for doing so. xlviii

a. AHRC and OAIC should seek to negotiate appropriate service levels for inclusion within their MoU to replace the present inadequate specification in that agreement; and xlix

b. OAIC should not move to establish its own internal corporate support capacity before operating under an MoU that includes proper service levels and, if the preceding recommendations of this Review are accepted, before proper consideration and assessment of the Attorney-General’s portfolio “corporate services business offering” recommended above. xlix

a. conduct a line-by-line examination of Courts’ previous and projected expenditure; l

b. consider existing options to reduce expenditure, and identify further options that may be available; l

c. identify likely impacts of each of the available options on court administration and service levels; and l

d. develop an indicative priority list of the expenditure reductions and other measures that should be pursued to avoid future deficits, with a focus on minimising negative impacts on service levels. l

a. The Government should adopt Option 4 (Administratively foster greater cooperation between the separate Commonwealth Courts) as sought by the Heads of Jurisdiction (but incorporating also the changes to administration structures under Option 3). Option 4 includes a governance structure and reporting regime that will provide not only an incentive for achievement but also a clear capacity for the Government to monitor success on a timely basis. l

b. The Government should retain Option 7 (Legislatively merge all administration of the Federal Court, Family Court and Federal Magistrates Court (and the proposed Military Court)) as a future possibility if efficiencies and effectiveness are not adequately achieved through Option 4. l

a. govern use of each building on a “whole-of-system” basis and without any presumption of ongoing allocation of space for the exclusive use of any Court; lii

b. seek to optimise the provision of common facilities such as libraries, conference rooms, common rooms etc. for use of all building tenants; lii

c. provide that the accommodation allocation for Public Service Act staff should not exceed that otherwise applicable in the Public Service generally, unless reconfiguration would be a more expensive option; and lii

d. include a specification of priority uses for each building. lii

a. the balance of responsibilities and resource allocation between the Federal Court and the National Native Title Tribunal (NNTT); lii

b. whether all current discretionary functions of the NNTT should continue to be performed, or performed at the current level; lii

c. whether any of the NNTT’s discretionary functions should be subject to a cost-recovery regime; and lii

d. the future structure of the NNTT. lii

liii

liii


liv

e. the extent to which the NNTT’s discretionary functions should continue to be performed, particularly strategic planning and research and publications; and liv

f. whether resourcing should be reduced for any discretionary functions. liv

a. abolishing these tribunals and replacing them with a new Administrative Review Tribunal (ART), as previously recommended by the Administrative Review Council (ARC); lv

b. maintaining the tribunals as separate entities but merging their support functions into a single administrative unit; or lv

c. seeking greater efficiency within existing tribunals through a cooperative process of review and reporting to Government. lv

g. The Administrative Review Tribunal proposal as recommended by the Administrative Review Council should be endorsed as the Government’s desired end-state (subject to a resolution of the reduction in appeal rights issue). lv

h. The Administrative Review Council model should be extended so that, unless a compelling case was made to the contrary, all Commonwealth merits review bodies should be “rolled into” the Administrative Review Tribunal and not just the five major tribunals. lv

a. review each initiative identified and either supported or rejected in the Tribunal Efficiencies Working Group Report; lvi

b. identify further initiatives for other efficiencies or improvements that might be achieved by cooperative or shared efforts between them; and lvi

c. report each six months to each relevant portfolio Minister, and to the Minister for Finance and Deregulation, on progress and in particular: lvi

identify which Working Group Report or other initiatives have been implemented, and the benefits thereby gained; lvi

identify which Working Group Report or other initiatives have been fully analysed and the conclusion drawn that they should not be implemented, and set out the reasons why; and lvi

advise the forward work plan for examining these matters. lvi

a. a representative of each Tribunal’s portfolio Department should participate in the work identified in Recommendation 7.2 in order (a) to avoid any divergence between tribunal administration and the underlying merits review policy objectives of the Government, and (b) to provide practical input and advice in relation to such matters as the potential availability of support services that might be provided by those Departments; and lvi

b. Ministers should consult and then: lvi

either accept or reject those periodic reports; and lvi

provide feedback and any necessary or desirable direction to the heads of the tribunals and their Departments. lvi

Chapter 1 - Introduction 1

Background 1

Review methodology and process 1

Governance arrangements 1

Consultation Strategy 1

Financial information in Appendices 1-13 2

a. the interpretation of the Expenditure Review Principles that the Review is required to apply in its assessment of the agencies within the scope of the Review; 6

b. given that those principles make reference to the integration of agencies, the bases on which the creation or continuation of independent statutory authorities separate from a portfolio Department may be justified; and 6

c. the nature of, and the consequences that flow from, that independence. 6

Expenditure Review Principles 6

a. they do NOT require that the least expensive option must be adopted. The Principles focus on effectiveness and value for money, not avoiding expenditure per se; 6

b. conversely, they do not mandate that everything must be done in the most efficient way possible - rather they require only that things be done in the most efficient way “achievable”. This means that the relevant test is whatever is practicable within the realistic context, including financial capability; 7

c. the requirement for integration through agencies working together is consistent with the proposition that there are necessarily limits on the view that can be taken of the independence of agencies. Independent agencies are still expected to exploit opportunities for efficiency or effectiveness improvements through collaboration; and 7

d. similarly the requirements for performance assessment and strategic policy alignment are also consistent with the proposition that independence is not an absolute quality. 7

Governance structures and arguments for independence 7

a. International comity – Australia may have agreed, in ratifying an international convention or otherwise giving a commitment in international fora, that it will establish a separate independent body to give effect to its international obligations or understandings. Of relevance to the present Review, under the Principles relating to the Status of National Institutions (the ‘Paris Principles’), Australia agreed that its national human rights agency: 9

b. Avoidance of conflict of interest – The performance of some functions, if undertaken within the Executive, may give rise to a perception that the Government would so manage the function to ensure that benefit accrued to itself rather than to affected citizens. For example: 10

the approval of future acts on Crown land pending the resolution of an application currently before the Federal Court for a declaration of native title over that land could readily give rise to such a perception if not undertaken by an independent body such as the National Native Title Tribunal, or possibly by an independent statutory officer; 10

the management of bankrupt estates in which the Australian Taxation Office may be a major creditor could give rise to a claim of favouritism towards taxation revenues if undertaken by the Executive rather than by an independent body such as the Insolvency and Trustee Service Australia (ITSA) (or, as discussed below, by independent statutory officers within a Department); 10

acceptance of the outcome of review of decisions of the Executive sought by citizens who remain aggrieved even after internal review within the Executive requires the existence of independent tribunals such as the Administrative Appeals Tribunal, the Migration Review Tribunal, the Refugee Review Tribunal, the Social Security Appeals Tribunal and the Veterans’ Review Board (or some alternative equivalent); and 10

claims of government accountability and transparency are clearly enhanced when there are mechanisms to test those claims, such as the AHRC, the Commonwealth Ombudsman and the Freedom of Information laws oversighted by the Office of the Australian Information Commissioner; 10

c. To secure the conferral of extra-ordinary powers – It is often the case that Parliament will only agree to confer highly intrusive or coercive powers on an agency independent of the Executive – for example, police or national security powers or the information gathering powers of bodies such as the Australian Competition and Consumer Commission or the Australian Taxation Office. And it may be unacceptable to the Parliament for the oversight of the exercise of those powers to rest solely with the Executive. For this reason, a Parliamentary Committee may be established to monitor an agency such as the Australian Securities and Investments Commission, or there may be a separate body such as the Australian Commission for Law Enforcement Integrity (ACLEI, which is within the scope of this review) or the Inspector-General of Intelligence and Security. 10

d. To distance government from regulatory intrusion – Occasionally, responsible government requires the imposition of significant restraints on the pursuit by business or other private individuals of what would otherwise be lawful activity. However, at the same time it may properly be desired that responsibility for such activity not be directly attributable to a Government Minister but rather to an independent agency. Agencies that regulate business affairs such as the Australian Competition and Consumer Commission, the Australian Securities and Investments Commission and the Australian Prudential Regulatory Authority fall into this category. Of relevance to the Review, so too does the Australian Transactions Reports and Analysis Centre (AUSTRAC) and ITSA. Of course, there are many other regulatory functions of Government that are undertaken directly by the Executive, or by independent statutory officers within a Department. 10

e. To ensure government access to best advice – The Australian Public Service has an accepted role in providing “frank and fearless” advice, having regard to the best information available within and to the Service, including the wider community. However, there are occasions when the Government wishes to obtain a more in-depth consideration of issues from advisers who are unencumbered by other potentially contradictory or competing demands and who can more readily formulate advice based on wider and more detailed community consultative mechanisms, in the process obtaining views that may not otherwise be made known, or obtaining assistance or input that might not otherwise be provided to the Executive itself.


This may provide a justification for the separate existence of bodies such as the Productivity Commission or, within the scope of the Review, the Australian Law Reform Commission (ALRC) and the Australian Institute of Criminology (AIC). Additionally, such bodies are often able to access, at no or minimal cost, input and advice that could not be expected to be made available to a Department of State on the same basis. For example, the ALRC advises that it obtains the voluntary assistance of judges and other talented and experienced practitioners to assist policy development for which a Department would be expected to pay some hundreds of thousands of dollars each year. Similarly, the AIC advised the Review that they are able to generate double blind peer review of their publications by utilizing the voluntary assistance of highly qualified academics and others, to a value exceeding $150,000 pa. 11

f. To ensure participation by stakeholders – On occasion, it is only by creating a separate independent agency that vital stakeholders can be induced to participate and provide an essential contribution to the achievement of a common goal. Of relevance to the Review, it is understood that it was only by establishing the CrimTrac Agency (CrimTrac) as an agency independent of both the Attorney-General’s Department and other portfolio agencies that State and Territory Police Commissioners could be persuaded to make available their individual crime-related data-sets that collectively generate the highly desirable national database administered by CrimTrac. 11

g. To allow ministers and departments to focus on higher priorities – Sometimes, the reason for moving a function out of a Department into, or maintaining it in, a separate agency may be as simple as allowing the Minister and Department to be able to concentrate on what are perceived at the time to be other higher priority issues without the need to carry active responsibility for more routine, transactional-type business. 11

a. reducing the number of points of entry to government, so that it is easier for the public to interact with government; 13

b. increasing the use of departments rather than stand-alone bodies allows for flexibility through the refocusing of work when required by the government of the day without requiring amendment of enabling legislation to change a body; 13

c. increasing employee flexibility and reducing the costs associated with inter-agency transfers; 13

d. maximising the application of accountability laws and processes—for example, freedom of information, parliamentary accountability and Public Service Act coverage; 13

e. achieving savings in the oversight costs of responsible departments, central agencies and integrity agencies; and 13

f. reducing any undesirable proliferation of separate cultures, practices, systems etc. 13

a. there should be a prima facie presumption against creating any new independent agency unless that course of action would be supported by the strength of the case as indicated by the indicative tests identified above; 13

b. in any subsequent review of existing agencies, there should equally be a prima facie presumption that the functions of an already established independent agency should be transferred to their portfolio Department or another appropriately justified portfolio agency where the continued existence of that agency cannot be justified by reference to the strength of the case as indicated by these indicative tests; 13

c. where one or more of these indicative tests are met, the strength of the case for independence should then be critically assessed and not simply assumed; and 14

d. in each case the alternative of establishing an independent statutory officer within the relevant portfolio Department should be actively explored. 14

The nature of independence 14

c. there should be a prima facie presumption against creating any new independent agency unless that course of action would be supported by the strength of the case as evidenced by the following indicative tests: 15

international comity; 15

avoidance of conflict of interest; 15

to secure the conferral of extra-ordinary powers; 15

to distance government from regulatory intrusion; 15

to ensure government access to best advice; 15

to ensure participation by stakeholders; and 15

to allow ministers and departments to focus on higher priorities; 15

d. in any subsequent review of existing agencies, there should equally be a prima facie presumption that the functions of an already established independent agency should be transferred to their portfolio Department or another appropriately justified portfolio agency where the continued existence of that agency cannot be justified by reference to these indicative tests; 15

e. where one or more of these indicative tests are met, the strength of the case for independence should then be critically assessed and not simply assumed; and 15

f. in each case the alternative of establishing an independent statutory officer within the relevant portfolio Department should be actively explored. 15

Chapter 3 – Shared Services 17

Recent background on shared services 17

a. resourcing and workload data from 22 agencies in relation to finance and human resource activity indicated significant variations in process efficiency and made estimates of savings targets difficult; 18

b. there was (and remains) a paucity of quality baseline data and benchmarking that would assist a shared services business case analysis; 18

c. experience in other jurisdictions suggested that the net efficiency gain of integrating small agencies with already established corporate service options can be marginal and that small agencies’ participation in shared services arrangements can be problematic; and 18

d. scope may exist for shared services savings and efficiencies in relation to the establishment of new agencies. 18

a. the difficulty in finding a model that gives small agencies an adequate say in the governance of a shared services operation alongside larger agencies; and 18

b. the likelihood that a small agency will not require (and cannot therefore justify the expense of) the level of sophistication and capability in financial and HR systems that larger agencies may need. 18

a. the lack of scale/critical mass (4,500 staff compared with 20,000 which had been shown to be a typical minimum in other jurisdictions); 19

b. currently divergent systems and business processes would increase implementation costs; 19




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