A board should develop a compliance program that suits the compliance needs of the public entity.
A board should develop a compliance program that suits the compliance needs of the public entity. In order to ensure compliance with statutory obligations, the board should aim to have elements of the compliance program embedded in everyday operational processes, guidelines, manuals and training programs.
A government policy is developed based on either a head of power within legislation, or a policy of the government without reference to a head of power but still lawful. Government policy is issued in different ways and, in general, includes the following:
- legislation with a whole of government perspective (for example, the Public Administration Act 2004 and the Financial Management Act 1994)
- industry or sector specific legislation such as the Water Act 1989
- government policy statements related to the whole of the public sector (for example, statements on contracting)
- government guidelines on particular issues (for example, guidelines on the General Government Purchasing Card)
- government policy statements related directly to statutory authorities
- ministerial directions
- policy decisions arising from intergovernmental agreements/forums (for example, the policy decision on the National Competition Policy)
- specific information contained in the relevant statutory authority legislation.
Orders or directions to comply with government policy are to be general in their effect and not specific to individual cases.
Here are two examples of government policy that require compliance: one is not based on legislation and the other is based on legislation.
Example 1: Policy Example Not Based on Legislation
It is government policy to increase the diversity on public entity boards. One such way is through the greater representation of women.
The government sets targets for the appointment of women and, in situations where the minister seeks nominations from a board, encourages it to put forward female nominees for board appointments.
To help ensure compliance, a board should consult the Office of Women’s Policy. It should do this at an early stage, either when it is considering nominations or making recommendations to a minister on appointments.
Example 2: Legislative Example Based on the Public Administration Act
Public entities may be required to comply with a specified government policy if required by the Premier or Governor in Council (s.92 (1) of the Public Administration Act).
This power to require compliance with policy is visible yet limited in what it can do. For instance:
- it is visible because it is the Governor in Council who exercises the power and the Order is published in the Government Gazette
- appropriate consultation with affected public entities must precede the recommendation for the Order
- the subject matter is limited to policy for improving operating standards or service delivery, or otherwise supporting a whole of government approach.
The terms of the Order are not to impede the public entity in the independent exercise of its functions. A particular application of this principle is that the Order is not to dictate a particular outcome in a matter within the public entity’s jurisdiction.
Compliance is about ensuring that the requirements of laws, regulations, industry codes and organisational standards are met.
A compliance program is an important element in the governance of a public entity and should:
- prevent, identify and respond to breaches of laws, regulations, codes or standards in the public entity
- promote a culture of compliance within the public entity
- assist the public entity in being a good corporate citizen.
The first two steps for beginning the adoption of a compliance program are 1) to identify the obligations to be complied with and 2) to develop a policy that details how those obligations are to be complied with.
A public entity’s compliance program should cover:
- the primary objective. For example, so the board can be satisfied that all possible measures are being taken by the public entity and its employees to comply actively with all relevant legislation, standards and codes
- the nature of the proposed compliance program. This ensures the public entity can operate, manage risks and identify compliance responsibilities for all positions. It must incorporate an appropriate and consistent approach.
If a public entity is deemed not to be compliant with legislative requirements, government policy or ministerial directions, it not only reflects poorly on the public entity and its board, but also it reflects poorly on the relevant department and minister.
The possible implications of non-compliance can include:
- Criminal prosecution has been known to occur where a public entity breaches occupational health and safety legislation or environment protection legislation. It can result in fines or imprisonment. Some of the accountability and stewardship legislation requires a board to permit officers from the Office of the Ombudsman or the Auditor-General to enter public entity premises, and it imposes criminal penalties for obstruction.
- Civil action for damages for breach of statutory duty, for example, Occupational Health and Safety legislation. In most cases this legislation provides for a fine or other penalty when someone fails to perform a statutory duty but the courts allow a person injured by a breach of a statutory duty to seek compensation for their injury.
- Adverse assessment by statutory bodies, for example, the Ombudsman and the Auditor-General are permitted by legislation to make reports to parliament.
- Additional reporting to the minister and closer monitoring by the department.
- Appointment of an administrator where legislation permits.
- Resignation or removal of directors.