All Victorian public sector organisations are ultimately accountable to the Victorian parliament through their minister.
This occurs within a legislative framework that allows the flexibility necessary to respond to change.
Ministers are responsible to parliament for the performance of public entities, including ensuring that proper accountabilities and controls are established and maintained by public entities. Ministers rely on departments in performing ministerial functions.
Ministers also determine policies for the portfolio in line with government priorities. This includes:
- structuring the portfolio sector
- setting standards and performance criteria
- monitoring performance against the criteria.
Over the course of a year, public entities are required to keep the responsible minister(s) and department(s) appropriately informed of progress and developments in accordance with agreed communications protocols.
The department advises the minister on matters relating to public entities within the portfolio, including the processes associated with the nomination and appointment of directors. The department liaises with other departments for the public entity.
Depending on the nature of the public entity, the departmental secretary may be personally involved in liaison with the public entity’s board. Usually, a designated unit within the department will have operational responsibility for liaison between the public entity and central agencies (including on governance matters) and advising the minister accordingly.
The minister is accountable to parliament for the performance of public entities. The minister establishes and maintains controls to ensure public entities both act properly and advance the government’s policy objectives.
The Public Administration Act 2004, Financial Management Act 1994 and each public entity’s establishing legislation give particular roles to ministers.
The minister is accountable for establishing and maintaining proper accountabilities and controls to ensure that public entities spend money and exercise powers in a proper manner and in a way that advances the government’s policy objectives.
The board of a public entity is accountable to the relevant minister for the exercise of the public entity’s functions and the minister is responsible to the parliament (s. 85 of the Public Administration Act) for:
- the exercise of the public entity’s functions
- the exercise of the minister’s powers relating to the public entity including the power to:
- appoint and remove directors
- give directions and request information
- control its operations
- initiate a review of the public entity’s management systems, structures or processes.
A minister may apply to the Magistrates’ Court for an injunction to stop a public entity or a director from breaching the Public Administration Act, the establishing legislation, subordinate instrument or other document (s. 86). A minister may also do this to stop a public entity or a director from breaching any other law.
The minister or the public entity may take court action against a director who has contravened a duty or any other requirement under Division 2 of Part 5 (s. 87). This action would be to recover money from the director where the director or someone else has profited as a result of the breach, or where the public entity has suffered loss or damage.
The responsible minister may ask for financial information from the public entity’s chief executive officer and that information must be provided. This provision is similar to the provision in s. 93 of the Public Administration Act that enables the Treasurer or the minister administering s. 44 of the Financial Management Act to request any financial information from the public entity board.
Ministers normally have the legislated right to issue directions to every board within their portfolio, except where a board’s enabling legislation excludes such power or regulates how it is exercised.
It is rare for ministers to give formal directions to individual public entity boards. This would be an action of last resort.
By convention, departments are an extension of ministers. They are the principal source of advice on portfolio matters including the performance of public entities within the portfolio and emerging risks.
The advisory role of departments includes undertaking high-level policy and strategic planning functions in a particular portfolio. In addition to providing advice, the functions of government that are desirably undertaken ‘close’ to ministers and the executive are the province of departments.
The department assists with liaison between the public entity and the minister, and between the public entity and central agencies (Department of Premier and Cabinet, and Department of Treasury and Finance).
Departmental staff must liaise with the public entity chief executive officer (or a person nominated by the chief executive officer) to understand the role or business of the public entity and to be aware of its major activities or priorities.
There is typically contact between a public entity and a department on routine administrative and funding matters.
If a director wishes to have access to a departmental employee this would be arranged through the chair and the departmental secretary.
In relation to public entities, the department performs the following functions:
- advising the minister on all significant documents and proposals submitted by a public entity, including policy proposals and significant contracts
- advising the minister on options for dealing with significant developments within the overall portfolio
- assisting the minister if remedial action is required, for example, changing strategies and structures to address potential issues and risks affecting public entities
- arranging for appointments to the board and recommending remuneration in line with government policy
- advising the minister and portfolio public entities about their responsibilities and developing processes and protocols to ensure adherence to cabinet requirements and parliamentary processes
- supporting the minister in the establishment of performance expectations through accountability documents, for example, purchase agreements may contain performance measures, statements of strategic intent and corporate plans
- commenting on and monitoring the public entity’s performance in the context of its business plan, statement of intent and similar documents
- providing feedback to the minister on a public entity’s compliance with legislation, contractual obligations, and organisational goals and policies
- advising the public entity on new government policies that may affect the public entity
- advising and supporting the minister to account to parliament for the actions and performance of the public entity, especially if the public entity has experienced problems.
The board must inform the responsible minister and the departmental secretary of known major risks, and their likelihood of occurrence, to the effective operation of the public entity (s. 81 Public Administration Act).
Under the Financial Management Compliance Framework (FMCF), the department is required to consolidate whole of portfolio data for reporting to the Minister for Finance.
The Department of Treasury and Finance website contains information for public entities seeking to improve their understanding of arrangements and responsibilities under the FMCF. The Financial Management Act, regulations, standing directions of the Minister for Finance and other financial management documents are all located at the Department of Treasury and Finance website.
Public officials should provide frank, impartial and timely advice to the government. This is a fundamental role of a department in relation to its minister and is one of the values under which the public sector operates (s. 7 of the Public Administration Act).