19 August 2004
Government Response to the Uhrig Review of the Corporate
Governance of Statutory Authorities
The Government has adopted most of the recommendations
of the Review of the Corporate Governance of Statutory
Authorities and Office Holders. Ministers will review all
relevant bodies against the governance templates identified
in the Report. Also, responsible Ministers will prepare
a Statement of Expectation for most bodies, and the bodies
will respond with a Statement of Intent.
The Uhrig Review and Report
The review, headed by Mr John Uhrig, was commissioned
by the Government in November 2002. The objective of the
review was to improve the performance of statutory authorities
and office holders and their accountability frameworks.
The terms of reference required an examination of structures
for good governance, including relationships between statutory
authorities and the responsible Minister, Parliament, and
the public (especially business), and the identification
of policy options for improving performance and structures.
The review reported to the Government in June 2003. On
12 August 2004, the Government released its response to
Most recommendations accepted; Reviews, and Statements
of Expectation and Intent
The Government has adopted all of the recommendations,
except the establishment of an Inspector-General of Regulation
to review regulatory authorities' systems and procedures
in administering legislation. Instead of an Inspector-General,
the Government has announced a timetable for the review
of all relevant bodies.
Portfolio Ministers responsible for statutory authorities
and other bodies will assess the bodies against the governance
templates identified in the Report, with a view to implementing
any necessary improvements. The assessments are to be completed
by March 2006.
Significantly, the Government has agreed that responsible
Ministers should prepare Statements of Expectation for
statutory authorities, and other bodies. In response, the
bodies are to prepare Statements of Intent, indicating
how they will meet those expectations. The Statements will
include the values central to the success of the body,
particularly those relating to its relationship with the
public. The Statements of Expectation and Intent will be
made public. The Report recognises, however, that the Statements
will have to be carefully formulated taking into account
each body's establishing legislation, and may not
be necessary in some cases (eg where the government does
not have a role in providing direction, or for government
The Report outlines two main governance templates for
ideal corporate governance for statutory authorities.
Template: recommended only where the Government delegates
full power to act (including power to dismiss the chief
executive), such as for commercial
- Executive Management Template: recommended where the
Government retains significant oversight, such as for
regulatory or service delivery organisations.
The Government response
adopted the recommendation flowing from these templates
that Boards are appropriate only
where they can be given the full power to act.
After considering both private and
public sector practices, the Report identified good governance
summary, the principles are as follows.
- Owners, or their
representatives, need to establish an understanding
of success for the activity, including their expectations
- There should be a governance framework
that is appropriate for the entity given the nature
of ownership and its functions.
- To be successful, the body
must have the necessary power, some of that power must
be delegated, and the delegates must take responsibility
the delegated power.
- There should be clarity of roles within the governance
arrangements of organizations to ensure that efforts
are directed towards success and that
responsibilities are performed in an efficient manner.
- With responsibility
there needs to be accountability.
- For a board of directors
to be effective, it must have the full power to act,
including the ability to appoint, supervise and remove
as well as approve strategy.
FMA Act and CAC Act
The Government has also accepted the
recommendation that financial frameworks be based on
the governance characteristics
of the authority. Hence Budget-funded agencies,
whose money and property should be held by the Commonwealth,
should be subject to the Financial Management
and Accountability Act 1997.
Where it is appropriate that
the authority be legally and financially separate from
and the authority
is best governed by a board, it should be subject
to the Commonwealth Authorities and Companies
AGS Governance Forum and further briefing
AGS will be hosting
a Governance Forum later this financial year for which
a more detailed
will be prepared.
If you would like to be on our mailing list
for that forum, please email Michelle.Easte@ags.gov.au.
For further information please contact:
Important: The material in Express law is
provided as an early, interim view for general information
only and further analysis on the matter may be prepared
by AGS. The material should not be relied upon for
the purpose of a particular matter. Please contact
AGS before any action or decision is taken on the basis
of any of the material in this message.