5.2 Accountability

The Commonwealth financial framework regulates the financial activities of Commonwealth bodies. The key legislative components of the framework are the Financial Management and Accountability Act 1997 (FMA Act) and the Commonwealth Authorities and Companies Act 1997 (CAC Act).

Together with the Auditor-General Act 1997 and the Charter of Budget Honesty Act 1998, these acts reflected a fundamental shift in Commonwealth financial management over the 1980s and 1990s, from a rules-based environment with centralised controls (governed by the old Audit Act 1901) to a more principles-based and devolved environment.

From 1 July 2014, the Public Governance, Performance and Accountability Act 2013 (PGPA Act) aims to establish the framework necessary for a modern public sector and a modern government. The PGPA Act consolidates into a single piece of legislation the governance, performance and accountability requirements for the Commonwealth. It will replace the current model for Commonwealth financial management established under the FMA Act and the CAC Act.

The new financial framework reflects changed community expectations of government. Citizens expect the government to act in an integrated and coordinated way and to respond to increasingly complex issues efficiently and effectively. They expect the Commonwealth to act as a coherent whole, to deliver services that meet their needs, rather than services that reflect organisational structures and boundaries. Citizens expect government to cover an increasing range of risks that may not previously have been considered the responsibility of the public sector. Further, at a time when public finances are under pressure, the public sector is expected to do more with less.

Public policy issues are becoming increasingly complex and require responses that stretch across boundaries, within government and across sectors. Traditional models for planning and delivering public services have been based on vertical hierarchical governance and accountability, and are less likely to be sustainable over the medium to long-term.