Executive Summary

This Second Phase Report of the National Commission of Audit builds on the theme of responsible government and examines in further detail government efficiency and effectiveness.

In accordance with its Terms of Reference, we also report on the extent, condition and adequacy of Commonwealth infrastructure and examine the appropriate role of the Commonwealth Government more broadly in infrastructure.

The Commission makes recommendations on what could be done to improve the structure and operation of the Australian Public Service and to improve practices for evaluating the effectiveness of government programmes and agencies.

Given the Commonwealth annually manages expenditure of some $410 billion it is essential that there are sound processes and reliable information about what government plans to spend, what it actually spends and, critically, what it achieves from this spending.

Current Commonwealth arrangements have a strong focus on financial accountability but there is insufficient attention to whether programme objectives are being achieved.

This Report recommends directions and processes that can be used to address these issues.

The Report complements the Phase One Report, particularly in relation to the proposed reform of the operation of the Federation and the importance of preserving and protecting the Commonwealth's balance sheet.

This Report includes also further assessments of grant programmes, rationalisation of Commonwealth agencies, boards and committees and options to reform and rationalise other spending areas.

Infrastructure

As at 30 June 2013 there were $110 billion of non-financial assets on the Commonwealth’s balance sheet including infrastructure with an estimated value of approximately $57 billion.

Compared with the States and Territories (hereafter ‘the States’), Commonwealth ownership of infrastructure is limited. Its main economic infrastructure is a network of rail lines and communication assets. This infrastructure is held in public corporations. It also holds research and Defence related infrastructure and extensive holdings of land and properties.

This disparity in infrastructure holdings and investment is appropriate and reflects the Constitutional division of responsibilities, with the Commonwealth’s role primarily in the areas of telecommunications, interstate freight and aviation while the States have responsibility for roads, intra-state transport, water and social infrastructure. In aggregate the States hold some $1.3 trillion in non‑financial assets.

Figure 1: Snapshot of Australia’s economic infrastructure at 30 June 2012

This figure shows key statistics on Australia's transport, energy, communication and water infrastructure as at 30 June 2012. Transport: 33,404 kilometres of railway route length; 6 ports above 50 million tonne throughput; and 900,082.5 kilometre length of roads. Energy: 776,321 circuit kilometres of above ground transmission network; 129,286 circuit kilometres of underground transmission network; and 55,395.9 megawatts of generation capacity. Communication: $15,451 million of net capital information technology stock for the information, media and telecommunications industry. Water: $144,179 million value of water infrastructure assets; 162,513 kilometres of urban water mains; 136,295 kilometres of sewer mains; and 56,619 kilometres of rural water network.

The majority of the Commonwealth’s infrastructure assets are held for its own use. They include property valued at $36 billion and other infrastructure, plant and equipment totalling $21 billion. The latter includes information and communications and office equipment.

Three Commonwealth public corporations hold the majority of Commonwealth-owned economic infrastructure held for public use – the Australian Rail Track Corporation, NBN Co and Airservices Australia. A fourth, Australia Post, owns a network of postal depots and mail sorting centres. The Commonwealth also owns a 13 per cent share in Snowy Hydro Ltd, an energy utility based in New South Wales.

Commonwealth-owned infrastructure also includes some $600 million of assets through the National Capital Authority (such as roads and bridges in Canberra and Scrivener Dam) as well as other assets such as Parliament House, CSIRO research stations and facilities, a nuclear reactor at Lucas Heights in Sydney, immigration detention centres, navigation buoys and lighthouses.

The Commonwealth owns comparatively little social infrastructure with a limited number of health and education assets including the Mersey Hospital in Tasmania and the Australian National University.

The condition and maintenance of the Commonwealth’s infrastructure

The condition of Commonwealth infrastructure varies markedly. In some cases, assets are new and are currently being brought into service, as is the case with the National Broadband Network. In contrast, other property holdings, including various military barracks, post offices and lighthouses, predate Federation.

Maintenance of the infrastructure assets of Commonwealth public corporations has generally been managed.

  • Maintaining the Australian Rail Track Corporation network has been and remains a major task. A major capital investment programme in excess of $3 billion is committed to 2017-18. Despite the investment in the Australian Rail Track Corporation’s network, the size and age of the network mean that it requires constant attention.
  • The Commission understands that Airservices Australia intends to invest $1.1 billion from 2013 to 2018. Ongoing investment in tower infrastructure and technology, the replacement of back-up terrestrial based navigation aids and surveillance equipment upgrades account for the majority of investment in the upcoming years and are designed to improve the efficiency and safety of air transport.
  • Since 2009-10, Australia Post has invested over $1 billion in its letters, parcels and retail networks. Australia Post is also investing $2 billion over the next four years to modernise its parcels and retail networks and develop digital communications to meet anticipated consumer demand.

As outlined in the Commission’s Phase One Report there are considerable challenges surrounding the management of the Commonwealth’s property holdings, reflecting legacy issues such as contamination and underinvestment in repairs and maintenance.

The condition of much of this estate has deteriorated primarily due to underinvestment in regular maintenance, ineffective asset management plans and in many instances the deferral of maintenance expenditure in response to budgetary pressures.

As a result, increased expenditure on maintenance and related functions is now needed to bring assets back to minimum standards. Deferral of maintenance is penny wise and pound foolish.

The Commission considers better asset management practices and improved planning of property maintenance is essential, with a focus on long-term sustainability.

The Commission recommends all agencies should maintain current asset management plans covering the full range of activity from acquisition and including management, maintenance and disposal.

Agencies should also be required to report on the value of deferred maintenance and repairs in the notes to their financial statements, drawing on the asset management plan.

Reflecting the fact that it has significant landholdings affected by contamination, the Commonwealth should develop an estimate of the cost of remediating contamination on all Commonwealth property and report this as a contingent liability in Budget papers and agency financial statements.

As well as experiencing challenges associated with ensuring appropriate maintenance of infrastructure, many Commonwealth agencies experience challenges when it comes to funding the replacement of assets.

To partly address this, arrangements have been in place for a number of years under which agencies (other than Defence) receive a departmental capital budget. This provides them with up to $10 million for individual asset purchases. The Commission considers further improvements should be made to this arrangement.

It is proposed the Commonwealth’s capital budgeting policy be strengthened through the creation of a new centrally managed provision to fund major capital assets. This provision should be equal to the value of depreciation on the Commonwealth’s major own-use assets, plus the net sales proceeds of such assets.

The Commonwealth’s role in infrastructure

Even though the Commonwealth owns only a small proportion of Australia’s infrastructure its role extends broadly across the sector and includes significant regulatory, coordination and funding responsibilities.

Consistent with the discussion on the Federation in its Phase One Report, the Commission maintains decisions on policy and service delivery should be devolved to the level of government closest to the people receiving the services.

For most infrastructure, the users and beneficiaries reside within a particular State, and the State Government is in the best position to assess the merits of a particular project in providing services to the local community. The States should therefore retain primary responsibility for delivering infrastructure.

However, there will be instances when the Commonwealth decides to invest directly in, or finance infrastructure. The Commission recommends that:

  • the Commonwealth only invest in infrastructure projects either alone, or jointly with the States and or the private sector, where a rigorous and transparent cost benefit analysis indicates substantial net benefits to the community;
  • the Commonwealth’s contribution of finance should be targeted to projects that provide broad economic or social benefits beyond commercial returns but cannot be completely funded in the short term by user charges and would not otherwise go ahead; and
  • while favouring grant or equity contributions, the Commonwealth not be constrained by the form in which finance is provided, other than to ensure complete transparency, including appropriate provisioning in the Budget.

Funding to State and local governments for infrastructure

The Commonwealth has a major involvement in funding infrastructure through grants to the States and to local governments, providing around $5 billion per annum. This funding is directed mostly to road (71 per cent) and rail (25 per cent).

Commonwealth funding to the States and local governments for infrastructure has primarily been delivered via two programmes, with additional funding provided for local governments under the Financial Assistance Grants.

  • The Nation Building Program provided funding of some $3.8 billion in 2013-14 to assist national and regional economic development by improving the performance of land transport infrastructure.
  • A separate source of funding is provided under the Nation-building Funds initiative. There are three Nation-building Funds: the Building Australia Fund (which funds economic infrastructure); the Education Investment Fund; and the Health and Hospitals Fund. As at 31 December 2013 these funds had an uncommitted balance of $6.7 billion.

In its Phase One Report the Commission recommended reducing the degree of vertical fiscal imbalance within the Federation to increase the States’ revenue capacities.

With access to an improved source of revenue — for example through the personal income tax system — the States would be in a better position to fund their own priorities, including in relation to infrastructure. In this situation the need for separate tied funding from the Commonwealth for infrastructure will diminish.

Recognising reforming the Federation will take some time, the Commission recommends consolidating existing infrastructure funding arrangements between the Commonwealth and the States in the interim under a single ‘parent agreement’.

Funding could be provided in a single pool and allocated to the States on a formulaic basis including appropriate funds for maintenance and disaster mitigation. While the formula would need detailed work it could be based on a simple approach, for example taking account of population, size of road network and geographic area.

Financial Assistance Grants paid to local governments through the States as untied local roads grants, which totalled $349.3 million in 2013-14, should also be included in this arrangement.

The Commonwealth would not be involved in the selection of projects. However, for this approach to work, there must be strong evaluation processes including appropriate cost benefit analyses. Too few project evaluations are made fully public and no Australian Government has in place adequate processes for ex-post review of cost benefit studies.

Public sector performance and accountability

The Australian Public Service is one of the largest employers in the nation, with some 167,000 staff at June 2013. In addition, a further 90,000 people are employed elsewhere in the Commonwealth General Government Sector.

Improving the overall efficiency and effectiveness of government will be heavily dependent on the performance of the public service.

The Public Service Act 1999 is the principal Act governing the establishment and operation of the Australian Public Service. The Act provides a framework for employment by outlining the core principles, values and characteristics that should underpin a professional and apolitical public service.

The Public Service Act does not contain any explicit references to the need to improve productivity in the public sector. However, it does aim to establish a public service that is efficient and effective and requires secretaries of departments to manage ‘the affairs of the department efficiently, effectively, economically and ethically’.

The Australian Public Service Commission

The Australian Public Service Commission has statutory responsibilities for leading and shaping the Australian Public Service.

Its functions include policy and advisory responsibilities on the service-wide employment framework (including workplace relations), classification, ethics and performance. It does not have centralised control over human resources, as agency heads have full managerial authority and responsibility under the Act.

During consultations stakeholders suggested public service performance is uneven and expressed concerns about the quality of leadership and performance management (including of under-performing staff).

It was also put to the Commission that the operation of the Public Service Act itself impedes improved productivity and a higher performing public sector.

Legally, there are no legislative barriers that restrict or impede addressing or managing out individual under-performance in the public sector. In practice however, it is difficult to manage under-performance.

The Australian Public Service comprises one of the largest and most complex workforces in Australia. The Commission of Audit recognises the benefits that come from devolving responsibilities to departmental secretaries and supports the continuation of this approach. Nevertheless, the Commission considers consistency in certain areas of operations improves productivity across the public sector.

The Commission of Audit also considers the Public Service Commissioner has an important role to play in supporting merit-based appointments to maintain an apolitical public service.

The Commission of Audit recommends that the office of the Public Service Commissioner be retained but be relocated to the Department of Employment. The role and responsibilities of the Public Service Commissioner would be assumed by the Secretary of that Department. Some existing functions of the Australian Public Service Commission should also be amalgamated into the Department of Employment.

Improving organisational structures within agencies

Reforming the structures of government is an essential part of creating a more efficient and effective public sector and lies at the heart of much of the Commission’s work.

The Commission’s Phase One Report provided an overview and assessment of the size and structure of the Commonwealth Public Service and noted that the machinery of government changes implemented in September 2013 significantly simplified and streamlined portfolio arrangements. Recommendations were also made to rationalise many Commonwealth bodies and agencies.

Significant opportunities exist to pursue further efficiencies through better organisational structures within departments and agencies.

As outlined in Chart 1 below, the current staffing structure within the Australian Public Service is ‘top-heavy’.

Around 40 per cent of the 167,000 Commonwealth public servants are employed at the junior and mid-manager levels – Australian Public Service Level 6 and Executive Level 1 classifications.

This trend towards middle management employment has occurred over the past twenty years. It reflects various factors including lower level jobs being lost due to technology and outsourcing, recruitment practices focused on highly qualified and specialist skills, and limited flexibility regarding remuneration resulting in promotion being used as a retention strategy.

The net result of this shift in the composition of the Australian Public Service workforce is that mid-level managers have comparatively few people reporting directly to them. This is known as having a narrow span of control.

Chart 1: Staffing structure within the Australian Public Service

This diagram shows the number of full-time employees in the Australian Public Service at different classification levels. The diagram also shows each classification level as a percentage of the total number of APS employees.

High performing organisations generally have fewer layers of employee classification and wider spans of control.

As part of its deliberations the Commission collected information from 90 agencies on their middle management spans of control and corporate overheads. Benchmarking was undertaken across agencies and against best practice targets for different functions.

The median spans of control reported by agencies that predominantly perform these functions are outlined in Table 1 below.

Table 1: Spans of control of EL1s and EL2s
Agency Type/Function

Best practice
spans of control

Median span of control for managers

Executive Level 2

Executive Level 1

Policy & Research 5 - 8 3.9 2.0
Service Delivery 8 - 10 4.8 3.2
Regulation and Compliance 7 - 9 3.8 2.8
Other (specialist) 6 - 10 3.5 2.3

The Commission considers that there is significant scope to improve structures within many Commonwealth organisations.

However, the Commission does not advocate imposing span of control targets recognising that there are legitimate reasons for individual agency structures to vary from best practice benchmarks. The Commission considers departmental secretaries should be responsible and accountable for their own management practices and structures.

Nevertheless, in light of its analysis, the Commission considers all departmental secretaries and agency heads should be required to prepare plans within the next twelve months, which report on current management structures and spans of control, and identify opportunities for improvement.

The Commission also recommends a number of departments and agencies should develop their plans immediately, given the possibility to realise improved management structures on a large scale.

These include: the Department of Defence, Department of Human Services, Australian Taxation Office, Department of Immigration and Border Protection, Department of Health, Department of Social Services, Australian Bureau of Statistics and the Department of Agriculture.

Improving performance information

The availability of good information on the performance of government programmes and activities is crucial to ensuring taxpayer funds are well spent and the government is held to account. High quality information is essential to answering basic questions such as what was the money used for, what was the policy objective and was it achieved? 

The Commission has been asked to identify options for improving the assessment of government activities and reporting performance with a view to increasing transparency and accountability. These are the hallmarks of responsible government.

While a large volume of performance information is currently available there is no easily understood performance framework. Current arrangements make it difficult for the community to determine whether money is well spent, whether spending programmes meet their objectives and how efficiently and effectively the public sector is performing.

The level of programme detail currently provided in portfolio budget statements varies considerably, with some entities providing only high level information, while others include information that is more useful and relevant to gauging performance for policy purposes.

For example, the information presented to Parliament within the portfolio budget statements for Austrade’s Export Development Grants Scheme is of limited usefulness. It simply outlines the amount budgeted to be spent and that the key performance indicators are the number of grant applications and recipients. There is no information on the effectiveness of this spending.

The Commission has made a number of recommendations to improve the information provided in portfolio budget statements along with the development of more meaningful key performance indicators and a greater role for the Australian National Audit Office to undertake assessments of departments’ programme performance information.

Programme evaluation

Through its annual budget process, the government reviews its policy settings and allocates funds to priority areas. However, budgeting is largely focused on incremental spending and savings decisions, with little systematic attention given to existing spending.

In particular insufficient attention is given to how existing spending can be better prioritised. The Commission considers there is a pressing need to improve programme evaluation practices at the Commonwealth level.

Greater scrutiny of programme performance and effectiveness and continuing appropriateness is achievable through three discrete measures:

  1. Incorporating new and mandatory programme evaluation arrangements into the annual Budget processes.
  2. Revamping the system of strategic reviews of selected programmes.
  3. A new rolling process of comprehensive Portfolio Agency Audits of selected agencies.

Mandatory programme evaluations: The Commission proposes portfolio ministers produce an evaluation plan each year, covering existing and scheduled evaluation activity over a four year period. Evaluation plans would be provided as part of the annual Budget process in portfolio budget submissions. Portfolio ministers would also be required to report on the results of the evaluation activity — that is on the effectiveness of their programmes — in their portfolio budget submissions.

Strategic Reviews: Government activity continues to grow in complexity and breadth with some activities cutting across portfolio boundaries. It is proposed that the Department of Finance could undertake a small number (possibly around six) of Strategic Reviews each year, which holistically examine groups of programmes for their overall effectiveness (as opposed to savings being their prime objective).

Portfolio Agency Audits: Australian Government agencies currently operate in a highly-devolved financial and management framework with significant autonomy to effectively manage their operations. To complement the evaluation of programmes, the Commission recommends the Government implement a separate process to independently and comprehensively ‘audit’ the operations of selected portfolio agencies. These rolling audits would include a detailed examination of an agency’s strategic focus, organisational capability, governance structures, risk management, workforce planning, staff performance management and cost controls.

Delineating policy from service delivery

The Commission was asked to examine the potential for a clearer delineation of responsibilities for policy and service delivery at the Commonwealth level.

In accordance with its Principles of Good Government, the Commission considers portfolio departments should undertake policy development, while agencies for the most part should deliver programmes and services. Between the categories of policy and service delivery choices need to be made about how things get done.

At the Commonwealth level, most service delivery functions are already separate from policy functions. The challenge therefore lies not so much in the separation but in working out how best to connect policy with delivery more effectively.

The Commission considers the interface between policy and service delivery can be improved by re-examining the way services are commissioned, improving the communication between policy departments and service delivery agencies and making greater use of the Cabinet Implementation Unit.

Further rationalisation of Commonwealth bodies

In addition to the 194 principal bodies that were considered for rationalisation in its Phase One Report, the Commission has identified 696 non-principal bodies which exist at the Commonwealth level (including councils, boards and committees) and recommends 482 of them be considered for action as summarised in Table 2 below.

Table 2: Bodies identified for rationalisation
Action to be taken

Principal bodies

Non-principal bodies

Abolish 7 35
Merge with other bodies 35 6
Consolidate into the portfolio department 23 57
To be privatised 9 1
Review, with a view to merging, abolishing or transferring 28 383
Total bodies identified for attention 102 482
Total bodies 194 696

The Commission’s analysis of the non-principal bodies revealed three themes which help explain why so many bodies exist. In summary, 93 non-principal bodies exist to provide support to the 194 principal bodies, 238 exist to facilitate inter-jurisdictional matters including Council of Australian Governments arrangements and processes; and a further 314 exist to provide advice to government.

Consistent with the Commission’s proposals for reforming the Federation by undertaking a thorough reassessment of roles and responsibilities across levels of government, the Commission considers the need for many of the bodies associated with inter‑jurisdictional matters including Council of Australian Government processes should be reassessed.

The Commission also considers that a major overhaul of the number of advisory bodies should be undertaken.

Assessing Commonwealth grant programmes

The Commission’s Phase One Report noted that the Commonwealth spent about $22 billion on grants in 2012-13, across more than 500 grants programmes. A number of recommendations were made around improving administrative processes, including a broad-banding of grants and the establishment of a central grants register. It also recommended abolishing 20 existing grant programmes.

In its Phase Two Report, the Commission builds on this, examining remaining programmes that extend from 2014-15 and beyond.

  • A practice of broad-banding grants programmes has the potential to significantly reduce the administrative and compliance burden and could lead to better outcomes for the money spent. For example there are 76 different grant programmes relating to Indigenous matters, 54 different programmes relating to health issues, 28 different schools-related grants and 21 different grants programmes relating to mental health matters (in this last instance involving aggregate expenditure of some $500 million).
  • In relation to identifying other Commonwealth grants programmes that could be abolished the Commission has focused on the larger programmes – the 172 grants programmes with annual spending of more than $5 million. Fourteen grant programmes are identified for abolition involving spending in 2014-15 of around $330 million. Taking into account funds already committed in these programmes (estimated to be about 40 per cent) abolition could deliver an annual saving of some $200 million.
  • The Commission also recommends transferring to the States a number of schools-related grant programmes.

Further potential savings in Commonwealth spending

The Commission’s Phase One Report focused on the Commonwealth’s 15 largest and fast growing programmes as well as a number of other large spending areas, including: reforming general revenue assistance to the States; options to place military superannuation arrangements on a more sustainable financial footing; and other potential savings options.

The Commission has also reviewed other spending and programmes that fall elsewhere within the top one hundred areas of Commonwealth spending and has identified scope to reform a small number of social welfare programmes and local government initiatives. This includes:

  • establishing a new benchmark for the Parenting Payment Single of 25 per cent of Average Weekly Earnings, with transition occurring over a 15 year period during which indexation would be linked to movements in the consumer price index;
  • reforming Youth Allowance arrangements to better target assistance to students. This includes converting Relocation Scholarships into a voluntary income-contingent loan, similar to Student Start-Up Scholarships;
  • realigning working-age payments (including Newstart, Widow and Sickness Allowance) for those over the age of 60 (who receive higher rates of assistance) to make them consistent with those for other recipients;
  • reforming the arrangements for education supplements to abolish the Education Entry Payment and ensure the Pensioner Education Supplement is only provided to recipients during study terms or semesters; and
  • not proceeding with the proposed trial of the Housing Help for Seniors programme, which will introduce a new exemption that would treat seniors with a similar level of wealth differently in terms of Age Pension eligibility.

Implications of the Commission’s recommendations for public sector staffing

The size of the public sector, including staffing, depends on the role of government, requiring a judgement about what governments should do and what citizens can best do for themselves.

The Commission considers that public sector staffing levels should reflect the Government’s conscious choices about the functions to be delivered by the public sector, and reasonable expectations about the efficiency with which they can be delivered.

Since the late 1980s, ‘efficiency dividends’ have promoted greater cost efficiency in the Australian Public Service. There is some rationale for a consistently-applied low rate of efficiency dividend, given the public sector is not subject to commercial discipline to restrain costs and improve productivity.

That said, efficiency dividends are a particularly ‘blunt instrument’ to achieve budgetary savings.

Rather than make explicit and often difficult decisions about what government should do and the extent of public sector resourcing, an efficiency dividend reduces funding to both areas of high priority and areas of low priority; to areas already operating efficiently, and to areas where there could be significant efficiency gains.

In recent years, relatively high efficiency dividends have been applied to deliver short-term budgetary savings.

The Commission recognises that some agencies, through the efficiency dividend and other decisions, have already had significant reductions in funding, requiring voluntary and, in some cases, forced redundancies. This includes the Departments of Health, Environment, Communications and the Treasury.

Many of the Commission’s recommendations, including those relating to a rationalisation of Commonwealth bodies and agencies, will have implications for public sector staffing levels.

However, given the existing activity within agencies to reduce staffing levels, the impact of the Commission’s recommendations may be within, or additional to, planned reductions.

Over the medium term, if the Commission’s recommendations to reform the Federation are progressed and a fundamental re-alignment of roles and responsibilities occurs, the reduction in duplication will mean fewer Federal public servants. This has particular implications for departments such as the Department of Education and the Department of Health.

In addition, the Commission has identified scope for potential improvements in organisational structures within departments and agencies, including through increasing spans of control at the Executive Level 1 and 2 staff classifications.

Depending on how these opportunities are progressed by departmental secretaries and agency heads there could be significant reductions in the number of mid-level public servants employed by the Commonwealth.

Estimates of the employment consequences of the Commission’s recommendations at an aggregate level are necessarily indicative. As was the case with its estimates of savings, decisions on detailed programme design and timing of implementation will impact on any employment implications arising from the Commission’s recommendations.

Nonetheless, as a broad guide, the Commission expects that some 15,000 fewer public servants could be required. This would represent a reduction of around 5 per cent of total Commonwealth General Government Sector employment.

A way ahead

The Commission was asked to undertake a full-scale review of the spending of the Commonwealth Government to ensure value for money and the elimination of wasteful spending as well as to examine opportunities to improve efficiency and effectiveness. It was given a broad remit.

The Commission has taken a methodical and structured approach to this task, focusing attention proportionately on those areas most likely to have the biggest effects on budget sustainability and government efficiency.

There are 64 recommendations in its Phase One Report and a further 22 recommendations in the Phase Two Report. As outlined in both Reports, many of the Commission’s recommendations can be implemented incrementally over time.

That said, the Commission has not examined everything the Commonwealth Government does. The Commission undertook its task in full knowledge that it would not be possible to examine every area of Commonwealth activity as part of a single, one-off review.

The reform process needs to be ongoing.

The Commission’s Reports provide important direction and set out a number of processes that should be embedded into government. These processes should lead to more effective government and are intended to continue well after the National Commission of Audit is completed.

The Commission has emphasised the importance of a credible medium-term fiscal strategy that provides certainty over the role of government and fiscal policy in the economy. Adhering to the strategy will require a disciplined approach over many years to reassess the Government’s spending priorities, return the Budget to surplus, and begin to pay down debt.

We have also made a case for reforming the Federation to clarify roles and responsibilities and improve financial arrangements so that governments can have greater control over their budgets and activities and are thus more accountable to their citizens.

The routine production of more meaningful information on government programmes and key performance indicators will improve transparency about the activities of government. It will also strengthen the evidence base for ministerial decision-making.

Similarly, a systematic approach to programme evaluation, linked to the Budget process, is aimed at ensuring ministers have robust information to guide key decisions about whether to expand existing programmes or reallocate funds to higher priorities.

A broader challenge is to foster a culture where the public sector systematically identifies what has worked and areas where further improvements could be made.

The effectiveness of individual government agencies is central to delivering effective and efficient government. While supporting the highly-devolved financial and management framework, the Commission has recommended separate processes to independently and comprehensively ‘audit’ the operations of selected portfolio agencies on a rolling basis. This would provide another avenue to drive performance by introducing external, objective scrutiny of an agency’s operations.

These measures to improve performance assessment and evaluation will form part of an ongoing process to drive better government. However they will only be effective if ministers own and act on their findings.

Ultimately, governments need to play their part by clearly articulating their own policy priorities.

The Commission’s Report maps out a path towards responsible government.

Throughout its deliberations, the Commission has been guided by the idea that Australia deserves responsible government.

It is an aspiration worth having.