Express law No. 263

10 January 2018

Commonwealth Government Business Enterprises – Governance and Oversight Guidelines

In January 2018, the Department of Finance released an updated version of Resource Management Guide No. 126 – Commonwealth Government Business Enterprises – Governance and Oversight Guidelines (GBE Guidelines). The new GBE Guidelines replace the guidelines published in August 2015.

The GBE Guidelines provide guidance regarding the governance of government business enterprises (GBEs) and cover issues such as:

• the GBE's board and corporate governance
• corporate plans and annual reports
• keeping shareholder ministers informed
• financial governance of GBEs.

The GBE Guidelines supplement the provisions of the Public Governance, Performance and Accountability Act 2013 and the Public Governance, Performance and Accountability Rule 2014, and apply to GBEs that are Commonwealth entities or wholly owned Commonwealth companies.

Key changes to GBE Guidelines

The changes to the GBE Guidelines will have an impact on both GBEs and the shareholder departments that oversee GBEs' activities. In addition to a number of drafting and editorial changes, the main changes to the GBE Guidelines are:

• changes to the content of appointment letters for directors of GBEs, and changes to the formal response required from a director to their appointment letter (including confirmation that the director has reviewed the GBE Director's Guide) [paragraphs 2.3–2.4 of the GBE Guidelines]
• clarification around the content of corporate plans and the corporate planning process, specifically shareholder ministers' ability to request a GBE board to reconsider elements of a draft corporate plan prior to finalisation, clarification that shareholder ministers are not required to approve or agree a GBE's final corporate plan and the content of progress reports [paragraphs 3.3–3.15 of the GBE Guidelines]
• clarification around the content of annual reports, specifically in relation to the financial results of subsidiaries and encouraging GBEs to include in their annual reports the minimum standards outlined in the Voluntary Tax Transparency Code, which has been developed by the Board of Taxation to promote more transparency in tax reporting by medium and large businesses [paragraphs 3.16 and 3.20 of the GBE Guidelines]
• a new reporting template for use when reporting executive remuneration [paragraphs 3.21–3.23 of the GBE Guidelines]
• additional guidance in relation to audit committees, including the functions of an audit committee, as specified in the audit committee's written charter [paragraphs 3.31–3.32 of the GBE Guidelines]
• encouragement for GBEs to consider applying the Commonwealth Risk Management Policy and Guide to Implementing the Commonwealth Risk Management Policy published by the Department of Finance in relation to risk management frameworks and systems [paragraphs 4.15–4.16 of the GBE Guidelines]
• confirmation that borrowing by corporate Commonwealth entities requires express authorisation by or under an Act, the Finance Minister or the PGPA Rules. GBEs that are corporate Commonwealth entities are also expected to consult the Shareholder Ministers on significant borrowing proposals [paragraph 4.23 of the GBE Guidelines].

Implications

GBEs and shareholder departments should review their procedures and templates (including appointment letter, annual report and corporate plan templates) to ensure consistency with the revised Guidelines.

Important: The material in Express law is provided to clients 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.