In January 2018, the Department of Finance released updated Government Business Enterprise Guidelines (GBE Guidelines). These replace the August 2015 GBE Guidelines.
The updates affect the following two Corporate Commonwealth entities and five Commonwealth companies prescribed by section 5(1) of the Public Governance, Performance and Accountability Act 2014 (PGPA Act):
Corporate Commonwealth entities
- Defence Housing Australia
- Australia Postal Corporation
- NBN Co Limited
- Australian Rail Track Corporation Limited
- ASC Limited
- Australian Naval Infrastructure Pty Ltd
- Western Sydney Airport Corporation
- Moorebank Intermodal Company Limited
From a practical perspective the relationship between a shareholder Minister and a GBE is similar to a holding company and its subsidiary. Accordingly, the GBE Guidelines deal with such topics as:
- the GBE’s board and corporate governance
- planning and reporting (including Annual Reports and Corporate Plans)
- keeping shareholder Ministers informed
- financial governance (including financial targets and management of risks)
The changes affect both GBEs and their shareholder departments. Many of the changes focus on the content of Corporate Plans and Annual Reports and reporting templates and letters (such as Director’s appointment letters).
Appointment Letters (paragraphs 2.3-2.4)
- Amended content and revision to the response required from a Director to an appointment letter.
Corporate Plans (paragraphs 3.3-3.15)
- Clarification around a shareholder Minister’s ability to request a Board to reconsider elements of a draft corporate plan and importantly that a shareholder Minister is not required to approve or agree a final corporate plan.
Annual Reports (paragraphs 3.16 and 3.20)
- Clarification in respect of Annual Report content, in particular the finances of subsidiaries and adopting the Voluntary Tax Transparency Code (developed by the Board of Taxation) as a minimum standard.
Executive Remuneration (paragraphs 3.21 – 3.23)
- Inclusion of a new reporting template.
Audit Committees (paragraphs 3.31 – 3.32)
- More guidance on the functions of an audit committee (re the committee’s charter).
Risk Management (paragraphs 4.15 – 4.16)
- GBEs are encouraged to apply the Commonwealth Risk Management Policy published by the Department of Finance to adopt a standardised risk management framework.
Borrowing (paragraph 4.23)
- Borrowing by corporate Commonwealth entities (Defence Housing Australia and Australia Post) requires authorisation by the Finance Minister, or must be expressly authorised by an Act or the PGPA Rules.
- Commonwealth entities (NBN Co Limited, Australian Rail Track Corporation Limited, ASC Limited, Australian Naval Infrastructure Pty Ltd, Western Sydney Airport Corporation and Moorebank Intermodal Company Limited) are required to consult their shareholder Minister’s on significant borrowing proposals.
What GBEs need to do
First, GBEs should update their templates and review their procedural documentation to reflect the new requirements and processes.
Second, GBEs should familiarise themselves with the newly mandated or encouraged processes, such as the Department of Finance’s Risk Management Policy and the Voluntary Tax Transparency Code.
How Meyer Vandenberg can assist
We are Commonwealth Government and corporate governance specialists. We assist GBEs to realign business processes to reflect regulatory changes. We can help prepare you for the impact of the new GBE Guidelines and better streamline your reporting to meet the new requirements. We understand the Commonwealth’s unique operating environment.
For more information contact the Government Team: