Commonwealth Financial Accountability Review

Overview of key issues

Support for reform

CCA strongly supports the overall directions for CFAR reform of the Commonwealth Financial Framework as outlined in the CFAR Discussion Paper. 

‘The financial Framework should support government operations to create public value.  It should promote the efficient and effective achievement of outcomes and provide for high levels of transparency and accountability.’                        (Chapter 4, Directions for reform pg. 19)

Although there is little hard data available about the exact nature of contracts, grants and other funding arrangements individual Commonwealth agencies enter into, it is clear that the notion of real performance management and monitoring falls well outside most contracting and procurement processes as they apply to not-for-profit organisations.  What passes as performance based contracting and funding in most instances is probably better described as Commonwealth agencies using financial penalties to ensure compliance with input and output milestones.  This approach is, at best, somewhat disconnected from what are often entirely separate policy goals.

The Productivity Commission recently highlighted the failure of Australian governments to adopt a more measured, efficient and outcome focused approach to the outsourcing of services, contracting and funding of not-for-profit organisations.  While there are many important findings in the Productivity Commission Report into the Contribution of the Not-for-Profit Sector, the following two recommendations are particularly pertinent when considering the issues outlined in the CFAR Discussion Paper:

Australian governments should urgently review and streamline their tendering, contracting, reporting and acquittal requirements in the provision of services to reduce compliance costs.  This should seek to ensure that the compliance burden associated with these requirements is proportionate to the funding provided and risk involved.  Further, to reduce the current need to verify the provider’s corporate or financial health on multiple occasions, even within the same agency, reviews should include consideration of:

• development of Master Agreements that are fit-for-purpose, at least at a whole-of-agency level
• use of pre-qualifying panels of service providers.

(Recommendation 12.7 Contribution of the Not-for-Profit Sector, Productivity Commission, 2010)

The Department of Finance and Deregulation should develop a common set of core principles to underpin all government service agreements and contracts in the human services area. This should be done in consultation with relevant government departments and agencies and service providers.

(Recommendation 12.8 Contribution of the Not-for-Profit Sector, Productivity Commission, 2010)

CCA's full submission is attached.