Table of Contents
Centrelink represents a departure from the APS departmental model because of the scope of its design and operations, in particular its complex and unusual governance arrangements. Its emergence coincided with the growth of corporate governance in the public sector.
Of the four primary stakeholder groups nominated by Centrelink—the portfolio ministers, client departments, internal customers (board of management and agency staff) and the people using Centrelink services—this chapter is concerned with the role of the minister and the board.[1] The central features of Centrelink’s governance have been, first, the formal political and executive elements involving the minister, board, departmental secretary and chief executive, and second, their interactions and operations in practice. In other words, there have been three sets of primary relationships, each involving Centrelink and either its board, its minister or the key purchasing departments.[2]
Three perspectives inform the approach to Centrelink’s governance. First, there is the corporate governance perspective, which looks at the formal elements of relationships and seeks to compare them and how they operate with good governance principles. The board features here as the key and most interesting element of corporate governance, particularly in consideration of what difference it makes. Second, there is the political management perspective. Here, centrality is given to the minister, who is operating in terms of one of the organisational imperatives, the political, outlined in the introductory chapter. Third, there is the perspective of the agency in its dealings with the other stakeholders. This reflects a second organisational imperative, the entrepreneurial, which requires advocacy and building and mobilising support for activities.
Given such distinctive roles and relationships, how do the actors work through these imperatives and what is the impact on other stakeholders? This chapter explores the governance operations of Centrelink, in particular, the political management of an agency that is outside the formal and normal departmental loop, and the relationship between a board dominated by businesspeople and those concerned with Centrelink’s social policy focus.
Minister Ruddock (1996:7624) made it clear that Centrelink was to be a statutory agency with full public service responsibilities as
a core part of government operations. All the mainstream legislation for the operation of Commonwealth departments and agencies will apply to this agency. It will be subject to the Audit Act, finance regulations and finance directions…these scrutiny and accountability arrangements are central to the management structures for the agency given that it will be responsible for the day-to-day administration of large sums of public moneys.
Minister Newman (1997) regarded Centrelink as significant because it would not operate solely within one department or portfolio. This feature had implications for governance.
Governance covers the overall management of the affairs of organisations and is ‘generally understood to encompass authority, accountability, stewardship, leadership, direction and control’ (ANAO 1997a:1). Elements of good governance include corporate planning, business plans, audit committees, performance information and standards, client service focus and planned and professional development. The main questions of good governance concern appointments to the board and its composition, the role of the board and the relationships between the board, the minister and Centrelink and, finally, the board’s impact.
Centrelink, as a statutory agency, operated under the Financial Management and Accountability (FMA) Act 1997, which required a high level of accountability. The chairman of its board of management was regarded as the chief executive for the purpose of the FMA Act and was given specific powers in the legislation establishing Centrelink, which included direct accountability to the portfolio minister. The accountability and reporting mechanisms were quite complex. Not only did the CEO, who was appointed by the board, report to the board, the CEO reported directly to the minister (or ministers) of client departments and was responsible for the delivery of programs for which these departmental secretaries were funded and accountable. The Review of Corporate Governance (Uhrig 2003) commented that Centrelink, while under the FMA Act,
unusually, is also governed by a board. Apparently, given the need to strengthen the governance power of the Centrelink board, the [FMA] Regulations 1997 establish the chairman of the board as the chief executive for FMA Act accountability purposes. However, the actual chief executive officer is the agency head for [Public Service] Act purposes. This situation creates an anomaly of having two chief executives for accountability and governance purposes.
Centrelink provides the case of an organisation that combines some formal autonomy through corporate governance arrangements (an independently appointed CEO and board) and operations (involving relationships with several departments), with informal features that facilitate conformity with government policy and preferences in politically sensitive fields.
Located within the core public service and a statutory agency, Centrelink is subject to the requirements of a department of state. How its position and relationships operate depends on its statutory basis and practice as it has evolved. Where functions derive from a department of state and remain in the core, some features will endure. As the organisation’s functions have been separated out from those of a department, it is also expected to display non-department-like features, such as being entrepreneurial and business like.
The standard departmental model consists of a direct relationship between a minister and a departmental secretary, who, under the Public Service Act 1999, has clear responsibilities in relation to the minister. In contrast, until 2004, Centrelink reported to the minister through the board on administrative issues relating to the portfolio. The client departments are the purchasers of services detailed in negotiated agreements with the agency, which requires effective working relationships to ensure policy is implemented to the standards and quantities agreed.