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Printable version: CAC Act Matters - Winter Edition 2010 [ 1.7 MB ]
Welcome to our inaugural issue of the CAC Act Matters newsletter.
Having recently taken on policy responsibilities for the Commonwealth Authorities and Companies Act 1997 (CAC Act), I see this newsletter as another way to help keep you up-to-date on issues that are relevant to your operations.
The newsletter is designed to provide you with assistance to understand your obligations under the CAC Act, and to assist you in your roles and responsibilities.
CAC Act bodies play an important role in the Australian community. We are keen to maintain good communication on CAC Act matters. We also expect that those of our colleagues in Departments who work closely with CAC Act bodies will have an interest in CAC Act Matters.
Financial Management Group
Department of Finance and Deregulation
In this issue we look at what is a CAC Act body and how CAC Act bodies benefit from working together. We also provide an update on legislative changes affecting CAC Act bodies.
Included with this newsletter is the CAC Act side of our flipchart with our guide to the chart and a Legislative Update to the CAC Legislation booklet published in August 2008. For a hardcopy version of any of these, please contact us at the email address below.
As this is our first issue, we are looking for a name for the newsletter. Currently, it is titled CAC Act Matters, but if you can come up with a better idea we would like to hear from you.
Also, if you have any comments, questions, or ideas for articles, or want to add someone to our mailing list, please contact us at CACAct@finance.gov.au.
First Assistant Secretary
Financial Framework Division
Financial Management Group
Department of Finance and Deregulation
Did you know that when you use your wi-fi internet connection, collect your mail from your letter box or watch Spicks and Specks on TV you benefit from the work of a CAC Act body? CSIRO (as inventor of technology that allows wi-fi internet communications), Australia Post and the ABC, along with other iconic entities such as SBS, the Australian War Memorial and Medibank Private Ltd are all CAC Act bodies.
So what is a CAC Act body? Simply, a CAC Act body is a statutory authority, (called a Commonwealth authority), or a company that is controlled by the Commonwealth, (called a Commonwealth company), established for a public purpose that holds money on its own account and, in most cases, is governed by a board of directors
In short, CAC Act bodies are different from other Commonwealth entities in that they are legally and financially separate from the Commonwealth and their directors and officers are subject to a range of directors' duties.
CAC Act bodies tend to be more entrepreneurial in nature than other Commonwealth entities. They are bodies that have a commercial focus but, for a variety of policy reasons, the Commonwealth seeks to have a role in that sector of the economy. For example, marketing 'There's Nothing Like Australia' is a major role for Tourism Australia, another CAC Act body.
One difference between the two types of CAC Act bodies (Commonwealth authorities and Commonwealth companies) is that directors of Commonwealth companies, as entities established under the Corporations Act 2001, are required, like any company, to ensure that the company can meet its debts as and when they fall due. But, directors of Commonwealth authorities under the CAC Act are not subject to this requirement.
To help understand the different types of Australian Government bodies, including CAC Act bodies, Finance has developed the flipchart and a guide to the chart. (The CAC Act side of the flipchart and guide is included for your information with this newsletter). The flipchart is regularly updated by Finance to reflect changes to bodies. Events that usually trigger an update of the flipchart include the creation of a new CAC Act body, the abolition of an existing body, when the Commonwealth obtains control of a company and a change to the administrative arrangements order.
The flipchart also arranges Commonwealth authorities and Commonwealth companies by portfolio and different legal structures. For example, it identifies bodies that are Government Business Enterprises and General Government Sector bodies.
Departments, when considering arrangements for new activities (such as establishing a new company) should refer to the policy document Governance Arrangements for Australian Government Bodies and contact Finance for help in determining the appropriate structure and arrangement for the new activity.
So the next time you see Blue Poles at the National Gallery of Australia or visit Kakadu National Park, remember you are enjoying the benefits of another CAC Act body.
CAC Act bodies are a varied bunch and there are many opportunities for them to work together. Recently we came across two instances where CAC Act bodies have worked closely together to the benefit of the bodies involved, as indicated below.
Recently the National Gallery of Australia wound up its highly successful Masterpieces from Paris exhibition. Works displayed at the exhibition included pieces from Vincent van Gogh, Paul Gauguin, Paul Cezanne, Georges Seurat, Pierre Bonnard, Claude Monet, Maurice Denis and Edouard Vuillard. These works are normally housed in the Mus©e d'Orsay in Paris, but were on loan to the National Gallery of Australia during renovations to the Mus©e d'Orsay's Post-Impressionist Galleries.
Following an extended showing, the exhibition ended on 18 April 2010 with the National Gallery of Australia open for 32 hours straight over the last two days of the exhibition. With the Gallery open all night, ABC Local Radio Overnight presenter, Rod Quinn, broadcasted live from the Gallery.
The ABC saw this as an opportunity to highlight the successful exhibition during the first all-night opening of the National Gallery of Australia. It was a great publicity opportunity for the Gallery and a good opportunity for ABC local radio to get out and about to meet its listeners
Above: Rod Quinn, ABC local radio presenter during the all-night opening of the National Gallery of Australia.
Adelaide is the City of Churches, home of the Adelaide Festival of Arts and close to the world famous Barossa Valley. Adelaide is also home of two CAC Act bodies working together to improve Australia's wine industry the GWRDC and Wine Australia.
The GWRDC supports the development of grape and wine industry through funding research and development, and then disseminates and commercialises the results throughout the industry.
Wine Australia is the first point of contact for wine sector information and analysis. Wine Australia is also responsible for the strategic marketing of Australian wine and assisting with international market access while preserving Australia's international reputation through its regulatory activities.
The two bodies work together as the research and development, marketing and export regulatory bodies for Australia's wine industry. For example, following the 2003 bushfires in Victoria, some wine made from smoke-affected grapes caused Wine Australia to reject certain wines for export. The GRWDC then organised research into the effects of bushfires on grapes.
Both bodies used the information from the research to better understand how bushfires affect the quality of grapes and wine in the Australian industry, and help maintain Australia's strong reputation in the international wine market.
If you have stories of CAC Act bodies working together, please let us know.
For the everyday Australian, a GPO would be a General Post Office. However, for bodies under the CAC Act (which includes Australia Post), GPOs (General Policy Orders) are a mechanism in the CAC Act for applying general policies of the Australian Government to CAC Act bodies.
Two CAC Act bodies (ABC and Australian National University) have a full exemption from the requirements to comply with GPOs, while two other CAC Act bodies (SBS and Australian Industry Development Corporation) have a partial exemption.
On 13 November 2009, Finance issued Finance Circular 2009/08: Application of general policies of the Australian Government to bodies subject to the CAC Act. The Circular explains the process for applying general policies through GPOs.
It reflects a change from the original requirements for applying general policies, through a letter from a body's responsible Minister.
However, notifications of general policies of government made under the previous arrangements are still in force until they are formally revoked by the Finance Minister.
A requirement in the new arrangement is that a GPO will be a legislative instrument recorded on the Federal Register of Legislative Instruments, enabling CAC Act bodies to identify which general policies are applicable to them. This makes it clearer for CAC Act bodies to understand what general policies of government are applicable to them.
This is an improvement on the previous process that relied on CAC Act bodies retaining accurate records of the notification letters sent to them by their Minister. Over time these letters were either lost or misplaced and no central record was kept regarding which general policies applied to specific CAC Act bodies.
For more information on the application of GPOs, refer to the Finance Circular 2009/08.
Commonwealth authorities are required to disclose all general policies applicable to them in their Report of Operations, and where applicable the extent of, and reasons for, any non compliance with a general policy.
So, the next time you hear public servants talking about GPOs, you'll know that they are more than likely referring to General Policy Orders and not heading to the Post Office.
Every day, most, if not all of us, deal with some aspect of a credit related transaction. We regularly use credit facilities (such as credit cards and credit vouchers) in a business and personal sense. Finance is aware of this and supports the use of credit facilities as an efficient and effective way to help transact business.
Commonwealth authorities can use credit facilities in their normal business operations, whether that be through an express borrowing power in their enabling legislation or through section 28A of the CAC Act.
Section 28A also allows for the creation of regulations on the use of credit cards and credit vouchers.
These regulations were introduced on 1 July 2009. In summary, they:
Directors of CAC Act bodies that make use of credit facilities may wish to provide guidelines on their use. For example, they may focus on issues such as the approval required to use a credit facility, reconciling credit statements, internal audits and general training on the use of those credit facilities.
To combat the intentional misuse of credit cards or credit vouchers, section 28B was introduced. It is now a specific offence (punishable by 7 years imprisonment) to intentionally misuse a Commonwealth authority's credit card or credit voucher.
It is important to note that while section 28A does not apply to those authorities that have an express borrowing power in their enabling legislation, section 28B applies to all Commonwealth authorities that use credit cards.
In respect to section 28B, the CAC Regulations allow the directors of a Commonwealth authority to authorise a holder of a Commonwealth authority credit card to use the card to pay a claim that includes both official and coincidental private expenditure. In summary, credit cards and vouchers can be an effective way for a Commonwealth authority to conduct business, but the CAC Act makes directors responsible for ensuring that they are used appropriately.
The environment in which we live and operate is constantly changing and as a result it is necessary for the CAC Act to try and keep pace. Like any piece of legislation the CAC Act needs to be regularly updated to cater for emerging issues (such as the use of credit facilities).
The Commonwealth Authorities and Companies Amendment Act 2008 (CAC Amendment Act) addressed a deficiency that existed regarding the use of Commonwealth authority credit cards and was the most significant amendment to the CAC Act since its enactment in 1997.
Finance consulted heavily in the development of the CAC Amendment Act and since then has been working with departments and CAC Act bodies to implement the changes.
A summary of the key changes that commenced on 1 July 2009 include:
To assist Commonwealth authorities and companies understand these and other obligations under the CAC Act, we have issued a Legislative Update (as at June 2010) that reflects the changes to the CAC Act since the last hard cover publication (August 2008). The Legislative Update is designed to slip neatly inside the front cover of the hard cover publication.
A consolidated electronic copy of the hard cover publication is available on the Finance Website.
In June 2010, the Financial Framework Legislation Amendment Bill 2010 (FFLA Bill) was introduced into Parliament. Amongst other reforms, the FFLA Bill proposed to amend the governance and legal arrangements of a number of CAC Act bodies.
Following the calling of the election the FFLA Bill has lapsed. The possible reintroduction of the FFLA Bill would be a matter for consideration by the incoming Government.
1 January 2010 saw the commencement of Finance Minister's (CAC Act Procurement) Directions 2009 (Directions) on the application of the Commonwealth Procurement Guidelines (CPGs) to certain CAC Act bodies. The Directions replace the previous directions in place since December 2004.
The Directions, which are included in the Legislative Update, only apply to those 19 CAC Act bodies listed in the CAC Regulations.
The Directions clarify the application of the CPGs to relevant CAC Act bodies. In particular they clarify:
For more information, on applying the CPGs, please e-mail Procurement Policy and Advice at email@example.com.
It's that time of year again, when directors and Chief Financial Officers trawl over pages of figures and reports in preparation for the opening of the reporting season. For CAC Act bodies this time of year also means preparing Compliance Reports.
Compliance Reports for the 2009-10 year must be sent to the Finance Minister through the Secretary of the Department of Finance and Deregulation by 15 October 2010. The address is:
Department of Finance and Deregulation
John Gorton Building King
Parkes ACT 2600 Australia.
Further information on the requirements for Compliance Reports can be found in Finance Circular 2008/05: Compliance Reporting - CAC Act bodies.
It is important for all CAC bodies to understand their CAC Act compliance obligations and for Departments of State to know what is expected of them when one of their portfolio CAC Act bodies advises it has a compliance issue under the CAC Act.
Portfolio departments should contact Finance about reported compliance issues when they need to seek input.
They can also contact Finance if their responsible Minister is of the opinion that the Finance Minister should commence civil penalty provisions under the CAC Act against the director or relevant staff member responsible for a reported compliance breach, in relation to Commonwealth authorities.
This does not prevent a CAC Act body or its portfolio department from referring a compliance issue to the Australian Federal Police or the Director of Public Prosecutions where an alleged criminal compliance breach is reported for Commonwealth authorities. In relation to Commonwealth companies, civil matters are, of course regulated by the Australian Securities and Investments Commission.
We are considering the introduction of a discussion forum for issues surrounding the CAC Act. The forum would be designed to allow members to raise topics and questions related to the CAC Act.
Through the forum, it is hoped that a community of knowledge could be developed, that would allow users to access advice on common questions.
The forum would also assist Finance to better understand what issues are being experienced by those using the CAC Act.
A possible format for the forum could be based on the Procurement Discussion Forum that currently operates to support the CPGs.
However, given that this format involves regular physical meetings, it may not be an appropriate structure, given the geographical location of CAC Act bodies.
Notwithstanding this, we still consider the value of an annual get together as part of the Forum, where Finance and CAC Act bodies can come together and discuss broad CAC Act issues.
Another method could be regular correspondence through the CAC Act mailbox, CACAct@finance.gov.au for question-and-answer type discussion, as well as allowing for additional comments to be posted on issues being discussed. A blog type forum may also be a possibility.
We are very interested in readers' views on how these suggestions and any others you may have on the structure of the proposed forum. Please contact us with your ideas and suggestions.
We often come across reference materials for CAC Act bodies and what it means to be working for and be involved with a CAC Act body.
For example, the Australian Institute of Company Directors (AICD), in October 2009 held its first major conference on public sector governance. The seminar covered topics including ethics in the public sector, directors' duties, collaboration of bodies within the public sector, etc. The AICD plans to hold another conference in October 2010.
Minter Ellison also recently prepared a Guide for persons serving on, or considering serving on the boards of Commonwealth authorities or Commonwealth companies. The Guide covers their legal duties and obligations, focusing in particular on the Corporations Act 2001 and the CAC Act.
The Guide is in three parts:
This Guide has been independently developed by Minter Ellison, and it can be found on the Minter Ellison Website.
If you come across other useful reference material on the. CAC Act, we would be interested to hear from you.
Finance contacts Legislative Review Branch (LRB), Financial Framework Division, Financial Management Group Marc Mowbray-d'Arbela, Assistant Secretary, LRB 02 6215 3657 Paul Levi, Director, CAC Act Team 02 6215 1555 Graeme Selleck, Assistant Director, CAC Act Team 02 6215 2684 Luke Kostava, Policy Officer, CAC Act Team 02 6215 3205 Daniel Koroma, Policy Officer, CAC Act Team 02 6215 2438 Anna Fredericks, Policy Officer, CAC Act Team 02 6215 1384 Email: CACAct@finance.gov.au ISSN: 1838-3416