Entities deliver their corporate services through different operating models.
Negotiating an agreement for the transfer of corporate employees, average staffing levels (ASL), assets, liabilities, systems, accommodation and appropriations can be complex. The underlying focus is to achieve the most efficient and effective whole-of-government outcomes in support of the Government’s objectives.
Entities are expected to implement the Machinery of Government (MoG) change in a way consistent with the MoG principles and operational protocols outlined in the Executive Overview.
Corporate functions
The movement of ASL (including corporate employees), assets, liabilities, systems, accommodation and appropriations is for negotiation between affected entities. There is an expectation that a proportion of corporate employees who have been providing support will move with the transferring function (‘employees follow function’).
Corporate functions may span finance, human resources, ICT, communications, ministerial/parliamentary, legal, records and information management, and other enabling services areas.
For a straightforward MoG change where corporate delivery models are similar, internal cost allocation methods are comparable and entities are experienced in implementing MoG changes, it may be appropriate for the transfer of corporate resources to be proportionate to the number of other employees moving from one entity to another.
Where a MoG change affects multiple entities, or where corporate services are delivered and/or costed in different ways, identifying employees to transfer, and agreeing on the transfer of assets and funding can be more complex. Generally, decisions on the transfer of ASL (including corporate employees), assets, liabilities, systems, accommodation and appropriations following a MoG change should allow all affected entities to continue to deliver their corporate services in accordance with their existing operating models.
Please see Average Staffing Levels for further information.
Where a MoG change is large and/or complex
Defining what makes a MoG change complex is difficult. However, factors that would indicate that a MoG is complex include:
the scale and value of the functions being transferred, relative to the size of the transferring and/or receiving entity
the transfer impacting multiple outcomes, programs and business functions
the transfer being geographically diverse
the transfer involving substantially different or numerous corporate systems and platforms
requirements for legislative change.
If the MoG change is large and/or complex, the Standard Departmental Costing Template (SDCT) and associated Standard Departmental Costing Model Principles should provide a starting point for discussions around the transfer of corporate functions.
Where the SDCT is not used, affected entities should develop and agree on a methodology to cost the corporate functions being transferred. The agreed methodology should reflect the likely cost of providing corporate functions to support transferred employees, without unduly impacting on the transferring entity. This methodology may be based on a combination of each entity’s cost and employee allocation models or internal budget models, as well as the SDCT.
ASL (including corporate employee) costs will include salaries/wages as well as related on-costs such as annual and long service leave expenses, personal leave expenses (where industrial instruments/legislation allow portability of leave) and superannuation expenses. Corporate asset related costs (including systems and fit outs) may include maintenance and replacement costs, particularly those already factored into the budget estimates in CBMS and/or agreed to by the Government.
As costings for MoG changes should represent the cost of delivery, it may be inappropriate to use the SDCT where this would result in a windfall gain to one entity from the transfer of corporate services. Entities should take into account all funded positions associated with the transferring corporate functions, both filled and unfilled, as well as any related cost recovery arrangements that may be in place.
If there is no agreement to use the SDCT, the funding transferred should be the total expenditure that the transferring entity was going to commit to the function prior to the announcement of the MoG change.
Where a MoG change is small
In the case of small and/or less complex MoG changes, the SDCT should be used as the default to calculate the corporate services funding to be transferred, if there is no agreement between the affected entities on an alternative model.
Shared Services
Where one or more entities involved in a MoG change have shared services arrangements, transfer of employees and contractors, ASL, assets and appropriations should be addressed through negotiations between the parties that give consideration to the delivery models of the entities.
If a MoG change requires that a change be made to a Memorandum of Understanding (MoU) covering shared services, the relevant entities will promptly and cooperatively review and execute any consequent changes to, or termination of, the MoU by the completion date of the MoG change. Entities should also engage early with their shared services providing entity to either agree on a timeframe for on-boarding or agree on transitional arrangements.
Where part of a transferring entity’s corporate functions involves the provision of shared corporate services, including ICT systems or property, to other entities including the receiving entity, it may be appropriate for the receiving entity to enter into an MoU or service agreement for the continued provision of services on a fee for service basis, rather than transfer employees, assets and liabilities associated with the shared corporate services being provided. Appropriations for the services being provided will still be transferred to the receiving entity.
