Centrelink annual report 1999 – 2000 Contact officer

Graham Bashford, Deputy CEO

‘Public and Private Sector Governance in Australia: Exploring the changing boundaries’

Inaugural National Institute for Governance Conference Canberrra, April 2000

Jane Treadwell, Chief Information Officer

World Bank, Poland May 2000

10. Corporate Governance

Governance Framework

Many of Centrelink’s governance features are innovative. Unlike other government bodies under the FMA Act, Centrelink has a Board with executive powers that is fully accountable to the Minister. It has an independent Chairman (who is also the Chief Executive under the FMA Act) and the majority of the Board members come from private sector backgrounds.

The governance framework allows the direct participation of at least two of the heads of the purchasing agencies on the Centrelink Board. This ensures a strong stewardship for the purchasing agencies and the Government since Centrelink is responsible for the disbursement of large sums of public monies on behalf of its client agencies.

The Board’s structure and processes and its reporting arrangements facilitate appropriate leadership, management environment, risk management, and monitoring and accountability in the organisation. Ministerial involvement ensures effective accountability with sufficient flexibility to allow greater capacity for innovation and improved customer service.

The Board of Management

The CSDA Act specifies that the Board should consist of:

• 
  the Chairman;
  
• 
  the CEO of Centrelink; and
  
• 
  at least four other members including at least two who are not principal officers of Commonwealth authorities.
  

Board Members

Current Positions:

• 
  Director, Ruskin Industries Limited.
  

• 
  Chairman, Electricity Trust of South Australia;
  
• 
  Chairman and Chief Executive of the Economic Development Authority of South Australia;
  
• 
  General Manager and Chief Executive of the Electricity Trust of South Australia; and
  
• 
  Chairman and Managing Director of Mobil Oil, New Zealand and Hong Kong/China.
  

CHIEF EXECUTIVE OFFICER

Current Positions:

• 
  Adjunct Professor, Institute of Governance, University of Canberra.
  

• 
  Chief Executive, Department of Correctional Services, South Australia;
  
• 
  Commissioner for Public Employment, Office of the Commissioner for Public Employment, South Australia;
  
• 
  CEO, Office of Public Sector Reform, South Australia; and
  
• 
  CEO, Department of Family and Community Services, South Australia.
  

Current Positions:

• 
  Group Executive—Group Services, St George Bank, Sydney; and
  
• 
  Director, CPT Global Limited.
  

• 
  Head of Information Technology, Bank of Melbourne;
  
• 
  General Manager, Information Technology, Coles Myer Limited; and
  
• 
  General Manager, MITS Proprietary Limited, Sydney.
  

Current Positions:

• 
  Chairman, Permanent Trustee Company Limited;
  
• 
  Member, Council of the National Museum of Australia;
  
• 
  Director, Australian Geographic Group;
  
• 
  Director, Australian Wheat Board;
  
• 
  Director, St George Bank Group; and
  
• 
  Director, Reckon Limited.
  

• 
  Managing Director, Advance Bank of Australia Limited.
  

Mr Pearce was a member of the Board and was Chair of the Quality Committee until he passed away on 22 October 1999. He was then the:

• 
  Chairman, James Boag & Son Limited;
  
• 
  National Manager Rothschild & Son Australia Proprietary Limited.
  

• 
  Chief Financial Executive, Woolworths Limited; and
  
• 
  Director, Accounting and Audit, Arthur Anderson & Company.
  

Current Positions:

• 
  Secretary, Department of Family and Community Services (FaCS).
  

• 
  Secretary, Department of Workplace Relations and Small Business;
  
• 
  Secretary, Australian Capital Territory Chief Minister’s Department;
  
• 
  Under Treasurer, Australian Capital Territory Government;
  
• 
  First Assistant Secretary, Commonwealth Department of Finance;
  
• 
  Group Chief, Canadian Treasury Board; and
  
• 
  Senior Private Secretary to the Prime Minister of Australia.
  

Current Positions:

• 
  Secretary, Department of Employment, Workplace Relations and Small Business (DEWRSB); and
  
• 
  Chairman, Board of the Public Sector Management Course.
  

• 
  Public Service Commissioner, Public Service and Merit Protection Commission;
  
• 
  CEO, Comcare Australia;
  
• 
  CEO, Aboriginal and Torres Strait Islander Commission; and
  
• 
  Head, Office of Multicultural Affairs.
  

Mr John Pascoe AM was appointed as the new Chairman of the Board and non-Executive Director on 26 July 2000.

Current Positions:

• 
  Non-Executive Chairman, George Weston Foods;
  
• 
  Director, Cambooya Investments Limited;
  
• 
  Chairman, Objective Corporation Limited;
  
• 
  Chairman, CommSecure Limited;
  
• 
  Chairman, Sealcorp Limited;
  
• 
  Member of the Board, Royal Alexandra Hospital for Children;
  
• 
  Member of the Advisory Council, Australian Graduate School of Management;
  
• 
  National Chairman, The Duke of Edinburgh’s Award Scheme in Australia;
  
• 
  Member of the Board of Trustees, The Duke of Edinburgh’s International Foundation (UK); and
  
• 
  Part-time Board Member, Tourism of New South Wales.
  

• 
  CEO, George Weston Foods;
  
• 
  Director, Qantas;
  
• 
  Chairman, Corporation and Securities Panel; and
  
• 
  Partner, Stephen Jacques and Stephen (now Mallesons).
  

Mr Don Fraser was appointed as a non-executive Director to the Board on 26 July 2000, replacing Mr Philip Pearce.

Current Positions:

• 
  Independent Management Consultant and Corporate Adviser.
  

• 
  Consultant to Dairy Farm International;
  
• 
  Regional Director, Dairy Farm International;
  
• 
  Fresh Foods Development Director, Dairy Farm International;
  
• 
  Joint Managing Director, Dairy Farm Spain;
  
• 
  State General Manager, Woolworths Qld; and
  
• 
  Executive Director, Australian Safeway Stores.
  

Board Appointments and Remuneration

The Chairman and members of the Board (who are not principal officers of Commonwealth agencies) were appointed on a part-time basis by Senator the Hon. Jocelyn Newman, then Minister for Social Security, on 1 September 1997 for three years. All are eligible for re-appointment.

Board members who are principal officers of Commonwealth agencies hold office during the Minister’s pleasure or while they remain the principal officers of the agencies (s. 23(2) and 27 of the CSDA Act). Currently, two principal officers of Commonwealth departments which have a service agreement with Centrelink (FaCS and DEWRSB) sit as non-voting members of the Board.

The Remuneration Tribunal determines the remuneration and allowances paid to Board members.

The CEO is appointed by the Board on a full-time basis. Part 4 of the CSDA Act states that the CEO holds office on terms and conditions, including remuneration and allowances, determined by the Board in writing. The Board is required to obtain advice from the Remuneration Tribunal in relation to the terms and conditions, including remuneration and allowances, on which the CEO holds office.

Disclosure of Interests

Board members provide statements to the Chairman advising of their directorships of other companies and organisations. The CSDA Act requires that any Director who may have a direct or indirect pecuniary interest in a matter being considered discloses the nature of the interest at a meeting of the Board.

Board Operations

The Board meets each month to deal with the significant issues relating to Centrelink’s operations. It works from an agenda agreed by the Chairman in conjunction with the CEO who reports to the Board on Centrelink’s financial and operational performance. The Chairman provides a report of each meeting to the Minister for Family and Community Services and to the Minister for Community Services outlining the key issues discussed and any significant decisions taken at the meeting.

Board Committees

The Board uses three committees to keep it fully informed about the details of Centrelink’s work. They are:

• 
  An Audit Committee to support the Board in ensuring Centrelink operates with proper financial management and internal controls.
  
• 
  An Information and Technology Committee to provide advice and direction to the Board on strategic IT issues, particularly those likely to impact on Centrelink’s ability to deliver government services.
  
• 
  A Quality Committee whose responsibility is to assure the Board that Centrelink is delivering services that will see it remains as the ‘first choice’ for Government and customers and is benchmarked as best practice in service delivery.
  

The Chairman and all non-Executive Directors participate in at least one committee of the Board. The CEO attends meetings of all committees. The charter of each of these committees is at Appendix ii. The table on the next page provides details of the Board members’ attendance at Board and Committee meetings.

Corporate and Operational Plans

Centrelink’s strategic, business and operational planning is reported on in Chapter 1 Introducing Centrelink, page 2. The associated performance reporting and review is covered in Chapter 3 Performance Report, page 17.

Risk Management and Fraud Control

Risk Management in Centrelink

Centrelink has a structured overall risk management regime,which is a unified approach seeking to align language and methodology and make risk integral to all planning, management and reporting. It is also a staged approach to achieve cultural change and avoid being just the imposition of another process.

In 1999–2000 Centrelink built further on its tradition of risk management, including:

• 
  an active audit program providing assurance across the business;
  
• 
  an enhanced financial statements ‘sign off’ process that includes all managers;
  
• 
  a quality assurance framework;
  
• 
  program risk assessments;
  
• 
  large scale compliance activity;
  
• 
  fraud control strategies and action plans;
  
• 
  debt prevention strategy;
  
• 
  business continuity and disaster recovery plans;
  
• 
  project risk assessments; and
  
• 
  Internal risk management workshops.
  

Late in 1999, Centrelink reinforced the use of standard language and methodology in its Risk Management Guidelines for strategic and corporate planning, management and reporting. Risk management will be an integral part of the business improvement planning process for 2000–01.

Last year a ‘vertical slice’of people from across Centrelink prepared its first Strategic Risk Management Plan. This built on work in program risk assessment and has been endorsed by the Board for use in corporate and strategic planning. It contains messages not only about the most important risks to Centrelink’s survival and how they are being controlled, but also about how it views risk.

Table 23: Members’Attendance at Board and Committee Meetings

BOARD MEMBER	BOARD MEETINGS	AUDIT COMMITTEE	QUALITY COMMITTEE	INFORMATION TECHNOLOGY COMMITTEE
	(12 meetings)	(3 meetings)	(1 meeting)	(8 meetings)
R. Marrett	11/12 (Board Chairman)	2/3 (C’ttee Chair)	1/1	–
C. Gillies	11/12	–	–	8/8 (C’ttee Chair)
P. Pearce*	0/4	–	1/1 (C’ttee Chair)	–
J. Thame	12/12	3/3	–	8/8
S. Vardon	11/12	2/3†	1/1	6/8
D. Rosalky	11/12	3/3	–	6/8
P. Shergold	12/12	–	–	–

* Mr Pearce passed away on 22 October 1999.

† As CEO, Ms Vardon attends meetings but is not a member of the Audit Committee.

Ethical Standards

The Public Service Act 1999, which replaced the Public Service Act 1922, came into effect on 5 December 1999 and contains both the APS Values and Code of Conduct. In accordance with the new Act, Agency Heads must promote the APS Values and establish procedures for determining whether an APS employee has breached the Code of Conduct. The APS Values are espoused in Centrelink’s Expectations Statement which sets out standards of behaviour applicable to Centrelink employees. A presentation on the new Act, including the APS Values, was given to Centrelink’s Guiding Coalition. In addition, the values have been promoted in People Matter, a bulletin issued to all Centrelink employees.

The CEO established procedures for determining whether an APS employee has breached the Code of Conduct on 5 December 1999. Due to the short timeframe between enactment and date of effect of the new Act there was insufficient time to finalise consultation with the union and employees on the procedures, prior to them being established. Consultation is currently under way and may result in amendments to the procedures.

When establishing the procedures, Centrelink sought to streamline the process for determining whether a breach had occurred, while maintaining the integrity and natural justice elements of the process. Centrelink aimed, by publicising the code of conduct, to ensure that all employees understood their obligations.

The procedures have been made available to all Centrelink employees via the People Handbook on CentreNet and the Expectations Statement will shortly be added to the handbook.

Since 5 December 1999 a number of employees have been subject to the procedures. The nature of the breaches of the Code of Conduct and the sanctions imposed vary. However, a number of employees have had their employment terminated in accordance with the procedures for breaches of the code of conduct, including breaches of privacy and misuse of Centrelink facilities, specifically email.

Overall, implementation of the code of conduct and the new procedures has been successful. The code itself is straightforward and the simpler procedures are easy to understand. In order to assess their overall effectiveness, Centrelink will continue to monitor the arrangements over the next 12 months.

(See also Appendix vii, Privacy, page 213, for details of action taken against employees involved in privacy breaches.)

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