Governance: Transformation and Change

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Governance Transformation and Change

• Professor Stephen Bartos
• Director, National Institute for Governance
• Presentation to VTA Conference
• 25 August 2006

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What is governance?

• the processes by which organisations are
  directed, controlled and held to account. It
  encompasses authority, accountability,
  stewardship, leadership direction and control
  exercised in the organisation (ANAO, 2003)
• The processes whereby decisions important to the
  future of an organisation are taken,
  communicated, monitored and assessed (Bartos,
  2005)

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Other meanings

• How a country is run ( frequent use of the word)
• Public administration (the sense in which it is
  often used in the USA)
• Management (many people dont make a distinction
  between G and M)

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Further meanings of governance

• Used in many other fields
• IT governance
• Medical governance
• Project governance
• University governance
• Everyone wants a piece of governance

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The topic of the moment

• Living in interesting times
• Governments worldwide have discovered
  governance why?
• not an end in itself govt. believes good
  governance improves outcomes
• governance spins well politically

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Governance in transformation

• From
• backroom to centre stage
• compliance to performance
• academic to practical
• And perhaps also
• from too little to too much?

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Private sector governance cases

• Enron, World Com, Parmalat, HIH
• Heightened attention to corporate governance
  issues
• Variety of responses worldwide
• Governments lack credibility in lecturing private
  sector on governance if they fail to act
  internally

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Victoria

• Australias leading State in terms of governance
  thinking
• Impressive approach in many areas of activity,
  including TAFE
• Leadership from SSA at State govt. level, OTTE at
  sector level

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Continuing change

• Education and Training Reform Act 2006
• Effective from 1/1/07
• Expect more changes in future years
• thats just the way the world now works
• need adaptable and flexible approaches

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Approaches to governance

• Compliance
• Legal compliance
• Accounting framework, audit and control
• Fraud prevention
• Performance
• How top level decisions are made
• Emphasis on relationships and incentives

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Performance dimension

• Harder to pin down in reports and standards
• But an emerging realisation that it is MORE
  important to effective governance
• But dont abandon compliance side

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Is governance important?

• Not much empirical evidence linking good
  governance to good results
• Plenty of links between poor governance and poor
  results
• Performance determined by many factors

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Public sector governance or corporate governance?

• Both organisational concepts
• Much of the public sector is organised into
  corporations
• Public sector governance is a more embracing
  term
• And recognises that even corporations in public
  ownership face specific issues

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Special issues affecting public sector governance

• Role of the Minister
• Setting and measuring objectives
• The accountability regime

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Principles of public sector governance

• Rule of law
• Accountability
• Ethics and probity
• Performance measurement
• Managing risk
• from Bartos, 2004, Public Sector Governance
  Australia

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Rule of law

• Applicable laws, regulations and conventions
• Many Boards (in general this is not a remark
  directed at TAFE) are unaware of many of the laws
  for which their own body is responsible
• Need also awareness of other State laws (eg
  Financial Management Act 1994)
• plus applicable Commonwealth law (eg Trade
  Practices)

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Accountability

• Essential component of governance
• Provision of information on performance to a
  person or body who can take action on that
  information
• Bartos 2004

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Accountability regimes

• Transparency
• Clarity
• Regular reporting
• Should NOT be compliance based
• Compliance only one element of the broader
  accountability regime

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TAFE sector transparency

• Websites, employer info, student info, all well
  supported and transparent
• Question for you to consider how open is the
  sector to external scrutiny by people who dont
  understand TAFE?

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Ethics and probity

• Bring down organisations if not observed
• Is determined by culture
• Can be managed - within your control
• Governance is vital
• Ethical standards start at the top

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Ethics and probity

• Ministers set the tone for ethics
• And in the Australian system, have the final say
  on what constitutes ethical conduct
• But each Board should still maintain a separate
  ethical monitoring framework

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Performance measurement

• Governance responsibility
• Decide what should be measured
• ask the right questions of management
• More difficult in the public sector long term,
  sometimes conflicting objectives
• But still desirable to measure progress where
  possible

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Public sector performance measurement
difficulties include

• Unclear objectives unclear problems
• Are Ministers real performance measures the same
  as the published?
• Tensions between what is good for government as a
  whole and what benefits an individual Minister or
  agency

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Issues in performance measurement

• what gets measured gets done
• Only a cliché because almost always true
• Key governance role is determining what the (few)
  important measures of performance should be

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TAFE sector performance measurement issues

• Outcomes are long term
• Immediate outputs may not relate to outcomes
• Sensitivity to small errors can undermine
  overall performance measurement

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Risk management

• Extensive risk reporting in the public sector in
  Australia
• Assessment of risk mandated
• An increasingly important role for audit
  committees
• Not as clear that risk is managed (vs. reported
  on)

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For further information

• Visit the National Institute for Governance at
• http//governance.canberra.edu.au/

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Questions and comment