Evidence presented by the Department of Treasury and Finance outlined the major stages in developing a Partnerships Victoria project. Updated in the June 2003 Contract Management Guide, the guidelines specified nine major stages, and highlighted the major points at which Cabinet approval, or approval by a Cabinet committee, is sought.
Reference was also made to the use of probity plans and the publishing of final contracts. Although the department's presentation did not discuss accountability arrangements in relation to Parliament, the Auditor-General or the community, the Committee noted the following broad principles underpinning the Partnerships Victoria policy:173
• there should be an emphasis on transparency and disclosure of the processes and outcomes, acknowledging the need to protect commercial confidentiality where appropriate;
• the conduct of the public sector should always be such that confidence in the probity of the partnership model and the way in which it is implemented is able to be maintained at all times.
The guidelines, however, appear to regard the question of governance more narrowly, as simply an element of project management commerce:174
Governance is concerned with processes for project decision-making. It defines the behavioural controls within the government party that ensure accountable project outcomes and processes. Governance is concerned with accountability and responsibilities. It encompasses authority, stewardship, leadership and control.
The department indicated that its governance framework comprised three discrete components: governance, probity and compliance.175 The Partnerships Victoria guidelines note that good governance for projects requires relevant staff having clear roles, appropriate skills and resources. It defines senior managers (usually the chief executive officer or deputy secretary) and contract directors as having overall responsibility for the project and for the successful delivery of government services.176 The department advised that Cabinet involvement in decision making occurred at the following points:177
1. Initial business consideration of the project business case as part of normal budget allocation for funding approval and project approval.
2. The approval to invite expressions of interest for the proposed Partnerships Victoria project.
3. Application for approval to issue a project brief and contract, against which private bids may then be accepted.
4. Finalisation of the contract management strategy.
The Committee also understands that Cabinet gives the final sign off on the preferred bidder.
In terms of governance, the department's submission explained that 'each Partnerships Victoria project is overseen by, and is the responsibility of, the relevant portfolio Minister'.178 The department argued that this arrangement provided a clearer accountability in contrast to the previous government, where a responsible Minister and the Treasurer worked in partnership to develop the project. The submission indicated that the Treasurer was responsible for the whole of government policy framework and for preparing detailed policy and guidance to assist implementation.179
Notwithstanding this situation, the department also argued that there may nevertheless 'remain projects with particular commercial characteristics (for example, the redevelopment of Southern Cross Station) where it is appropriate for the Treasurer to work with the portfolio Minister for at least part of the project'.180
This applies to traditional procurement also.
Governance arrangements in the United Kingdom have evolved into a mixture of groups forming part of the PFI industry. HM Treasury has policy responsibility for the PFI, a number of partnerships, and responsibility for state owned businesses. The Treasury Taskforce established in 1997 was designed to bring specialist skills and experience to the public sector and to be a focal point for PFI activities. It was replaced by 'Partnerships UK' (PUK), an independent entity with 51 per cent private ownership and 49 per cent government owned. PUK acts as a PPP developer working alongside the public sector.181 The Office of Government Commerce (OGC) was also initiated in 2000 to replace the policy facet of the previous Treasury Taskforce. The Private Finance Unit within OGC is now responsible for developing and promoting PFI policy.
Together with these formal bodies, a 4Ps182 program exists in the United Kingdom at local government level to encourage investment through PFI as well as through the PPP forum, which was established by private organisations to promote the benefits of PPPs.
__________________________________________________________________________________________________
173 Department of Treasury and Finance, Partnerships Victoria, June 2000, p.7
174 Department of Treasury and Finance, Contract Management Guide, p.70
175 Ibid., p.69
176 ibid., p.71
177 Department of Treasury and Finance, Partnerships Victoria Guidance Material, Overview, July 2006, p.15
178 Department of Treasury and Finance, submission no.35, p.17
179 ibid.
180 ibid.
181 G Allen, The Private Finance Initiative (PFI), Research Paper, House of Commons Library UK, p.17
182 4Ps works in partnership with all local authorities to secure funding and accelerate the development, procurement and implementation of PFI schemes, public private partnerships, complex projects and programmes