Thursday, 3 December 2020
National Collecting Institutions Legislation Amendment Bill 2020; Second Reading
) ( ): I move:
That this bill be now read a second time.
The National Collecting Institutions Legislation Amendment Bill provides for a range of measures that reflect the government's ongoing commitment of support for the six national collecting institutions within my portfolio: the Australian National Maritime Museum, the National Film and Sound Archive of Australia, the National Gallery of Australia, the National Library of Australia, the National Museum of Australia and the National Portrait Gallery of Australia.
The bill includes two schedules. Schedule 1 includes measures that will allow these institutions to invest philanthropic donations more broadly than is currently permitted under the Public Governance, Performance and Accountability Act 2013. Doing this will allow them to seek higher returns on funds associated with such donations and encourage greater philanthropic giving for the long-term benefit of those institutions, their collections and the delivery of their programs and services in the national interest.
Schedule 2 of the bill makes minor amendments to improve consistency between the six enabling acts and reduce inefficiency in a range of administrative matters.
Investment of philanthropic funds (schedule 1)
Currently, the Public Governance, Performance and Accountability Act 2013 restricts the ability of corporate Commonwealth entities, including the six national collecting institutions in my portfolio, to invest any cash reserves not immediately required for the purposes of the entity, in low-interest bearing options such as bank accounts or securities guaranteed by the Commonwealth.
The measures in the bill will provide a mechanism for these institutions to invest funds associated with philanthropic donations in higher yielding asset classes in order to achieve greater financial returns. To do so their accountable authorities (that is, their governing boards and councils) must first formulate investment policies identifying their investment and risk management strategies, and benchmarks for assessing investment performance. Investment policies will also be required to be made publicly accessible on their websites for transparency purposes.
The bill does not change the current investment restrictions imposed by the Public Governance, Performance and Accountability Act 2013 for those funds received from the government, or from revenue generated by the commercial and retail activities of the institutions as part of their business. The government considers that the provisions in the bill provide a sensible balance to enable greater financial freedom to invest those funds received by donation (which present a lower risk), while retaining restrictions on revenues from business operations that have a clear connection to appropriated funds and the ability for institutions to deliver their mandated functions.
Over many years our national collecting institutions have successfully attracted philanthropic giving through fundraising foundations, endowments and bequests. This private giving is a valuable means of support for these institutions which helps them develop and deliver additional exhibitions and educational programs, enhance their facilities and purchase particular items of cultural heritage and national significance for their collections.
There is strong ongoing competition for philanthropy across many sectors. These measures respond to feedback from the national collecting institutions that restrictions to investing beyond low-interest bank accounts was proving to be a deterrent to philanthropic giving and preventing them from realising the full financial potential of the philanthropic support that they receive. These institutions are fortunate to attract significant philanthropic interest; however, individuals who are often making extremely generous donations are understandably making choices to direct their donations where they will have the greatest impact.
The government expects this amendment will contribute to the financial sustainability of the national collecting institutions by enabling them to optimise the returns on the investment of privately donated revenue and to encourage greater philanthropic support into the future.
Other administrative amendments (schedule 2)
The bill also provides an opportunity to make administrative amendments to the enabling acts of the six national collecting institutions, which reflect differing drafting approaches over the period 1960 to 2013 and are hence inconsistent with each other. Some of these acts also contain provisions that are no longer necessary in light of the commencement of other legislation of broader application.
There are gains to be made through the simplification and standardisation of certain administrative requirements, contributing to improved efficiency and productivity in government operations. The amendments proposed by the bill include removing planning and reporting provisions that are additional to what is required by the Public Governance, Performance and Accountability Act 2013, introducing more consistent provisions related to entering into contracts and financial transactions, among others.
For example, the bill repeals a number of requirements included variously in three of the acts in relation to corporate plans. These include a provision for the minister to give directions regarding the content of the plan, as well as particular requirements around timing, approval and tabling before parliament. The bill also repeals requirements for one agency, related to the preparation, approval and tabling of an operational plan. These planning and reporting provisions exceed the requirements under the PGPA Act that apply to corporate Commonwealth entities and place an additional administrative burden on the affected agencies.
The bill also seeks to standardise the provisions related to entering into contracts including the financial thresholds below which ministerial approval is not required. This means both the way the provisions are described and, in some cases, the actual financial values related to the thresholds.
The proposed amendments will list six common categories of arrangement which will have corresponding threshold values listed in regulations. The six types are the acquisition and the disposal of collection material; the acquisition and disposal of property, right and privilege; building construction; and entering into a lease of land.
It is proposed that the regulations of each of the acts will be remade, where necessary, to include a common threshold of $2 million below which ministerial approval would not be required prior to entering a contract. For three of the agencies this would represent an increase. It is anticipated that this will streamline approvals, and that specifying thresholds in the regulations, rather than the acts, will provide flexibility to update threshold amounts over time.
An exception to the $2 million threshold will be for the National Gallery of Australia, which currently has a $10 million threshold for acquiring works of art. It is anticipated that the remade regulations will retain this amount and introduce a corresponding $10 million threshold for disposals of works of art.
The bill also seeks to introduce exemptions to the requirement to seek ministerial approval in relation to contracts for the day-to-day operations of the agencies. This will mean agencies will no longer be required to seek the minister's approval prior to entering into an arrangement for services such as utilities, cleaning, security, general maintenance and replacement of capital assets. The institutions enter such contracts only after testing the market and considering what provides best value and it is sensible that they be permitted to directly manage their own operational affairs in this way.
An exemption from ministerial approval for all transactions associated with investments is also proposed by the bill. This recognises that governing bodies will be responsible for investment activities under their policies and that the requirement for ministerial approval would be contrary to the intention of the newly introduced investment provisions.
A number of amendments are also proposed with regards to governing bodies. Currently some acts include a ceiling of nine years service by individual members of their board or council. The minister will be able to make short-term acting appointments, and an acting period will be counted in the nine years service. The bill aims to apply this across the acts for consistency, recognising that it provides an appropriate balance of retaining experience and renewing the skills and expertise of the membership.
The bill also seeks to repeal a requirement that the Governor-General terminate the appointment of a senator or member of parliament elected to sit on the National Library of Australia Council if their term as a senator or member of parliament ends. This means that such an appointment would automatically end and not require a letter of resignation or advice to the Governor-General. This reflects the arrangements already in place for parliamentary representatives elected to the National Archives of Australia Advisory Council.
The bill removes requirements that the Australian National Maritime Museum furnish the minister with an annual operational plan, and a copy of its minutes after each council meeting, and that the National Gallery of Australia be restricted to storing its collection within the Australian Capital Territory. These provisions are considered unnecessary to retain.
The bill provides that the minister may delegate specific powers to the secretary or relevant senior executive staff of the department. These powers expressly exclude the ability of a delegate to make a ministerial direction, to appoint an acting board or council member, to approve the entering of an agreement for the purchase of land. This new provision would enable the minister, where he or she wishes, to delegate across the acts the powers to appoint an acting agency head or to approve entering into contracts above specified thresholds. Such appointments or approvals are sometimes required at short notice. Providing such a delegation will support greater efficiency. Some of the acts already include this provision and are supporting current delegations of this nature. The bill will extend this provision in relation to each of the national collecting institutions and agencies.
The bill also provides that the minister may make a ministerial direction for each of the national collecting institutions, which removes an inconsistency in that the minister at present is unable to make a ministerial direction for two of the six institutions.
The measures that the bill proposes will offer the national collecting institutions an opportunity to enhance their financial sustainability through the investment of donated funding. The measures will also remove anachronistic requirements and replace them with clearer administrative provisions. These measures aim to provide long-term benefits to those institutions and their audiences.
I commend the bill.