9.1 Principal bodies

In considering the potential for rationalisation of bodies, the Commission has focused on the 194 principal bodies. They have each been assessed against the criteria outlined above.

The main findings of the Commission are summarised in Table 9.1 below.

Table 9.1: Rationalisation of Commonwealth bodies, authorities and agencies
Action to be taken

No. of bodies

Abolish 7
Merge with other bodies 35
Consolidate into portfolio department 22
To be privatised 9
Review, with a view to merging, abolishing or transferring 26
Total number of bodies identified for attention 99

Source: National Commission of Audit.

The 99 bodies identified as warranting action represent 51 per cent of the existing principal bodies. (Details are outlined in Annex C to this report.) The Commission recognises that further investigation or consultation may be required regarding these suggested rationalisations.

Bodies recommended for abolition

The Commission has identified one agency prescribed under the Financial Management and Accountability Act 1997 and six Commonwealth Authorities and Companies Act 1997 bodies that should be abolished.

  • Australian Institute for Teaching and School Leadership Limited. Commonwealth involvement is not warranted as schools are primarily a State responsibility.
  • The Australian Reinsurance Pool Corporation. With continued recovery in terrorism insurance markets, there is scope for a gradual Commonwealth exit over the coming years.
  • The Clean Energy Finance Corporation. Legislation is currently in the Parliament to abolish this corporation, as part of the carbon tax repeal bills.
  • The Climate Change Authority. Legislation is also in the Parliament to abolish this Authority, as part of the carbon tax repeal bills.
  • The Export Finance and Insurance Corporation. The rationale for abolishing this body is outlined in Section 8.1.
  • Innovation Investment Funds Investments Pty Ltd. This body provides direct subsidies to Australia’s venture capital industry. In the same way other industry-specific assistance is recommended for abolition, to avoid distorting resource decisions across the economy, so should this assistance to the venture capital sector.
  • Low Carbon Australia Limited. This body is integrated into the Clean Energy Finance Corporation, which is to be abolished.

Large mergers

The Commission has identified a number of opportunities for major consolidations of Commonwealth agencies and authorities.

This includes the potential consolidation of border services agencies; consolidating crime intelligence capability in the Australian Crime Commission; a consolidated Civilian Tribunal; a new Health Productivity and Performance Commission; a single Commonwealth Ombudsman; and a single Arts Council.

These opportunities for consolidation are outlined below.

Recommendation 50: Reduce the number of government bodies

There are too many government bodies. This can lead to duplication, unnecessary complexity and a lack of accountability. The Commission recommends that a significant rationalisation be undertaken of 99 Commonwealth bodies operating under the Financial Management and Accountability Act 1997 and the Commonwealth Authorities and Companies Act 1997 including by:

  1. reducing the number of existing bodies by 73, including those in Recommendations 51 to 54, by:
    1. abolishing seven bodies;
    2. merging 35 bodies;
    3. consolidating 22 bodies into departments and agencies; and
    4. potentially privatising nine bodies; and
  2. reassessing the operations and continuing need for 26 other bodies.

Consolidation of border protection services

Border protection and security is integral to national security. The seamless flow of people and cargo across Australia’s borders is also critical to the country’s success as an open, trading nation.

Protecting and securing our borders requires a range of functions across the border continuum as well as international cooperation, intelligence gathering, maritime patrols and inspections and identity checks. Three principal agencies now perform these functions: the Department of Immigration and Border Protection; the Australian Customs and Border Protection Service; and the biosecurity operations of the Department of Agriculture.

These agencies employ around 17,000 staff and cost around $7.8 billion to run. The border agencies also collect in excess of $11 billion of revenue through visa application charges, the passenger movement charge and import processing charges.

Australia’s border control arrangements should be highly effective and efficient. Yet authority and accountability for border control is fragmented across agencies, portfolios and ministers.

Given recent trends and developments (including in technology) a more effective approach to border management will require a series of integrated activities both beyond and within the border. A continued effort to improve intelligence-led, risk-based approaches will ensure better border management to deal with material threats while the vast majority of people and cargo, which are low risk, are easily moved.

Continued growth in electronic lodgement and on-line processing, which reduce transaction cost and improve information capture, is essential. More efficient collaboration, integration and communication between stakeholders along with early interventions upstream will enhance Australia’s capacity to manage its borders.

Our existing multiple border agency and portfolio arrangements do not provide the optimal structure to pursue these objectives.

The Commission suggests a single, integrated border agency, to be known as Border Control Australia be considered. This would combine the border control functions of Customs and the Department of Immigration and Border Protection in a single agency.

Responsibility for all policy and regulatory functions relating to immigration and customs would be retained within the Department of Immigration and Border Protection. Border Control Australia would be responsible for cargo and services at the border as well as other related functions, including processing visa applications and running the immigration detention network.

The biosecurity functions of the Department of Agriculture would be retained separately for now. This recognises the role of biosecurity is broader than enforcing quarantine law at the border, with the Commonwealth having some 2,500 ‘post-entry’ quarantine facilities and accredited premises. It also works closely with industry, business and technical experts to ensure exports meet the quarantine standards required by export destination countries.

A consolidation of Australia’s border services has the potential to generate significant savings by removing duplication, better integrating and improving operational systems and practices, reducing staff, as well as consolidating back office functions and rationalising property. Savings could also come from greater efficiency in visa processing.

Recommendation 51: Consolidation of border protection services

Border protection and security is integral to national security. The Commission recommends that a single, integrated border agency, to be known as Border Control Australia, be established through the merger of the border control functions of the Department of Immigration and Border Protection and the Australian Customs and Border Protection Service.

Consolidated crime intelligence capability

Criminal law enforcement is increasingly dependent on strong intelligence collection and analysis, including sophisticated financial intelligence and an ability to track the flow of money. Intelligence enables law enforcement agencies to target areas of greatest risk and cooperate with the private sector to identify and address vulnerabilities.

Over time, the Commonwealth has created a number of separate national criminal law enforcement and intelligence agencies to serve different needs. The Australian Federal Police is the Commonwealth’s primary criminal law enforcement body. A number of other agencies have limited criminal law enforcement powers in specific areas, such as the Australian Customs and Border Protection Service.

Various agencies are also responsible for crime intelligence and information matters, including the Australian Crime Commission, CrimTrac, the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Institute of Criminology.

While these agencies are working effectively together, the Commission considers Crimtrac should be merged in to the Australian Crime Commission to better harness their collective resources. A consolidated crime intelligence capability would also better support law enforcement operations by the Australian Federal Police and other Commonwealth and State agencies.

The Commission also considers that AUSTRAC should be reviewed to determine if it should also form part of the Australian Crime Commission, while relocating the Australian Institute of Criminology to a university should be considered.

The Australian Federal Police and the Australian Crime Commission should remain separate agencies to ensure that the latter maintains its national criminal intelligence role, with a focus on strategic risks, and the continued involvement of State law enforcement partners in its governance.

In addition, the Australian Crime Commission has the ability to use special intelligence gathering and coercive powers which should continue being separate from the Australian Federal Police.

The implementation of this recommendation will require consultation with the States. It is critical their interests are reflected, including through the continued representation of the State police commissioners on the Australian Crime Commission board.

Recommendation 52: Consolidated crime intelligence capability

Criminal law enforcement is increasingly dependent on strong intelligence collection and analysis. The Commission recommends that CrimTrac be merged with the Australian Crime Commission to better harness their collective resources.

Consolidation of health bodies

There are 22 bodies within the Health Portfolio, along with numerous associated boards, councils and committees.

Chart 9.1: Health Portfolio Structure
Chart 9.1 shows the bodies within the Health Portfolio.

Source: National Commission of Audit.

In addition to the broader reforms to Australia’s health system proposed in Sections 7.3 and 7.4, the Commission proposes three broad actions to address the number of bodies in Health.

  • Establish a single National Health and Medical Research Institute.
  • Establish a new Health Productivity and Performance Commission.
  • Consolidate a number of remaining bodies into the Department of Health.

The Commission recognises that many elements of Australia’s health system are underpinned by cooperation between the Commonwealth and the States. As such some of the approaches recommended below may require consultation with the States.

National Health and Medical Research Institute

The creation of a new national health institutes flagship would combine the National Health and Medical Research Council, Cancer Australia and the research budget of the Australian National Preventative Health Agency.

The new institute would align and fully embed health and medical research in the health system. This would improve patient outcomes and deliver efficiencies by improving the evidence base available to clinicians and patients.

Health Productivity and Performance Commission

Multiple agencies now collect data and report on health outcomes. The Commission considers it is possible to improve data collection, analysis and information to inform decisions on health-related measures.

A new independent Health Productivity and Performance Commission could coordinate, report and drive performance across the health care system. This would include identifying innovative options to increase efficiency across the sector and publicly reporting health performance statistics and outcomes. Corporate functions would be supplied by the Department of Health.

The commission would be formed through a merger of the Australian Commission on Safety and Quality in Health Care, the Australian Institute of Health and Welfare, the Australian National Health Performance Authority, components of the Australian National Preventative Health Agency, the Private Health Insurance Administration Council, the Independent Hospital Pricing Authority, the National Health Funding Body and the National Mental Health Commission.

Consolidation of agencies into the Department of Health

The Commission also recommends five bodies be considered for consolidation into the Department of Health.

  • Australian Organ and Tissue Donation and Transplantation Authority and National Blood Authority, which could be brought together within the department to harness expertise.
  • General Practice Education and Training Ltd and Health Workforce Australia, which could be brought together as a clinical training unit.
  • The Professional Services Review scheme.

In addition, in Section 7.4 the Commission proposes that a new authority (the ‘PBS Entity’) be established in the Health Portfolio to manage the funding of new and currently listed medicines; negotiate prices for existing drugs; and make decisions about de-listing drugs.

Recommendation 53: Consolidation of Health bodies

There are 22 bodies and agencies within the Health Portfolio, along with numerous associated boards, councils and committees. The Commission recommends that a significant consolidation of Commonwealth health related bodies be undertaken by:

  1. establishing a National Health and Medical Research Institute to better align and embed health and medical research in the health system;
  2. establishing a Health Productivity and Performance Commission by consolidating seven existing bodies to better coordinate, report and drive performance across Australia's health care system with a focus on measurable outcomes; and
  3. consolidating five other agencies into the Department of Health.

Single civilian merits review tribunal

The Commonwealth maintains four main bodies to review the merits of Commonwealth decisions: the Administrative Appeals Tribunal; the Social Security Appeals Tribunal; the Migration Review Tribunal and the Refugee Review Tribunal; and the Classification Review Board.

While these bodies have different responsibilities, funding models and structures, there is merit in moving to a unified tribunal framework.

Merging the resources of the Commonwealth’s civilian merits review tribunals can provide significant medium to long-term savings and better services. This is demonstrated by the successful establishment of amalgamated ‘super tribunals’ in State jurisdictions.

A single tribunal model would also provide the opportunity to reassess whether the cost of multiple layers of external merits review as a right is justified in a modern merits review framework, particularly given judicial review of all decisions is available in the courts.

The Commission proposes that Commonwealth civilian merits review tribunals should be amalgamated within the Administrative Appeals Tribunal.

The Commission does not propose the Veterans’ Review Board be included as it essentially operates as a division of the Department of Veterans’ Affairs and focuses on defence-related matters.

Given potential financial and cultural hurdles could impede the proposed consolidation of tribunals, amalgamation might be best undertaken incrementally.

Recommendation 54: Single civilian merits review tribunal

The Commonwealth currently maintains four main bodies to review the merits of Commonwealth decisions. The Commission recommends that the Commonwealth civilian merits review tribunals (the Social Security Appeals Tribunal, the Migration Review Tribunal and the Refugee Review Tribunal) and the Classification Review Board be amalgamated with the Administrative Appeals Tribunal.

Other consolidations

The Commission also recommends the following actions to reduce the number of government bodies.

The Commonwealth has various ombudsman offices, including the: Commonwealth Ombudsman; Norfolk Island Ombudsman; Overseas Students Ombudsman; Immigration Ombudsman; Law Enforcement Ombudsman; Defence Force Ombudsman; Taxation Ombudsman; Postal Industry Ombudsman; Fair Work Ombudsman; and Private Health Insurance Ombudsman.

In addition, the Inspector-General of Taxation reports to government on the performance of Australian Taxation Office processes, identifying how to reduce the administrative burden for taxpayers.

A number of functions have already been consolidated into the Commonwealth Ombudsman’s office recognising the similarity of the underlying functions.

In light of this and in accordance with its principles, the Commission considers the existing ombudsman offices and the Inspector General of Taxation should be amalgamated within the Office of the Commonwealth Ombudsman.

Bringing together the Australia Council, Australian Business Arts Foundation Ltd, Screen Australia and Bundanon Trust into a single arts council will reduce administrative costs and support closer collaboration within the arts community. It will provide improved capacity for grant and procurement processes to be centrally and professionally managed. The Commission notes that the Bundanon Trust will likely need to be maintained within the new Arts Council to some degree, given the terms of a gift from the Boyd family.

The Australian Film, Television and Radio School could be transferred to a university or vocational education institution with an option for the Arts Council to fund scholarships. This is consistent with the principle that the Commonwealth should withdraw from activities that are outside its areas of core responsibility and could be more efficiently and effectively undertaken by the private sector or another jurisdiction.

Other proposed changes by portfolio

Agriculture

The Commission notes and supports the recent passage of legislation to merge the Grape and Wine Research and Development Corporation and Wine Australia Corporation from 1 July 2014.

The National Industrial Chemicals Notification and Assessment Scheme (currently in the Department of Health) could be merged with the Australian Pesticides and Veterinary Medicines Authority to create a new Chemicals Australia body in the Industry Portfolio.

Attorney-General

It would be possible to merge the Federal Court of Australia with the Family Court and Federal Circuit Court of Australia. This would reduce administrative costs and provide additional opportunities to share facilities and streamline back-office functions to achieve more efficient administration of justice.

The Australian Law Reform Commission should also have its functions moved into the Attorney-General’s Department (recognising the need to maintain its statutory mandate).

Communications

Opportunities exist to consider the privatisation of Australia Post and for the longer-term privatisation of NBN Co. These issues are discussed in Section 10.1.

The Telecommunications Universal Services Management Agency should be moved into the Department of Communications. This would help streamline administration of the Universal Service Obligation.

Defence

As discussed above, the Commission considers that the Defence Materiel Organisation should be consolidated into the Department of Defence. Defence Housing Australia should be considered for privatisation (see Section 10.1).

In addition, the Commission considers that the various canteen and trust funds should be assessed to determine if their activities need to remain within the public sector. This includes the AAF Company, Army & Air Force Canteen Service, Australian Military Forces Relief Trust Fund, RAAF Veterans’ Trust Fund, RAAF Welfare Recreational Company, Royal Australian Air Force Welfare Trust Fund, Royal Australian Navy Relief Trust Fund and Royal Australian Navy Central Canteens Fund.

Education

The Australian Curriculum, Assessment and Reporting Authority should be consolidated into the Department of Education.

The Tertiary Education Quality Standards Agency should be merged with the Australian Skills Quality Authority (from the Industry Portfolio). This should reduce reporting and other requirements for institutions that currently deal with both bodies.

Employment

Several bodies in the Employment Portfolio could be consolidated into the Department of Employment: the Asbestos Safety and Eradication Agency; Comcare, including the Safety, Rehabilitation and Compensation Commission and the Seafarers’ Safety, Rehabilitation and Compensation Authority; Safe Work Australia; and the Workplace Gender Equality Agency.

Environment

In the Environment Portfolio, the Commission recommends consolidating the Director of National Parks function into the Department of the Environment as a division, while retaining the role of director as a statutory position.

The Murray-Darling Basin Authority should also be consolidated into the department, noting that this can reduce costs and achieve independence. Separate account and funding arrangements could be established to ensure financial independence.

The National Water Commission could be consolidated into the department, given its small size, which will provide administration cost savings. Alternatively, its monitoring, audit and assessment functions could be transferred to the Productivity Commission.

The Sydney Harbour Federation Trust should be transferred to the New South Wales Government or consolidated into the department as part of the Director of National Parks function and be reviewed to ensure its land holdings are being appropriately managed and utilised.

The Commission also recommends abolishing the Climate Change Authority and Low Carbon Australia Limited, noting legislation to abolish the Climate Change Authority is currently before Parliament as part of the carbon tax repeal bills.

Finance

Consideration should be given to consolidating Comsuper into the Commonwealth Superannuation Corporation, which is its only client.

The Albury-Wodonga Development Corporation should be wound up given it has successfully sold much of its landholdings. Any residual landholdings could be transferred into the department to achieve economies of scale and reduce administration costs.

ASC Pty Ltd should be considered for its privatisation potential (see Section 10.1).

Foreign Affairs and Trade

As outlined in Chapter Eight, the Australian Trade Commission (Austrade) should be consolidated into the Department of Foreign Affairs and Trade, noting the growing maturity of global markets and Australia’s export sector, as well as the fact it assists only a small portion of Australia’s exporters.

Tourism Australia should be consolidated into the department.

The Export Finance and Insurance Corporation should be abolished.

Human Services

Australian Hearing should be reviewed with a view to privatisation (see Section 10.1).

Industry

In addition to the potential rationalisation of a number of industry assistance programmes, scope exists to rationalise agencies and bodies within the portfolio, including consolidating the Australian Renewable Energy Agency into the Department of Industry.

The merging of the Australian Skills Quality Authority is discussed above.

Infrastructure and Regional Development

Commonwealth involvement with the National Capital Authority should be re-assessed with a view to transferring functions to the Australian Capital Territory Government. The Commission also recommends a review of the National Transport Commission to determine whether the body should continue or cease operations.

Scoping studies of the Australian Rail Track Corporation and Moorebank Intermodal Company should be undertaken with a view to privatisation – see Section 10.1.

Prime Minister and Cabinet

The recent consolidation of Indigenous programmes into a single department provides an opportunity to improve cohesion and programme delivery. However, consistent with the above proposition that portfolio departments should undertake policy work and agencies should deliver programmes and services, the Commission sees merit in moving the programme and service delivery functions into a new body, the Indigenous Affairs Agency.

The Commission notes that there are a significant number of Indigenous bodies, including approximately 20 in the Prime Minister and Cabinet Portfolio. The Commission suggests that the department should undertake a review of all Indigenous bodies, with a view to significantly reducing the number of bodies to improve delivery and accountability. The Commission acknowledges that these matters are likely to require consultation with stakeholders. Further recommendations about Indigenous bodies are set out in Section 8.3.

The Commission considers merging the Indigenous Land Corporation and Indigenous Business Australia could achieve efficiencies, avoid duplication (these organisations already share a common chair) and be more convenient for clients. The Aboriginal and Torres Strait Islander Land Account should be maintained to provide a stable revenue stream to fund Indigenous land acquisition and management activities.

The Office of the Commonwealth Ombudsman should be expanded to bring together all Commonwealth ombudsman offices including the Private Health Insurance Ombudsman and Fair Work Ombudsman.

Treasury

The Commission recommends abolishing the Australian Reinsurance Pool Corporation (over time) and the Clean Energy Finance Corporation.

The Commission recommends merging the Auditing and Assurance Standards Board and the Australian Accounting Standards Board, consolidating the Corporations and Market Advisory Committee into the Department of the Treasury and moving the National Competition Council’s functions into the Productivity Commission (recognising there may be sensitivities with it retaining some regulatory responsibilities).

The functions of the Australian Securities and Investments Commission, particularly areas of overlap with the Australian Prudential Regulation Authority and the Australian Competition and Consumer Commission, should be considered in the context of the Financial System Inquiry.

In the meantime, the registry functions of the Australian Securities and Investments Commission should be transferred to the Australian Taxation Office, its consumer protection functions transferred to the Australian Competition and Consumer Commission and its financial literacy functions should cease.