The consequences of the current public sector reporting framework for government accountability and decision making

In the last two decades of the twentieth century and into the twenty-first century the Australian public sector has undergone fundamental reform of both the way it structures its operations and the processes of administering its operations. These reforms, emanating from New Public Management which had also been adopted in other western democracies, shifted the focus of public sector administration from the control of inputs to the pursuit of outputs and outcomes. By the early 1990s, the shift to ‘managerialism’ in the Australian public sector was accompanied by a conversation that was largely conducted in financial terms, underpinned by a commitment to ‘good’ commercial practices imported from the private sector and an obvious bias to adopt market solutions wherever possible. The introduction of private sector accrual accounting techniques (including the generation of general purpose financial reports) in Australia was fiercely debated. There were significant concerns about the appropriateness of a general purpose financial reporting framework which has a decision-useful objective as a means of discharging accountability in the public sector. A further consideration was that the adoption of accrual accounting was not able to be a replacement for cash accounting since Australia’s constitution requires annual appropriation of expenditure to be enacted through Parliament and to be accounted for annually. There is a third reporting mechanism, Government Finance Statistics (GFS), which provides statistics to assist in obtaining (amongst other things) an international comparison of the financial performance of government. While there is some commonality amongst these three frameworks, what has resulted is a fragmented accountability landscape. In this chapter, the consequences of this fragmentation for government accountability and decision-making will be discussed.