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Legislative Assembly for the ACT: 2005 Week 4 Hansard (17 March) . . Page.. 1139..


MR QUINLAN (continuing):

in a dynamic environment that demands innovative outcomes and outputs, often with fewer resources. Risk management is good management.

The government's enterprise-wide risk management framework represents best practice not only for the ACT government but also for public administration in Australia and the world. Importantly, it will enable us to manage risk under one structure so decision makers at all levels understand all the key issues that need to be managed, not just one aspect of their operation. It will provide community assurance that we have a systematic regime to identify and treat risk and that it is being followed in accordance with stakeholder expectations.

Turning back to the bill, members will observe that the key difference between the existing legislation and that proposed by the bill lies in the structure of the ACT Insurance Authority, its management and governance. The previous legislation established the authority as a non-commercial government entity with a governance structure that mirrored more commercially focused businesses. This gave rise to the potential for a divergence in views between Treasury and the board. The potential for divergence arose due to a natural inclination of the board to take a very conservative risk position from the sole point of view of the authority's balance sheet and operating result, whereas Treasury required a whole-of-government view of acceptable insurance risk.

This situation was managed through the Treasurer and the Department of Treasury providing the board with guiding parameters within which it could operate. However, the board was unclear as to its role and responsibilities and considered itself to be more akin to an advisory board than a governing board. The revised governance arrangements included in this bill remove the potential for a divergence in views. By shifting responsibility from an independent board, the bill does not require the references to ministerial directions to the authority that existed under the old act.

Insurance, and its accompanying policies, is an essential tool of fiscal management. As such, it should be managed in the context of broader fiscal strategies rather than by an independent board with narrow fiscal responsibilities and accountabilities. Notwithstanding that, one aspect of the previous board's contribution should be preserved. It is proposed that an advisory board be established to provide technical and market advice to ensure that dealings with the reinsurance market provide the best outcomes, and to assist in the development of best practice risk management strategies.

Finally, and from a technical perspective, legal advice to the government indicated that the existing legislation has an internal inconsistency concerning the employment status of the general manager of the authority and the authority's staff. This bill removes that inconsistency.

Mr Speaker, in summary, this bill provides for a more cohesive management mechanism to accommodate the authority's expanded role. As to internal governance, the authority will be more closely aligned with the Department of Treasury, and an advisory board, similar in generic functions to the investment advisory board, will operate within the new structure. The authority's management will be better able to function within a whole-of-government perspective. I commend the bill to the Assembly.

Debate (on motion by Mr Mulcahy ) adjourned to the next sitting.


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