Introduction

Public entities are organisations established and owned by the government to undertake a range of administrative, service delivery and/or regulatory functions outside government Departments. Whereas Departments are the home of functions desirably 'close' to the executive government, public entities perform functions that warrant a degree of independence and distance. This might be because an entity performs operational functions that do not require routine control of the Department. Or it might be that the entity requires formal independence because the entity performs functions (such as regulatory and quasi-judicial functions) over which day-to-day government control would not be appropriate.
There are many reasons for establishing a public entity, and as a consequence there are many types of entity. In Victoria, public entities deliver services such as health, environmental and transport services. Some perform regulatory functions – examples include the Essential Services Commission and the Victorian WorkCover Authority. Some public entities are run along business lines, as government business enterprises (GBEs) with corporate-style structures and reporting.

Boards are formed to govern. Governance defines the relationships between directors and between the Board and senior management, the Minister, stakeholders (including consumers), and others interested in the affairs of the public entity, including regulators and auditors.

What is governance

Governance encompasses processes by which organisations are directed, controlled and held to account. That is, the processes whereby decisions important to the future of an organisation are taken, communicated, monitored and assessed. It refers to the authority, accountability, stewardship, leadership, direction and control exercised in the organisation.

Governance gives practical meaning to public sector accountability obligations. Central to the accountability framework is Ministerial accountability to Parliament and the electorate. Public entity boards are accountable to their Minister. Accountability is also strengthened through agencies such as the Auditor-General and the Ombudsman.

Good governance provides the foundation for high performance. It strengthens community confidence in a public entity, and helps ensure entities’ reputations are maintained and enhanced. Good governance enables entities to perform efficiently and effectively, and to respond strategically to changing demands.

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Being a member of a public sector Board

It can be difficult for people with a private sector background to enter a system of Ministerial accountability and direction, no matter how well motivated and experienced they are. This guide is designed to make that transition easier.

Public entity Boards must meet a range of economic, social and environmental objectives as required by the checks and balances imposed on them by Parliament, the government and central agencies.

Good governance strengthens Ministerial, government and community confidence in a public entity. It also has direct benefits for public entities themselves.

It helps ensure public entities' reputations are maintained and enhanced, and assists them to respond effectively to changing demands.

Directors on the Board of a public entity are 'public officials' under the Public Administration Act 2004 (PAA) and are bound by the public sector values of the Act (s. 7). Public sector values are:

• responsiveness
• integrity
• impartiality
• accountability
• respect
• leadership
• human rights

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