Introduction

1.1 The Australian Public Service (APS) provides policy advice to government and in doing so should equip decision-makers with the information they need to make the best possible decision.⁵ Impact Analysis (IA) is a long-established administrative process in the APS with the intention to support informed policy decision-making. ‘Any policy proposal or action of government, with an expectation of compliance, that would result in a more than minor change in behaviour or impact for people, businesses or community organisations’ is required to have an IA.⁶

1.2 IAs are defined as a ‘factual assessment of a given issue [that] is not designed to critique or praise a particular policy’.⁷ An IA should assess each policy option, cost the likely impact of the policy and consider a range of viable alternatives against existing arrangements. An IA is included as part of explanatory material for proposed legislation and is also published upon policy announcement. It is a document that may be read by decision makers, stakeholders, the media and general public.

1.3 IAs should answer the seven questions that have been part of the IA framework since March 2014, with some minor changes in March 2020 and May 2023 (Box 1).⁸

1.4 The Australian Government Guide to Policy Impact Analysis provides high-level principles for policy makers and an outline of the process for developing IAs (Box 2).⁹

1.5 The IA framework’s origins can be traced back to 1985, when the Australian Government established the Business Regulation Review Unit in the Department of Industry, Technology and Commerce to examine the impact of proposed regulatory changes. In 2022 the government sought to refocus the IA framework on the ‘total effect’ of policies, not only the potential regulatory burden.¹⁰ In 2023 the IA framework’s supporting guidance document, the Australian Government Guide to Regulatory Policy Analysis¹¹, was renamed the Australian Government Guide to Policy Impact Analysis. Changes made to the IA framework in 2023 included¹²:

• a change in focus from ‘decisions of government with an expectation of compliance’ to ‘any policy proposal or action of government, with an expectation of compliance, that would result in a more than minor change in behaviour or impact for people, businesses, or community organisations’¹³;
• agencies certifying other reviews or analyses as representing an equivalent process to IA, and thereby not requiring the policy proposal to undergo the full IA framework process, could do so only with the prior agreement of the Department of the Prime Minister and Cabinet (PM&C); and
• whereas under the previous settings all Cabinet submissions that were assessed to have a low regulatory impact needed to have a ‘minor IA’¹⁴, sponsoring ministers were given the discretion to determine whether a minor IA for Cabinet submissions was required.

Office of Impact Analysis

1.6 The Office of Impact Analysis (OIA), a branch within PM&C’s Economic Division and Economic, Industry and Resilience Group, is responsible for the administration of the IA framework.¹⁵ Under the IA framework, PM&C through the OIA acts as a gatekeeper in determining whether policy proposals are of sufficient impact to trigger requirements to prepare an IA. If PM&C determines that an IA is required, it then assesses the quality of the IA against the seven questions that an IA is meant to answer (Box 1).¹⁶

1.7 As at September 2024 the OIA comprised 16 staff and had been allocated $2.5 million to undertake its activities in 2023–24.

1.8 The OIA’s work has two elements: an assessment element, to assess the IA work of policy agencies against the requirements of the IA framework; and a coaching element, to lift the APS’s capability to conduct evidence-based policy analysis.¹⁷ The OIA’s responsibilities to support policy agencies throughout the IA process include:

• advice on whether an IA is required or not, and, if required, the depth of analysis that must be undertaken¹⁸;
• assistance with preparing an IA, including feedback on the quality of informal and early drafts of the IA prepared by an agency¹⁹;
• assessment of the quality of an IA through a formal assessment rating²⁰;
• publication of IAs and assessments on the PM&C website; and
• ensuring agencies meet requirements to publish IAs in full in explanatory material for bills and regulations tabled in the Parliament.²¹

1.9 Under the IA framework, there are four ‘special cases’ that do not require agencies to submit an IA for assessment by the OIA: Prime Minister’s exemptions, IA equivalents, carve-outs and sunsetting legislative instruments.²² See paragraph 3.28 for a definition of the four special cases. Documents relating to Prime Minister’s exemptions, IA equivalents and sunsetting legislative instruments are published in place of an IA or a full IA.

1.10 PM&C’s assessment process for IAs comprises five steps²³ that are aligned to the policy development cycle (Figure 1.1).²⁴

• Preliminary assessment — Prior to the decision step in the policy cycle, a preliminary assessment by PM&C determines whether a policy proposal requires an IA.
• Early assessment (optional step) — If PM&C determines that an IA is required, the policy agency may submit an IA to PM&C for an ‘early assessment’. This provides entities with an opportunity to test the quality of the IA.
• Assessment — PM&C assesses each IA based on the quality of analysis and the process associated with its development in a first and second pass assessment. There are four assessment tiers: exemplary; good; adequate; and insufficient.²⁵ The IA assessment is provided to government along with the policy proposal at the final decision point.
• Publication — After government makes a decision on the policy proposal and the policy is announced, the final IA (or IA equivalent), associated documents, and second pass assessment rating are published on the PM&C website.²⁶
• Post implementation review — In some cases a post implementation review of the policy is required, which is monitored by the Department of the Treasury (Treasury) (see paragraph 3.85). PM&C and Treasury share certain responsibilities to administer post implementation reviews.

Figure 1.1: Policy cycle^a, Impact Analysis and Impact Analysis assessment steps

Note a: APS Academy guidance on policy development refers to the ‘policy cycle’ as the steps for making public policy (APS Academy, Policy cycle: A ‘’good process’ test for making public policy’’, APS Academy. 2022, available from https://www.apsacademy.gov.au/sites/default/files/2022-04/22-016%20-%20Toolkit-TheoryBites-31Mar22_05_Policy%20cycle.pdf [accessed 31 January 2025]).

Note b: There are four types of special cases that do not require agencies to submit an IA or a full IA for assessment by the OIA: Prime Minister’s exemptions, IA equivalents, carve-outs and sunsetting legislative instruments.

Note c: A post implementation review is not required in all cases (see paragraph 3.85).

Note d: Responsibility for the assessment of post implementation reviews was transferred to the Department of the Treasury (Australian Centre for Evaluation) in July 2023 (see paragraph 3.84).

Source: ANAO analysis of PM&C documentation.

1.11 Table 1.1 shows IAs published by the OIA in 2022–23 and 2023–24.

Table 1.1: Preliminary assessments, IA assessments and IAs published, 2022–23 and 2023–24^a

Note a: Australian Government assessments only. Excludes Commonwealth / state IA activities.

Note b: The total number of preliminary assessments in 2022–23 and 2023–24 was calculated by the ANAO using raw data in PM&C systems. PM&C does not calculate and record this information.

Note c: Comprises IAs for decisions announced in the relevant financial year.

Note d: Of the 70 IAs assessed one was rated ‘insufficient’ on the basis that the policy was announced without a finalised IA (see paragraph 3.26). This IA is excluded from the ANAO’s analysis of IA’s assessed by the OIA throughout this report.

Source: ANAO analysis of PM&C IA data and Australian Government Impact Analysis status, 2023–24, p. 5, available from https://oia.pmc.gov.au/sites/default/files/2024-10/2023-24-aus-gov-impact-analysis-status-agency.pdf [accessed 5 November 2024].

1.12 Figure 1.2 shows a ten-year trend of the number of IAs published.

Figure 1.2: Number of IAs published, 2014–15 to 2023–24

Source: PM&C, Australian Government Impact Analysis status, 2023–24, PM&C, 2024, p. 6, available from https://oia.pmc.gov.au/sites/default/files/2024-10/2023-24-aus-gov-impact-analysis-status-agency.pdf [accessed 13 February 2024]; PM&C, Australian Government Regulation Impact Statement Status, 2021–22, PM&C, 2022, p. 5, available from https://oia.pmc.gov.au/sites/default/files/2022-08/2021-22-aus-gov-regulation-impact-statement-status-agency.pdf [accessed 13 February 2025]; PM&C, Compliance with the Australian Government’s RIS Requirements, 2014–15 to 2019–20, PM&C, 2020, p. 1, available from https://oia.pmc.gov.au/sites/default/files/2021-06/compliance-with-aus-gov-regulation-impact-statement-requirements-2014-15-to-2019-20.pdf [accessed 13 February 2025].

Rationale for undertaking the audit

1.13 The Public Service Act 1999 states that the APS ‘provides the Government with advice that is frank, honest, timely and based on the best available evidence’.²⁷ Providing quality advice to support government in making policy decisions is a core function of the APS. Priority four of the APS reform agenda is ‘An APS that has the capability to do its job well’.²⁸ This includes improving the capability of the APS to deliver good policy advice to support informed decision-making.

1.14 The IA framework is intended to support evidence-based policy development and informed decision-making by the Australian Government, including by improving the APS’s capability to undertake quality evidence-based policy analysis. The Assistant Minister to the Prime Minister’s foreword to the Australian Government Guide to Policy Impact Analysis states that an IA ‘provides decision-makers with information about how people, community organisations and businesses may be affected and how the costs and benefits fall across these groups’ to ‘help government choose the best path forward’.²⁹ Published IAs support transparency over Australian Government decision‐making.

1.15 This audit provides assurance about whether PM&C is effectively administering the IA framework to achieve the IA framework’s objective of enabling well‐informed and transparent Australian Government decision‐making.

Audit approach

Audit objective, criteria and scope

1.16 The objective of the audit was to assess the effectiveness of PM&C’s administration of the IA framework to enable well-informed and transparent Australian Government decision-making.

1.17 To form a conclusion against the objective, the ANAO adopted the following high-level criteria.

• Are PM&C’s governance arrangements for the IA framework fit for purpose?
• Is the IA framework implemented effectively?
• Has PM&C been an effective steward of the IA framework?

1.18 The audit focused on the period from 1 July 2022 to 30 June 2024.

Audit methodology

1.19 To address the audit objective, the audit methodology included:

• review of PM&C documentation and public IA reporting;
• walkthroughs of PM&C processes for administering the IA framework and observation of a training activity;
• analysis of case management and stakeholder survey data;
• meetings with PM&C officials; and
• meetings with stakeholders that engage in the IA process or have a role in improving the APS’s policy capability.

1.20 The audit was open to public contributions. The ANAO did not receive any contributions.

1.21 The audit was conducted in accordance with ANAO Auditing Standards at a cost to the ANAO of approximately $566,000.

1.22 The team members for this audit were Kai Swoboda, Callum Mann, Jillian Hutchinson, Yoann Colin, Megan Cook and Christine Chalmers.

2.1 The Public Governance, Performance and Accountability Act 2013 (PGPA Act), Public Service Act 1999, National Archives Act 1983, and directions issued by the Department of Home Affairs set out governance requirements for Australian Government entities including relating to risk management, probity, record keeping and information security.

2.2 Australian Public Service Commission (APSC) guidance on stewardship notes that stewardship includes building and nurturing genuine partnerships.³⁰ The IA framework requires PM&C to work with Australian Government policy agencies. Within the Australian Government, there are other IA processes managed by other entities for women, First Nations peoples and regional Australians, and sector-wide guidance produced by other entities that refers to the IA framework and other frameworks (see Table 2.1). As the steward of the IA framework, PM&C needs to work with stakeholders across government to coordinate, implement and improve the framework to ensure that it is effectively and efficiently achieving its objectives.

2.3 The APSC’s guidance Getting stakeholder engagement right articulates how the Australian Public Service (APS) is expected to conduct stakeholder engagement.³¹ APSC advice refers to the APS framework for engagement and participation, which provides further guidance on effective stakeholder engagement.³²

Are internal governance arrangements fit for purpose?

Independence

2.4 The Office of Impact Analysis (OIA) is a branch within PM&C’s Economic Division, which is part of the Economic, Industry and Resilience Group (see paragraph 1.6). The OIA is managed by an executive director (a senior executive service band 1 official), who reports to the First Assistant Secretary of the Economic Division. The accountable authority for the OIA is the Secretary of PM&C. The OIA is subject to PM&C’s general governance arrangements including policies and governance committees.

2.5 The Organisation for Economic Co-operation and Development (OECD) states that one of the principles of a sound regulatory system is integrating regulatory impact statements into early stages of regulatory development, and that a regulatory oversight body should exercise its technical functions of assessing and advising on the quality of impact statements independently.³³

2.6 On 28 October 2010 the Minister for Finance and Deregulation made a statement reaffirming the government’s commitment to an independent regulatory assessment process.

Consistent with international best practice, the [Office of Best Practice Regulation (OBPR)] needs to exercise its decision-making functions independently. The Government will ensure that Ministers do not influence the OBPR’s decisions in determining the adequacy of Regulation Impact Statement or agency compliance with the Best Practice Regulation Guidelines. Decisions on the adequacy of a regulatory impact analysis and compliance with best practice regulation requirements will continue to be made independently by the Executive Director of the OBPR. The OBPR will continue to brief Cabinet and myself independently on the quality of regulatory analysis which accompanies regulatory proposals which are submitted to Cabinet.³⁴

2.7 A 2012 Independent Review of the Australian Government’s Regulatory Impact Analysis Process noted that:

To perform its watchdog role effectively, the OBPR needs to exercise its decision making functions in an independent manner. The government has put in place procedures to ensure neither ministers nor their staff can seek to intervene in or influence the OBPR’s deliberations. Decisions on the adequacy of a regulatory impact analysis and compliance with the best practice regulation requirements will be made independently by the Executive Director of the OBPR.³⁵

2.8 The 2012 review noted that ‘there is considerable store placed upon the integrity, wisdom or judgement that has to be exercised by the head of OBPR’ and that ‘the role does demand independence and a high degree of fortitude’. This is because ‘difficult calls have to be made that impinge on the responsibilities of ministers, departmental secretaries and statutory agencies’.³⁶

2.9 The 2012 review found that ‘the OBPR head is accorded independence in practice, even though the position is a line position in the Department of Finance and Deregulation’.³⁷ Independence was achieved through the support of the department’s secretary by ‘helping shield the OBPR executive director from any undue influence …’³⁸ The review recommended that, to strengthen the independence of the OBPR, a ‘small deregulation advisory board’ be established as a non-statutory body to advise the head of the OBPR and, as required, the Minister for Finance and Deregulation’.³⁹ The government’s final response to the review ‘noted’ the recommendation, and stated that a case had not been made to justify creation of a Deregulation Advisory Board.⁴⁰ An update to IA processes in July 2013 did not include an advisory board.

2.10 PM&C’s 2024–25 Corporate Plan and 2023–24 Annual Report do not include references to the OIA other than a reference to the branch in the PM&C organisation chart. The corporate plan and annual report do not discuss the concept of the OIA’s independence. There is no publicly documented statement (similar to a ‘statement of intent’ required of entities undertaking regulatory functions) that describes how the OIA maintains independence as a branch within PM&C. On PM&C’s website, in a section about the OIA, PM&C states that the OIA ‘maintain(s) day-to-day independence from the Australian Government in our decision-making’.⁴¹ The Australian Government Guide to Policy Impact Analysis also asserts that the office ‘maintains day-to-day independence from government in its decision making on the IA system’. Neither the website nor the guide specifically explains how independence is achieved through structural arrangements, settings or practices. PM&C advised the ANAO in November 2024 that the ‘OIA’s independence occurs through its administrative decision making which is based on the Australian Government Guide to Policy Impact Analysis, endorsed by the Government (rather than PM&C)’ and that:

Evidence of the independence of OIA’s administrative decision making is demonstrated through OIA’s processes – that is, a written brief provided to the OIA Executive Director providing a summary and recommendations on a IA assessment at both the formal First and Second Pass Assessment stages, with the decision made by the OIA Executive Director to determine whether an IA is of a sufficient quality to be compliant under the Guide.

2.11 PM&C advised the ANAO in November 2024 that ‘If there was pressure on the OIA around publishing an IA, the executive director of the OIA could call upon PM&C Senior Executive to provide support.’

2.12 The OIA’s 2023–24 and 2024–25 business plans (see paragraph 2.24) included a risk of ‘Potential perceived conflicts of interest, integrity of decision making, fraud and corruption’. The 2023–24 business plan described the risk source as the OIA’s ‘day to day independence’ in implementation of the IA framework is ‘unduly influenced by external parties’, including ‘pressure to publish or not publish’. The risk was rated low, described as being ‘shared’ with the PM&C executive, and had identified controls and treatments. These included: to clearly document all assessment decisions in a case management system; have clear lines of communication and escalate to senior executives; have a second OIA officer assess the final process; clear policy and procedures; and senior executive support.

Conflict of interest

2.16 The OIA’s 2023–24 and 2024–25 business plans include a risk of ‘[p]otential/perceived conflicts of interest, integrity of decision making, fraud and corruption’. There is no further description of how these risks could arise in the specific context of the OIA’s work. Threats to independence could arise from conflicts of interest.

2.17 PM&C has a department-wide conflict of interest policy that is available to staff on the PM&C intranet. The conflict of interest policy states that PM&C employees are required to disclose and take action to mitigate or resolve any real or perceived conflicts of interest. Under the policy, PM&C’s senior executive service (SES) staff are required to submit an ‘annual disclosure and declaration process’ form on commencement. SES staff must submit a new statement in March each year and in circumstances where there is a change in their responsibilities or personal circumstances that could impact on their decision-making or advice. PM&C’s non-SES staff who have identified a real or apparent conflict of interest must complete a conflict of interest declaration form submitted via the PM&C intranet. The conflict of interest policy states that, in addition to these general requirements, ‘Managers may decide that specific roles or projects carry a particular risk and require those employees to declare any personal interests’.

2.18 There is no specific conflict of interest procedure or policy relating to the activity of IA assessment.

2.19 Each of the three PM&C staff who held the position of OIA executive director (an SES-level role) between July 2022 and June 2024 submitted their annual disclosure as required. In the same two-year period, one non-SES OIA official declared a conflict of interest in relation to their previous employment and for a specific policy proposal that was being considered by the OIA. As part of the declaration the staff member identified how the potential conflict of interest would be managed. Although the declaration was not submitted via PM&C’s intranet, it was provided to the staff member’s supervisor and branch manager via email.

2.20 PM&C’s annual mandatory training includes a 30-minute training module on ‘Integrity in the APS’, which provides an outline of the APS values, principles and code of conduct. The module includes a scenario about conflicts of interest and gifts and benefits. The completion rate for OIA staff for this training module was 100 per cent in 2022–23, 65 per cent in 2023–24, and for 2024–25, 100 per cent as at October 2024.

Risk management

2.21 PM&C’s Risk Management Policy and Framework (May 2020) specifies three strategic risks (staff welfare, failure to deliver on the government’s priorities and advice not of high quality or timely); establishes a risk matrix and escalation process; and specifies the risk tolerance. The Risk Management Policy and Framework refers to a ‘three yearly review process with ongoing monitoring and updates’. PM&C advised the ANAO in November 2024 that ‘[t]he review of the Risk Management Policy and Framework has commenced and is in progress’. A revised Risk Management Policy and Framework was presented to PM&C’s audit and risk committee (ARC) in March 2025.

2.22 The Risk Management Policy and Framework requires that:

• a risk assessment be completed in quarter 1 of PM&C’s governance planning cycle for each branch, to be informed by a relevant divisional risk assessment; and
• if a high or extreme risk, or a risk out of tolerance, is identified it should be escalated to the appropriate senior executive or, where appropriate, the Executive Board⁴² for approval.

2.23 In July 2023 the ARC received a ‘health check’ on the IA framework. The health check found that the OIA did not maintain specific risk management documentation beyond the Economic Division’s Business Plan, and that this may lead to exposure to unidentified and unmanaged risks that may be outside of PM&C’s risk tolerances. The health check recommended that the OIA conduct risk management activities in accordance with the Risk Management Policy and Framework. PM&C accepted the recommendation and advised the ARC in September 2023 that it would be implemented by 30 November 2023. September 2024 ARC papers described implementation as ‘delayed’. The ARC agreed to close the recommendation in December 2024, on the basis of advice that an OIA 2024–25 business plan and risk assessment had been approved.

2.24 OIA risks were identified in business plans.

• A branch business plan for 2023–24 finalised in May 2024 (see paragraph 2.25) lists nine ‘top risks to OIA achieving its priorities’. For each identified risk there is a risk owner, control, and residual risk rating (after treatment). One risk was rated extreme after treatment: business systems do not continue to effectively and efficiently support the work of the OIA. Two risks were rated high after treatment: officials experience burn out or other health related/psychosocial issues; and a lack of buy-in or poor relationships with APS stakeholders. As required by PM&C’s Risk Management Policy and Framework, the branch business plan stated that the three risks assessed as high or extreme had been escalated to the appropriate senior executive (in the case of the extreme risk to deputy secretary level) and accepted. Acceptance of the risks by the appropriate senior executive was not documented.
• A branch business plan for 2024–25 finalised in November 2024 lists 11 risks, of which eight were assessed as low and three were assessed as medium after treatment. The extreme business system risk identified earlier in 2024 was rated medium and within tolerance in November on the basis of funded investments in systems improvements due to commence in January 2025.⁴³ The two high risks identified earlier in 2024 (burn-out and stakeholder relationships) were rated medium and outside of tolerance. The First Assistant Secretary of the Economic Division agreed to the risk management plan in November 2024.

Business and workforce planning

2.25 PM&C advised the ANAO in August 2024 that its business planning arrangements require business plans to be developed at the divisional level, and that performance against these plans is reviewed by the Executive Board. Business planning at the branch level is not mandatory. The 2023–24 and 2024–25 OIA business plans:

• describe the purpose of the OIA as to ‘Ensure Government decisions that require Impact Analysis are supported by the best possible evidence and analysis and ensure Australia remains a leading nation in the delivery of exemplary impact analysis’;
• identify priority objectives, activities and intended results from these activities; and
• list performance measures.

2.26 The OIA’s workload is cyclical, with higher levels of policy development activity associated with the Budget cycle prior to May and November each year (Figure 2.1).

Figure 2.1: OIA monthly IA activities, July 2022 to June 2024^a

Note a: An individual case record may have more than one policy proposal included within the case.

Source: ANAO analysis of OIA case management system data.

2.27 A draft June 2021 OIA business plan included a staffing allocation for 2021–22 of 16 full-time equivalent (FTE). The draft 2021–22 business plan was not finalised and subsequent business plans do not include planned staffing allocations. At September 2022, the OIA consisted of 21 staff organised across three teams that aligned with Australian Government portfolios, which included a ‘surge’ function that commenced in late 2021 and continued to 2022–23 to provide more direct support to policy agencies to develop high-quality impact analyses. OIA staffing was 18 at September 2023 (comprising 12 staff who were at the OIA in September 2022 and six new staff). At September 2024, the OIA consisted of 16 staff (comprising eight staff who were at the OIA in September 2023 and eight new staff).

2.28 As discussed at paragraph 2.24, one of OIA’s high risks after treatment in the 2023–24 and 2024–25 business plans was officials experiencing burn out or other health related/psychosocial issues. The risk was attributed to tight deadlines, prolonged periods of excessive hours, delays in recruitment processes or applicants unsuited to the role, failure to communicate pressures to senior managers, and decisions made without adequate consultation. A number of controls were established for the risk, which was assessed as outside of tolerance but accepted.⁴⁴ As at October 2024, the OIA had not used workforce planning tools available on the PM&C intranet and PM&C advised the ANAO in November 2024 that ‘workforce planning is optional’. In 2022–23 and 2023–24, OIA staff participated in six and 22 scheduled training activities respectively, covering new starter training (two sessions), systems training (11 sessions) and IA framework practices (15 sessions). PM&C held four wellbeing sessions for OIA staff between March 2024 and October 2024.

Information management

2.29 Records relating to IA decision-making are largely retained within an OIA-specific system called the ‘OIA Record of Compliance and Assessment’ system (ORCA)⁴⁵ (see paragraph 2.30). ORCA has been used since October 2021 to administer the IA framework.

2.30 The ORCA case management system: registers a unique identification number for each policy proposal; manages and auto-files all email correspondence sent or received via a central helpdesk email address; allocates each policy proposal to individual OIA staff members; provides for other records related to a policy proposal (such as meeting minutes, phone messages and other information) to be included as part of the record; and includes a reporting function. PM&C upgraded ORCA in 2022 to include additional features.⁴⁶ ORCA allows for an auditable trail as a policy proposal progresses through different stages of the IA process. The system does not capture resourcing information such as time spent by staff on assessing each IA.

2.31 PM&C has established guidance to support OIA staff to use ORCA, including a user guide and information for new starters, and provided 11 training sessions for staff in 2022–23 and 2023–24 on the use of ORCA. As at December 2024 the terminology used in ORCA and some business processes did not reflect the November 2022 renaming of the OIA or other IA framework changes (see paragraph 1.5).

2.32 PM&C publishes four IA framework-related compliance reports on the PM&C website.⁴⁷ May 2024 internal guidance on compliance reporting and publication monitoring notes that ‘ORCA includes a reporting function to support preparation of these reports … However it is not clear the function is operating as intended due to data validation issues’. To compile these reports, PM&C must undertake a manual validation process. PM&C’s reporting for IAs published in 2023–24 as at 22 May 2024 was correct for 96 per cent of IAs. Errors in two IAs were corrected when the full-year reporting to 30 June 2024 was published on 31 October 2024.

2.33 A 2024–25 capital project funding proposal for a ‘critical upgrade’ to ORCA was presented to PM&C’s Operations Committee⁴⁸ in June 2024. The funding proposal identified a design flaw that risked policy proposals being missed because specific procedures within ORCA were linked to individual staff who may have left the OIA or PM&C. The Operations Committee approved (at a cost of $586,757) the proposal to upgrade ORCA to address the design flaw, update the outdated terminology and workflow, and implement enhancements that were expected to improve productivity and efficiency. The project plan for the upgrade states that changes would be implemented by June 2025.

2.34 An ‘Information Governance Framework’ (approved May 2023) establishes PM&C’s approach to the creation, capture, management and use of records, information and data. Key information management policies that support the framework are: the PM&C Security Framework (December 2018; updated July 2024); and the Information Management Policy (August 2018; updated June 2024).

2.35 The Security Policy Framework covers personnel, information, and physical security. Requirements relevant to the work of the OIA include:

• establishing the ‘need to know principle’ whereby official information should only be made available to individuals who require access in order to do their work;
• completion by PM&C staff of security induction training within four weeks of joining PM&C and annual refresher training; and
• references to a separate ICT Security Policy (July 2024) relating to the storage of classified documents and information on ICT systems, which notes that PM&C networks are audited against the requirements of the Australian Government Information Security Manual.

2.36 Access to ORCA is restricted to OIA staff, who are granted access to the full range of policy proposals across government. PM&C’s annual mandatory training includes a 15-minute training module on ‘security basics’. The completion rate for OIA staff for this training module was 100 per cent in 2022–23 and 76 per cent in 2023–24. The completion rate for 2024–25 was 100 per cent as at October 2024. PM&C undertook IT assurance activities prior to approving the implementation of ORCA.

2.37 The Information Management Policy specifies that all official information must be captured in an endorsed location and lists specific systems as ‘acceptable repositories’. As at January 2025, ORCA was not listed in the Information Management Policy as being endorsed as an acceptable repository to hold departmental records. The Information Governance Framework states that PM&C must implement processes to ensure new systems are assessed against the National Archives of Australia’s Business Systems Assessment Framework (BSAF) requirements.⁴⁹ The BSAF assessment for ORCA was completed in September 2024. PM&C advised the ANAO in April 2025 that the BSAF provides ORCA with the authority to hold departmental records.

2.38 The Information Management Policy requires PM&C staff to capture certain official information⁵⁰ in relation to decision-making ‘to make known the intention of a decision-maker, the basis for a decision, all the key decision points in relation to its subject matter and who has made those decisions.’ Official information should include: all the information which a decision-maker has taken into account in making a decision, including any significant options that the decision-maker considered but rejected; any information made public and upon which members of the public rely on to make decisions; and other information for which PM&C may be held accountable.

2.39 PM&C staff must participate in annual information management training programs under the Information Management Policy. PM&C’s annual mandatory training includes a 20-minute training module on ‘Managing records and information’, which was added to the mandatory training program in late 2023.⁵¹ The completion rate for OIA staff for this training module was 71 per cent in 2023–24 and for 2024–25 was 100 per cent as at October 2024.

Are there fit-for-purpose arrangements to coordinate with IA framework stakeholders?

2.40 Effective stakeholder engagement can encourage new ideas and innovation, support evidence-based advice and contribute to meeting objectives. The effectiveness of stakeholder engagement should be monitored on an ongoing basis to improve the engagement process if necessary.⁵²

Stakeholder engagement framework

2.41 APSC stakeholder engagement guidance notes that stakeholder engagement starts with mapping and identifying stakeholders and creating an engagement plan.⁵³ PM&C has not mapped IA framework stakeholders or established a stakeholder engagement plan.

2.42 In addition to the policy agencies that PM&C, as steward of the IA framework, must work with to implement the IA framework, IA framework stakeholders may include Australian Government entities that share IA framework objectives or responsibilities, are involved in other types of targeted impact assessments or own guidance that supports the effectiveness of the IA framework (Table 2.1).

Table 2.1: Selection of Impact Assessment framework stakeholders

Note a: Australian Public Service Academy, The Australian Policy Cycle, APSA, available from https://www.apsacademy.gov.au/resources/australian-policy-cycle [accessed 31 October 2024].

Note b: Department of the Prime Minister and Cabinet, Including Gender: An APS Guide to Gender Analysis and Gender Impact Assessment, PM&C, 2024, available from https://www.pmc.gov.au/sites/default/files/resource/download/aps-guide-gender-analysis-impact-assessment_0.pdf [accessed 25 October 2024].

Note c: National Indigenous Australians Agency, First Nations Impact Assessment Framework, NIAA, available from https://www.niaa.gov.au/our-work/closing-gap/first-nations-impact-assessments-framework [accessed 25 October 2024].

Note d: Department of Infrastructure, Transport, Regional Development, Communications and the Arts, Regional Australia Impact Statements, DITRDCA, available from https://www.infrastructure.gov.au/territories-regions-cities/regional-australia/regional-australia-impact-statements [accessed 25 October 2024].

Note e: Department of Finance, Australian Government Cost Recovery Policy, DoF, available from https://www.finance.gov.au/government/managing-commonwealth-resources/implementing-charging-framework-rmg-302/australian-government-cost-recovery-policy [accessed 25 October 2024]. At paragraph 69, the Cost Recovery Policy notes that ‘Entities must contact the Office of Impact Analysis prior to seeking policy approval to check whether a Policy Impact Assessment (PIA) will be required. If a PIA is required, it must accompany the policy proposal.’

Note f: Department of Finance, Regulatory Reform, DoF, available from https://www.regulatoryreform.gov.au/ [accessed 28 November 2024].

Note g: Australian Public Service Commission, Impact Analysis 101, APSC, available from https://www.apsacademy.gov.au/resources/impact-analysis-101 [accessed 25 October 2024].

Note h: Department of the Prime Minister and Cabinet, Cabinet Handbook, 15th Edition, PM&C, 2022, available from https://www.pmc.gov.au/sites/default/files/resource/download/cabinet-handbook-15th-edn-august-2024_1.pdf [accessed 25 October 2024].

Note i: Department of the Prime Minister and Cabinet, Legislation Handbook, PM&C, 2017, available from https://www.pmc.gov.au/sites/default/files/resource/download/legislation-handbook-2017.pdf [accessed 25 October 2024].

Note j: Attorney-General’s Department, Guide to managing the sunsetting of legislative instruments, AGD, 2020, available from https://www.ag.gov.au/sites/default/files/2020-07/Guide%20to%20Managing%20Sunsetting%20of%20Legislative%20Instruments.pdf [accessed 25 October 2024].

Note k: Office of Parliamentary Counsel, Instruments Handbook, OPC, 2024, available from https://www.opc.gov.au/sites/default/files/2024-12/Instruments%20Handbook%202024.pdf [accessed 23 December 2024].

Source: ANAO.

Engagement activities

2.43 PM&C interacts with policy agencies to implement the IA framework. These interactions are discussed in Chapter 3.

Shared responsibility or objectives

2.44 The Australian Centre for Evaluation (ACE) was established within the Department of the Treasury (Treasury) to ‘provide leadership and improve evaluation capability across government, including support to agencies and leading a small number of flagship evaluations each year’.⁵⁴ Responsibility for certain parts of the post implementation review (PIR) process under the IA framework were assumed by ACE from 1 July 2023 (see paragraph 3.84).

2.45 A memorandum of understanding (MOU) was established between PM&C and Treasury in April 2024. The MOU sets out the responsibilities of the OIA and ACE with respect to the administration of PIRs, communication and training. The MOU requires the OIA to: inform ACE via a fortnightly email of all policy proposals that trigger an IA; refer policy proposals where an IA has not been triggered to ACE for additional consideration about evaluation; alert ACE via email within two working days to instances of a PIR being triggered; maintain and publish the registers of PIRs required⁵⁵ and PIRs completed and published⁵⁶; publish the PIR Guide⁵⁷; and consult with ACE where there are concerns with the level of expertise or quality of a response to IA question seven (see paragraph 1.3). For the period between April 2024 and December 2024, the OIA met the requirement to provide ACE with fortnightly emails about policy proposals that trigger an IA The fortnightly emails included a section for PM&C to list ‘no IA triggered, but significant policy that may be of interest to ACE’. In the nine-month period examined, two policies of this nature were listed for ACE. For the one PIR triggered in the period, an email was sent to ACE within one week. PM&C has maintained the PIR registers and published the PIR Guide. The ANAO observed examples of PM&C engaging with ACE where there were concerns about the quality of a response to IA question seven.

2.46 One of the OIA’s objectives is ‘providing support and training across the Australian Public Service to support increased policy analysis capability and improved advice to the Australian Government’.⁵⁸ One of the APSC’s objectives is to ‘build APS capability and leadership for the future’, with an attached performance measure ‘contribute to an uplift in APS capability in the domains of APS Craft’.⁵⁹ APS Craft is defined as the ‘fundamental capabilities needed to deliver great policy and services’, one of which is ‘delivering great policy services with strategic analysis and evaluation throughout the policy lifecycle’.⁶⁰

2.47 PM&C does not have a documented approach agreed with the APSC or other entities to coordinate activities and address shared interests in lifting policy capability across the APS.

2.48 The OIA contacted the APS Academy⁶¹ in April 2024 to discuss policy development course content. PM&C advised the ANAO in November 2024 that it had provided 36 hours of impact analysis training to over 400 participants through 17 sessions between 1 July 2024 and 14 October 2024. Further meetings between the OIA and APS Academy in September and October 2024 discussed OIA involvement in graduate training and the use of IA references in training material.

Other targeted impact assessment processes that can interact with the IA framework

2.49 As shown at Table 2.1, PM&C shares purposes with other impact assessment policy owners such as: the Office for Women (gender impact assessment); the National Indigenous Australians Agency (First Nations impact assessment); and the Department of Infrastructure, Transport, Regional Development, Communication and the Arts (regional Australia impact statements). PM&C advised the ANAO in November 2024 that ‘The Australian Government Guide to Policy Impact Analysis does not reference other impact assessment frameworks or processes, and hence OIA is not required to have a direct interaction with these frameworks’. PM&C noted, however, that it ‘has gone beyond the requirements of the IA Framework’ in leading a multi-agency forum to share best practice.

2.50 Since 2023, PM&C has participated in cross-government forums with other policy owners of targeted impact assessment frameworks.⁶² Cross-agency forums comprise the following.

• Multi-agency impact statement forum — PM&C chairs on a rotating basis, a forum that was established in 2023. The forum does not have terms of reference. Meeting minutes indicate that its purpose is to ‘provide a forum where the teams developing new Impact Statements can share progress, learnings and provide feedback’. Specific issues considered by the forum in 2024 included: an update of APSC policy development training; an update on an OIA survey conducted in December 2023/January 2024 (see paragraph 4.24); the development of a senior executive forum; and opportunities to streamline IA processes. The forum held 11 meetings between August 2023 and August 2024.
• Senior executive forum — In 2024 PM&C established and chairs a senior executive forum across the same Australian Government agencies. The forum met in June 2024 and September 2024 and intends to meet quarterly. No terms of reference have been established. The June 2024 meeting agenda states that the objective of the meeting was to ‘Build a shared understanding of the intersections of the Impact Statement frameworks to inform coordination efforts’. Issues discussed included: strategies to encourage early agency engagement; consideration of whether the APSC could assist with training to build compliance with IA processes; and lessons from international experience.

2.51 The OIA has engaged with government officials involved in regulatory analysis from other Australian jurisdictions and other countries to discuss the design and delivery of other impact analysis frameworks including ‘regulation review units’ in Australian state and territory and New Zealand governments.⁶³

Owners of guidance that supports the IA framework

2.52 The IA framework is supported by guidance material maintained and published by other Australian Government entities. With the November 2022 renaming of the OIA and the March 2023 shift in focus away from analysis of regulatory impacts (see paragraph 1.5), some supporting guidance materials, as at December 2024, reflected outdated IA arrangements. The Legislation Handbook (2017) and Guide to Managing Sunsetting of Legislative Instruments (Sunsetting Guide) (July 2020) referred to the Office of Better Practice Regulation and regulatory impact statements. PM&C had not engaged with the Attorney-General’s Department to ensure that the Sunsetting Guide was appropriately updated. Until December 2024, the Instruments Handbook (September 2022) referred to regulatory impact statements.⁶⁴ The Office of Parliamentary Counsel updated the 2022 Instruments Handbook in December 2024, following the release of the new Federal Register of Legislation. The December 2024 Instruments Handbook contains contemporary references to the IA framework and OIA.⁶⁵

3.1 The PM&C 2022–23 Annual Report states that:

The [Office of Impact Analysis (OIA)] oversees the Australian Government’s Policy Impact Analysis framework through 2 elements: a coaching element, to lift the [Australian Public Service’s (APS’s)] capability to conduct evidence-based policy analysis; and an assessment role, assessing the work of others against the Government’s Impact Analysis Framework.⁶⁶

3.2 The key steps in the IA process are preliminary assessment, early assessment, final assessment and publication (see Figure 1.1). The Australian Government Guide to Policy Impact Analysis (Guide to Policy IA) establishes the key steps that policy agencies must undertake to comply with the IA framework and the service standards for PM&C in administering the IA framework.⁶⁷ Clear, accessible and relevant guidance and support can assist entities to comply with mandated requirements.

3.3 PM&C’s Information Management Policy requires PM&C staff to establish records to document decisions and decision-making (see paragraph 2.34).

Is there effective assistance to entities to comply with the IA framework?

Guidance materials

3.4 The Guide to Policy IA, published by PM&C on 17 February 2023, is the primary guidance on the IA framework. It establishes⁶⁸:

• the agencies and types of policy proposals that are subject to the IA framework;
• six principles for Australian Government policy makers (see paragraph 1.4);
• seven IA questions (see paragraph 1.3); and
• different stages of the IA process, assessment tiers and processes to be followed.

3.5 PM&C has produced other resources and guidance materials to support agencies’ compliance with the IA framework. This information is accessible via PM&C’s website and includes a series of guidance notes for different types of policy proposals. The guidance notes are published under four categories (Table 3.1). Published guidance materials were updated between May 2023 and July 2023, following February 2023 changes to the IA framework.

Table 3.1: Guidance materials by category, as at June 2024^a

Note a: The following elements have been excluded from this table: resources that are outdated; and guidance notes about IA requirements for decisions taken by intergovernmental decision-making bodies.

Source: ANAO analysis of guidance materials on PM&C website.

3.6 PM&C has template emails for internal use to communicate to agencies what guidance materials are available and where to access them on the PM&C website. This is largely communicated at the beginning of IA processes after PM&C has conducted a preliminary assessment of a policy proposal.

3.7 Other than through one question about templates in a survey of six entities undertaken as part of a 2023 internal audit, external feedback about published guidance materials has not been collected by PM&C. Between January 2024 and June 2024, seven meetings were held for OIA staff to share lessons learnt and issues related to different OIA procedures or guidance materials. Each meeting focused on a specific topic.⁶⁹ The meetings resulted in a list of recommendations to update procedures or guidance notes. As at October 2024, three of 11 actions were recorded as completed.

Training

3.8 The 2024–25 OIA business plan finalised in November 2024 (see paragraph 2.25) identifies the objective of training is to uplift APS capability and improve the use of an evidence base in policy development to deliver better policy outcomes. The intention is to deliver high quality, consistent training across the APS. Performance measures comprise developing an annual training strategy, delivering targeted training sessions, and reporting on training provided.

3.9 PM&C finalised an OIA ‘Training Strategy 2025’ in March 2025, which lists training objectives, approach and evaluation activities. The Training Strategy does not set out a process for targeting training to areas or agencies with greatest need.

3.10 The OIA states on its website that it provides four types of training to APS staff.

• Foundation — aimed at APS graduates, entry level officers, and those new to public policy. The course is intended to provide a ‘solid’ foundation in IA and evidence-based policy making (see Case study 1).
• Practitioner — aimed at experienced APS officers to enhance their analytical skills, and those preparing to complete an IA. Course duration varies from one to three hours, and the information presented is focused on the Guide to Policy IA, the IA process, and the seven IA questions (see paragraph 1.3).
• Specialised — tailored training on specific components of an IA such as understanding cost-benefit analysis techniques.
• Workshop — informal style workshops with policy makers from agencies preparing an IA. The workshops primarily focus on the seven IA questions.

3.11 PM&C maintains a list of training activities delivered by the OIA. According to this list, between July 2022 and June 2024, the OIA delivered 125 training sessions to 2,081 participants. Seventy-four per cent of total training hours (8,213 hours) were for foundation-level training (6,094 hours) (Table 3.2).

Table 3.2: Training delivered by type, 2022–23 and 2023–24

Note a: PM&C calculated total training hours by multiplying the number of participants per session by the duration (number of hours) of each session and summing this for all sessions.

Note b: The list included courses from one to three hours duration titled ‘IA Session’ or ‘RIA Session’. These courses have all been counted under ‘Practitioner’ training.

Note c: Numbers may not add to 100 per cent due to rounding.

Source: ANAO analysis of OIA training data.

Note a: Australian Public Service Commission, APS Learning Quality Framework, APSC, 2022, available from https://www.apsc.gov.au/initiatives-and-programs/learning-and-development/learning-quality-framework [accessed 25 October 2024].

Note b: Guidelines not applicable to the course have not been included in the analysis.

3.12 Although a draft training plan from 2023 identified four key training-related risks, the Training Strategy did not discuss risks. The four risks included lack of knowledge in specialist training such as regulatory burden measurement or cost benefit analysis⁷⁰, and an assumption that training translates into better IAs or further engagement.

• Lack of knowledge in specialist training — The risk was focused on the ability of OIA staff to provide appropriate training in specialist areas. The mitigation strategy was to involve specialised trainers to upskill OIA staff. Although the Guide to Policy IA notes that ‘[e]ngaging external consultants to do the work for you will not build the appropriate in-house skills within your agency’, it also states that consultants ‘are often best placed to help with technical aspects of [an] IA’⁷¹ The draft training plan did not consider the implications of a lack of capability in specialist areas within policy agencies and the use of contractors, to the achievement of IA framework objectives to uplift capability across the APS.
• Assumption that training results in better IAs — The mitigation for this risk was to collate evaluations on the effectiveness of training ‘to build an identifiable trend’. The draft training plan included a performance metric based on conducting training evaluation surveys. The Training Strategy included evaluation activities such as measuring and reporting training hours, monitoring the share of forms returned (target 90 per cent of participants) and summarising training effectiveness on an ongoing basis. Feedback is routinely collected from participants in foundation courses, however PM&C does not consistently collect feedback from training courses delivered at other levels. PM&C advised the ANAO in August 2024 that it does not collect feedback from other training sessions where it is difficult to distinguish formal workshops and training from general meetings and feedback on their IA processes, or if a session involves small numbers of people and participant feedback could be readily identifiable. Participant feedback data is collated and analysed for each financial year (Table 3.3). Feedback was largely positive in 2022–23 and 2023–24.

Table 3.3: Impact Analysis training feedback data, 2022–23 and 2023–24

Source: ANAO analysis of OIA training feedback data.

3.13 OIA training activity⁷² is reported monthly to the Assistant Minister to the Prime Minister (Assistant Minister) (see paragraph 4.29).

3.14 While collecting training feedback from participants could provide some indication of perceived effectiveness from the participant perspective, directly correlating training provision with IA quality could provide more meaningful information about training impact. In November 2022, PM&C analysed a selection of training data (July 2020 to November 2022) to assess if an increased number of training hours completed by an agency led to an improvement in IA assessment scores. For 11 agencies, PM&C compared the overall average IA assessment score against the total number of training hours that the agency had received. Results did not demonstrate a relationship between training hours and an agency’s IA assessment score. PM&C has not undertaken this type of analysis since 2022.

Early assessments

3.16 Agencies may submit an early draft of an IA, covering IA framework questions one to four (see paragraph 1.3), for an early assessment by the OIA. While submitting an early assessment is not mandatory, published early assessment guidance notes that⁷³ submitting an IA for early assessment ‘demonstrates that [the agency is] undertaking a rigorous process’. The early assessment process⁷⁴:

is used for consultation or to inform a non-final decision point. It allows [the agency] to test [the agency’s] initial policy options and analysis with stakeholders or provide preliminary analysis to decision makers. It presents a clearly defined problem, potential options to solve this problem, and an early consideration of likely impacts, well in advance of the final decision. The document is designed to be reacted to and corrected by stakeholders, not as a final decision making tool.

3.17 The OIA’s case management system — OIA Record of Compliance and Assessment (ORCA) (see paragraph 2.29) — does not capture sufficient information to identify which IAs progressed through the early assessment process, nor is this information separately captured by PM&C. In a sample of 27 (out of a total population of 69) published IAs in 2022–23 and 2023–24 (see paragraph 3.72)⁷⁵, three involved the policy agency undertaking the early assessment process (although an additional 18 involved agencies submitting informal drafts of the IA to the OIA outside of this process). One of the three was at the direction of government.

3.18 A template email to advise agencies that an IA is required included the option of undertaking the early assessment process. PM&C does not have a strategy for the use of the early assessment process by agencies. Based on the sample of 27 IAs, PM&C did not target specific agencies or policies to undergo an early assessment (for example, on the basis of the risk an agency does not have the policy capability or capacity to deliver an IA of sufficient quality or experiences in previous IA processes with an agency).

3.19 For the three sampled IAs that progressed through the early assessment process (see paragraph 3.17):

• the average time taken for the early assessment was five working days;
• the OIA provided advice on how to improve the quality of the IA; and
• the two IAs that were assessed using the assessment rubric (see paragraph 3.61) improved their score between the early and first pass final assessments by between 10 and 20 points across the four IA questions.⁷⁶

3.20 The IA assessment rating of ‘exemplary’ was introduced with the March 2020 changes to the IA framework. Under the March 2023 IA framework, to achieve an ‘exemplary’ rating, policy agencies are required to complete the early assessment process (see paragraph 1.10).⁷⁷ This requirement is set out in OIA’s guidance on the early assessment process, which was published in July 2023. It is not set out in other published guidance.⁷⁸

3.21 Between July 2022 and June 2024, five published IAs were rated as ‘exemplary’. Three of these did not meet the requirement to undertake the early assessment process. For two of the three, the OIA executive director was advised that the decision to overlook the early assessment requirement was based on ‘good practice engagement’ by the entity. There was no documented rationale for granting an exemplary rating despite the lack of an early assessment for the third IA.

Is there assurance that impact analyses have been submitted when required?

Monitoring compliance with the IA framework

3.23 Agencies must consult PM&C regarding IA requirements for every type of policy decision if they are a: government department; statutory authority; board (even if it has statutory independence); or public entity operating under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).⁷⁹ Any policy proposal or action of the Australian Government, with an expectation of compliance, that would result in a more than minor change in behaviour or impact for people, businesses or community organisations, must be accompanied by an IA.⁸⁰

3.24 As at 1 August 2024, 191 entities were subject to the PGPA Act.⁸¹ Between July 2022 and June 2024, the OIA created 4,530 cases in its case management system for potential policy proposals across 81 entities.

3.25 PM&C’s compliance approach for the IA framework is outlined in the User Guide, which notes⁸²:

OIA monitors regulations tabled in parliament, news reports, media releases and other sources for indications that a decision that falls within the Policy Impact Analysis framework has been made. Where it appears that such a decision has been taken before Impact Analysis was completed, OIA will contact the agency in the first instance to obtain additional information. After consultation with the agency, OIA determines one of the following: the Impact Analysis requirements have been met and no further action is required; the process used to prepare Impact Analysis was in some way inconsistent with the Impact Analysis requirements (the reason for this determination will be published as part of OIA’s assessment advice); or the requirement to prepare Impact Analysis has not been met and the agency needs to undertake a post-implementation review (in addition, the agency will be reported as insufficient).

3.26 Between July 2022 and June 2024 the OIA published one instance where a policy was announced without a finalised IA, requiring a post-implementation review (Case study 2).

3.27 PM&C has not formally reviewed the effectiveness of its approach to ensuring agencies comply with the requirement to consult with the OIA about whether an IA is required. PM&C advised the ANAO in October 2024 that:

While the [OIA] has not conducted a formal review of its effectiveness of the approach it uses to monitor compliance with the framework, the OIA notes that the current OIA process and practices take advantage as much as possible of PM&C processes to mitigating the risk of non-compliance. The OIA regularly engages with Department and Agencies, particularly Budget coordination areas, to ensure that the OIA is across the development of new policies. The OIA has not been able to identify any further process or approaches that would be effective and time-efficient in assisting the OIA to further identify potential non-compliance.

Special cases

3.28 There are four types of special cases that do not require agencies to submit an IA for assessment: Prime Minister’s exemptions; IA equivalents; carve-outs; and sunsetting legislative instruments. The OIA has published a guidance note on each of these special cases, outlining the specific requirements a policy proposal needs to satisfy.⁸⁴

Prime Minister’s exemption

3.29 Under the IA framework the Prime Minister can exempt an entity from the need to undertake an IA in limited circumstances, which are⁸⁵:

• when there are truly urgent and unforeseen events requiring a decision before an adequate IA can be undertaken; or
• where there is a matter of budget or other sensitivity and the development of an IA could compromise confidentiality and cause unintended market effects or lead to speculative behaviour which would not be in the national interest.

3.30 A Prime Minister’s exemption was used four times between January 2020 and June 2022.⁸⁶ In each of these cases the OIA published on its website that an exemption had been applied, the reason the exemption had been applied and post implementation review requirements (see paragraph 3.86). In the period July 2022 to June 2024, one Prime Minister’s exemption was applied.⁸⁷ PM&C published the exemption on its website on 1 November 2022.

Impact analysis equivalent

3.31 IA requirements can be met by an agency if a process has been undertaken that contains analysis of the policy proposal that is equivalent to what would otherwise have been required in an IA.⁸⁸ Examples of an IA equivalent process may include ‘green papers’; ‘white papers’; Productivity Commission reviews; Royal Commissions; or substantial internal departmental or agency reviews or reports or briefs.⁸⁹ The policy agency’s secretary, chief executive or deputy secretary must certify in writing to the OIA that the review or other similar analysis has been prepared through a process equivalent to an IA and has addressed all seven IA questions.⁹⁰

3.32 In December 2022 the Assistant Minister to the Prime Minister wrote to the Prime Minister (see paragraph 1.5) that the OIA would implement a quality assurance process ‘to reduce the capacity for the APS to circumvent the IA framework by using [IA equivalents] in lieu of an IA’. The Prime Minister was advised that around 28 per cent of all items that required an IA used this mechanism. As discussed at paragraph 4.27, PM&C considered that there was a risk that agencies used this mechanism to avoid scrutiny of less-than-robust policy development.

3.33 Prior to March 2023, the OIA would assess IA equivalent reviews for relevance to the recommended options, however it did not assess the analytical quality of reviews.⁹¹ Where the OIA assessed the options or recommendations in reviews as not relevant, it was to request additional analysis. However, it did not assess any additional analysis provided. The IA equivalent process would be deemed ‘insufficient’ if additional analysis was requested but not provided.

3.34 Changes to the IA equivalent certification process from March 2023 included the following.

• Pre-approval — A requirement for the OIA to pre-approve the certification of an IA equivalent.
• Suitability assessment — An expansion of the relevance assessment so that ‘a reasonable person’ would conclude that the policy problem the proposal seeks to address is substantially the same as the policy problem addressed in reviews, the proposal presents options or recommendations that are substantially the same as the options or recommendations in reviews, and the reviews address all seven IA questions.⁹²
• Additional analysis — The OIA could request additional analysis (which was also subject to a suitability assessment). The IA would be deemed insufficient if additional analysis was requested but not provided, or if the additional analysis did not meet the suitability assessment.⁹³

3.35 Although the March 2023 changes increased scrutiny of IA certifications’ relevance and equivalence, the reviews themselves are not assessed against the IA questions by the OIA. The OIA’s published letter acknowledging certification and containing the assessment may include ‘brief commentary’ on the quality of the analysis in the IA equivalent, however this is not a requirement.⁹⁴ PM&C guidance states that responsibility for the quality of analysis, and certification that it is sufficient to support a decision of government, rests with the relevant secretary, deputy secretary or chief executive of the policy agency.⁹⁵

3.36 PM&C has not developed internal procedural guidance for the pre-approval of an IA equivalent or the approach to assessing IA equivalent suitability. Its internal guidance does not address under what conditions additional information would be required.

3.37 The ANAO reviewed IA equivalents certified and published between March 2023 to June 2024 to examine the OIA’s treatment of IA equivalent certifications under the strengthened post-March 2023 arrangements (Table 3.4). During this period, 12 IA equivalent certifications were submitted to the OIA. All were deemed to be suitable by PM&C.⁹⁶ As discussed at paragraph 3.32, at December 2022, the Prime Minister was advised that 28 per cent of items that required an IA used the mechanism of an IA equivalent. The 15 IA equivalents published in 2023–24 also comprised 28 per cent of the 54 IAs published in 2023–24 (see Table 1.1).

Table 3.4: IA equivalent decision-making, March 2023 to June 2024

Key: ● Meets requirement for all assessed IAs ◕ Meets requirement for 75 to 99 per cent ◑ Meets requirement for 25 to 74 per cent ◔ Meets requirement for less than 25 per cent ◯ Does not meet requirement for any assessed IAs.

Note a: Required documentation requires the certification letter, OIA assessment letter and IA for OIA equivalent reviews. There are also accessibility requirements.

Source: ANAO analysis of OIA decision-making documentation for 12 IA equivalent certifications.

3.38 Exceptions in PM&C’s documentation of decision-making over IA equivalents included the following.

• Pre-approval — In one instance, PM&C did not clearly document pre-approval to use the IA equivalent approach. In a second instance, the request was not put by an appropriate official from the policy agency.
• Regulatory burden estimates — While all 12 IA equivalent certifications included regulatory burden estimates, the OIA did not document its consideration of this in five instances.
• Suitability of IA equivalent reviews:
  • for six IA equivalent suitability assessments, documentation demonstrated limited consideration of the relevance of the policy problem;
  • for 10 IA equivalent suitability assessments, documentation demonstrated limited consideration of the relevance of the options/recommendations presented; and
  • for one IA equivalent suitability assessment, fewer than seven IA questions had been addressed.
• Publication — In eight of 12 instances, not all required documents (including accessible versions) were published.⁹⁷

3.39 PM&C has established a service standard of five working days for the timeliness of pre-approvals to use the IA equivalent process and for the formal assessment of suitability following agency certification.⁹⁸ Median timeframes for key steps to be completed were three days (Table 3.5), with pre-approval times ranging from one to six days.

Table 3.5: Timeliness of IA equivalent decision-making, March 2023 to June 2024

Source: ANAO analysis of 12 IA equivalent certifications.

Sunsetting instruments

3.40 Under the Legislative Instruments Act 2003, all legislative instruments sunset, or cease automatically, after 10 years, unless action is taken to remake them, or they are otherwise exempt. If instruments have impacts on people, businesses, or community organisations, changes to their future operation fall within the scope of the IA framework.⁹⁹

3.41 PM&C has clear guidance for sunsetting legislative instruments. Where there is a genuine need for ongoing regulation, a review of the performance of the instrument has found it to be fit for purpose and the instrument is to be remade without significant change, agencies may use a streamlined process.¹⁰⁰

• An agency’s secretary, deputy secretary, or equivalent may write to the OIA to certify that they have reviewed and assessed the performance of the instrument and found that it is achieving its objectives efficiently and effectively.
• The certification letter needs to state that the agency’s assessment was informed by appropriate consultation with relevant stakeholders.
• Before the instrument is tabled in Parliament, the agency certification letter and outcomes of the assessment must be sent to the OIA for publication.

3.42 Twenty-three sunsetting instruments were remade between July 2022 to June 2024. The ANAO examined PM&C’s documentation of the 12 that were remade after April 2023. In all 12 cases, agency certification letters were documented.

3.43 PM&C does not establish a timeliness service standard for the publication of agency certification letters for sunsetting instruments. Notices for seven of the 12 examined (58 per cent) were published to the PM&C website within two weeks of an announcement that a new instrument had been issued or remade. Timely publication requires the OIA to be aware of the announcement of the instrument. Instances where publication was delayed beyond two weeks included instances where the agency did not advise the OIA of the announcement of the instrument.

Carve-outs

3.44 A carve-out is a standing agreement between PM&C and an entity that removes the requirement for a preliminary assessment for certain types of regulatory change. A carve-out can be used when anticipated regulatory changes are machinery in nature, minor and likely to occur on a regular basis. Carve-outs cannot be applied to proposals where Cabinet is the decision maker.¹⁰¹

3.45 PM&C has clear guidance and internal procedures for granting a carve-out for a proposal. In order to grant a carve-out PM&C must¹⁰²: obtain approval from an appropriate senior official from the agency proposing a carve-out; check the proposal is appropriate against the carve-out requirements; add the approved carve-out to the list of existing carve-outs; and publish to the PM&C website at the next update.

3.46 The ANAO reviewed the OIA’s assessment of proposals that met the requirements for a carve-out for the period July 2022 to June 2024. Eleven new carve-outs were granted during this period. For all carve-outs granted, the OIA’s decision-making is clearly documented and complies with internal guidance.

3.47 PM&C maintains a list of approved carve-outs that is published as part of a carve-out guidance note (see paragraph 3.5) on the PM&C website.¹⁰³ The OIA is required to update the list on a ‘periodic’ basis once a carve-out is granted for a proposal. Updates to the carve-outs guidance note were published in March 2020, August 2022, July 2023, and March 2024. For the 11 carve-outs granted in 2022–23 and 2023–24, publication occurred in either July 2023 or March 2024. The guidance note published in March 2024¹⁰⁴ contains 102 carve-outs listed by agency, details of the proposal for which the carve-out was granted, the nature of the proposed change (an indexation, routine administrative, or minor or machinery change), and any associated comments or limits to the carve-out granted.¹⁰⁵

3.48 The OIA does not have a regular, established process to review the currency of carve-outs (that is, that the policy change described in the carve-out is still considered to be minor or machinery in nature and likely to occur on a regular basis). In the two-year period examined by the ANAO, PM&C reviewed the currency of carve-outs once (between November 2023 and March 2024). The suitability of each listed carve-out was assessed against the eligibility requirements. Agency representatives were contacted to confirm if the policy change described in the carve-out was still minor or machinery in nature, and likely to occur on a regular basis. The review determined that 102 out of 116 carve-outs were still current and 14 carve-outs should be cancelled. Following the review, the guidance note was updated with the revised list and published by PM&C in March 2024.¹⁰⁶

Are preliminary assessments implemented effectively?

3.50 Under the IA framework, an agency is required to contact the OIA to seek advice on whether an IA is required for an Australian Government policy proposal.¹⁰⁷ A preliminary assessment is undertaken by the OIA.¹⁰⁸ The OIA assigns policy proposals that undergo a preliminary assessment to different IA requirement categories (Table 3.6).¹⁰⁹ When providing a preliminary assessment decision, PM&C is required to advise on the depth of IA required (minor¹¹⁰ or standard).¹¹¹ The assessment of impact must take into account a range of factors that may include¹¹²: the level of difference the proposed intervention represents from the status quo; the number of entities impacted and the degree to which each entity is affected; the level of stakeholder interest and degree to which the policy issue is contested; whether the proposal is likely to limit future options or opportunities; distributional impacts; and the levels of risk involved.¹¹³

Table 3.6: Possible outcomes of a preliminary assessment

Note a: Includes the special cases of IA equivalents and Prime Minister’s exemptions. Carve-outs do not require a preliminary assessment.

Source: ANAO analysis of PM&C documentation.

3.51 Between July 2022 and June 2024, the OIA conducted 3,769 preliminary assessments, of which it was decided that 97 (three per cent) required an IA (Figure 3.1).

Figure 3.1: Completed preliminary assessments^a by outcome^b, 2022–23 and 2023–24

Note a: This figure is based on 2,004 preliminary assessments for 2022–23, and 1,765 preliminary assessments for 2023–24.

Note b: IA required includes Prime Minister’s exemptions and IA equivalents. Carve-outs do not involve a preliminary assessment.

Source: ANAO analysis of OIA ORCA case data.

Preliminary assessment guidance and tools

3.52 Internal guidance for the preliminary assessment process outlines the workflow required to complete an assessment and how to document the information and assessment results in the case management system, ORCA (see paragraph 2.29).

3.53 Agencies must give a written summary of a policy proposal to the OIA by completing a preliminary assessment form or submitting a policy proposal for review.¹¹⁴ The form facilitates the process for OIA staff to make assessments as it requires agencies to indicate: the type of proposal¹¹⁵; whether the proposal is an election commitment; key dates and timeline; who the decision-maker will be¹¹⁶; description of the problem; outline of the objectives of government action; outline of the options available; likely impacts of the proposal; assessment of the significance of the likely impacts of the proposal; number of people, businesses or community organisations that will be affected; and stakeholder views. A preliminary assessment form is encouraged. For a random sample of 215 preliminary assessments (see paragraph 3.58), the OIA received information from agencies via the preliminary assessment form in 40 per cent of cases. For the remaining 60 per cent of cases, information was provided via a policy proposal or email request. Provision of the policy proposal without a preliminary assessment form requires PM&C to develop the information required by the form. PM&C requested additional information from agencies in 24 per cent of the sampled preliminary assessments.

3.54 ‘Salami slicing’ occurs when policy proposals are submitted by an agency on a piecemeal basis. The preliminary assessment may determine that the impact is ‘no more than minor’ when a policy proposal is assessed in isolation. However, the cumulative impact of multiple related proposals may be significant. PM&C is cognisant of the risk of ‘salami slicing’ and has prepared guidance for staff when considering multiple new policy proposals within a Cabinet submission. As discussed at paragraph 2.30, PM&C upgraded ORCA in 2022 to include additional features such as allowing related policy proposals to be grouped together to assist with the monitoring of a package of policy proposals.

3.55 A June 2023 PM&C internal audit (see paragraph 2.23) found that OIA staff (particularly new staff) had requested additional guidance on the criteria and thresholds to apply when deciding if a proposal is significant enough to warrant an IA. In September 2023 PM&C undertook internal consultation to understand key issues that staff encounter when undertaking preliminary assessments. In December 2023 PM&C developed additional guidance. A Preliminary Assessment Tool (PAT) was developed to give OIA staff more confidence in completing preliminary assessments; create efficiencies in the assessment workflow; improve consistency of assessment within and across OIA teams; and improve consistency in the recording of preliminary assessment results in ORCA.

3.56 The OIA piloted the optional use of the PAT between February 2024 and May 2024. In assessing the results of the pilot, the OIA noted that use of the PAT had led to discussions among staff on what is or is not in scope for IA when assessing preliminary assessment forms. From these discussions, the tool was refined to include more detail about where a policy proposal may be ‘out of scope’ of the IA process. The PAT became mandatory in August 2024. When communicating the preliminary assessment decision to agencies, PM&C advised policy agencies of the next steps and different requirements for a minor or standard IA. Templated guidance is built into ORCA for this process. PM&C advised the ANAO in November 2024 that it intends to integrate the PAT into ORCA in the proposed upgrade to the case management system scheduled for the first half of 2025. Preliminary assessment forms were updated in January 2025.

Administration of preliminary assessments

3.57 Internal consultation found inconsistency in how preliminary assessment decision-making was recorded in ORCA. One of the aims of the PAT was to improve consistency in the recording of preliminary assessment results in ORCA. The OIA found that there was an increase in the recording of details in ORCA for two of three months that the voluntary PAT pilot was underway.

3.58 The ANAO examined a random sample of 215 preliminary assessments conducted between July 2022 and June 2024 to determine if they were conducted in a manner consistent with internal guidance, and whether decisions and decision-making were documented as required under PM&C’s Information Management Policy (see paragraph 2.34) (Table 3.7). The use of the PAT by OIA staff to document an IA decision was identified in 17 per cent of sampled preliminary assessments.

Table 3.7: Documentation of preliminary assessments, 2022–23 and 2023–24

Source: ANAO Analysis of OIA ORCA case data for 215 randomly sampled preliminary assessments.

Quality assurance

3.59 PM&C has quality assurance processes for preliminary assessments. If OIA staff conduct a preliminary assessment and the result is determined to be uncertain, an executive level (EL) 2 staff member is required to be consulted on the preliminary assessment result. Where the outcome of a preliminary assessment is determined to be ‘more than minor’ and therefore requiring an IA, OIA staff are required to provide email advice to an EL2 staff member. For the sample of 215 preliminary assessments, 13 involved instances where the preliminary assessment decision was either uncertain or ‘more than minor’. Of these, 100 per cent received advice from an EL2 officer.

Advice to agencies about the outcomes of preliminary assessments

3.60 PM&C has established a service standard of five working days to conduct a preliminary assessment and advise an agency if an IA is required.¹¹⁷ For the sampled preliminary assessments, the median number of working days taken by PM&C to communicate the outcomes of a preliminary assessment decision was two working days, ranging from a minimum of less than one working day to a maximum of 23 working days.¹¹⁸ PM&C provided links to guidance materials for 95 per cent, advice on the next steps for 100 per cent, and offers of support and coaching for 100 per cent, of sampled applicable preliminary assessments.¹¹⁹

Are final assessments implemented and published effectively?

3.61 The final assessment process comprises a first pass and second pass assessment. Assessment is made of both the quality of the IA itself and the development process.¹²⁰ In March 2022, the OIA introduced an assessment rubric to assist OIA decision-making on IA quality. The rubric is linked to the seven IA questions (Box 3).

3.62 The OIA published 70 assessed IAs for policies that were announced between 1 July 2022 and 30 June 2024 (Figure 3.2). Between 2022–23 and 2023–24, the proportion of IAs assessed as ‘good practice’ or ‘exemplary’ increased from 39 per cent to 64 per cent. PM&C advised the ANAO in November 2024 that:

Any number of factors could have led to the increase by over 20%. Some of these could include but are not limited to: the time allowed to improve the quality of IA; the capability of the agency; and ‘workshop’ approach of OIA staff to provide improved support to agencies. Importantly, given the limited time period of observation (only two years) and the relatively small number of observations, the OIA would suggest there is not sufficient data to reasonable [sic] determine if this represented any real shift or is just some usual year-on-year variation.

Figure 3.2: Assessment of published IAs, 2022–23 and 2023–24^a

Note a: This figure is based on 31 IAs for 2022–23 and 39 IAs for 2023–24.

Source: ANAO analysis of OIA IA framework reporting.

Final assessment guidance and tools

3.63 In January 2023, ahead of the March 2023 changes to the IA framework (see paragraph 1.5), the OIA commenced a review of the assessment rubric that had been established in March 2022. The final review report stated that the March 2023 changes had caused the rubric to be ‘no longer fit for purpose’. The objectives of the review were to ensure: each of the seven IA questions had the required and appropriate sub questions to be able to easily describe and justify the score assigned by the OIA; and questions, sub questions and benchmark statements were linked to the Guide to Policy IA and related guidance, such as the User Guide. The review involved workshops and discussions with OIA staff. PM&C discussed aspects of question seven (evaluation) with the Australian Centre for Evaluation (ACE) in July 2023. The review was finalised in August 2023. The revised rubric, first used in October 2023¹²¹, includes 37 sub questions (compared to 35 sub questions in the previous rubric), and more benchmark statements.

3.64 Internal guidance includes limited information about how to use the rubric and how to document score decision-making in ORCA. There is no documented guidance about how to apply the necessary judgements in assessing sub questions or the quality of the IA process. PM&C advised the ANAO in November 2024 that the use of the rubric is supported by in-person mentoring that includes practice rubric scoring, reviews of scores and reconciliation of different scores.

Administration of final assessments

Documentation of decision-making

3.65 As discussed at paragraph 3.3, PM&C’s Information Management Policy requires staff to establish records to document decisions and decision-making. PM&C’s assessment at first and second pass has two elements: the quality of analysis contained in the IA and the quality of the process associated with the IA’s development.¹²²

3.66 A June 2023 internal audit (see paragraph 2.23) found that, in a sample of IAs, there were instances where records could not be located in ORCA to evidence key decisions. The internal audit noted that there was a risk of questions being raised about IA assessments, including those published online, which may not be readily substantiated with retained documentation. The report included a recommendation that the OIA should review processes to ensure all key documentation associated with the assessment process is being maintained in the ORCA system. PM&C’s audit and risk committee (ARC) agreed to close the recommendation in December 2023, noting actions taken including updating internal record keeping and briefing processes and templates.

3.67 The ANAO examined a sample of 27 of the 69 2022–23 and 2023–24 IAs to determine whether the decision-making over the quality of IAs and the IA process were clearly documented (Table 3.8).

Table 3.8: Documentation of final assessments, 2022–23 and 2023–24

Key: ◆ Requirements met in all instances. ▲ Requirements met in in part. ■ Requirements not met.

Source: ANAO analysis of sample of 27 assessed IAs.

3.68 The documentation of decision-making about the quality of IA was not always complete.

• Of the 27 sampled IAs, an assessment rubric was completed for 26.
• Of the 26 IAs that had a completed assessment rubric, 24 had no clear documentation at the second pass assessment about how judgement was applied to arrive at sub question scores. The second pass assessment brief provided to the executive director for approval contains an overview of the rating, potential improvements and the rubric score, with limited information that goes to the rationale for scores. For the two IAs that documented how judgement was applied at the second pass assessment, documentation related to 12 of 35 sub questions and 12 of 37 sub questions respectively.¹²³ The lack of documentation of the rationale for scores is not consistent with PM&C’s Information Management Policy, which requires PM&C staff to establish records to document the basis for a decision as well as the decision itself (see paragraph 2.34).
• Under the rubric, assessors can skip a sub question if it is considered to be irrelevant.¹²⁴ Sixteen of 27 assessments excluded one or more sub questions at the second pass assessment.¹²⁵ None of these documented the rationale for skipping the sub question. Of the 16, five had at least one sub question that was turned off or on between the first and second pass assessments with no documented rationale about why the approach changed between the first and second pass.

3.69 In assessing the quality of the IA process, the OIA considers four factors:

1. whether the IA was certified by the appropriate official before formal OIA assessment;
2. if the policy problem and circumstances were such that there were fewer than three options feasible for consideration, did the appropriate official explicitly state this in the certification letter and whether this was also discussed in the IA;
3. whether the IA was assessed by PM&C and provided to the decision-maker prior to each major decision point; and
4. the appropriateness of the type and duration of consultation.¹²⁶

3.70 Decision-making documentation about the quality of the IA process was not always complete. Of the 27 sampled IAs, all final assessments mentioned that the IA was certified by the appropriate official. Of these, 10 assessments referred to other elements of the quality of the IA process (statement of fewer than three options, assessment by PM&C prior to major decision points and/or overall appropriateness of the consultation). For the 17 assessments that did not refer to other elements of the quality of the IA process, decision-making records for 11 showed consideration of these factors and decision-making records for six did not.

Advice to policy agencies

3.71 Under the Guide to Policy IA and the User Guide, PM&C is required to undertake certain steps in the final assessment process. These include¹²⁷:

• certification — ensuring that the submitted first pass and second pass IAs are certified by an official of appropriate seniority in the agency that submitted the IA¹²⁸;
• advice to policy agencies at first pass — advising the agency on whether the first pass IA is consistent with the requirements and adequately addresses all seven IA questions; and
• advice to policy agencies at second pass — if not rated exemplary, explaining to the agency how an IA could have been improved.

3.72 For the sample of 27 IAs¹²⁹, all 27 adhered to these requirements.

3.73 For the sampled IAs, average improvement in IA score achieved by agencies between first pass and second pass assessments was 12 percentage points.

Timeliness of decision-making

3.74 PM&C has established a service standard of providing feedback and decisions on first pass IAs and second pass IAs within five working days.¹³⁰ Table 3.9 shows that, for the sample examined, the median number of working days was five or less in 2022–23 and 2023–24, but that the standard was not always met.

Table 3.9: Timeliness of the final assessment process, 2022–23 and 2023–24^a

Note a: Timeliness was measured as the number of working days between the date the IA was submitted to the OIA for assessment by the policy agency and the date of OIA’s final assessment letter.

Source: ANAO analysis of sample of 27 assessed IAs.

Quality assurance

3.75 IA assessments are required to be reviewed by team members’ supervisors prior to submission to the executive director of the OIA for endorsement. The OIA has no standard operating procedures for reviewing individual staff scoring for an IA or reviewing IA scoring across the three portfolio-based teams (see paragraph 2.26). PM&C advised the ANAO in August 2024 that it had put in place a practice of peer reviews for IAs rated as exemplary, referred to as a ‘secondary assessment’. This practice is undocumented.

3.76 The ANAO has seen evidence of PM&C reviewing rubric scoring for two IAs — once in March 2024 for an exemplary IA, and once in August 2024 as part of a demonstration to the ANAO. In the March 2024 example, the separate assessment scores were 91 (exemplary) and 77 (good practice). The IA was finally rated as exemplary on the basis that ‘the quality of analysis is proportional to the scale of impact, and [the policy agency] has actioned all of our formal and informal feedback’.

Publication

3.78 Under the Guide to Policy IA and the User Guide, the following must be published.¹³¹

• PM&C must publish the IA and associated documents (the second pass policy agency certification letter; and the IA assessment) on the PM&C website ‘as soon as practicable’ following the announcement of the government’s policy decision.¹³²
• If the IA relates to legislation or a regulation tabled in Parliament, the IA that has been assessed by PM&C must be included in the explanatory memorandum (for primary legislation) or the explanatory statement (for legislative instruments). This requirement is described in the Legislation Handbook and Instruments Handbook.¹³³

3.79 A June 2023 internal audit (see paragraph 2.23) found that for 15 sampled IAs, some of the required published information could not be located for three. The internal audit noted that not publishing the required documents reduced public visibility over the IA process and recommended that the OIA reviews processes. PM&C’s ARC endorsed closure of this recommendation in June 2024, noting actions taken including new guidance and an executive director briefing template.

3.80 The 2023–24 OIA business plan included a performance measure for IAs to be published within five business days and the 2024–25 business plan included a performance measure for IAs to be published ‘as soon as possible’ after announcement. Documents supplied to the OIA for publication by policy agencies must conform to accessibility guidelines, which require PDF documents to be published in at least one alternative format.

3.81 The ANAO examined the 69 IAs¹³⁴ that were assessed and published between July 2022 and June 2024 to determine the timeliness of publication after the announcement of final decisions and whether published documents included required documents (including at least one alternative format) (Table 3.10).

• As at December 2024, of 68 published IAs where an announcement date was specified on the PM&C website¹³⁵, the median number of working days to publish after the policy announcement was four days, and the maximum number of days was 195.
• As at December 2024, the full suite of documents¹³⁶ was included for 58 per cent (40) of the 69 IAs. Of the remaining 29, 20 were complete except for an accessible version of the agency certification letter. Nine were missing accessible versions of other documents.¹³⁷

Table 3.10: Final assessment publication timeliness and completeness, 2022–23 and 2023–24, as at December 2024

Note a: One IA published in 2022–23 did not specify an announcement date so was excluded from these calculations.

Source: ANAO analysis of final assessment IAs published on the PM&C website as at December 2024.

3.82 The IA framework places the onus on policy agencies to provide accessible versions of documents for publication by PM&C, however, also provides a lever for the OIA to manage compliance. The User Guide to Policy IA states that policy agencies that take too long to provide accessible versions of documents may attract a negative comment from the OIA or an IA assessment of insufficient.¹³⁸ If the IA relates to legislation or a regulation tabled in Parliament, the IA framework provides that the failure of the policy agency to publish the IA in full in explanatory material, without the agreement of PM&C, will lead to an IA being reported as insufficient.¹³⁹ There were no examples of PM&C taking this action in 2022–23 or 2023–24.

Is the requirement for post implementation reviews administered effectively?

3.84 As discussed at paragraph 2.44, PM&C has had joint responsibility for the administration of post implementation reviews (PIRs) with the Department of the Treasury (Treasury) since July 2023. Under an April 2024 memorandum of understanding (MOU), the agencies have responsibility for administering different parts of the PIR process (Table 3.11).

Table 3.11: PIR responsibilities since April 2024

Note a: Department of the Prime Minister and Cabinet, 2024–25 Post-implementation Reviews: Completed and Published, available from https://oia.pmc.gov.au/sites/default/files/2024-07/2024-25-pir-completed-published.pdf; and 2024–25 Post-implementation Reviews: Required, available from https://oia.pmc.gov.au/sites/default/files/2024-08/post-implementation-reviews.pdf [both accessed 27 October 2024].

Note b: Individual PIRs completed are published on the PM&C website and are searchable. Department of the Prime Minister and Cabinet, Published Impact Analyses, PM&C, available from https://oia.pmc.gov.au/published-impact-analyses-and-reports [accessed 27 October 2024].

Note c: Department of the Prime Minister and Cabinet, Post-implementation reviews, PM&C, 2024, available from https://oia.pmc.gov.au/sites/default/files/2024-08/post-implementation-reviews.pdf [accessed 27 October 2024].

Source: ANAO analysis of PM&C/Treasury MOU.

3.85 A PM&C guidance note states that the three circumstances that trigger a PIR are¹⁴⁰:

• the OIA has assessed a policy proposal as having a substantial or widespread economic impact;
• an IA had not been assessed by the OIA for the policy change prior to the final decision being taken and the change was neither minor nor machinery in nature; or
• the policy proposal was granted a Prime Minister’s exemption (see paragraph 3.29).

3.86 Between July 2022 and June 2024, the OIA determined that a PIR was required for seven policy proposals (all seven involved IAs that were published in 2022–23). A PIR was required for five of the seven on the basis of the policy proposal having a substantial or widespread economic impact; for one on the basis of the IA being rated as insufficient; and for one on the basis of it being granted a Prime Minister’s exemption. Advice was provided to policy agencies about why a PIR was required.

3.87 PM&C’s internal guidance does not cover how to make decisions about whether a policy proposal meets the threshold for having a substantial or widespread economic impact. PM&C advised the ANAO in August 2024 that the PAT provides guidance. While the PAT includes a category of ‘major/significant’ impact, there is no reference to the term ‘widespread’ or any guidance as to what ‘major/significant’ means.

3.88 PM&C’s assessment of 12 IA equivalent certifications from March 2023 to June 2024 (see paragraph 3.37) and the 27 IAs assessed between July 2022 and June 2024 included in the ANAO sample (see paragraph 3.72) did not document why the IAs did not met the substantial or widespread economic impact trigger for a PIR.

3.91 Under the MOU with Treasury, PM&C is required to maintain and publish a register of required PIRs. As at 9 October 2024, the required PIR register had 17 entries.¹⁴¹ Of these, five were overdue. For the 17, the register indicates which agency has responsibility to complete the PIR to take account of machinery of government changes made over time. Of the five overdue PIRs, four were the responsibility of the Department of Infrastructure, Transport, Regional Development, Communications and the Arts. One was the responsibility of the Attorney-General’s Department. The due dates ranged from June 2013 to October 2022. For overdue PIRs there are no further measures under the IA framework to ensure that these are completed.

3.92 On 1 July 2023 responsibility for PIR evaluation and monitoring was transferred to Treasury. PM&C advised the ANAO in October 2024 that ‘As such, OIA … is not responsible for activities to notify agencies with “non compliant” PIRs to notify them that a PIR remains outstanding.’ Treasury advised the ANAO in March 2025 that it intends to take action on PIR non-compliance relating to the period prior to July 2023 and that Treasury will also consider PIR non-compliance more generally, as part of a review of the Post-Implementation Reviews Guidance Note that is scheduled for 2025–26.

4.1 In 2022 the PM&C Secretary stated:

Alongside our roles of policy, impartial advice and service delivery, there is another key responsibility for the public service: stewardship … Stewardship is the ability to anticipate, plan, record outcomes, and learn. Stewardship is about now and the endless future, a public service with a shared memory and capacity to act when required.¹⁴²

4.2 The Public Service Amendment Act 2024 added a new Australian Public Service (APS) value of stewardship that all APS employees must uphold. Stewardship means that ‘the APS builds its capability and institutional knowledge and supports the public interest now and into the future, by understanding the long-term impacts of what it does’.¹⁴³ The Australian Public Service Commission (APSC) further defines stewardship in the following way.

Stewardship is a practice of caring for something that we have been trusted to look after. Being a good steward means accepting responsibility for that care, and working to ensure the long-term integrity and sustainability of what has been entrusted to us.¹⁴⁴

4.3 Appropriate stewardship of the IA framework includes assuming responsibility for ongoing monitoring of how well it is being implemented, as well as assessing and communicating to decision-makers whether the IA framework is achieving its objectives.

Is there assurance over the effective and efficient implementation of the IA framework?

4.4 PM&C does not have an overarching monitoring plan to establish what needs to be measured and monitored in relation to its effective and efficient implementation of the IA framework. PM&C has established some performance measures and service standards in corporate planning documents relating to its administration of the IA framework.

• The 2022–2026 Corporate Plan included the performance measure ‘proportion of [Australian Public Service (APS)] employees [participating in a training evaluation survey] satisfied with the training provided to uplift their policy capability’.¹⁴⁵ The target for this measure was 75 per cent in 2022–23, 76 per cent in 2023–24, 77 per cent in 2024–25 and 78 per cent in 2025–26. This measure was removed from the 2023–24 and 2024–25 corporate plans.
• The User Guide to the Australian Government Guide to Policy Impact Analysis establishes a service standard of five working days for Office of Impact Analysis (OIA) advice at the preliminary assessment stage as to whether an IA is required.¹⁴⁶ The Australian Government Guide to Policy Impact Analysis (Guide to Policy IA) establishes a service standard of five working days for the provision of advice at the final assessment stage (first and second pass).¹⁴⁷
• The 2022–23 and 2023–24 Economic Division business plans had internal ‘results/outcomes’ for the number of preliminary assessments undertaken; the number of IAs assessed as at least adequate; and the percentage of policy proposals for which IA requirements would be met.
• The OIA’s 2023–24 business plan (see paragraph 2.25) included 21 internal performance measures. These comprised a mix of activity (15) and output (five) measures, and one outcome measure. The one outcome measure was that: ‘Australia is seen as a best practice practitioner in [IA]’. The OIA’s 2024–25 business plan (see paragraph 2.25) included 25 performance measures (17 activity; eight output; and zero outcome).

4.5 The Executive Board reviewed divisional business plans and mid-year outcomes since 2022–23. In its mid-year reporting on the 2023–24 business plan (covering the period July 2023 to February 2024), it was reported that 965 policy proposals had a preliminary assessment (against a full year ‘results/outcome’ of 2,000 to 3,000), 13 IAs had been assessed as being at least adequate (against a full year ‘results/outcome’ of 80 to 100) and that IA requirements had been met for 100 per cent of proposals (against a ‘results/outcome’ of 99 per cent). These results were assessed as ‘Completed or on track to be delivered by 30 June 2024’. End of year business plan outcomes are not reported to the Executive Board.

4.6 PM&C has access to various monitoring data. This data is not always fully utilised, accurate or complete.

• Data on external training activities is manually compiled by the OIA and includes training activities conducted, number of participants and feedback (see paragraph 3.11). In addition to informing a previous annual performance statements measure, the training data is included in monthly reporting to the Assistant Minister (see paragraph 4.29). A June 2023 internal audit report (see paragraph 2.23) noted that the 2022–23 Corporate Plan measure was based on incomplete and inaccurate data, and used data from training evaluation surveys that were not relevant to the performance measure. The internal audit recommended that the OIA should take steps to ensure completeness of annual performance measure results; and implement a robust quality assurance process to ensure accuracy of results and calculations. The PM&C audit and risk committee (ARC) endorsed closure of the recommendation in December 2023, noting actions taken in response to the recommendation including removing the measure from the 2023–24 Corporate Plan.
• As discussed at paragraph 2.29, PM&C can extract data from the OIA’s case management system — the OIA Record of Compliance and Assessment system (ORCA) — to provide information about its IA-related activities including throughput, status, outcomes and workload. The OIA maintains a range of dashboard reports that draw on ORCA data to provide point-in-time information. PM&C advised the ANAO in September 2024 that it regularly uses dashboards to monitor workload, analyse trends and track overdue matters. ORCA data is also used for publicly available IA framework compliance reporting (see paragraph 2.31).
• While PM&C has timeliness service standards for preliminary and final assessments, it does not collate timeliness data from ORCA or other sources. It does not analyse or report on whether it is meeting timeliness targets. PM&C advised the ANAO in November 2024 that the 2025 systems improvements to ORCA will introduce the ability to input dates for when IAs are received and finalised.
• PM&C does not collect data on resources used to enable monitoring of efficiency (output per unit of input) across its various IA assessment activities.

4.7 A stakeholder survey was undertaken as part of the June 2023 internal audit, which consisted of 11 questions about OIA engagement, responsiveness, quality of advice and templates, understanding of OIA/stakeholder roles and responsibilities, and understanding of the IA framework and processes. The survey was sent to 16 agencies with six responses received (38 per cent response rate). The internal audit indicated potential areas for improvement in relation to: expanding the level of understanding of the IA framework; clarifying roles and responsibilities for external agencies and the OIA; improving the quality of templates published by the OIA for completion by policy agencies; and improving the extent of feedback provided by the OIA. The internal audit made five recommendations.¹⁴⁸

4.8 One of the findings of the June 2023 internal audit was that:

The OIA is not formally assessing or systematically seeking information to make continuous improvements to key elements of the Impact Analysis assessment process, such as published guidance, published templates and stakeholder engagement.

4.9 Recommendation 5 was that PM&C explore avenues to monitor and assess the effectiveness of the OIA’s administration of the IA assessment process, with consideration of feedback obtained through an independent survey of external agencies. PM&C agreed to this recommendation, with an implementation timeframe of 30 September 2023, noting that it was considering conducting a lessons learnt exercise at the completion of each IA.

4.10 An external agency survey was conducted by PM&C in December 2023 to January 2024 (see paragraph 4.24). The ARC was advised on 4 September 2024 that the internal audit recommendation would be implemented by 30 October 2024 and that the OIA was developing an Executive Board paper on potential reforms to IA framework administration, to be considered by the Executive Board in September 2024. As at December 2024, the Executive Board paper had not been finalised.

Is there appropriate evaluation of whether the IA framework is achieving its objectives?

4.12 Effective evaluation provide assurance that government activities and programs are delivering intended outcomes. The evidence gained from evaluation allows Australian Government entities to adapt to changing economic and policy environments and make judgements that support government decision-making.¹⁴⁹

Evaluation planning

4.13 Preparing a detailed evaluation plan that describes how the achievement of an activity’s, program’s or policy’s objective will be evaluated and how the results will be used, can help to ensure that there is a common understanding of exactly what needs to be evaluated and why.¹⁵⁰ Evaluation planning begins with a clear articulation of the intended outcome.

4.14 The objective of the IA framework is clearly established in the Guide to Policy IA, which states that the purpose of IA is:

[to ensure] that advice to government is accompanied by robust analysis, data and an accurate overview of the effects of proposed policies on our community.¹⁵¹

4.15 The Guide to Policy IA further states that:

A balanced assessment of the available options, and their likely effects on Australia, is critical to support government deliberative processes. In addition, the Australian community has a right to accurate, timely, accessible information about government decisions.¹⁵²

4.16 The role of the OIA is articulated on the PM&C website, which states that:

[The OIA’s] role is to work with departments and agencies to produce detailed, evidence-based assessments of complex policy issues.¹⁵³

4.17 As discussed at paragraph 3.1, in other documents such as the PM&C 2022–23 Annual Report, the OIA is also described as having a role in lifting the APS’s capability to conduct evidence-based policy analysis. This secondary role is less consistently and clearly articulated in governance documents. The Guide to Policy IA states in its glossary that the OIA is:

The Branch within the Department of the Prime Minister and Cabinet responsible for providing advice to Portfolios on whether Impact Analysis is required, assessing the adequacy of Impact Analyses, and for providing support and training across the Australian Public Service to support increased policy analysis capability and improved advice to the Australian Government.¹⁵⁴

4.18 PM&C has not developed an evaluation plan for the IA framework.

Evaluation activities

4.19 PM&C compared IA-like frameworks established in selected countries in May 2022 and in other Australian jurisdictions in September 2022. A briefing to the PM&C executive in June 2024 stated that the objective of the international comparison was to ‘inform decisions on systematic and effective international engagement and shared use of best practice across Australia’s [IA] frameworks’.

4.20 Data presented to the Executive Board in November 2022 summarised the OIA’s assessment of IAs over the period March 2022 to September 2022. The analysis examined the assessment scores achieved against the seven IA questions (see paragraph 1.3) between the first pass and second pass assessments (Figure 4.1). This showed improvements for all seven questions.¹⁵⁵

Figure 4.1: Final IA assessment average scores by question^a, March 2022 to September 2022

Note a: Question 1: What is the policy problem you are trying to solve? Question 2: Why is government action needed? Question 3: What policy options are you considering? Question 4: What is the likely net benefit of each option? Question 5: Who did you consult and how did you incorporate their feedback? Question 6: What is the best option from those you have considered? Question 7: How will you implement and evaluate your chosen option?

Source: ANAO analysis of November 2022 Executive Board paper data. Graphic developed by the ANAO.

4.21 Monthly reports to the Assistant Minister and PM&C’s senior executives (see paragraph 4.29) include point-in-time information about the average agency and APS IA assessment scores across the seven IA questions. Monthly reporting to the Assistant Minister and PM&C executive does not analyse trends. The ANAO determined that between January 2023 and December 2024, there was a change in average APS IA assessment scores for the first five IA questions of between zero and +9 percentage points (Figure 4.2).¹⁵⁶

Figure 4.2: Average IA assessment score by IA question^a, January 2023 to December 2024

Note a: Question 1: What is the policy problem you are trying to solve and what data is available? Question 2: What are the objectives, why is government intervention needed to achieve them, and how will success be measured? Question 3: What policy options are you considering? Question 4: What is the likely net benefit of each option? Question 5: Who did you consult and how did you incorporate their feedback?
March 2023 changes to the IA framework included changes to questions 6 and 7, which disrupt the time series. Questions 6 and 7 have been excluded from the analysis and figure.

Source: ANAO analysis of OIA monthly reporting to the Assistant Minister. Graphic developed by the ANAO.

4.22 In November 2022, the Executive Board considered the potential to use IA assessment data to assess policy capability across the APS and identify areas where policy effectiveness could be improved, including: identifying areas of policy analysis where agencies underperform; identifying policies supported by sub-par analysis; comparing and contrasting individual agencies’ analysis capability; and tracking APS-wide improvement in policy analysis across specific time periods. The Executive Board agreed for the OIA to bring forward more comprehensive data to inform next steps in early 2023 and to prepare a one-page summary for an APS leadership group. This was not done.

4.23 In August 2023 the Executive Board considered undertaking a survey of policy agencies to test views on the extent to which the IA framework helped lift quality of analysis. The Executive Board noted:

The survey is an opportunity to explore avenues for how the IA framework can support the Government’s APS reform agenda, including by providing advice to APSC on the ways the IA framework could be used to build analytical capability across teams in the APS. The OIA is in discussions with APSC on these matters. The survey would attempt to validate the value-add of the IA framework, both in uplifting the capability of agencies to conduct detailed policy analysis and improving the quality of policy development.

4.24 A survey was conducted by PM&C in December 2023. Two separate survey questionnaires were sent to 74 senior officials and 409 working-level officers. Responses closed in January 2024. Of the 74 senior officials who received a survey, 21 responses (28 per cent response rate) were received. Of the 409 working-level officers who received a survey link, 98 responses were received (24 per cent response rate). The survey results were compiled by PM&C. Four key themes comprised:

• the IA contains useful information for decision-makers, stakeholders, and policy teams;
• the IA can come too late in the decision-making process;
• IAs work best when teams have enough time and good data; and
• the OIA challenges drafters to lift the quality of their analysis.

Is there advice to government on the effectiveness of the IA framework?

Reporting and advice to government

4.27 Throughout 2022, PM&C advised government to make changes to the IA framework, including changes to the name of the OIA and language associated with the process (see paragraph 1.5). Two key changes to the IA framework proposed to government in December 2022 were the following.

• Removing the requirement for Cabinet submissions with minor impacts to contain a minor regulatory impact statement (RIS) (see paragraph 1.5).¹⁵⁷ PM&C considered that agencies disproportionately associated the OIA with the minor RIS process, which PM&C described as a compliance process that added limited value to decision-making.
• A stronger focus on ensuring independent reviews replacing IAs (see paragraph 1.5) contained quality analysis and were not used as a ‘loophole’ to avoid the IA framework process. PM&C recommended that: ‘independent reviews’ be renamed ‘IA equivalents’ given they were not always independent of government; the OIA’s agreement be required for agencies to use a separate review in lieu of the IA process; and the OIA be allowed to comment on the quality of the IA equivalent analysis.

4.28 In January 2023, the Prime Minister agreed to the changes, which were to commence on 1 March 2023.

4.29 From February 2023, the OIA provided a one-page monthly report about the administration of the IA framework to the Assistant Minister and PM&C’s senior executives. The monthly report provided a point-in-time summary including coverage of: training delivered (training hours, participants); OIA monthly workflow (policy proposals received/assessed and proposals requiring an IA); key IAs on hand with assessment of policy progress, complexity and stakeholder engagement; key IAs published; and published or in development IAs with ‘insufficient’ assessments.

4.30 In addition to monthly reports, in 2023 and 2024 PM&C provided ad hoc advice on specific IAs achieving exemplary ratings. The advice noted the elements of the IAs that contributed to these results. In April 2024 PM&C provided advice to the Assistant Minister on the outcomes of the December 2023/January 2024 survey of policy agencies (see paragraph 4.24). PM&C provided the Assistant Minister with proposed next steps: a paper to the PM&C Executive Board on survey findings and recommendations; a paper to the Secretaries Board (chaired by the Secretary of PM&C) on survey results and recommendations; and briefing to the government to provide advice on IA reforms and a process for reforms. As at December 2024 a paper on survey findings and recommendations had not been considered by the Executive Board.

Public performance reporting

4.31 PM&C’s 2022–23 Annual Report included annual performance statements reporting on the 2022–23 Corporate Plan performance measure related to the IA framework (see paragraph 4.4). The performance result was that 92 per cent of APS enterprise employees surveyed were satisfied with the training provided to uplift their policy capability in 2022–23, compared to the target of 75 per cent.¹⁵⁸ As discussed at paragraph 4.4, neither the 2023–24 Corporate Plan nor the 2024–25 Corporate Plan included any performance measures related to IA framework activities.

Appendix 1 Entity responses

Department of the Prime Minister and Cabinet

Department of the Treasury

Appendix 2 Improvements observed by the ANAO

1. The existence of independent external audit, and the accompanying potential for scrutiny improves performance. Improvements in administrative and management practices usually occur: in anticipation of ANAO audit activity; during an audit engagement; as interim findings are made; and/or after the audit has been completed and formal findings are communicated.

2. The Joint Committee of Public Accounts and Audit (JCPAA) has encouraged the ANAO to consider ways in which the ANAO could capture and describe some of these impacts. The ANAO’s corporate plan states that the ANAO’s annual performance statements will provide a narrative that will consider, amongst other matters, analysis of key improvements made by entities during a performance audit process based on information included in tabled performance audit reports.

3. Performance audits involve close engagement between the ANAO and the audited entity as well as other stakeholders involved in the program or activity being audited. Throughout the audit engagement, the ANAO outlines to the entity the preliminary audit findings, conclusions and potential audit recommendations. This ensures that final recommendations are appropriately targeted and encourages entities to take early remedial action on any identified matters during the course of an audit. Remedial actions entities may take during the audit include:

• strengthening governance arrangements;
• introducing or revising policies, strategies, guidelines or administrative processes; and
• initiating reviews or investigations.

4. In this context, the below actions were observed by the ANAO during the course of the audit. It is not clear whether these actions and/or the timing of these actions were planned in response to proposed or actual audit activity. The ANAO has not sought to obtain assurance over the source of these actions or whether they have been appropriately implemented.

Table A.1: Improvements observed by the ANAO