In 2013 Treasury committed to a reform program known as Financial Management Transformation (FMT), which aimed to improve financial governance across the NSW public sector. The program was informed by the NSW Commission of Audit 2012 (the Schott Report) which identified:
- significant under-investment in public sector financial management over several decades
- an outdated and prescriptive policy framework, underpinned by the oldest financial management legislation in Australia
- systems which do not provide functionality to support a high performing public sector
- the ongoing need for Government to meet modern budget control commitments.
The NSW Government is now implementing FMT - the biggest financial reform undertaken by the Government in 30 years. When complete, it will drive better outcomes for the people of NSW by introducing a strong focus on results and performance of Government expenditure. This means that when the Government makes spending decisions, not only will there be focus on budget discipline but there will be greater attention to 'what benefits will this deliver to citizens of NSW'.
Benefits of FMT
The reform brings NSW up to world’s best practice in relation to financial management. The benefits are multifaceted – providing greater transparency on how funding drives benefits for citizens and ensuring taxpayer dollars are spent as efficiently and effectively as possible.
The FMT program
The FMT program has three pillars:
1. A new legislation which will establish a single framework for public sector financial management and replace numerous outdated legislative requirements.
2. new policies that support performance and high quality resource management. They will ensure spending decisions have greater alignment to the Government’s policy objectives for the State.
3. a new financial management system called Prime that enables end-to-end management of the budget – from the program planning stage, to the allocation of funding, to tracking expenditure, to the benchmarking of results.
Together, each of these elements will reform how the NSW Government manages its finances.