Chapter 2 Governance and the organisation

This chapter describes the AIHW's governance and management arrangements, including its accountabilities to the Minister for Health, and the roles and responsibilities of its Board and Ethics Committee.

The Australian Institute of Health was established as a statutory authority in 1987 by the Australian Institute of Health Act 1987 to report to the nation on the state of its health.

In 1992, the role of the Institute was expanded to include welfare-related information and statistics, and was renamed the Australian Institute of Health and Welfare. The Institute's legislation is now titled the Australian Institute of Health and Welfare Act 1987 (AIHW Act). The AIHW Act and its Regulations are reproduced in Appendix 1.

The AIHW Act establishes the AIHW Board as the governing body of the Institute, with its role and composition specified in s. 8(1). The Board is accountable to the Parliament of Australia through the Minister for Health.

The AIHW operates under the Commonwealth Authorities and Companies Act 1997 (CAC Act). It prepares a set of annual financial statements as required by the Finance Minister's Orders made under the CAC Act.

The AIHW's accountability framework is shown in Figure 5.

The AIHW has a range of reporting mechanisms to ensure transparency and accountability in its operations. Key documents as identified in the framework are:

• AIHW Strategic directions 2011–2014: this provides the foundation for establishing, recording, refining and assigning priorities to the AIHW's activities for the period 2011–2014.
• Portfolio Budget Statements: these annual statements inform members of parliament of the proposed allocation of resources to government outcomes and programs.
• Annual work plans and key deliverables: these are internal management documents that provide the AIHW's Director and senior executives with an overview of the AIHW's proposed activities for the next year, against which progress is monitored.
• Annual reports: an annual report to the Minister for Health for presentation to the Australian Parliament is a requirement of s. 9 of the CAC Act.

Figure 5: Accountability framework

Ministerial accountability

The AIHW is responsible to the Minister for Health, and informs the Minister of its activities as required. This includes occasions when the AIHW receives or expends significant funds, for example, when it undertakes work valued at over a certain threshold amount (currently $1.5 million) for other agencies and organisations.

The AIHW ensures that the Minister for Health and all relevant ministers in the Australian Government and state and territory governments have early embargoed access to its reports, to allow ministers to be prepared to respond to the findings.

Ministerial directions, general policies and significant events

The AIHW is required to provide details of:

• ministerial directions issued to it
• general policies of the Australian Government that were notified to it before 1 July 2008 under s. 28 of the CAC Act and which continue to apply
• General Policy Orders that are applicable under s. 48A of the CAC Act
• the occurrence of significant events.

Details are provided in Appendix 8.

AIHW Board

The management of the AIHW is carried out by a board.

Board members, with the exception of the 3 ex-officio members and the staff-elected representative, are appointed by the Governor-General and hold office for a specified term not exceeding 3 years. The ex-officio members are the AIHW's Director, the Australian Statistician or nominee and the Secretary of the Australian Government Department of Health and Ageing (DoHA) or nominee.

Table 7 provides details of AIHW Board members attending meetings for the period 1 July 2011 to 30 June 2012. Further information about AIHW Board members, including qualifications, current positions and affiliations, is in Appendix 3.

Table 7: Members of the AIHW Board and their attendance at meetings, 2011–12

	Appointment change	Meetings attended	Eligible meetings
The Hon. Peter Collins, AM, QC (Chair)	Until 18 July 2011	—	0
The Hon. Andrew Refshauge (Chair)	Appointed 19 July 2011	4	4
Mr David Kalisch (Director, AIHW)		4	4
Dr David Filby (nominee of the Australian Health Ministers' Advisory Council)		4	4
Mr James Moore (nominee of the Community and Disability Services Ministers' Advisory Council)		2	4
Ms Margaret Crawford (representative of state housing departments)	Resigned 14 December 2011	1	2
Ms Mercia Bresnehan (representative of state housing departments)	Appointed 13 June 2012 (acting arrangement)	1	1
Mr Brian Pink (Australian Statistician)		0(a)	4
Mr Graeme Head(b)	Until 6 September 2011	—	0
Ms Kerry Flanagan(b)	From 14 September 2011	4	4
Ms Libby Davies (person experienced in the needs of consumers of welfare services)	Until 6 August 2011	—	0
Ms Samantha Page (person experienced in the needs of consumers of welfare services)	Appointed 7 August 2011	3	4
Dr Lyn Roberts, AM (person with expertise in public health research)		3	4
Prof. Terry Dwyer, AO (ministerial nominee)		2	4
Mr David Stanton (ministerial nominee)		3	4
Dr Greg Stewart (ministerial nominee)		4	4
Mr Stuart Fox (staff-elected representative)	Until 18 July 2011	0	0
Ms Jessica Cumming (staff-elected representative)	From 19 July 2011	3	4
Ms Serena Wilson or nominee (observer)(c)		4(a)	4
Prof. Warwick Anderson or nominee (observer)(d)		3(a)	3
Audit and Finance Committee
Dr Greg Stewart (Chair)		4	4
Dr Lyn Roberts, AM		3	4
Mr David Stanton		3	4
Mr Max Shanahan(e)	From 8 December 2011	2	2
Remuneration Committee
The Hon. Andrew Refshauge (Chair)	From 19 July 2011	3	3
Dr Greg Stewart		3	3
Dr David Filby		3	3

1. A representative attended when the member was not present, in an observer capacity.
2. Member nominated by the Secretary, Department of Health and Ageing.
3. The Secretary, Department of Families, Housing, Community Services and Indigenous Affairs, or a nominee, is an observer.
4. The Chief Executive Officer, National Health and Medical Research Council, or a nominee, is an observer.
5. Appointed by the AIHW Board as an independent member of the Audit and Finance Committee.

Charter of Corporate Governance

The AIHW Board has adopted a Charter of Corporate Governance that outlines the governance framework for the Institute. The charter may be found at Appendix 2. It provides AIHW Board members with a clear set of governance arrangements within which they are to meet their legislative and other obligations. The Chair and Board members are given a briefing on the charter and how it delineates their roles and guides their actions.

The charter describes, among other things:

• legislation governing the operations of the AIHW
• constitution of the AIHW Board
• conduct of AIHW Board members and the Director
• roles of AIHW Board members
• Board delegations
• Board processes, for example, meetings, conflicts of interest
• Board committees.

Board members are provided with a package of information about the Board and the AIHW's governance frameworks on their commencement as a member. They are also given the opportunity to meet the Director to discuss the role of the Board and key issues for the AIHW.

Consistent with best practice, the AIHW Charter of Corporate Governance provides that the Board should review its performance every 2 years. Matters reviewed may include its success in pursuing the AIHW's objectives, procedural matters, protocol and clarity of roles, and the individual performance of Board members. The scheduled 2011 review was deferred pending the appointment in late 2010 of a new Director and in mid-2011 of a new Board Chair, and is now scheduled to begin towards the end of 2012.

The AIHW Board has two subcommittees: the Audit and Finance Committee and the Remuneration Committee. Full details are provided in the charter.

Audit and Finance Committee

The Audit and Finance Committee is a subcommittee of the AIHW Board. It authorises and oversees the AIHW's audit program and reports to the AIHW Board on financial and data audit matters.

During 2011–12, the committee consisted of 3 non-executive members of the AIHW Board and one independent member.

The major matters on which the committee reported to the AIHW Board during 2011–12 were the review of annual financial statements, the draft budget, the internal audit program and business risks.

Remuneration Committee

The Remuneration Committee is a subcommittee of the AIHW Board and comprises the Chair of the AIHW Board, the Chair of the Audit and Finance Committee and one other member. The committee advises the AIHW Board on the performance and remuneration of the Director.

AIHW Ethics Committee

The AIHW Ethics Committee is established under s. 16(1) of the AIHW Act (see Appendix 1).

The committee's main responsibility is to advise the AIHW on the ethical acceptability or otherwise of current or proposed health-related and welfare-related activities of the AIHW, or of bodies with which the AIHW is associated. The Australian Institute of Health and Welfare Ethics Committee Regulations 1989 prescribe the functions and composition of the AIHW Ethics Committee.

The AIHW Ethics Committee is registered with the National Health and Medical Research Council as a properly constituted human research ethics committee.

Consistent with the AIHW Act and the Privacy Act 1988, the AIHW may release personal health and welfare data for research purposes with the agreement of the AIHW Ethics Committee provided that release does not contravene the terms and conditions under which the data were supplied to the AIHW.

In June 2011, the AIHW Board accepted the recommendations of a review to ensure the Institute's ethics arrangements and procedures are compliant with its statutory and regulatory obligations, and provide for efficient and accessible access to data by researchers while ensuring robust privacy protections (see the spotlight).

Membership and attendance of the Ethics Committee are shown in Table 8. Details of Ethics Committee members are in Appendix 3.

Table 8: Members of the AIHW Ethics Committee and their attendance at meetings, 2011–12

	Appointment change	Meetings attended	Eligible meetings
Dr Ching Choi (Chair)		4	4
Mr David Kalisch (Director, AIHW)		3(a)	4
Dr Wendy Scheil (person experienced in professional care, counselling and treatment of people)	Until 29 August 2011	—	0
Dr Angela McLean (person experienced in professional care, counselling and treatment of people)	Appointed 30 August 2011	4	4
Prof. Malcolm Sim (person experienced in research)		3	4
Ms Val Edyvean (nominee of Registrars of Births, Deaths and Marriages)	Until 6 March 2012	3	3
Ms Erin Keleher (nominee of Registrars of Births, Deaths and Marriages)	From 31 May 2012	1	1
Rev. James Barr (minister of religion)		4	4
Ms Camilla Webster (lawyer)		3	4
Mr David Garratt (male general community representative)		2	4
Ms Wendy Antoniak (female general community representative)	Until 27 July 2011	—	0
Ms Margaret Reynolds (female general community representative)	Appointed 17 August 2011	4	4

1. A representative attended all meetings when the member was not present.

The committee met on 4 occasions during the year to consider proposals for the ethical acceptability of a number of research projects. The committee approved the ethical acceptability of 63 projects during the year (Table 9).

Table 9: Research projects considered by the AIHW Ethics Committee, 2011–12

	Considered	Approved	Decision pending
Projects seeking approval
AIHW	9	9	0
AIHW collaborating units	5	5	0
External	46	35	11
Projects seeking modification or extension
AIHW	6	6	0
AIHW collaborating units	2	2	0
External	6	6	0
Total	74	63	11

Executive

The Director of the AIHW manages the day-to-day affairs of the Institute.

The Director was supported by an executive team of 9 group heads, one more than in 2010–11, who formed the Executive Committee.

The Executive Committee met, usually fortnightly, to consider major policy, financial and other corporate matters.

Of the 9 group heads in place at the end of the year, 6 managed groups that oversaw specific subject areas. The other 3 managed groups that provided support services to the whole organisation.

During the year, the AIHW added 1 new group, the ICT and Business Transformation Program Group, to implement an ICT and business transformation program and deliver new IT applications. One new executive staff member, Mr Warren Richter, was appointed as group head.

The Executive Committee as at 30 June 2012 is listed below.

Mr David Kalisch Director
Mr Andrew Kettle Business Group head	Mr Brent Diverty Continuing and Specialised Care Group head	Ms Alison Verhoeven Governance and Communications Group head
Ms Lisa McGlynn Health Group head	Ms Jenny Hargreaves Hospitals and Performance Group head	Mr Geoff Neideck Housing and Homelessness Group head
Mr Warren Richter ICT and Business Transformation Program Group head	Ms Teresa Dickinson Information and Statistics Group head	Dr Fadwa Al-Yaman Social and Indigenous Group head

Further information about the executive and unit heads is included in Appendix 4. Additional information about staffing can be found in Chapter 4 Our people.

Changes to groups that occurred during the year are discussed in Chapter 3 Our operating units.

Organisational structure

The AIHW's structure at 30 June 2012 is shown in Figure 6.

Relationship management

The AIHW's work traverses federal, state and territory government and non-government areas of responsibility in the health and welfare sectors. Effective engagement and productive relationships with all relevant agencies are crucial.

Australian Government

Department of Health and Ageing

The AIHW is an independent agency in the Health and Ageing portfolio. The AIHW's relationship with DoHA is vital, and DoHA directly funds the AIHW to undertake significant work under arrangements additional to work funded through the portfolio appropriation.

With the exception of work that must be competitively tendered under the Commonwealth Procurement Guidelines and other Commonwealth governance requirements, the AIHW's work for DoHA is guided by a memorandum of understanding (MoU) with the Department. The MoU began on 1 January 2011 and will conclude on 30 June 2015.

An MoU management group, comprising senior executive representatives of the two agencies, meets on a regular basis to ensure the effective administration of projects funded or procured under the MoU and to discuss any matters that may emerge during the course of the relationship. The Governance and Communications Group coordinates the AIHW's contribution to the meetings.

The Secretary of DoHA or her nominee is a member of the AIHW Board. The AIHW consults DoHA about the AIHW's annual work plan before it is presented to the AIHW Board for approval. The AIHW also provides DoHA with copies of all publications.

Department of Families, Housing, Community Services and Indigenous Affairs

The AIHW's relationship with the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) is also very important, particularly in such areas as housing and homelessness, disability services, Indigenous affairs and child protection. An MoU guides all work undertaken by the AIHW for FaHCSIA that has not otherwise been subject to competitive tender. The MoU began on 1 July 2010 and will conclude on 30 June 2015.

An MoU management group, comprising senior executive representatives from both agencies, meets on a regular basis to ensure the effective administration of projects funded or procured under the MoU and to discuss any matters that arise. The Governance and Communications Group coordinates the AIHW's contribution to the meetings.

The Secretary of FaHCSIA is an invited observer at AIHW Board meetings and receives copies of AIHW Board papers. The AIHW consults with FaHCSIA about the AIHW's annual work plan before it is submitted to the AIHW Board for approval. The AIHW also provides FaHCSIA with copies of all publications.

Australian Bureau of Statistics

The AIHW interacts regularly with the Australian Bureau of Statistics (ABS) as a key partner on a range of activities. This relationship is enshrined in the AIHW Act, which provides that the AIHW's functions in collecting health- and welfare-related information and statistics should be conducted with the agreement of the ABS and, if necessary, with its assistance. The Australian Statistician or his nominee is a member of the AIHW Board.

Other Australian Government bodies

The AIHW also works closely with other government bodies, including the:

• Australian Commission on Safety and Quality in Health Care
• Australian Health Practitioners Registration Authority
• Australian Institute of Family Studies
• Cancer Australia
• Department of Education, Employment and Workplace Relations
• Department of Veterans' Affairs
• Health Workforce Australia
• Independent Hospital Pricing Authority
• National Health Performance Authority
• National Mental Health Commission
• Productivity Commission
• COAG Reform Council.

The AIHW and the Australian Commission on Safety and Quality in Health Care have a joint commitment to work collaboratively towards a more informative and useable national system of information that enhances the safety and quality of health care in Australia.

The AIHW works closely with the Australian Institute of Family Studies, in particular in its work on the Closing the Gap Clearinghouse. The relationship is governed by an MoU that acknowledges that the sharing of information and expertise is critical to effective and meaningful research by the two bodies.

The relationship between AIHW and Cancer Australia is facilitated by an MoU that reflects the parties' commitment, in consultation with partner organisations and stakeholders, to work in a planned and coordinated manner to ensure that national cancer data needs are met effectively. AIHW is also a member of the Cancer Australia Data Advisory Group. Cancer data from state and territory cancer registries in each state and territory are nationally coordinated through the National Cancer Statistics Clearing House, which is housed at, and managed by, the AIHW in collaboration with the Australasian Association of Cancer Registries.

The AIHW's relationship with the Department of Education, Employment and Workplace Relations (DEEWR) continues to grow, particularly in such areas as the development of information on early childhood education and care. In particular, the AIHW has entered arrangements with DEEWR to provide consultancy services through DEEWR's Research, Evaluation and Analysis Panels.

The AIHW is party to an MoU with the Department of Veterans' Affairs under which it provides consultancy and related services. The MoU reflects a strategic partnership, committed to developing information sources for the delivery of world-class veterans' health care policies and services. At an operational level, the MoU facilitates the collection and use of relevant statistics that are essential elements in the delivery of health and aged care services to the veteran community. Within this context, AIHW also manages selected veterans and defence health databases and nominal rolls.

During 2011–12, the AIHW and Health Workforce Australia agreed on an MoU under which the two organisations exchange data and share information on the health professional workforce. A further MoU between these two organisations and the Australian Health Practitioners Registration Authority also provides for the exchange of data on health practitioners.

Also during the year, an MoU was agreed on with the Independent Hospital Pricing Authority to provide the framework for a business relationship supporting health-and hospitals-related information requirements.

The AIHW has a business relationship with the National Health Performance Authority to supply MyHospitals website data updates and support services, as well as supporting other health-and hospitals-related information requirements. An MoU is in development.

During 2011–12, the AIHW and the National Mental Health Commission put in place an MoU that provides the framework for a business relationship supporting the provision of information relating to mental health.

The AIHW provides statistical, information and advisory services to the Productivity Commission, under a formal agreement on business arrangements. It also provides similar services to the COAG Reform Council under an MoU.

State and territory governments

The AIHW's close working relationships with state and territory governments are critical to the development of nationally consistent and comparable information. During the year, the AIHW continued to engage with all jurisdictions through the various national and ministerial committees and forums charged with developing nationally consistent health and welfare data and information. The AIHW provided secretariat services for many of these committees. A list of the main national committees in which the AIHW participates is provided in Appendix 5. Many units of the AIHW engaged with national committees in their areas of expertise. These are detailed in the reports for each unit in Chapter 3 Our operating units.

Underpinning the activities of the national information committees are national information agreements between the AIHW and a significant number of parties from all Australian jurisdictions. The agreements cover the areas of health, community services, and housing and homelessness. They ensure that effective infrastructure and governance arrangements are in place for the development, supply and use of nationally consistent data for each area. During 2011–12, the National Community Services Information Infrastructure Agreement was finalised and the AIHW supported arrangements that finalised the revision of the National Health Information Agreement.

Under the auspices of the COAG process, engagement by the AIHW with relevant state and territory government departments has been maintained throughout the year.

Collaborations and partnerships

During the year, the AIHW was active in maintaining and strengthening its engagement with allied organisations, including peak bodies and other national forums, to satisfy their need for information to help in the development of policies and program delivery. As well, it contributed information to parliamentary inquiries and committees (see Parliamentary relations), and provided advice in areas of specialist knowledge.

The AIHW conducts its program of work in Aboriginal and Torres Strait Islander health and welfare information in close collaboration with Indigenous advisers to ensure that the work is shaped by relevant policy requirements. The AIHW continued to support the National Advisory Group on Aboriginal and Torres Strait Islander Health Information and Data, and participated in the National Aboriginal and Torres Strait Islander Health Officials Network.

The AIHW funds work plans and data-sharing agreements with a number of universities to facilitate collaboration and to enable it to draw on their expertise in specialist research areas (see Appendix 6). AIHW collaborating units at various universities provide specialist expertise in the areas of injury, asthma and chronic respiratory conditions, dental and perinatal statistics (see Collaborating units). These collaborations extend the range of skills available to the AIHW and enhance its capacity to perform its functions in a broader range of subject matters.

The AIHW also has a number of data-sharing agreements with specialist centres. These agreements provide for the use of AIHW data, within the protection of the AIHW Act's confidentiality provisions, to facilitate the development of information in areas such as immunisation research and surveillance, and HIV epidemiology and clinical research. A list of universities and specialist centres with which the AIHW had funding or data-sharing arrangements in place during 2011–12 is provided in Appendix 6.

In addition, the AIHW plays an important role in international data standards and classifications work through the World Health Organization's (WHO) Family of International Classifications and reports health statistics to the Organisation for Economic Co-operation and Development (OECD).

Financial management

Financial management in the AIHW operates within the following legislative framework:

• Australian Institute of Health and Welfare Act 1987
• Commonwealth Authorities and Companies Act 1997
• Auditor-General Act 1997.

The AIHW classifies all expenditure as internally or externally funded.

Internal expenditure consists of:

• project work undertaken by the AIHW's statistical units
• collaborations with other organisations, often universities, that perform functions under the AIHW Act, for example, the AIHW National Injury Surveillance Unit operated by Flinders University
• corporate services, for example, financial services, human resources, library services and IT services.

Funding for internal expenditure is derived from:

• appropriation (through the federal budget and estimates process)
• contribution to overheads earned on externally funded projects
• miscellaneous sources such as interest and the sale of publications.

A large proportion of the AIHW's revenue comes from external funding for specific projects. Externally funded projects operate on a cost recovery basis, with revenues derived through agreements with external clients. The financial arrangements are determined using an AIHW Board-approved pricing template and most agreements are conducted under the auspices of MoUs with relevant Australian Government departments.

A draft detailed budget for the following financial year is prepared by the AIHW Executive Committee in May each year. The Audit and Finance Committee reviews the budget, which is then approved by the AIHW Board at its June meeting. Individual AIHW units are expected to manage within their allocated budgets.

Contract management

The AIHW's contractual business is conducted through:

• contracts for the purchase of services
• revenue 'contracts' for the provision of services, which are usually in the form of MoUs, such as those in place with DoHA and FaHCSIA
• agreements with third parties, such as those underpinning collaborating arrangements with universities.

Purchase contracts

Most of the AIHW's purchase contracts are for standard support services, such as rent, cleaning, payroll processing, internal audit, IT equipment and consultancy advice. The AIHW has adopted standard short-form and long-form contracts prepared by its legal advisers. Wherever possible, these documents are used as the basis of contracts with suppliers. They contain standard clauses on matters such as insurance, indemnity, intellectual property, privacy and performance standards. They also require the specification of tasks, deliverables and due dates that are linked to payment.

Procurement requirements

As required by the Finance Minister's (CAC Act Procurement) Directions 2009 (clause 5), during 2011–12, the AIHW complied with the Commonwealth Procurement Guidelines when undertaking procurements with a value greater than $400,000.

The Directions allow the Institute discretion about using coordinated procurement contracting arrangements as specified under the Guidelines.

As required by the Finance Minister's (CAC Act Procurement) Directions 2012, from 1 July 2012, the AIHW is required to comply with new Commonwealth Procurement Rules that supersede the Guidelines.

Revenue 'contracts'

The scope, timing, deliverables and budget for most externally funded projects are set out in schedules to MoUs with Australian Government departments. The AIHW treats these schedules as revenue contracts even though they are not contracts in the strict legal sense. The relevant unit head is responsible for the delivery of these services to a satisfactory standard and within budget. The Finance and Commercial Services Unit monitors expenditure against the budget and seeks explanations for any projects that appear to be over budget or behind schedule.

In some cases the AIHW has entered into revenue contracts for work done on behalf of non-government organisations. These are managed in the same way as revenue schedules.

Contract approval

Contracts must be signed by the appropriate delegate. Any contract involving receipt or payment of more than $1.5 million must be approved by the Minister for Health. The contract manager must be satisfied that the supplier is meeting their obligations under the contract before recommending the payment of invoices.

Any purchase contract worth more than $25,000 must be approved by a Senior Executive Service officer. Purchase contracts worth more than $100,000 must be cleared by the Governance and Communications Group head and the Business Group head, and approved by the Director.

Revenue 'contracts' or schedules worth $100,000 or less must be cleared by the relevant group head and, if there are non-standard clauses, by the Governance and Communications Group head and the Business Group head. Revenue 'contracts' or schedules worth more than $100,000 must be cleared by the relevant group head, the Governance and Communications Group head and the Business Group head, and approved by the Director.

Risk management

The AIHW has a wide range of policies to reduce and manage business risks, including those relating to:

• risk management
• physical security
• information security
• fraud control
• business continuity.

During the year the AIHW updated its business risk assessment. The AIHW contracts out its internal audit function. The current internal auditors are Oakton. During 2011–12, Oakton conducted internal audits on the fraud control plan, records management and purchase contracts of greater than $400,000 in value.

These audits produced several recommendations for improving the management of the relevant risks. The AIHW's management reported to the Audit and Finance Committee on a regular basis on progress in implementing the recommendations. A representative from Oakton attended each of the Audit and Finance Committee meetings.

Risk of fraud

The AIHW's fraud control plan contains appropriate fraud prevention, detection, investigation, reporting and data collection procedures and processes that meet the specific needs of the AIHW and comply with the Commonwealth Fraud Control Guidelines. The fraud control plan and fraud risk assessment were updated in 2011–12.

Indemnities and insurance premiums for officers

The AIHW has insurance policies through Comcover and Comcare that cover a wide range of insurable risks, including property damage, general liability and business interruption. The Comcover insurance policy includes coverage for directors and officers against various liabilities that may occur in their capacity as officers of the AIHW. The AIHW made no claims against its directors' and officers' liability insurance policy in 2011–12.