Establishing, governing, and operating small statutory agencies

The public sector includes a wide range of statutory agencies that have been established by parliaments to perform certain functions at arm’s length from departments of state and political control. Many of these bodies are small – in terms of staffing and resources, if not necessarily of remit and impact.

These small statutory agencies face, more acutely than larger bodies , a question of how to balance their formal independence with their need to build relationships within and across the broader machinery of government to succeed in their missions.

This ANZSOG research project, commissioned in partnership with the public sector commissions of Queensland and Western Australia and completed across 2023, contributes to a fuller understanding of these agencies’ work and challenges.

It finds that this type of agency is under-studied and that the relationships between small statutory agencies’ establishment, governance structures, functions, and size are often unclear or unsystematic. Through interviews with leaders of agencies across 3 jurisdictions, it identifies some of the key practical challenges small statutory agencies face.

Leaders of small statutory agencies and public servants who interact with them , including those in central agencies, will benefit from insights into the practical challenges these agencies face, their role in the broader machinery of government, and how they can be supported in their missions. Policymakers considering the establishment or reform of small statutory agencies will also find insights here into how various levels of independence, governance structures, functions, and sizes interact to influence the effectiveness of small statutory agencies.

The aim of the project was to identify governance and operational issues faced by small statutory agencies using a mixed-method approach across two phases:

• Phase 1: The project engaged the University of Western Australia’s Public Policy Institute to undertake a review of scholarly and grey literature on questions including how to define small statutory agencies and their functions, mandates, governance arrangements, operational challenges, and relationship to the broader machinery of government. The review was supported by an ANZSOG analysis of small statutory agencies in the two partner jurisdictions.
• Phase 2: ANZSOG interviewed 10 leaders of small statutory agencies from 3 jurisdictions, with different mandates, governance arrangements, and sizes, to illuminate the practical reality of their operations, using questions derived from the earlier evidence review.

1. Small statutory agencies are a discrete and identifiable type of government body: created by law for specific purposes, operating with some measure of independence, and exercising executive power, but reliant, to varying degrees, on support from the broader machinery of government. They are analysable in terms of their:

a) Sizes – while the size of an agency’s domain, impact, and resources might be hard to assess from outside, their staffing level (full-time equivalent positions) provides a useful proxy for size. The figure to the right uses the size categories that the APSC uses for the Commonwealth public service agencies within its purview.

b) Functions – including regulation, provision of specialist advice, operation of facilities and services, and, less commonly, a role in policymaking.

c) Forms – governance arrangements include standalone agencies, statutory offices and functions integrated into departments, and statutory offices and boards supported by public service secretariats.

2. Small statutory agencies exist on a spectrum of independence. The defining feature of small statutory agencies is formal independence: legal possession of some powers that are exercised independently of the normal political control inherent in departments of state. At the same time, because of size constraints, small statutory agencies have a range of functional dependencies because they tend, in practice, to negotiate and rely on relationships and resources across the broader machinery of government. Balance is a matter of practice and expedience.

3. Small statutory agencies face some unique challenges as well as some challenges that are made more acute because of their size constraints. These include:

a) The risk of political interference in legally independent powers

b) The ability to manage operational and communication risks

c) Increasing the visibility and understanding of their work across government

d) Gaining access to resources and capability development

e) Attracting and retaining talented leaders and staff

f) Managing a wide range of stakeholder relationships across and outside government and in often complex domains

g) Meeting system-wide priorities and governance requirements

Designing for independence

Existing frameworks across jurisdictions suggest principles for how independence, functions, governance structures, and sizes relate to one another, for policymakers to consider when establishing or reforming small statutory agencies:

• Following Queensland’s Public Interest Map, but narrowing its focus, the threshold question for establishing a small statutory agency should be whether a government function requires a new and discrete independent body of this type, noting that small statutory agencies experience independence in different ways.
• The threshold question is answerable in terms of conflict of interest: a small statutory agency may be needed where the proposed government function would create a conflict if undertaken by a department of state (characterised by political control, hierarchy, diverse mandates, and large size). Some functions that might create such a conflict include commercial purposes, government oversight or citizen engagement, and advocacy for certain environmental or social values that might be underrepresented in public discussion.
• Parliaments should design small statutory agencies for independence, asking what kinds of governance and functional dependencies, and what amounts of resources and staffing, will support agencies in the performance of their functions. For example, the Commonwealth advises that the creation of new public sector bodies should be guided by “clarity of purpose, minimis[ing] the role of government, maximis[ing] the efficiency by using existing structures, [and] accountability to the Parliament and people”. More broadly, these principles can be likened to the ‘4Es’ used to assess government spending: effective, efficient, economical, and ethical – aiming for the right mix of oversight, independent action, and resources. As the Victorian framework illustrates, different types of governance structures and sizes are suited to different functions and operating domains.

Building on, and distilling, earlier work and frameworks across jurisdictions, our research suggests the following factors to consider when designing or analysing a small statutory agency. The chart below takes three broad kinds of small statutory agency identified in our research and places a 4Es lens over them, to identify their relative strengths.

Because small statutory agencies negotiate their positions within the broader machinery of government, leadership is key. Our interviews suggested that mission success for small statutory agencies requires highly capable leadership, and their leaders tend to have an identifiable profile:

• A mix of management and domain-specific skills
• Stakeholder management and managing-up with ministers and boards
• Political astuteness and the ability to win support and raise awareness with the authorising environment.