Inside government boards

After making the jump from a career as a corporate lawyer in the early 1990s, Elizabeth Montano FAICD has gone on to carve a long and successful career in the Australian Public Service.

In 1996, Montano became CEO of AUSTRAC, and the most senior woman in Commonwealth law enforcement and regulatory agencies at that time. Later she became chair of Centrelink, and has since sat on a number of other government boards and committees. Today she advises and consults to government departments and agencies on strategy, business planning, governance, compliance, assurance and risk.

Elizabeth Montano spoke with the AICD to share the lessons she has learnt over her career inside and outside the boardroom.

AICD: In your opinion, what makes a good government board?

Elizabeth Montano (EM): A good government board is one which can think commercially but still remember it’s operating within a government context. A mix of people with strong commercial, financial and public sector experience who all understand the core motivators and contexts of stakeholders will always produce a better and more innovative result.

AICD: Are there any specific skills you think need to be injected into government boards and committees?

EM: The key skill set is extensive experience in governance and risk with the ability to adapt and apply that in varying contexts. Some government boards and committees require members with specific skill sets and relevant industry expertise.

However, there is great merit in appointing fresh eyes without industry baggage. “I appreciate we’ve been doing things this way for 50 years, but can someone tell me why?” can be the most valuable question a new board or committee member asks. Often they’ll be the catalyst for innovation. You need all these skills in a collegiate group of people who respect and appreciate what each brings to the table. And when you get on a board like that, it’s the most exhilarating place to be.

AICD: You have served on a number of audit and risk committees and now provide advice on public sector assurance and risk. Has the way the sector deals with audit and risk changed over the years?

EM: There is a strong emphasis on governance in the public sector. So much so, that audit committees are now mandatory and, at the federal level, have much broader functions and responsibilities than the name suggests. They have evolved to advise on assurance, risk and performance frameworks tailored to suit the organisation and to monitor and evaluate their effectiveness. This reflects the strong connection made in the public sector between governance and superior performance. Audit and risk committees are now recognised as key contributors to public sector outcomes.

Smart boards and CEOs know that active and focused audit committees are a big part of their personal risk management strategies. You can’t always ask the probing questions yourself – so you need someone with a different perspective who can ask those questions.

AICD: As former chair of Centrelink, do you have any advice for managing competing political, social and community pressures for directors in similar positions?

EM: Directors on government boards have largely the same obligations as directors in the private sector- you are not appointed a director to represent any particular interest group. I’ve found that the best way to deal with competing pressures is to overtly recognise them and work to find common ground. That may sound a little “Pollyanna-ish” but it’s amazing how the elephant in the room becomes a mouse once you’ve shone the spotlight on it. Strong conflict of interest protocols support this.

AICD: What are some examples of innovation that you have seen in the public sector? How can the public sector encourage innovation?

EM: There are many examples of innovation in the public sector and I have been fortunate to contribute to a number of them.

In the mid-1990s, AUSTRAC as one of the world’s first financial intelligence agencies and anti-money laundering/ anti-terrorist financing regulators, developed innovative information technology including cheap and fast electronic data exchanges between government and industry involving leveraging off institutions’ back offices (a world first). We data mined before it became fashionable and we identified intelligence needs of front line agencies. The recently announced Fintech sandbox should provide an environment for industry and regulators to deepen their interactions.

Centrelink focussed on delivering public policy on the ground leading to a closer and more responsive relationship between the public sector and the community.

The Australian Institute of Marine Sciences is another example of a leading innovator. It has an international reputation as a collaborative creator of “public good” and industry relevant science. It has built this over decades by matching strategic direction and capabilities.

The common thread between all of these is a clear understanding of your objectives combined with an unfettered view of how to do it. Of course, when you’re delivering essential public services you can’t throw everything up in the air and wait to see how the experiment goes. You need to operate on two planes of thought - business continuity and business transformation. Boards, CEOs and audit committees who understand this will succeed.