Our operating environment

This section sets out the nature of PM&C's operating environment over the 4-year period of this corporate plan. It outlines how factors and changes in the environment may affect and influence the focus of the department's work and key priorities. Understanding, adapting and responding to changes in our operating environment, including the strategic priorities of the Australian Government, is critical to delivering on our purpose.

Serving Australia's Prime Minister

The Prime Minister has set out a clear agenda, outlining his expectations for the department – that we ensure the Government's priorities are delivered to the highest standards, and in the timeframes required, on behalf of the Australian people. It is the role of the Prime Minister's department to ensure we support the Prime Minister in delivering on his commitments.

The department will play a critical role to coordinate work across the APS, ensuring a joined-up approach to policymaking and program delivery.

Australia's economic and fiscal outlook

Australia is facing a challenging economic environment in an uncertain world. Inflation has passed its peak but is still high. Headwinds in the global economy continue to build, increasing uncertainty in the global economic outlook. Global growth over the next 2 years is expected to be the weakest in over 2 decades, excluding the global financial crisis and the pandemic. Global inflation peaked in the second half of 2022, but remains well above central bank targets.

Key risks include more persistent than expected inflation, requiring interest rates to be higher for longer, and further interruptions to global food and energy supplies stemming from Russia's invasion of Ukraine.

The department supports the Government to deal with these economic challenges, including supporting the development of policies to provide cost-of-living relief to Australians including those targeting energy prices, housing and child care.

Workforce issues, including those in care sectors, continue to be a challenge. Achievements in the past 12 months include securing award wage increases for aged care workers and passing workplace relations reform legislation. PM&C will continue to support the work of the Care and Support Economy Taskforce, and the Government's migration policies.

The past year has seen economic policymakers in Australia and overseas refocus from the COVID-19 recovery to dealing with high inflation. Central banks have raised interest rates to their highest levels in decades, which has seen a slowdown in economic growth and an easing of employment growth across many advanced economies, including Australia. Reflecting this, the International Monetary Fund recently downgraded its forecasts for global growth and flagged that risks remain heavily weighted to the downside.

In this context, inflationary pressures are easing, though still tight labour markets will continue to dominate policy considerations across advanced economies, alongside emerging signs of financial sector vulnerabilities in some markets.

In Australia, the focus of fiscal policy in the short term has been on providing cost-of-living relief to those most in need, while avoiding adding to inflationary pressures. Over the medium to longer term, efforts are underway to manage growing expenditures over several policy areas to help improve the structural budget position. We continue to support the Government to deliver its priorities while improving budget sustainability.

In addition to these pressures, the Australian economy is also witnessing a range of broader structural shifts, including climate change adaptation, the expanding use of data and digital technology, and the ongoing impacts of an ageing population. We will work to support the Government in navigating these significant policy changes.

Social context

PM&C has an important role in assisting the Government to progress domestic reforms to support Australian families and communities.

Many Australians are struggling to access secure, safe, and affordable housing as reflected in the 2021 census result, with the national rental vacancy rate at historical lows of around 1 per cent. The department will support the Government to address these issues by supporting and facilitating housing strategies across agencies, governments, sectors, and the community. The delivery of the landmark National Housing Accord demonstrates the Government's focus on building a shared ambition to improve housing outcomes for all Australians.

Over the past 12 months, the department has supported the work of National Cabinet to improve housing supply and affordability, and the Government's $2 billion Social Housing Accelerator Payment that will build thousands of new social rental homes across the country. In 2023­–24, the department will continue to support the Government to deliver its $10 billion Housing Australia Future Fund.

Recent, widespread skill shortages have demonstrated the importance of investing in the skills Australia needs to deliver secure, well-paid jobs and drive future economic growth. PM&C will continue to support the Government in delivering a new vision for Vocational Education and Training and higher education.

The Government's commitment to working in genuine partnership to improve life outcomes for First Nations people will continue to be a key focus for the department in 2023–24. We will support the Government in its commitment to the National Agreement on Closing the Gap, which establishes a formal partnership between First Nations organisations and all levels of government, and requires governments to make significant structural changes in the way they work with First Nations people. Australians will have the opportunity to have their say on recognising the First Peoples of Australia in the Constitution through an Aboriginal and Torres Strait Islander Voice. The department will continue to support work across the APS to implement the significant First Nations policy agenda and ensure that Aboriginal and Torres Strait Islander people have a say on matters that affect their lives.

PM&C supports consideration of health reform through both the Cabinet and collaborative work with state and territory governments through National Cabinet.

In the 2023–24 Budget, the Government invested $5.7 billion in strengthening Medicare, implementing broad and ambitious reforms to improve access to primary care and medicines, support more multidisciplinary care, reduce pressure on hospitals and improve the health workforce.

The Government is committed to improving the aged care system and continues to progress reforms to provide older Australians in care with the safety and respect they deserve.

The recently established Aged Care Taskforce housed within the department, will review funding arrangements for aged care and develop options for a system that is fair and equitable for everyone in Australia. The Taskforce will provide a report to Government by the end of 2023.

To close gender gaps and advance gender equality, the Government is embedding gender responsive budgeting and gender impact assessments in its policy making and budgeting decisions.

The Office for Women is leading the implementation of gender responsive budgeting by developing guidance and tools to support gender analysis in the budget process, incorporating analysis into an annual Women's Budget Statement, collecting gender-disaggregated data and building capability of public servants.

The global context and national security

Keeping Australians safe and our economy prosperous are key priorities for the Government. As the Prime Minister said during his Shangri La Dialogue keynote, peace, prosperity and stability can never be taken for granted. To achieve this, Australia must build and maintain strong and productive strategic partnerships across our region and the globe. PM&C continues to support these partnerships, including bilaterally and multilaterally, through key forums like the East Asia Summit, the Pacific Islands Forum, the United Nations, the Quad, ASEAN, Asia-Pacific Economic Cooperation and the G20. PM&C's role is to support the Prime Minister and the Cabinet by driving and coordinating whole-of-government and whole-of-nation efforts to protect and advance Australia's national and global interests.

Australia's region, the Indo-Pacific, faces increasing competition that operates on multiple levels – political, economic and military. Australia's goal is to secure these interests through deterrence and reassurance, building resilience in the Indo-Pacific, and keeping multilateral institutions effective to deliver for Australia and the needs of our region. The prosperity of Australia's region has always been driven by shared opportunity and the stability of our region can only be secured through collective responsibility.

PM&C will support the new strategic conceptual approach to Australia's defence planning and strategy – National Defence – which takes a whole-of-nation approach to security. It will require a more active Australian statecraft working to support the maintenance of a regional balance of power, broader utilisation of Australia's national power and alignment of government policy. Our statecraft will be directed at both deepening diplomatic engagement and building stronger defence capabilities – to deter coercion and lower the risk of conflict. The trilateral AUKUS security partnership will strengthen our capabilities through the most challenging times of this century. Australia's conventionally-armed nuclear-powered submarine capability will enable AUKUS partners, in collaboration with likeminded countries, to better contribute to a sovereign and resilient Indo-Pacific and to deter aggression more effectively. All three AUKUS partners are committed to ensuring the Indo-Pacific remains a region where all countries – big or small – are able to act in their sovereign interests to shape their own future free from coercion.

The Government is committed to Australia's longstanding alliance with the United States. The Australia-United States relationship is unprecedented in scale, scope and significance, reflecting more than 100 years of partnership between our nations. It is underpinned by an enduring foundation of trust, a long record of achievement and continues to build to tackle emerging challenges – including by making climate change cooperation the third pillar of our alliance.

Increasing geostrategic competition is challenging multilateral cooperation and threatening the global economic and financial architecture we rely on. PM&C will drive integration of domestic, international, economic and strategic policy to shape Australia's international economic engagement so it supports economic prosperity and resilience at home and throughout our region. Maintaining Australia's constructive engagement as a bridge between advanced and emerging economies will help bolster support for multilateralism and the international rules-based order, which are central to achieving this objective.

Domestic security and economic prosperity are mutually reinforcing and remain the foundations of Australia's success. Strengthening Australia's social cohesion will be central to the health of our democracy and to addressing the persistent threats posed by extremism, terrorism and foreign interference. The department will also work across government to promote Australia's economic prosperity through the facilitation of trade, investment and travel.

Climate change is an environmental, economic, social and national security issue, and the department will support the Government in delivering a comprehensive plan on climate change. In recent years, Australians have experienced unprecedented bushfires and floods, as well as the effects of the COVID-19 pandemic. PM&C continues to support the Prime Minister and the Government in responding to crises and critical issues, and in promoting whole-of-government coordination to emergency management and national resilience.

ASEAN–Australia Special Summit 2024

The Indo-Pacific, with the Association of Southeast Asian Nations (ASEAN) at its centre, is pivotal to global prosperity and security. Deepening engagement with Southeast Asia is a key priority for Australia. We want to maximise the significant trade, investment and other economic opportunities for Australia and our region, and enhance people-to-people ties.

ASEAN is an intergovernmental organisation that brings together Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam to promote political, economic and social cooperation along with regional security and stability. This year will mark the 50th Anniversary of Australia's Dialogue Partnership with ASEAN, and the Prime Minister has agreed to host a Special Summit in Australia to mark this important milestone.

The Special Summit provides a unique opportunity to expand our cooperation in fields such as business, maritime, emerging leadership, climate change and clean energy transition. A Taskforce has been stood up to deliver a world class summit that is safe, substantive and forward-looking for all participants.

APS Reform

The APS Reform Office, currently located within PM&C, is tasked with supporting and overseeing the successful implementation of the Government's APS Reform agenda. The APS Reform Office will transition to the Australian Public Service Commission by the end of 2023 and continue to lead and support the reform agenda.

Recognising the importance of this agenda, and what it means as a strategic Government priority, PM&C is committed to working with the APS Reform Office and partner agencies to support the ongoing implementation APS Reform initiatives.

Further, PM&C is a lead agency and leader across the service with regards to public sector reform. We understand that it is our responsibility – in line with community values and expectations of stewardship – to not only deliver as a department on specific APS Reform initiatives, but also act as a role model and an enabler of the agenda across the public service.

In this way, PM&C intends to focus on the following outcomes of the APS Reform agenda:

• Outcome 1: Public sector employees act with and champion integrity
• Outcome 2: Public service employees are stewards of the public service
• Outcome 4: The APS has effective relationships and partnerships with First Nations peoples
• Outcome 7: The APS sets the standard for First Nations employment and cultural competency
• Outcome 8: The APS continuously improves its capabilities.

PM&C is establishing the Australian Government Consulting function within PM&C. The function is a flagship initiative within the APS Reform agenda.

Parliamentary workplace reforms

PM&C, through the Jenkins Report Implementation Team is supporting the Government's commitment to work across the Parliament to implement the Set the Standard report. The former Sex Discrimination Commissioner's report made 28 recommendations to help ensure Commonwealth parliamentary workplaces are safe and respectful. We work closely with the Department of Finance, including on the establishment of a new statutory Parliamentary Workplace Support Service (PWSS).

The new PWSS will provide human resources support to parliamentarians and their staff. PM&C is also supporting the establishment of an Independent Parliamentary Standards Commission, which will investigate complaints of behaviour code and standards breaches in Commonwealth parliamentary workplaces.

Net Zero Authority

The Australian Government is establishing a new authority – the Net Zero Authority (the Authority) – to ensure the workers, industries and communities that have powered Australia for generations can seize the opportunities of Australia's net zero transformation. The Authority will be established by legislation, which will occur following established parliamentary processes.

In the meantime, the Net Zero Economy Agency (the Agency), which was established on 1 July 2023, is starting this important work by engaging with communities, regional bodies, industry, investors, unions and First Nations groups to start to develop strategies for how it can best support positive transformation. This includes:

• helping investors and companies to engage with net zero transformation opportunities
• coordinating programs and policies across government to support regions and communities to attract and take advantage of new clean energy industries and set those industries up for success
• supporting workers in emissions-intensive sectors to access new employment, skills and support as the net zero transformation continues.

The Agency is also working through the detailed design of the new Authority in consultation with key stakeholders. This includes defining the Authority’s functions, powers and governance. This work will ultimately feed into the legislative process.

A Net Zero Economy Advisory Board has been established to provide advice to the Chair and Chief Executive Officer of the Agency, and to support the Agency achieve its functions with a focus on organisational strategy, performance and development.