Administrative Office (AO) governance arrangements

Relationship between the minister, Department Head and AO Head

AO Heads are responsible to both the minister and Department Head. The section below outlines their different roles.

AO Heads are responsible to the minister for the general conduct and the effective, efficient and economical management of the AO’s functions and activities. They therefore must keep the minister informed about any matters related to the AO.
If the AO has any legislated functions, then it the AO Head is solely responsible to the minister for these functions. For any non-legislated functions, the AO Head is responsible to both the minister and the relevant Department Head.
The Department Head:
- is responsible to the minister for the general conduct and the effective, efficient and economical management of the functions and activities of the department and AO (section 13 of the Public Administration Act (PAA))
- advises the minister on all matters relating to the AO (section 13 of the PAA)
- incorporates the financial statement of the AO into those of the department (section 45 (4) of FMA). This means that the Department Head must have sufficient oversight over the financial management of the AO, where it is material to the department, to be able to meet their obligations and sign off on the accuracy of the combined financial statement in the annual report. This is particularly important for AOs that manage more assets and funding.
The department supports the Department Head to fulfil these obligations.
The AO Head:
- is responsible to the Department Head for the general conduct and the effective, efficient and economical management of the functions and activities of the AO (section 14(1) of the PAA)
- must advise the Department Head in all matters relating to the AO (section 14(1) PAA)
- has no responsibility to a Department Head in relation to functions set out in an Act other than the PAA (section 14(2) PAA).
- has the same functions in relation to the AO, as a Department Head in relation to a department (section 14(3) PAA)
AO Heads are employed by the Premier. They are responsible to both the relevant Department Head and minister for most matters and are responsible solely to the minister for any legislated functions. This demonstrates the potential complexity of AO reporting arrangements, which require careful management.

Memorandum of Understanding

The portfolio department and the AO should enter into a Memorandum of Understanding (MOU) that sets out how they will work together, what assistance and resources the department will provide and how the AO will report to the department.

A template MOU is available from Governance Branch, DPC.

An MOU provides a formal documented agreement between two parties. It sets out a common understanding between the parties as a voluntary statement of intent and contains the serious commitment of both parties.

In general, the purpose of an MOU is to:

clarify the nature of the relationship between the parties
seek to foster a productive working relationship between the parties
clarify the accountability, functions and responsibilities of each party.

MOU between AO and department

An MOU between the AO and portfolio department formalises governance arrangements. This will clarify expectations for the AO and department. In addition to the purpose set out above, a MOU may:

establish communication processes, or briefing protocols
agree to the corporate costs charged to the public entity.

It should be:

circulated to relevant department and AO employees
regularly reviewed to ensure it meets both parties’ needs.

Ministerial Statement of Expectations

It is recommended that an AO’s portfolio Minister also writes to the AO Head to issue them with a Statement of Expectations within three months of establishment, and then periodically updates the Statement of Expectations at least once every three years.

At a minimum, an Statement of Expectations should cover the:

purpose and objectives of the AO
strategic priorities of the AO
performance targets and government priorities the AO is expected to work towards
reporting, resourcing, use of departmental corporate services and any other relevant matters
roles and responsibilities of the secretary and the AO Head, based on relevant legislation.

Considering that AOs inherently have overlapping reporting lines with the minister and department, the Statement of Expectations and the MOU between the department and AO should be consistent about what level of direct engagement the AO Head will have with the minister, and what should be filtered through the department.

Employment arrangements

All AO Heads are employed by the Premier under section 12(2) of the Public Administration Act 2004. An AO Head falls within the definition of a public service body Head, meaning the Head has powers to employ their own staff on behalf of the Crown.

How to classify the AO Head

To classify an AO Head, use the Victorian Public Service Executive Classification Framework. As the employer of the AO Head, the Premier will make the final determination of the classification of the position.

The Victorian Independent Remuneration Tribunal (VIRT):

determines the remuneration bands for executives employed in public service bodies <link>
issues guidelines on the placement of executives within remuneration bands.

If it proposed to pay the AO Head above the maximum of the relevant remuneration band, advice must be sought from VIRT.

Updated 11 August 2025