Public Sector (Closing the Gap) Legislation Amendment Act 2025

The central concept is the "closing the gap principle". It is not a standalone statutory standard but a composite duty built on the NAOCG. The NAOCG is defined in the PSMA dictionary (and cross-defined in the Annual Reports Act dictionary) as the agreement between the Commonwealth, states, territories, the Australian Local Government Association, and the Coalition of Aboriginal and Torres Strait Islander Peak Organisations that took effect on 27 July 2020, including as amended or replaced from time to time, and including any future agreement under its clause 13 (s 8(4)). This means the substantive content of the duty can shift without further legislative amendment; the Act piggybacks on an intergovernmental document that the ACT did not unilaterally control.

The principle applies only to SES members and statutory office-holders. An SES member is defined by the PSMA dictionary; statutory office-holders are deemed SES members for the purpose of s 8(3A) by new s 151(1A). The duty differentiates between provisions of the NAOCG that relate to "transformation or governance of government agencies" and other provisions. For transformation/governance provisions, the duty is mandatory implementation coupled with four specific actions: developing and demonstrating Aboriginal and Torres Strait Islander cultural capability (for oneself and one’s unit/service), promoting cultural safety, and working to eliminate institutional racism. "Aboriginal and Torres Strait Islander cultural capability" is defined in s 8(4) as "the extent to which knowledge about the experiences and aspirations of Aboriginal and Torres Strait Islander peoples is integrated into the way the public sector works, including policies, practices and attitudes, to improve outcomes for Aboriginal and Torres Strait Islander peoples." "Cultural safety" is defined by reference to NAOCG part 12 (Definitions). "Institutional racism" is defined as "the inequitable treatment and outcomes experienced by Aboriginal and Torres Strait Islander peoples as a result of an entity’s policies, practices and culture" - notably outcome-based rather than intent-based.

For other NAOCG provisions (not transformation/governance), the duty is alternative: implement the provisions or advise the Minister about implementation. This creates a hierarchy: transformation/governance provisions attract a more demanding and specific duty; others attract a less prescriptive obligation that can be satisfied by advice.

The duty explicitly does not create or affect any legal right (s 8(3B)(b)), so no private individual can sue for breach. Enforcement is through the existing misconduct framework under the PSMA, which applies to SES members and statutory office-holders. The note to s 8(3B) cross-references s 9(1)(c)(i) (misconduct includes contravening a public sector principle) and s 9(3) (which deals with misconduct by SES members).

The annual reporting concepts are straightforward: "measures taken" is the operative phrase. The reports must describe actions, not outcomes. The director-general and public sector body statements must cover measures to implement the NAOCG, specifically the priority reforms (however described) and responses to recommendations from reviews of progress. The state of the service report must cover measures to assist SES members and statutory office-holders to comply with the closing the gap principle. The elected body (the Aboriginal and Torres Strait Islander Elected Body under the Aboriginal and Torres Strait Islander Elected Body Act 2008, s 7) gains a consultative role in the annual report direction process, but the Minister is not bound to accept its recommendations.

The Act directly imposes duties on two categories of public servant: SES members (the ACT Senior Executive Service) and statutory office-holders. The PSMA defines SES members broadly to include heads of service, directors-general, and other senior executives. Statutory office-holders hold positions created by legislation (for example, the Ombudsman, Auditor-General, or information commissioner) and are now deemed to be SES members for the purpose of s 8(3A) (s 151(1A)). These individuals must adjust their conduct, decision-making, and strategic priorities to align with the closing the gap principle. They also face potential misconduct proceedings for non-compliance, which the existing PSMA framework handles.

The Act affects all administrative units and public sector bodies through the annual reporting obligations. Director-generals must produce a report that includes a statement on measures to implement the NAOCG. Public sector bodies (which may include statutory authorities, boards, and other entities) have a similar obligation under new s 7(2A). The head of service must prepare the state of the service report with the new closing the gap assistance statement. Territory entities covered by the Annual Reports Act may be directed by the Minister to include a closing the gap statement in their annual reports (s 8(3)(h)). This expands the reporting burden for every entity that currently provides a human rights statement; they may now have to include a parallel closing the gap statement if directed.

The Minister responsible for the Annual Reports Act (likely the Chief Minister or Treasurer) is affected by new consultation duties. Before issuing annual report directions that affect the content of reports, the Minister must engage with the Aboriginal and Torres Strait Islander Elected Body, provide the proposed direction, seek recommendations, consider them, and respond in writing. This adds a procedural step that could delay direction-making. The Minister also must table both the direction and any recommendation and response in the Legislative Assembly within six sitting days (s 8(5)).

The elected body itself gains a formal consultative role in the direction-making process, but its recommendations are not binding. It may also be asked for recommendations on matters relating to Aboriginal and Torres Strait Islander peoples under s 9(1B)(b), which is broader than just the closing the gap content.

Indirectly, the Act affects all public sector employees through the requirement that SES members continually develop the Aboriginal and Torres Strait Islander cultural capability of their administrative units and the service. This likely translates into mandatory training, changes to policies and practices, and altered performance expectations for all staff. The duty to eliminate institutional racism may require systematic reviews of policies, procurement, service delivery, and hiring practices. Private contractors delivering public services may also feel ripple effects if their contracts require alignment with the NAOCG.

The Legislative Assembly is affected insofar as it receives reports and directions. The review requirement (s 253) imposes a deadline on the Minister to review and report.

The Act creates duties on public officials; it does not create new rights for private individuals. The primary duty is in s 8(3A): "An SES member must do their job in accordance with the closing the gap principle." This duty is expanded to statutory office-holders by s 151(1A). The closing the gap principle (defined in s 8(4)) imposes two types of obligations.

First, for NAOCG provisions relating to transformation or governance of government agencies, the SES member must implement those provisions. Implementation includes four specific sub-duties:

• continually developing and demonstrating their own Aboriginal and Torres Strait Islander cultural capability;
• continually developing the cultural capability of their administrative unit (and for the head of service, the service);
• promoting cultural safety for Aboriginal and Torres Strait Islander peoples;
• working to eliminate institutional racism in relation to Aboriginal and Torres Strait Islander peoples.

"Continually developing" suggests an ongoing process, not a one-off training. "Promoting cultural safety" and "working to eliminate institutional racism" are open-ended obligations that could be interpreted expansively.

Second, for other NAOCG provisions that relate to the SES member's job, the duty is alternative: implement those provisions or provide advice to the responsible Minister about implementing them. This allows flexibility but still requires either action or advisory engagement.

The duty is expressly limited: it does not affect the operation of any other Act and does not create or affect any other legal right (s 8(3B)). This means no private cause of action arises from breach. However, the note to s 8(3B) points to s 9(1)(c)(i) and (3), indicating that breach may constitute misconduct under the PSMA, triggering disciplinary processes. That gives the duty practical teeth for SES members and statutory office-holders.

Annual reporting duties are imposed on different actors:

• The head of service must include in the state of the service report a statement describing measures taken within the public sector to assist SES members and statutory office-holders to do their jobs in accordance with the closing the gap principle (s 5(2)(aa)).
• Each director-general must include in the annual report for their administrative unit a statement describing measures taken to implement the NAOCG, including priority reforms and responses to recommendations from reviews (s 6(2)(b)).
• Each public sector body must include a similar statement in its annual report (s 7(2A)).
• The Minister may direct a territory entity to include either a human rights statement or a closing the gap statement in its annual report (s 8(3)(h)). The Minister must consult the elected body before making such a direction (s 9(1A), (1B)).
• The Minister must present the direction and any recommendation and response to the Assembly within six sitting days (s 8(5)).

The elected body has a right to be consulted, to make recommendations in writing, and to receive a written response from the Minister. This is a procedural right, not a veto. The Minister must consider the recommendation but need not accept it.

The Act also imposes a duty on the Minister to review the amendments as soon as practicable after 1 January 2028 and to report within six months (s 253). That review provision itself expires on 30 June 2029, so the review is a one-off obligation.

The Act does not create new penalties or enforcement mechanisms. Instead, it relies on the existing misconduct framework under the PSMA. Breach of the closing the gap principle by an SES member or statutory office-holder may constitute misconduct under s 9(1)(c)(i) of the PSMA, which provides that a public sector member commits misconduct if the member contravenes a public sector principle. The closing the gap principle is now a public sector principle by virtue of new s 8(1)(c). For SES members specifically, s 9(3) of the PSMA (not amended by this Act) provides that misconduct includes a breach of a public sector standard or principle. The misconduct provisions allow for disciplinary action ranging from a reprimand to termination, depending on the severity. There is no civil penalty, fine, or criminal offence for breach.

The absence of private rights (s 8(3B)(b)) means that individuals who consider themselves adversely affected by a failure to implement the NAOCG cannot sue for damages or injunctive relief. Enforcement is thus internal to the public service. The Australian Public Service Commission or the head of service would handle complaints and investigations. The note to s 8(3B) flags this but does not create a direct avenue for third-party complaints. It is plausible that internal whistleblowers or employment-related grievances could trigger misconduct processes.

For the reporting obligations, the Annual Reports (Government Agencies) Act 2004 has its own enforcement regime. Section 36 of that Act (not amended) makes it an offence for a responsible person to fail to ensure that a required report is prepared and tabled within six months after the end of the reporting year. The maximum penalty is 50 penalty units (currently $8,000 in the ACT). Failure to include the new closing the gap statement could be a deficiency in the report, but whether it triggers the offence is unclear; the offence likely turns on failure to produce a report at all, not on content omissions. The Minister could also use direction powers to require correction.

The review provision in s 253 is a soft enforcement mechanism: the Minister must review and report, but there is no penalty for delay except political scrutiny. The provision expires on 30 June 2029, effectively requiring the review to be completed and reported before that date.

In summary, enforcement relies on internal disciplinary processes for SES members, potential prosecutions for non-production of reports, and political accountability through tabling and review.

The Act amends two Acts: the Annual Reports (Government Agencies) Act 2004 and the Public Sector Management Act 1994. It does not directly amend any other legislation, but it creates new interactions. First, it incorporates by reference the National Agreement on Closing the Gap, which is not an ACT statute but a multilateral intergovernmental agreement. The NAOCG is defined as "in force from time to time" and includes any future agreement under its clause 13 (s 8(4)). This means the substantive content of the closing the gap principle can change without further legislative amendment, raising questions of parliamentary oversight and delegated law-making. Courts may need to interpret the NAOCG as a factual document, not a legislative one, but the duty to implement its provisions gives it quasi-statutory force for SES members.

Second, the Act interacts with the Human Rights Act 2004. Annual reports for administrative units already require a statement on measures to respect, protect and promote human rights (s 6(2)(a)). The new s 6(2)(b) adds a separate statement on NAOCG implementation. Territory entities may be directed to include either a human rights statement or a closing the gap statement (s 8(3)(h)), effectively treating the two as alternatives. This could create conflicts where human rights obligations and closing the gap obligations point in different directions, though the Act does not resolve such conflicts.

Third, the Act interacts with the Aboriginal and Torres Strait Islander Elected Body Act 2008, which establishes the elected body. The amendment uses the defined term "elected body" from that Act (s 9(3) as amended). The consultation duties in s 9(1A) and (1B) operate alongside any existing consultation requirements for the elected body.

Fourth, the Act interacts with the Legislation Act 2001 for notification and tabling requirements. The annual report direction must be notified under the Legislation Act, and the Minister must table copies within six sitting days (s 8(5)). The dictionary amendments also incorporate the note about "State" including the Northern Territory.

Fifth, the misconduct provisions of the PSMA are engaged. Section 9(1)(c)(i) of the PSMA makes contravention of a public sector principle a form of misconduct. By elevating the closing the gap principle to a public sector principle, the Act brings it within that enforcement framework. This does not require amendment of the PSMA's enforcement provisions but does expand their scope.

Sixth, the Act may interact with employment law and industrial instruments. Developing cultural capability and eliminating institutional racism could affect recruitment, promotion, performance management, and termination decisions. The Fair Work Act 2009 (Cth) and the ACT's own anti-discrimination laws would apply. The closing the gap principle does not override those laws; s 8(3B) says it does not affect the operation of any other Act.

Seventh, the Act interacts with procurement and service delivery laws indirectly. The duty to eliminate institutional racism may require changes to how the ACT government procures services and delivers programs, potentially affecting contractors and grant recipients.

Finally, the Act includes a non-extinguishment clause (s 8(3B)(a)): the duty does not affect the operation of any other Act. This suggests that if there is a conflict between the closing the gap principle and another statute, the other statute prevails. This is a standard interpretive clause.

The Public Sector (Closing the Gap) Legislation Amendment Act 2025 is itself a new amendment Act. It was passed by the Legislative Assembly on 2 December 2025, notified on 15 December 2025, and commences on 1 July 2026. It inserts new provisions into two existing Acts. The Act has not been amended since enactment. The review provision in s 253 is a self-contained sunset clause requiring a ministerial review and report; that provision expires on 30 June 2029. The rest of the Act has no scheduled expiry. The Act's long title describes it as "An Act to amend the Annual Reports (Government Agencies) Act 2004 and the Public Sector Management Act 1994". It does not amend itself.

There is no litigation history because the Act commences on 1 July 2026. However, the structure of the Act gives rise to several potential litigation risks. The express exclusion of private rights (s 8(3B)(b)) means that individuals cannot sue for breach of the closing the gap principle. This likely precludes actions for damages, injunctions, or declarations by affected third parties. Challenges would more likely arise in the context of public sector disciplinary proceedings. An SES member or statutory office-holder facing misconduct allegations for failing to implement the NAOCG could challenge the scope of the duty or the interpretation of the NAOCG provisions. Courts would need to interpret the NAOCG as a non-statutory document incorporated by reference, which could be novel.

Another potential litigation area is the annual reporting requirements. If a director-general fails to include the required statement, an offence prosecution under s 36 of the Annual Reports Act could occur. The defence might argue that "measures taken" is too vague or that the NAOCG is not sufficiently accessible. However, given the Act provides a website reference (www.closingthegap.gov.au), a vagueness challenge might fail.

The consultation provisions for the annual report direction could be subject to judicial review if the Minister fails to consult or consider a recommendation from the elected body. The Act uses "must" (s 9(1B)), so failure could lead to a declaration that the direction is invalid. However, the elected body's recommendation is only about matters relating to Aboriginal and Torres Strait Islander peoples, and the Minister's duty is to consider and respond, not to accept. Judicial review would likely focus on procedural fairness.

The definition of "institutional racism" as outcome-based ("inequitable treatment and outcomes ... as a result of an entity's policies, practices and culture") could be challenged for overbreadth if it is applied to decisions that are not motivated by race. Litigants could argue that it imposes a disparate impact standard without clear legislative intent. However, s 8(3B) limits legal effect.

Overall, the Act is designed to limit litigation by denying private rights and relying on internal enforcement. That does not guarantee litigation will not occur; misconduct proceedings themselves can generate judicial review. The review requirement in s 253 may produce recommendations for amendment if litigation risks are identified.

Practitioners should watch for several traps. First, the duty applies only to SES members and statutory office-holders. It does not apply to all public servants. But the duty includes developing cultural capability of the administrative unit and the service, so its effects cascade down. Line managers may be directed to implement training or policy changes, but they themselves have no direct legal duty.

Second, the closing the gap principle incorporates the NAOCG "as in force from time to time", including future agreements under clause 13. This means the obligations can change without fresh legislation. An SES member could be bound by provisions negotiated by the Commonwealth and other parties over which the ACT has limited influence. The 2020 agreement has been reviewed; a replacement or amendment could expand duties.

Third, the Act creates no private rights of action. Even if an Aboriginal or Torres Strait Islander person is harmed by a failure to implement the NAOCG, there is no statutory remedy. Enforcement is through internal misconduct processes, which are not transparent or accessible to outsiders.

Fourth, the "institutional racism" definition is outcome-based: inequitable treatment and outcomes resulting from policies, practices and culture. This is broader than intentional discrimination. A policy that has a disparate impact could be deemed institutional racism even if neutrally designed. The duty to "work to eliminate" it could be interpreted as requiring proactive review of all policies.

Fifth, "cultural safety" is defined by reference to NAOCG part 12, which is not reproduced in the Act. An SES member must know that external document. The same applies to "National Agreement on Closing the Gap" - it is a 50+ page intergovernmental document. Practitioners must locate and interpret it.

Sixth, the duty under s 8(3A) does not create a statutory right, but failure may be misconduct. This creates an asymmetry: an SES member could be disciplined for non-compliance, but cannot defend their actions by claiming resource constraints or conflicting duties unless those are recognised in the NAOCG. The PSMA's misconduct framework has its own standards of reasonableness, but the closing the gap principle is mandatory.

Seventh, the annual reporting obligations are not well-defined. The phrase "measures taken to implement the National Agreement on Closing the Gap" is broad. What counts as a measure? Training, policy changes, funding decisions, new procurement criteria? Inclusion of "including measures taken ... to implement the priority reforms ... and in response to any recommendations ... in any review of progress under the agreement" (s 6(2)(b)) suggests a wide reach. Reports could become lengthy or formulaic.

Eighth, the consultation obligation on the Minister before making an annual report direction is now compulsory (s 9(1A) uses "must"). But the Minister may issue a direction only after responding to the elected body's recommendation or after 30 days if no recommendation is made (s 9(1) as amended). This creates a minimum 30-day waiting period for directions that involve closing the gap content. If the elected body makes a recommendation, the Minister must respond in writing; that response must be tabled. This process could delay annual report directions and increase political sensitivity.

Ninth, the review clause (s 253) is narrow: it reviews the "operation of amendments made by this Act", not the substance of the NAOCG or the outcomes. The report is due within six months after the review starts, but the review must start "as soon as practicable after 1 January 2028". That gives the Minister discretion on timing.

Tenth, the definition of "National Agreement on Closing the Gap" includes "any future agreement mentioned in clause 13 of the agreement". Clause 13 of the 2020 agreement allows for a new agreement to be negotiated to replace the current one. If that happens, the old agreement is replaced, and the new agreement automatically applies. This could happen without any ACT legislative scrutiny, creating a significant delegation of power.

Compliance involves two distinct tracks: substantive compliance by SES members and statutory office-holders, and procedural compliance in annual reporting and ministerial direction-making.

For SES members and statutory office-holders, the first step is to understand the NAOCG. The head of service should ensure that each SES member and statutory office-holder receives a copy of the NAOCG (available at www.closingthegap.gov.au) and briefings on its provisions, especially those relating to transformation or governance of government agencies. The four specific actions under s 8(4)(a) require:

• Developing and demonstrating one's own Aboriginal and Torres Strait Islander cultural capability - likely through formal training, self-assessment, and performance development plans.
• Developing the cultural capability of the administrative unit (and the service, for the head of service) - this involves ensuring all staff have access to appropriate training, that policies reflect cultural capability principles, and that recruitment and retention practices support this.
• Promoting cultural safety - this means creating an environment where Aboriginal and Torres Strait Islander peoples feel safe to be themselves. This may require workplace culture reviews, complaint mechanisms, and leadership modelling.
• Working to eliminate institutional racism - this requires systematic review of policies, practices and culture to identify and correct inequitable outcomes. SES members should document these efforts, as they may be needed for annual reporting.

For NAOCG provisions that do not relate to transformation or governance, the SES member must either implement those provisions or advise the Minister about implementation. This is a binary choice. Documentation of advice given is prudent. The SES member should track which provisions fall into which category and keep records.

Non-compliance can lead to misconduct proceedings. Therefore, SES members should seek legal advice if uncertain about the scope of the duty. They should also ensure they have adequate resources to comply; if resources are inadequate, they should escalate the issue in writing to avoid being held personally liable.

For annual reporting, administrative units and public sector bodies need to prepare the new statements. The director-general should coordinate with relevant policy areas to identify measures taken to implement the NAOCG during the reporting year. Measures should be concrete: funding decisions, policy changes, training programs, new procurement criteria, community engagement, etc. The statement must specifically address priority reforms under the NAOCG and any responses to recommendations from reviews of progress. Those reviews include the Joint Council on Closing the Gap's annual progress reports. The head of service must similarly identify measures taken within the public sector to assist SES members and statutory office-holders in complying with the closing the gap principle - this could include training programs, guidance materials, and performance management systems.

For territory entities, the Minister may direct inclusion of a closing the gap statement. Entities should be prepared to produce such a statement if directed; they should already be gathering data on measures taken.

The Minister (or the Minister's department) must comply with the new consultation process before making annual report directions. The Minister should:

• Prepare a proposed direction.
• Provide a copy to the Aboriginal and Torres Strait Islander Elected Body.
• Ask in writing for recommendations on matters relating to Aboriginal and Torres Strait Islander peoples.
• Wait at least 30 days for a recommendation.
• If a recommendation is received, consider it and respond in writing, including any revision to the direction.
• After completing that process, make the direction under s 8.
• Notify the direction under the Legislation Act.
• Within six sitting days, table the direction and any recommendation and response.

The Minister must also conduct the review required by s 253 after 1 January 2028. The review should assess whether the amendments achieved their intended effect in terms of implementation of the NAOCG and the closing the gap principle. The report must be presented to the Legislative Assembly within six months after the review starts. The review provision itself expires on 30 June 2029, so the review must be completed and reported before that date.

All entities should monitor changes to the NAOCG, as the definition includes future agreements. If a new agreement is negotiated, the duty content changes automatically. The review process may identify necessary amendments.

Finally, because the duty does not create private rights, compliance is primarily internal. Entities should however maintain thorough records of all measures taken, as these may be requested by the auditor-general, parliamentary committees, or the Minister for the review. Failure to prepare required annual report statements could lead to prosecution under s 36 of the Annual Reports Act.