Every Australian jurisdiction has imposed a duty of care and diligence on directors and other officials of public sector entities. This duty is modelled on the duty applicable to directors and officers of corporations and plays a significant role in setting governance standards in the public sector. This article examines the interpretation of the duty and its effectiveness in setting governance standards across the public sector. It argues that there is evidence of an emerging community expectation that entities which carry out governmental functions or manage public resources should be required to take reasonable care and diligence in the exercise of those functions, but that this standard has received only incomplete recognition in Australian legislation. The article argues further that the public sector duty of care presents significant difficulties in interpretation given that some of the key concepts relating to the private sector duty are not readily translatable to the public sector and that the mechanisms for enforcement in every jurisdiction are inconsistent, ineffective and lack a clear policy rationale. The consequence is that the duty of care and diligence does not play a significant role in setting governance standards in the public sector.
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