Silver Review Implications for VPS Financial Decision Makers: Guardrails, Savings and Financial Stewardship

The new fiscal reality for Victoria

The Silver Review confirms what many VPS finance leaders have already felt: expenditure growth, rising debt and higher interest costs are constraining Victoria’s operating capacity. Departments and agencies can no longer rely on incremental baseline growth or ad hoc funding decisions; they must operate within tighter guardrails and show that every dollar contributes to clearly defined community outcomes.

For senior financial decision makers, this means resetting expectations about what is ‘funded and ongoing’, what must be reprioritised, and how risk is managed with far less headroom for unexpected pressures. It also requires more rigorous conversations between executives, Deputy Secretaries and Secretaries about tradeoffs, timing of savings, and the risks of underfunding critical services.

Enhanced financial management principles

The Review proposes strengthened financial management principles and annual budget “rules” that reshape how the system allocates and manages resources, including a single annual decision window for major funding decisions, deeper scrutiny of base expenditure, reduced reliance on fixed term programs and more systematic expenditure evaluation.

For VPS finance leaders, this implies a shift from reactive, bid driven budgeting to a more planned, cyclical approach that emphasises long-term sustainability. Budget processes, timetables and internal governance will need to align with these principles, with clearer decision making forums, better integration of strategic planning and budgeting, and a stronger reliance on evidence when seeking new or continued funding.

Government commitments and financial accountabilities

The Government has broadly endorsed the direction of the Silver Review and committed to delivering multiyear savings across workforce, entities and programs while maintaining essential services. As these commitments flow through to budgets, departmental and agency finance leaders will be expected to ensure that plans can realistically deliver required savings and that financial risks are being identified and managed.

This demands stronger financial governance: clearer delegations and decision rights, better visibility of financial performance across portfolios, and more robust challenge of assumptions underpinning savings plans. CFOs will also play a central role in identifying and informing the financial implications of reforms to Secretaries, Deputy Secretaries, Audit and Risk Committees and central agencies.

Impacts on departmental and agency finance functions

The Review’s focus on entity consolidation, workforce changes and digitisation will significantly affect how finance functions operate. More rigorous expenditure evaluation will lift demand for high quality financial and nonfinancial data, analytical capability and program level insights, with finance teams working more closely with policy, operational and transformation colleagues to understand cost drivers, demand trends and impacts on service outcomes.

At the same time, finance systems, data structures and reporting will need to support this more analytical and riskaware approach. This includes strengthening chart of account design, improving the accuracy and timeliness of financial reporting, and ensuring that key indicators such as unit costs, productivity measures and benefits realisation metrics are visible and reliable for both departmental executives and agency boards.

Key implementation risks for finance leaders

The scale and pace of change contemplated by the Silver Review creates real risks for decision-makers and finance leaders to manage. These include:

• Savings being implemented without a clear strategy, leading to shortterm reductions that erode critical capabilities or create hidden costs elsewhere.
• Unintended impacts on frontline services, vulnerable cohorts or regulatory functions if financial pressures override risk and service considerations.
• Weak or inconsistent benefits tracking, making it difficult to demonstrate whether savings have been delivered and whether reforms are improving efficiency or outcomes.
• Finance functions being stretched by parallel demands – business as usual reporting, reform design and assurance over implementation – without adequate re-prioritisation or support.

Addressing these risks requires finance leaders to embed structured financial risk assessments into reform planning, strengthen internal reporting on savings progress and impacts, and ensure that financial controls and reconciliations are not weakened in the push for change.

How finance leaders can lead ‘good cuts’, not ‘bad cuts’

In this context, VPS leaders – including CFOs in agencies and their departmental counterparts – have a critical leadership role in shaping the quality of savings, not just their quantum. This includes:

• Using program evaluations and costtoserve analysis to identify where expenditure is misaligned with outcomes, and where efficiency gains are genuinely achievable.
• Applying clear prioritisation frameworks that protect high impact services and cohorts, and that distinguish between temporary deferrals and sustainable reductions.
• Supporting outcome based budgeting approaches that link funding to measurable service objectives, rather than historical allocations alone.
• Leveraging opportunities for process standardisation and shared services, particularly in corporate and back office functions, as triggers for full process redesign and optimisation, rather than simply centralising existing inefficiencies.
• Crossfunctional collaboration will be essential. Finance leaders will need to work closely with technology leaders to ensure finance systems and data are fit for purpose, and with risk management and assurance functions to align financial governance and reporting with broader risk and assurance frameworks.

Strengthening governance, risk and controls in finance

As financial guardrails tighten, strengthening governance, risk and controls within finance functions is as important as identifying savings. Finance leaders should consider:

• Reviewing financial governance structures, committees and delegations to ensure they support faster, better informed decisions aligned to the new budget rules.
• Reexamining risk management frameworks to ensure financial risks related to restructuring, entity changes and digital initiatives are clearly articulated and monitored.
• Testing the resilience and efficiency of core finance processes – budgeting, forecasting, month end, reconciliations and management reporting – under new spans of control and staffing levels.
• Maintaining regular engagement with internal audit and Audit and Risk Committees so that key risk areas are independently assessed and control weaknesses are addressed before they lead to financial misstatements or service disruption.

How Protiviti Australia can help

Protiviti understands that each Victorian department and public sector entity is confronting the Silver Review from a different financial starting point, with distinct budget pressures, risk profiles and service priorities. That’s why a one size fits all approach to financial governance and assurance will not work.

Our public sector specialists bring deep experience, independent insight and a collaborative style to help finance leaders strengthen financial stewardship in a constrained environment. We support leaders across the full financial management cycle, including:

• Review and uplift of financial governance structures, delegations and decision making forums.
• Assessment of budgeting, forecasting and basespend review processes.
• Design and review of financial performance, savings and benefits tracking reporting.
• Assurance and risk assessments over major savings programs, restructures and consolidation initiatives.
• Targeted reviews of finance systems, data quality and key financial controls.

Our team has extensive experience working with state and federal agencies on high profile reform, savings and transformation programs. Our focus is on helping finance leaders navigate complexity, meet governance and assurance obligations, and deliver savings plans that are transparent, sustainable and aligned with public value.

What’s next in the series?

This blog has explored the implications of the Silver Review for VPS finance leaders and decision-makers, highlighting the need for strengthened financial governance, more rigorous budgeting and evaluation, and a deliberate focus on “good cuts” that protect public value. The final blog in this series will examine how risk and assurance leaders can respond:

• Blog 4: Assuring the Silver Review Reforms – The Critical Role of Risk Management and Assurance will discuss how leaders, including Audit and Risk Committees and Chief Risk and Audit Officers, can provide strategic assurance over workforce, entity, digital and change management reforms, and elevate internal audit as a key partner in safeguarding public value.

If you missed blog 1 in this series, read Resetting the Victorian Public Service: What the Silver Review Means for VPS Leaders. For blog 2, visit Digitising the VPS – Shared Platforms, AI and the Responsibilities of Technology Leaders.