Audit Program 2016-17
The following audits have been completed or are currently in progress. Further information will be added as it becomes available.
The Government Advertising Act 2011 requires the Auditor-General to conduct a performance audit on at least one government advertising campaign run in each financial year. These audits must include, but are not limited to, assessing whether a government agency is carrying out activities in relation to government advertising campaigns effectively and doing so economically and efficiently and in compliance with this Act, the regulations, other laws and the government advertising guidelines.
Red tape reduction
The government committed to reducing regulatory costs for business and the community by $750 million in annual terms by June 2015. This target was part of the NSW Government's 2021 State Plan goal to reduce red tape and increase the competitiveness of doing business in NSW. Actions to deliver on this target included:
- setting red tape reduction targets for all NSW Government departments
- including a requirement in department secretary contracts for reporting against the target
- requiring that the number of principal Acts/regulations repealed in a calendar year is at least twice the number of new principal Acts/regulations (‘One on, two off’ policy)
- targeted sector reviews
- regulation reviews by the Independent Pricing and Regulatory Tribunal.
This audit will assess whether government initiatives and processes to prevent and reduce red tape were effective. The audit will examine the following:
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- Did savings initiatives effectively reduce red tape?
- Did the ‘One-on, two-off’ policy effectively reduce red tape?
- Does the Department of Premier and Cabinet effectively review regulatory proposals to ensure they prevent and reduce red tape?
Implementation of the Government’s Program Evaluation Framework
In 2013, the NSW Government introduced program evaluation as a strategy to improve transparency and justification for government programs. The stated objective of program evaluation was for New South Wales to lead the way in evidence-based policy, by ensuring that evaluation is an integral part of managing government programs at every stage of the policy cycle. Agencies must identify their programs and assess the level of evaluation they are required to undertake according to criteria published in the 2013 NSW Government Evaluation Framework and the 2016 Evaluation Guidelines. Departments must aggregate this information for their clusters and submit an annual schedule to the Expenditure Review Committee of Cabinet, outlining evaluations commencing, in progress or to be completed within the year.
This audit will assess how well five departments ensure that their cluster’s annual evaluation schedule meets the criteria for program selection and prioritisation. We will examine progress towards achieving the government’s stated objective for program evaluation. The audit will not seek to assess the quality of program evaluations, as this is being reviewed by NSW Treasury.
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Contingent workforce: procurement and management
Government agencies spend a significant amount of money buying goods and services to help them deliver crucial services and programs for the community. Part of this spend includes people who work for agencies on a non-permanent basis, also called a contingent workforce. Agencies need contingent staff to provide skills and capabilities that they do not have, for example, to fill a position while a staff member is on leave or where specialist knowledge is needed. The government has sought to reform how agencies purchase contingent staff and in 2013 introduced a contingent workforce pre-qualification scheme.
This audit will assess whether agencies’ approach to purchasing and managing their contingent workforce meets business needs and delivers value for money. The audit will answer the following questions:
- do agencies have effective oversight of their contingent workforce and ensure that it meets their business needs?
- do agencies’ arrangements for purchasing and managing their contingent workforce deliver value for money?
By ‘contingent workforce’ we mean people employed by a contingent labour supplier under the 0007 prequalification scheme. The audit will not specifically assess:
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- contingent workforce procurement that is not part of the pre-qualification scheme
- other labour procurement schemes such as Performance and Management Services
- NSW Procurement’s role in monitoring the Government’s Contingent Workforce Strategy
- the operations of suppliers i.e. recruitment agencies.
- However, we may comment on these issues/areas where they affect our findings or to provide context.
Planning for school infrastructure
Schools in some areas, particularly Sydney’s Inner West and North Shore, are facing overcrowding. Across the State, the design of some schools and classrooms may not suit contemporary teaching practices. It is important for educational outcomes that these issues are addressed, and that schools and classrooms are located where required and are suited to modern teaching practice.
A strategic objective of the 2014 State Infrastructure Strategy Update is to ‘equip growing urban and regional populations with the modern schools and training infrastructure required to deliver educational service for a competitive, innovative economy’.
This audit will assess whether the Department of Education has a strategy and implementation model to ensure it has sufficient fit-for-purpose student learning spaces when and where needed. In making this assessment, the audit will examine whether the Department has:
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- identified the demand for future learning spaces
- determined the infrastructure required to meet demand
- developed an implementation model to provide learning spaces when and where needed and to do so economically
- secured the funding needed to provide required learning spaces.
Use of ICT to improve teaching and learning
Rapid and continuing advances in ICT are changing the ways people share, use, develop and process information and technology. In this digital age, young people will use and interact with ICT in a range of learning, work and social contexts. Schools have responded to this by integrating modern and technology-enabled learning into school curricula. To ensure students benefit from new approaches, schools and teachers need to plan and use ICT resources effectively.
This audit will assess how well NSW schools are using ICT to improve teaching and learning. The audit will focus on:
the Department’s plans, policies and strategies for use of ICT in schools
support and training provided to teachers to integrate ICT into classroom practice
monitoring, reporting and evaluation of the impact of ICT on student learning.
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National Disability Insurance Scheme – Ensuring readiness and capability of non-government sector
There are many people with disability who currently receive a range of services from Ageing, Disability and Home Care (ADHC) within the Department of Family and Community Services (FaCS). These services include early intervention programs, supported accommodation, assistance with independent living, advocacy, and case management. Over the next two to three years, ADHC's role in the disability area will reduce as the National Disability Insurance Agency assumes these responsibilities as part of the introduction of the National Disability Insurance Scheme (NDIS).
In its ‘Ready Together’ strategy, the NSW Government has committed to a sector which delivers contemporary, quality services and supports to assist people to live life their way. The strategy says that providers will be supported to transform their services to reflect the transition to self-directed supports and individualised funding approaches.
This audit will review the effectiveness of the FaCS’ work to manage the risks of transition to the NDIS in New South Wales by building the readiness of the non-government sector. The audit will also consider broader lessons that can be learned about government’s use of the non-government sector to deliver services.
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Asset management in Health
This audit will examine how efficiently and effectively NSW Health and Local Health Districts manage equipment used for the diagnosis or treatment of patients. This may include:
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- functional planning of equipment to meet maximum utility, including the routine scheduling and availability of equipment
- strategic planning of equipment to ensure demand can be met in a timely and equitable way
- rules, policies and practices that apply to the buying, leasing and maintaining equipment.
Palliative care is an increasingly important part of the health system. The demand for palliative care services is increasing due to the ageing of the population and increases in the prevalence of cancer and other chronic diseases that accompany ageing.
This audit will look at whether people in New South Wales receive high‑quality palliative care that is timely, coordinated, and responsive to their needs and wishes. This may also include an assessment of progress toward meeting the key objectives set in the ‘NSW Government plan to increase access to palliative care 2012–2016’.
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Ensuring food retail businesses comply with food safety standards
The NSW food industry was worth $113.0 billion in 2015. The NSW Food Authority (NSWFA) is responsible for regulating the production, transportation and sale of food in NSW. It is also responsible for ensuring food is safe and fit for human consumption. NSWFA has Food Regulation Partnerships (FRPs) with 152 local councils to ensure food retail businesses comply with food safety standards. Councils inspect and monitor food retail businesses on NSWFA’s behalf. The level of monitoring councils are required to provide utilises a risk-based approach developed by NSWFA. Food retail businesses are defined as businesses that sell ready to eat prepared food to consumers and include cafes, restaurants, clubs, pubs, takeaways and bakeries.
This audit will assess the effectiveness of NSWFA in ensuring food retail businesses comply with food safety standards. This is primarily done through the FRPs. We will look at these agreements, and policies and procedures established by NSWFA, to ensure these functions are fulfilled.
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Sale and lease of Crown land
This audit will focus on the Department of Primary Industries, assessing whether it is managing transactions involving the sale or lease of Crown land effectively. In assessing this, we will consider the Department’s:
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- overall strategic plan for the management of Crown lands, including how well this is communicated and understood, and how effectively performance against outcomes is measured and reported;
- engagement with stakeholders, including whether decisions are made transparently and communicated clearly; and
- governance framework for decision making, including the role of decision making delegation, assurance and review.
Mining rehabilitation security deposits
Companies authorised by the NSW Department of Industry to undertake mining activities must pay a security deposit prior to starting mine operations. The deposit is designed to cover the full estimated costs of rehabilitation, to the standard set by their approvals, in the event of them defaulting on their rehabilitation obligations. To assist the Department in determining the security deposit amount for each site, mining companies are required to provide an estimate of total rehabilitation costs. The Department is responsible for verifying the adequacy of these rehabilitation cost estimates.
This audit will assess whether the Department maintains adequate security deposits to cover the liabilities associated with mining rehabilitation, including the decommissioning of infrastructure and any long term post-closure management requirements.
In making this assessment, the audit will examine whether the Department:
- has a clear understanding of rehabilitation outcomes for each major mine site
- undertakes ongoing reviews of the extent of disturbance and rehabilitation at each major mine site
- maintains reasonable estimates of rehabilitation costs, including contingencies
- can access adequate security deposits to cover the costs of rehabilitation when needed.
The audit will examine larger mineral mines including open cut and underground metalliferous and coal mines but will not cover mineral exploration, and petroleum and CSG mining.
The audit will not examine the appropriateness of consent conditions set by the Department of Planning and Environment, but will consider how these are used by the Department of Industry to identify appropriate rehabilitation outcomes.
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Planning Assessment Commission determinations
The Planning Assessment Commission (PAC) was established in 2008 as an independent body under the Environmental Planning and Assessment Act 1979. It makes decisions on major development applications where either local council objects to the proposal, more than 25 public submissions have been made, or a reportable political donation has been declared. Around half the applications referred to the PAC relate to mining or the resources sector, with the remaining relating to urban development.
This audit will assess the extent to which the Planning Assessment Commission’s decisions on major development applications are made in a consistent and transparent manner. The audit will answer the following questions:
- Does the PAC have sound processes in place to help it make decisions on major development applications that are informed and made in a consistent manner?
- Does the PAC ensure that its decisions are free from bias and transparent to stakeholders and the public?
By ‘decisions on major development applications’ we mean planning determinations made under the EP&A Act on behalf of the Minister for Planning. By making decisions ‘in a consistent manner’ we mean that the PAC is consistent in its approach, not that outcomes are consistent.
The audit will not specifically assess:
- the appropriateness of individual decisions
- PAC’s advice and review functions
- the Department of Planning and Environment's role in the planning process.
However, we may comment on these issues/areas where they affect our findings or to provide context.
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Preventing and managing worker injuries
Operational staff in the NSW Police Force and Fire and Rescue NSW are more likely to suffer injuries and emotional stress compared to their other government workers, due to their high-risk work environments. The way agencies manage injured workers directly affects the outcome of the injury, and the psychological wellbeing of those injured, as well as the productivity and morale of other staff. Injury prevention and management also impacts on staffing budgets and the delivery of front line services.
This audit topic is material, as workers compensation and death and disability schemes costs in the two services amount to over $500 million annually. This audit may examine whether the NSW Police Force and Fire and Rescue NSW:
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- have programs and practices that prevent injury and provide for early intervention
- are reducing the number of medical discharges of injured workers
- are reducing the length of time off work and help injured workers return to work more quickly
- have policies to provide for alternate or light duties where required
- are reducing workers compensation premiums and death and disability scheme costs.
Support programs and services in prisons
According to Report on Government Services (ROGS) data, approximately 46 percent of inmates in NSW reoffend and return to prison. This adds significantly to the costs of custodial services, and to the costs to the broader community arising from preventable reoffending. NSW has the second-highest rate of reoffending of all states and territories, and this rate has steadily increased over the past five years.
Providing access to resources and services in prisons to improve rehabilitation outcomes has been shown to reduce the likelihood of reoffending. Services and amenities in prisons also assist in keeping inmates gainfully occupied, and can contribute to reducing disturbances that arise from boredom and inactivity. However, in April 2015, the Inspector of Custodial Services found that available programs and services had not increased in step with increases in the prison population.
This audit may assess the availability, efficiency and effectiveness of support programs in adult prison, including targeted rehabilitation support programs, vocational and employment programs, and appropriate amenities and services.
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CBD and South East light rail project
Transport remains a key focus of the NSW Government's infrastructure priorities. These projects represent a major investment and financial risk for the State, and therefore robust planning is essential to ensure that projects deliver promised public benefits, and value for money for the state.
In December 2012, the NSW Government announced a light rail system would be built through the Sydney CBD to Randwick and Kingsford, at an estimated cost of $1.6 billion. The CBD and South East Light Rail (CSELR) project is a large capital works project, with potentially significant economic, environmental and social impacts for the State.
This audit will assess how well Transport for NSW ensured that the planning and procurement for the CSELR project achieved value for money within the parameters set by the NSW Government.
To answer the audit objective, the audit will focus on whether TfNSW ensured that:
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- project planning was robust
- changes to the project scope and cost were justified and represented best value for money
- appropriate probity and due diligence was undertaken in the tendering process.
Getting rail passengers to their destinations on time
A NSW Government priority is to maintain or improve reliability of public transport services over the next four years. On a typical weekday, trains deliver 44 per cent of employees in the North Sydney–Sydney CBD–Redfern employment spine to their jobs. The NSW Long-Term Transport Master Plan forecasts that rail patronage will increase by 26 per cent between 2012 and 2031. This growth will represent a significant challenge to getting rail passengers to their destinations in a timely manner.
This audit will assess whether rail agencies have plans and strategies to maintain or improve performance in getting the growing number of rail passengers to their destinations on time. The audit will focus on:
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- actions and plans to address any current performance shortcomings in getting rail passengers to their destinations on time
- plans to get rail passengers to their destinations on time in future, in the context of predicted patronage growth
- plans to improve communication to passengers to assist them to get to their destinations on time.
Delivering major projects – NorthConnex
The NorthConnex motorway is a nine kilometre tolled tunnel linking the M1 Pacific motorway at Wahroonga to the Hills M2 motorway at West Pennant Hills. The $3.0 billion project, consisting of a construction budget of $2.65 billion, in addition to land and project delivery costs, is funded through a public private partnership. The NSW Government and Australian Government will each contribute up to $405 million to the project. The public private partnership funding model for the project initially came to the NSW Government as an unsolicited proposal.
The NorthConnex motorway was the first infrastructure project assessed through the unsolicited proposal process, and is a major infrastructure project in NSW.
This audit, which was included on the performance audit forward program two years ago, follows on from the 2015–16 performance audit on the assessment and governance framework for unsolicited proposals in New South Wales. The audit on unsolicited proposals found that that there was a lack of clarity about what regard government gives other relevant procurement processes and approval requirements when forming governance arrangements for unsolicited proposals.
The audit will assess whether the process used to determine the NorthConnex funding model adequately considered value for money for taxpayers and road users.
The audit will answer two questions, each with its own criteria.
1. How did the assessment of the North Connex funding model ensure value for money for NSW taxpayers?
- The processes used to estimate the initial project scope and budget were robust
- The use of traffic modelling, including as part of negotiating tolling concessions, was consistent with best practice and government requirements
- The process used to determine the NSW Government's contribution to the project cost was reasonable
2. Did the assessment adequately consider the overall impact of tolling arrangements to road users and the community?
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- The assessment considered the equity of tolling arrangements for road users
- The assessment considered the impact of tolling arrangements across the metropolitan road network
Sydney region road maintenance contracts
Roads and Maritime Services (RMS) is responsible for the Sydney region road network, with over 2,600 kms of roads and associated road corridor infrastructure such as bridges, tunnels and drainage structures. This network is divided into three geographical areas: West zone, South zone and North zone.
RMS has outsourced road maintenance for the North zone through a Performance Specified Maintenance Contract (PSMC) since 1995.
In late 2013, RMS awarded separate road maintenance contracts for the West and South zones, with full services commencing in March 2014. By outsourcing road maintenance in these zones, the NSW Government aimed to improve the efficiency and effectiveness of road maintenance delivery.
The contracting out approach RMS adopted for the West and South zones, termed Stewardship Maintenance Contracts (SMCs), is based on an alliance model. The contract uses a mixture of fixed price, target cost and cost plus as payment mechanisms, depending on the predictability of the services involved. The SMCs, while still performance based, are broader in scope than the current PSMC as they include specific road and road infrastructure upgrades.
This audit will assess whether RMS has realised the expected benefits of outsourcing road maintenance for the Sydney Region West and South zones under Stewardship Maintenance Contracts.
We will address the audit objective by assessing whether:
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- RMS’s decision to adopt the SMC model was justified
- SMCs include performance indicators and incentives which promote efficiency and effectiveness
- RMS collects high quality information on contractor performance and action is taken to correct performance deficiencies
- expected net benefits are being achieved.