Executive summary

	The focus of our audit
	Our 2003 ‘Protecting our rivers’ audit examined whether the water quality of New South Wales rivers was efficiently and effectively protected against unacceptable levels of pollution. In this follow up audit we examined whether there had been progress in addressing the recommendations of our 2003 audit. We also examined whether a monitoring system had been established to measure river health and water quality of NSW rivers.
	By the time of our audit in 2003, agencies had been taking action to reduce the quantity of pollutants reaching rivers for more than 20 years. They considered that their actions had been effective. But they could not measure the effectiveness of their actions in every river system, as they had not established a comprehensive monitoring system to measure water quality or river health.
	Our 2003 audit found there were significant gaps in the monitoring and evaluation of water quality. It was not possible, using the information available, to gauge the health of all rivers, the main risks to rivers or strategies for managing those risks. We also considered that the existing arrangements for managing water quality lacked the structure to ensure success. There was no lead entity to coordinate efforts to protect river water.
	We recommended that the Government establish a lead entity with an appropriate governance structure and resources for implementing the State’s objectives for water quality. The lead entity should develop: § a framework for coordinated management of rivers § a State river health and water quality strategy including a monitoring system for river water quality § a plan to limit and reduce pollution in rivers, particularly diffuse source pollution.
	We also recommended that the Government establish an independent environmental audit of river water quality.
	Audit opinion
	At the time of our 2003 audit agencies were unable to measure the water quality in NSW rivers as they had not established a comprehensive and ongoing monitoring system for water quality. Agencies are now developing a monitoring system to measure the progress against the State Plan 2006 target to improve the condition of riverine ecosystems by 2015. It may not be possible to identify an overall trend in the condition of riverine ecosystems by the State Plan target date of 2015. This is because riverine ecosystems do not respond rapidly to change in the environment. A long period of time is required to collect sufficient data to establish a baseline for all indicators being used and to determine trends, particularly given the prolonged drought.
	The State Plan 2006 river ecosystems target to improve the condition of riverine ecosystems by 2015 will provide a clearer basis for agency accountability than the previous guidelines on selection of water quality and river flow objectives.
	Agencies are now implementing the recommendations of our 2003 audit as part of their program to achieve the State Plan 2006 target for the condition of riverine ecosystems.
	The Government has appointed a lead entity, the Natural Resources and Environment CEOs Cluster Group (NR&E CEO Cluster Group) to coordinate achieving the 13 natural resource targets in the State Plan 2006, including the target for the condition of riverine ecosystems. The NR&E CEO Cluster Group is striving to achieve this target. In our view the NR&E CEO Cluster Group lacks the governance structure and resources for the long program required as it has no direct funding and cannot direct agency priorities. However, the agencies advise that the NR&E CEO Cluster Group is responsible to the Premier for achieving the natural resources targets. The CEOs on the NR&E CEO Cluster Group will agree on allocation of tasks to agencies and the individual CEOs can negotiate priorities and budget allocations for their tasks within their own agencies.
	The Government responded to our 2003 audit recommendation to establish an independent environmental audit of river water quality. In late 2003 it established the Natural Resources Commission (NRC) to undertake independent audits of natural resources. The NRC is currently required to report against the 13 statewide natural resources targets in the State Plan 2006. The NRC has legislative capacity to undertake audits of other natural resource management plans and issues, as required by the Minister. We believe that the NRC would be an appropriate entity to undertake such reviews.
	Key Audit Findings
Chapter 1: Measuring river health and water quality	Can NSW agencies now measure whether there has been an improvement in the river health and water quality of NSW rivers?
	Agencies are establishing a monitoring system for the State Plan 2006 target: ‘By 2015 there is an improvement in the condition of riverine ecosystems’. This target is a further development from the water quality and river flow objectives that applied at the time of our 2003 audit. The monitoring system will measure trends in the condition of river ecosystems, initially using fish, macroinvertebrates and hydrology indicators. The condition of riverine ecosystems indicates the overall condition and health of the river.
	The approach of monitoring the condition of riverine ecosystems to indicate river health was developed for the Murray Darling Basin Commission’s Sustainable Rivers Audit of rivers in the Murray Darling Basin, which commenced in 2004.
	NSW agencies have implemented the Sustainable Rivers Audit approach within the river valleys of the Murray Darling Basin. They have commenced a program of monitoring the State’s coastal rivers using the same methodology. Additional indicators of river health are being developed to add to the Sustainable Rivers Audit approach – riverine vegetation and river physical form. They are also implementing a new water quality monitoring program that will eventually provide a statewide coverage for turbidity, nutrients and salinity.
	It is not yet clear how long it will take to demonstrate valid trends in the overall condition of riverine ecosystems. Riverine ecosystems do not respond rapidly to change in the environment and are affected by variability of climate, such as the severe drought since 2001. Agencies expect to take until about 2012 to effectively establish a meaningful baseline for indicators being used for assessing river health, and then further time for monitoring and analysis to establish the trend. Monitoring that is underway is expected to present a snapshot of the current condition of river systems across NSW and for each Catchment Management Authority area by the end of 2008.
Chapter 2: Progress in addressing the recommendations of the 2003 audit	Has there been progress in addressing the recommendations of the 2003 audit?
	We made a number of recommendations in our 2003 audit to improve the protection of water quality of NSW rivers. The Government and the agencies are now implementing our 2003 audit recommendations as part of the program to achieve the State Plan 2006 target to improve the condition of riverine ecosystems by 2015.
	The 2003 recommendations (in bold) and our findings on the actions being taken to implement them are:
	We recommended that the Government establish a lead entity to implement the State’s objectives for river health and water quality. The Department of Environment and Climate Change has overall responsibility for leading the response on Priority E4 of the State Plan 2006 and reporting on progress. Priority E4 contains 13 State Plan natural resource targets, including the target to improve the condition of riverine ecosystems by 2015. The Natural Resources and Environment CEOs Cluster (NR&E CEO Cluster Group) is lead entity/coordinator for all 13 natural resources targets.
	and that the lead entity: § develop a framework for coordinated management of river health and water quality The Water CEOs Group (now replaced by the NR&E CEO Cluster Group) agreed to a draft framework document that broadly describes the responsibilities of agencies involved in managing river health and water quality.
	§ develop a strategy to define the role of the water quality objectives, call for a formal risk assessment of rivers and strengthen systems for water quality monitoring the State Plan 2006 target includes a target for the condition of riverine ecosystems and guidelines have been issued to define the role of the water quality objectives no formal risk assessment of NSW rivers has been undertaken since 1997 the agencies are developing a comprehensive statewide monitoring system for the State Plan 2006 target for river health that they expect to be fully operational in 2008-09. Valid trends may not be evident in all indicators by 2015 – the State Plan 2006 target date to achieve improvement.
	§ develop a plan for pollution, particularly diffuse source pollution. The agencies have advised that diffuse source pollution is the main source of pollution to rivers remaining to be addressed. The lead entity has prepared a statewide draft plan to limit and reduce diffuse source pollution from priority sources across NSW catchments as part of the program to achieve the State Plan 2006 target for the condition of riverine ecosystems. This plan will build upon existing programs and will initiate and coordinate new management actions across the State. There has also been significant action to address urban stormwater management.
	We also recommended that the Government establish an independent environmental review of river health and water quality.
	Our 2003 audit noted that no entity regularly audited river water quality. In late 2003 the Government established the Natural Resources Commission (NRC). The NRC currently audits the effectiveness of the Catchment Management Authorities’ implementation of their catchment action plans. It has been tasked with reporting against the 13 statewide natural resources targets in the State Plan 2006. The NRC has legislative capacity to undertake audits of other natural resource management plans and issues, as required by the Minister. We believe that the NRC would be an appropriate entity to undertake such reviews.

Response from the Department of Environment and Climate Change

Thank you for the opportunity to provide a formal response to the Follow up of the 2003 Performance Audit ‘Protecting our rivers’.

As you would be aware the Department of Environment and Climate Change (DECC) has worked closely with the Auditor-General’s Office as they prepared this report. We believe the report is now a fair and reasonable account of the general issues involved in managing and monitoring river health and water quality in NSW.

However, it has been difficult to reflect the full extent of the governance changes and technical challenges faced by Government agencies since the 2003 Audit. Soon after the 2003 Audit the Government introduced substantial reforms to natural resource management in NSW, which included the establishment of the Natural Resources Commission (NRC) and the establishment of Catchment Management Authorities (CMAs). The NRC was charged with developing standards and targets for natural resources management (including the target for riverine health) for Government’s consideration and auditing the Catchment Action Plans developed by the CMAs. Considerable effort (time and resources) by relevant Departments went into assisting the NRC develop the statewide standard and targets throughout 2004-05.

Following this stage there was an intensive effort from relevant agencies to develop a NSW Natural Resources Monitoring, Evaluation and Reporting Strategy to support the implementation of the natural resource standard and targets for both agencies and CMAs. The strategy represents the first time that such a comprehensive, statewide monitoring strategy has been developed across all natural resource agencies and put in place. This is the result of some three years of work undertaken by several departments with the NRC to develop the strategy, through the early developmental stages, consultation and refinement of methodologies and analytical methods. Implementation of the strategy will involve a massive amount of data collection and analysis by the participating agencies for years to come.

The Audit report correctly points out that some of the indicators and measures adopted in the monitoring strategy will take some years to develop an adequate data base to be able to understand the baseline condition and then some further time to get a meaningful picture of trends. In the case of the riverine health target the Government is better placed than for some other targets as it put in place community agreed water quality objectives for each river valley in 1998. These objectives provide a benchmark for measurement of river condition against desired environmental values and these can be measured in a quantitative sense through the application of the ANZECC/ARMCANZ Guidelines for Fresh and Marine Water Quality published in 2000. The roll out of the Monitoring and Evaluation Strategy will build on this part of the NSW water reforms and provide a consistent and rigorous monitoring program into the future.

In addition, for the first time the Government will have a NSW Strategy for Diffuse Source Water Pollution which has also involved considerable time and effort to research and develop a methodology for setting priorities and brokering agreed projects and partnerships across agencies, local councils and CMAs. This project should provide a framework for addressing this very complex and widespread problem in a far more focussed and coordinated way than has been attempted in the past.

The Department agrees that an independent environmental review of river health and water quality is desirable, and that the NRC is well placed to do so.

We thank you and your staff for the opportunity to contribute to this follow up Audit, in particular for the time necessary to explain the new arrangements and detailed concepts involved in the management of river health in New South Wales.

(signed)

Lisa Corbyn

Director General

Dated:  29 April 2008

Response from the Department of Water and Energy

I refer to your letter of 1 April 2008 concerning The Audit Office’s final report on the follow-up performance audit ‘Protecting our Rivers’, and I thank you for the opportunity to provide a formal response.

As you know, the Department of Water and Energy (DWE) has devoted a significant amount of time and effort to assist the Auditor-General’s Office in preparing this report.  We believe the report now reflects much better the current natural resources directions that the Government has implemented in an effort to tackle the complexities of river health and water management, rather than just the water quality component.  This has been borne out not only by the Government’s decision to establish targets for river health within its State Plan 2006, but also recent Australian Government initiatives within the Murray Darling Basin.

The report appropriately recognises that state agencies and Catchment Management Authorities have made significant progress since the original audit in 2003.  The DWE agrees that more needs to be done, in particular to derive the necessary baselines for monitoring and reporting against the state targets, but also to ensure ongoing assessment of our progress towards these targets.

The creation of DWE as a Division of Government in April 2007, places the Department in a position to lend strong and effective support into the future to ensure that sufficient information is available for government to measure its performance against its agreed targets for river health.  The DWE is working collaboratively with both the Department of Environment and Climate Change and Department of Primary Industries to ensure this is achieved.

(signed)

Mark Duffy

Director-General

Dated: 29 April 2008