Report highlights

The Auditor-General, Mr Peter Achterstraat, today released his Volume Ten Report to Parliament for 2011. The report includes comments on financial audits of government agencies in the Health sector.

Ambulance Officers spending more time waiting at emergency departments (pg 48)

‘In 2010-11, Ambulance Officers spent an extra 77,200 hours waiting at emergency departments for patients to transfer to hospital care. In 2009-10, it was 58,400 hours’, Mr Achterstraat said. ‘This excludes the first 30 minutes of waiting time for each admission. I am concerned that so many ambulance officers are unavailable to respond to other emergencies. More needs to be done to address this unfavourable trend’, he added.

Hospital admission performance deteriorates (pg 22)

‘In 2010-11, only 66 per cent of patients were moved from the emergency department to an inpatient bed within eight hours of their arrival’, Mr Achterstraat said. ‘This is significantly down on last year’s 73 per cent and well below the 80 per cent target’, he added. 

While elective surgery waiting lists have increased the number of people overdue is down (pgs 23 & 24)

‘In 2010-11, over 90 per cent of elective surgery patients were treated within the clinically desirable times and the number of overdue patients decreased significantly to just 145 at 30 June 2011. While overdue patients are down, the total number of people on the elective surgery waiting list at 30 June 2011 increased by 1,378 to 68,195’, Mr Achterstraat said.

Processes for paying Health suppliers and employees need to improve (pgs 14 & 45)

For the second year, I have recommended that Health Support Services and local health districts improve processes for paying suppliers and employees.

‘Some payments to suppliers have been made without approval exposing local area health districts to financial loss’, Mr Achterstraat said. ‘Health Support Services and local health districts need to agree on who should check approval signatures to ensure payments are properly made’, he added.

Outstanding debts are up (pgs 12, 13 & 14)

At 30 June 2011, the health sector’s outstanding debts to suppliers increased by over 15 per cent to $699 million, up from $606 million at 30 June 2010.

‘At 30 June 2011, supplier invoices that are more than 45 days old increased to $34.7 million up from $28.7 million. Nearly $7 million of these are more than six months old’, Mr Achterstraat said. ‘While many of these are in dispute, the health services should promptly review and clear these invoices’, he added.

Overtime payments show a steady decline but there are still some large payments (pgs 32 & 33)

Overtime payments are down from $341 million in 2009-10 to $327 million in 2010-11, average overtime payments fell from $5,909 to $5,369 and the percentage of employees receiving overtime is down from 62 to 42 per cent.

‘There are over 1,200 employees who worked more than 500 hours overtime in 2010-11, with one employee paid $333,073 in overtime’, Mr Achterstraat said.

Low cash reserves at local health districts (pgs 11 & 12)

‘The NSW Ministry of Health continually provided funds to assist the local health districts clear their debts on a timely basis’, Mr Achterstraat said. ‘At 30 June 2011, some districts did not have enough cash reserves to cover one day’s activities. While I recognise that once a week, districts receive their subsidy funding from the Ministry, this is a perilous position to be in’, he added.

Further information

Barry Underwood, on 02 9275 7220 or 0403 073 664 and email barry.underwood@audit.nsw.gov.au

The public hospital system in New South Wales would not function without Visiting Medical Officers and Staff Specialists. They make up more than half of the 13,000 doctors working in public hospitals.

VMOs are doctors who often have their own private practices and work as contractors in public hospitals. Surgeons tend to be VMOs. Staff Specialists work full or part time, mainly in large hospitals. Emergency department doctors, psychiatrists and geriatricians are generally Staff Specialists.

This report looked at payments made to VMOs and Staff Specialists and also examined how well they are used to meet demand within the NSW hospital system.

Firstly, the adequacy of processes supporting payments to VMOs varies considerably across NSW public hospitals.

‘At some public hospitals, mainly smaller ones, only very basic checks support payments to VMOs’, explained Mr Achterstraat. ‘If hospitals are not properly checking VMO claims they might be overpaying or underpaying them’, he added.

The audit found some good examples of VMO payment processes. Every particular – date, patient name, rates, whether the procedure was carried out and if they were public or private patients – was checked and verified. These hospitals found errors in 10 to 18 per cent of VMO claims for payment. Errors included:

• multiple claims for the same service, including claims for more than one consultation for the same person on the same day

• the patient not being in the hospital on the day claimed.

‘As VMOs are collectively paid over $500 million per annum for their work in public hospitals, the dollar value of undetected errors could be significant,’ Mr Achterstraat said.

Some doctors submit claims for payment irregularly or late, sometimes 12 months late or longer. One VMO has an estimated $799,000 owing for 12 months of work and another has $733,000 owing for 36 months of work. These outstanding claims need to be promptly processed and paid.

Secondly, NSW hospitals do not know if they are getting what they pay for from many of their staff specialists.

‘Staff Specialists generally do not have to account for their time or activities’, explained Mr Achterstraat. ‘None of the hospitals we visited could tell us how many hours their staff specialists spent attending to patients, teaching, managing, researching and improving quality and processes’, he added.

VMOs working in NSW public hospitals earn on average $119,000 per annum treating public patients but earnings vary widely depending on hours worked and treatments delivered. Staff specialist remuneration in the public health system ranges from $198,212 to $390,528 per annum, excluding additional payments such as overtime.

Full time Staff Specialists are also entitled to a training, education and study leave allowance of about $29,400 per annum plus 25 calendar days of special leave for training per year.

‘I am pleased that the NSW Ministry of Health is beginning to develop new systems to help hospital staff check VMO claims and to develop rosters for doctors, nurses and other health workers. Only then can hospitals be confident they know who should be on duty and what they should be doing’, Mr Achterstraat said. ‘I want the Ministry to speed up these improvements and make sure that the public get what they pay for and that doctors are where they should be’, he added.

Further information

Barry Underwood, Executive Officer, on 9275 7220 or 0403 073 664; email: barry.underwood@audit.nsw.gov.au

The Auditor-General, Mr Peter Achterstraat, today released his Volume Nine Report to Parliament for 2011. The report includes comments on financial audits of government agencies in the Education and Communities sectors.

Major IT project deferred (pgs 44 & 45)

A major IT project to replace finance, human resources and payroll systems at the Department of Education has been deferred and has failed to provide the expected benefits.  At this stage, none of the systems have been deployed in the State’s 2,230 schools.

The project has already cost $176 million, nearly half of the total estimated project cost of $386 million.

‘I am concerned that another large Government IT project is failing to deliver, is over budget and is behind schedule’, Mr Achterstraat said.

Lack of young teachers in our schools (pgs 56 & 57)

In 1986, more than half of Australian teachers were under 35.

‘In NSW, around 20 per cent of public school teachers are now under 35 and I am concerned that less than 10 per cent are under 30’, Mr Achterstraat said. ‘We need to do more to attract and retain young teachers to a profession that is essential for our children and our future prosperity’, he added.

Retention rates at NSW public schools gradually improving but still the lowest of any State (pgs 48 & 49)

New South Wales’ Year 12 retention rates are improving but are nearly five per cent below the national average and the lowest of any State. Sixty–eight per cent of New South Wales public school students complete year 12, while the national average is 73 per cent.

‘Year 12 retention rates for aboriginal students remain low at 35 per cent’, Mr Achterstraat said. ‘While this is an improvement on 2006 levels of nearly 29 per cent, it is still a concerning figure’, he added.

More Community Services caseworkers (pg 69)

‘Last year, I recommended the Department of Family and Community Services make concerted efforts to fill vacant Community Services caseworker positions. It is pleasing that the number of vacant caseworker positions has fallen significantly from 497 in 2009-10 to 166 in 2010-11’, Mr Achterstraat said.

Costs down and enrolments are up at TAFE (p 61)

TAFE services are being delivered more cost effectively and enrolments have increased by nearly 12 per cent.

‘A highlight for TAFE enrolments has been a more than 50 per cent increase in aboriginal student enrolments since 2006’, Mr Achterstraat said. ‘Qualifications provide better employment outcomes for students and add skills to the workplace’, he added.

Further information

Contact Barry Underwood on 02 9275 7220 or 0403 073 664, or email barry.underwood@audit.nsw.gov.au

The Auditor-General, Mr Peter Achterstraat, today released his Volume Eight Report to Parliament for 2011. The report includes comments on financial audits of government agencies in the Transport and Ports sectors.

Slower travel speeds in the morning peak (pg 33, 34 & 60)

Road users in the Sydney morning peak period are taking longer to get to work, while the afternoon peak remains largely unchanged.

‘Morning peak travel speeds have worsened on six of the seven major Sydney roads’, Mr Achterstraat said. ‘The morning peak‘s average speed decreased from 31 to 29 km/h. The afternoon peak’s overall average speed remained unchanged at 42 km/h’, he added.

‘In 2010-11, the slowest major Sydney road was Victoria Road with an average morning peak speed of 24 km/h and 31 km/h in the afternoon peak’’, Mr Achterstraat added.

Crowding on trains (pgs 87 & 102)

More than half of train users are concerned about crowding on CityRail trains. However, CityRail is performing better than international benchmarks for crowding. ‘CityRail’s trains compare well against a global benchmark of no more than four passengers per square metre, achieving an average of one passenger in both 2011 and 2010’, Mr Achterstraat said.

People left standing at bus stops (pg 116)

‘There are more buses and more services, but 22 per cent of passengers with key operators have been left standing at bus stops because buses are too full, did not stop or do not turn up’, Mr Achterstraat said.

Transport workers far more likely to test positive for drugs than alcohol (pgs 22 to 24)

‘Although positive drug and alcohol test results at RailCorp, State Transit and Sydney Ferries continue to fall, positive drug test results remain significantly higher than alcohol results’, Mr Achterstraat said. ‘At RailCorp contractors consistently return much higher rates of positive drug and alcohol test results than employees’, Mr Achterstraat added.

All three agencies had very few positive alcohol test results.

Major capital projects over budget and behind schedule (pg 48 & 90)

Nineteen of the 43 major transport projects are late or over budget. ‘The Waratah train project is more than a year behind schedule and continues to experience difficulties’, Mr Achterstraat said. ‘Only one eight carriage train was delivered by 30 June 2011 - the remaining 618 carriages will be progressively introduced into service, with all carriages expected to be in operation by January 2015, fourteen months late’, he added.

Rail freight at Port Botany (pgs 9, 12 to 14)

Total trade through NSW ports corporations increased by 10 per cent in 2010-11. What is concerning is the declining use of rail at Port Botany. ‘Rail movements through Port Botany fell from nearly 19 per cent to 14 per cent in 2010-11. This is a significant fall and places pressure on an already congested road network’, Mr Achterstraat said. ‘The $725 million Port Botany expansion will add a third terminal in 2013 and will put further pressure on our transport systems’, he added.

Long-term contractors (pgs 37 & 38)

‘Transport agencies have 91 long-term contractors - all these have been engaged for more than 6 years’, Mr Achterstraat said. ‘Extensive reliance on contractors can result in higher employment costs and less ownership and commitment to organisational goals and objectives’, he added.

State Transit has the longest serving contractor who has been engaged for over ten years. The highest paid contractor was engaged by RailCorp and paid $578,000 in 2010-11. ‘It is pleasing that RTA has significantly reduced contractor numbers, falling from 698 to 448 in 2010-11’, said Mr Achterstraat.

Further information

Barry Underwood, on 02 9275 7220 or 0403 073 664 and email barry.underwood@audit.nsw.gov.au

The Auditor-General, Mr Peter Achterstraat, today released his Volume Seven Report to Parliament for 2011. The report includes comments on financial audits of government agencies in the Law, Order and Emergency Services sectors.

Blow out in Police Death and Disability Scheme (page 14)

The NSW Police Death and Disability Scheme’s liability now stands at $284 million, an increase of nearly 150 per cent in the past four years. The annual number of partial and permanent disability claims paid has increased nearly four times from 108 to 415 and the average claim size has increased from $379,000 to $458,000.

‘The increase in the number of claims is concerning, not only from a financial perspective, but also from the impact on the NSW Police Force more generally’, Mr Achterstraat said. ‘Actions taken to address the unfavourable trend in claims have had no impact to date’, he added.

The backlog of victims’ compensation claims has more than tripled since 2006 (page 27)

The Department of Attorney General and Justice had 21,646 pending claims for victims’ compensation at 30 June 2011, which it estimates will result in payments of $239 million, or an average payment per claim of $11,041. The backlog represents more than four years of claims and has more than tripled since 2006.

‘The Department needs to address the backlog of victims’ compensation claims’, Mr Achterstraat said. ‘It is also apparent that the burden to compensate victims is falling on the State. Offenders owe the Department $289 million while only $18.8 million is likely to be recovered’, Mr Achterstraat added.

In 2010/11 $63 million was paid with only $4.3 million recovered.

IT project over budget and time (page 33)

The JusticeLink IT project has suffered many delays and cost a lot more than originally planned.

‘In 2001, the JusticeLink IT project was expected to cost $30 million and be completed in 2006’, Mr Achterstraat said. ‘It was finally completed in 2011 at a cost of $48 million’, he added.

Juvenile prison costs are up (pages 31 and 32)

Juvenile prisoners cost substantially more than adult prisoners. In 2010, an adult prisoner cost $198 per day, down from $206 the previous year. Juveniles cost $589 per day in 2010 – in 2011 this rose to $652.

The number of juvenile and adult prisoners in custody continues to fall.

Crime Commission’s performance reporting needs to improve (page 66)

The New South Wales Crime Commission should consider how it can improve reporting its performance to key stakeholders. Other jurisdictions report their performance more comprehensively.

‘The Commission needs to measure its performance against all its key delivery areas and report accordingly’, Mr Achterstraat said.

The internal control environment at the NSW Trustee and Guardian needs to improve (page 43)

‘Improvements are needed to the NSW Trustee and Guardian’s processes to better safeguard the assets of its clients and reduce the risk of fraud’, Mr Achterstraat said.  ‘For example, annual stocktakes of clients’ personal property are not performed and the controls over the receipting, storage and disposal of client personal property are inadequate’, he added.

In recent years, the NSW Trustee and Guardian’s internal audit function has made 94 recommendations to improve processes and controls. Of these only 57 are partially implemented.

Further information

Barry Underwood, on 02 9275 7220 or 0403 073 664 and email barry.underwood@audit.nsw.gov.au

The Auditor-General, Mr Peter Achterstraat, today released his report on financial audits of government agencies in the environment; water, planning and infrastructure sectors. Some of the primary industries agencies and the Department of Premier and Cabinet are also included.

The Environment Protection Authority’s expenditure for the financial year 2010/11 was $92 million - $76 million of this was for environment protection and regulation.

The Office of Environment and Heritage and the Environment Protection Authority commenced 145 prosecutions for environmental offences and 106 were completed in the financial year 2010/11, down from the 134 prosecutions completed in 2009/10. Financial penalties for 2010/11 totalled $969,000 down from $1,403,000 in 2009/10. The average fine decreased from $10,468 in 2009/10 to $9,141 in 2010/11.

Prosecutions do vary from year to year and depend on court process. In the three months since 30 June 2011, 53 prosecutions had been completed with financial penalties of $605,000.

Mr Achterstraat was also concerned that: ‘There are a large number of contaminated sites in New South Wales and the cost to remediate them is largely unknown.’

‘Derelict mines may represent the largest contamination liability facing our State. There are approximately 500 derelict mine sites.’

The Office of Environment and Heritage advised that the cost of cleaning up derelict mines would be substantial and that the few million dollars allocated annually to the Derelict Mines Program are substantially inadequate.

There are also just over 300 sites that are significantly contaminated with a further 1,070 sites still to be assessed - nearly 950 of these relate to services stations and other petroleum sites.

Projects that reduce electricity consumption such as rebates for energy efficient household items are far more cost effective than the Solar Bonus Scheme.

‘Energy saving programs have cost about 3 cents to save a kilowatt hour of energy, this is in stark contrast to the 60 cents to generate a kilowatt hour under the Solar Bonus Scheme’, said Mr  Achterstraat. 

The Climate Change Fund is now expected to meet the costs of the Solar Bonus Scheme. With the Fund originally capped at $700 million it will need to be increased or other sources found to meet the future Solar Bonus Scheme payments. These payments could be up to $1.75 billion.

‘It is far cheaper to save energy than to make it’, said Mr Achterstraat.

Contributions from the four water authorities to Government increased by 25 per cent in 2010/11 - $472 million was paid to Government, up from $379 million in 2009/10.

The total number of questions asked on notice in the NSW Parliament reduced significantly in 2010/11, falling by 44 percent - from 5,080 in 2009/10 to 2,852 in 2010/11.
 
Further information

Barry Underwood, on 02 9275 7220 or 0403 073 664 and email barry.underwood@audit.nsw.gov.au

The Auditor-General, Mr Peter Achterstraat, today released his Volume Five Report to Parliament for 2011. The report includes comments on financial audits of government agencies in the Superannuation, Compensation, Housing and Finance sectors.

High unfunded superannuation liabilities

Unfunded superannuation liabilities remain high at approximately $20.0 billion. These liabilities relate to defined benefit superannuation schemes for public servants – these schemes are closed to new members.

‘Unfunded superannuation liabilities continue to pose significant challenges for the New South Wales Government, as the liabilities are borne by the Government’, Mr Achterstraat said.

Parliamentary Contributory Superannuation Scheme’s unfunded liabilities continue to increase. At 30 June 2011 liabilities were $184 million, substantially up from $40.3 million at 30 June 2007 - representing an increase from 12 per cent to 46 per cent unfunded.

Cost savings in consolidation of Superannuation Trustee Boards

‘Consolidation of Superannuation Trustee Boards is occurring in private sector superannuation funds. I expect this to flow to the public sector superannuation funds, and may offer cost savings for the benefit of members,’ said Mr Achterstraat.

‘I caution that proper analysis should be carried out to ensure efficiency gains are tangible, drawing from the lessons from the already merged private sector superannuation funds,’ he added.

Police Superannuation Scheme members mostly retire hurt on duty

‘Hurt on duty’ remains the most common way Police Superannuation Scheme members retire. The Scheme closed to members joining the Police from 1988.

At 30 June 2011, 66 per cent of police superannuation scheme pensioners were receiving a ‘hurt on duty’ pension. The Scheme paid $220 million in ‘hurt on duty’ pensions in 2010-11. The average age for these members on retirement is 45. In 2010-11, 198 members retired ‘hurt on duty’ compared to 176 for 2009-10.

The NSW WorkCover Scheme’s financial position continues to deteriorate

The State’s compensation liabilities continue to increase. The Workers Compensation Scheme’s financial position was $2.4 billion in deficit at 30 June 2011. The Scheme may not collect enough premiums in 2011-12 to meet its requirement for sustainable long term funding.

‘There appears to be emerging changes in workers compensation claimant behaviour indicating attempts to maximise claims resulting in increased Scheme liabilities’, said Mr Achterstraat. ‘I am concerned that lump sum claims are re-emerging, significantly increasing workers’ compensation costs. This requires proactive management’, he added.

Higher Lifetime Care and Support Services Scheme compensation

The liability for people severely injured in motor vehicle accidents in New South Wales is estimated to increase to $4 billion by 2016, up from $1.4 billion at 30 June 2011.

Dwelling construction 

NSW Land and Housing Corporation identified risks associated with builders becoming financially stressed while constructing its dwellings. These risks had emerged on 12 separate projects involving the construction of 141 dwellings and eight bedsitting conversions to one bedroom units.

The Corporation advised that the failure rate of firms engaged on the Corporation’s projects is currently 0.3 builders per $100 million spent on construction contacts. The Department of Finance and Services advised that the general New South Wales rate of insolvencies of construction firms in 2009–10 is approximately four firms per $100 million.

Further information

Barry Underwood, on 02 9275 7220 or 0403 073 664 and email barry.underwood@audit.nsw.gov.au

Organisations generally work together to improve the safety of victims when there is an overt and serious crisis, particularly where children are involved.

“My concern is that the response before and after crises is fragmented. Access to help varies depending on where you live,” said Mr Achterstraat.

There are no standard ways for victims and perpetrators to access help that might prevent ongoing violence and address underlying issues. This is particularly problematic where there are repeat victims and perpetrators, many of whom have complex mental health, drug and alcohol problems and are difficult to work with.

“Nearly half of the 92,215 victims and 81,772 perpetrators, who came to the attention of Police in 2010 over family and domestic violence incidents, had a history of such incidents over the preceding five years,” explained Mr Achterstraat. “Organisations are not providing a response that works or lasts for many victims and perpetrators,” he said.

New South Wales has trialled a number of projects to improve the way that organisations work together to support vulnerable people in particular communities.

“Some programs such as Staying Home Leaving Violence show promise. It is now time to consolidate and mainstream successful approaches across the State,” said Mr Achterstraat.

Two in three victims of violence do not go to the Police and there has been little progress in reducing this high level of under-reporting.

“Many people who do not go to Police will seek help from doctors, charities, welfare agencies, other government and non-government organisations and friends”, said Mr Achterstraat. “A coordinated response is required,” he added.

Domestic and family violence damages too many people in our community.

“In 2010, NSW Police responded to over 126,000 incidents involving domestic and family violence. It is also present in 50 per cent of the households where children are neglected or abused, and contributes to nearly 20 per cent of homelessness. It contributes to ill health and disability amongst women under 45 years of age more than any other single factor, including smoking or obesity,” said Mr Achterstraat. 

Domestic and family violence costs the NSW economy more than $4.5 billion each year and on average, kills 36 people each year.

“Domestic and family violence is responsible for nine per cent of police call-outs, 13 per cent of court time and 22 per cent of offenders on probation in the community,” said Mr Achterstraat.

Mr Achterstraat recommended that government and non-government organisations adopt a common framework to identify domestic and family violence, assess risk, prioritise need and refer people to services. The Government needs to resolve problems around the sharing of information so government and non-government staff can work together locally to help victims and perpetrators.

“No single organisation can fix this. It requires a whole of government and a whole of community approach to encourage respect and help people live a life free of violence,” said Mr Achterstraat.
 
Further information

Barry Underwood, Executive Officer, on 9275 7220 or 0403 073 664; email: barry.underwood@audit.nsw.gov.au

A NSW Auditor General’s Report has found that the NSW Government and its agencies grossly underestimated the cost and number of people that would install systems under the Solar Bonus Scheme.

By October 2010, the estimated cost of the Scheme, if it continued the way it was going, would have reached $3.988 billion. More than ten times the original estimate of $362 million. In response to the increased cost, the gross tariff for new applicants was reduced from 60 to 20 cents reducing the estimated cost to $1.954 billion.

It was a statutory requirement that when 50 mega watts of installed capacity was reached, the Government would review the Scheme. By the time the review was completed the installed capacity had reached 101 mega watts.

‘The Scheme lacked the most elementary operational controls, had no overall plan and risks were poorly managed,’ said Mr Achterstraat.

The latest Government projection for the total tariffs to be paid over the life of the Scheme is $1.75 billion.

‘I anticipate that the total tariffs to be paid under the Scheme will be between $1.05 billion and $1.75 billion,’ Mr Achterstraat said. ‘The most probable range will be between $1.25 billion and $1.44 billion, significantly more than the original $362 million estimate', he added.

There are many variables that make it difficult to be certain about the cost of the Solar Bonus Scheme: Changing weather patterns, the orientation of the solar cells to the sun, shading, and the quality of products and their installation all affect performance.

‘The New South Wales Scheme was far more generous than other States and contributed to many more people joining the Scheme than were expected,’ said Mr Achterstraat. 'Under the scheme, people could effectively sell electricity to the government one day and buy the same amount back the next day at half the price'.

Mr Achterstraat identified major deficiencies in the way the Scheme was handled.

‘The Scheme had three broadly stated objectives with no specific targets to measure progress. These objectives did not include reducing emissions or obtaining value for money'.

‘No cost-benefit analysis was undertaken before the Government’s decision to introduce a scheme'.

‘Little was done early enough to identify and reduce relevant risks. I found no contingency planning, analysis and assessment of options and exit strategies to address potential high risk situations'.

‘There was no budget for dollars or the number of connections and consequently very little control over the cost of the Solar Bonus Scheme'.

Mr Achterstraat recommended that:

• such Schemes should be assessed in a similar fashion to major Government infrastructure expenditure

• the performance of such schemes needs to be monitored more closely

Further Information

Contact Barry Underwood, Executive Officer, on 9275 7220 or 0403 073 664.

The sale of the State’s electricity retail and trading rights raised $5.3 billion. The electricity retail businesses sold for a $3.08 billion profit with the electricity generation output sold for a $1.85 billion loss, delivering a overall profit of $1.23 billion.

‘The proceeds from selling the generation output represented less than half of the value of Government power station assets at the time of sale,’ said Mr Achterstraat. ‘An Australian Tax Office ruling is currently being sought to clarify the tax deductibility of the capacity charge payments and a positive outcome would deliver the Government approximately an additional $258 million,’ he added.

Electricity wholesale prices decreased by 16.9 per cent from an average of $44.19 per megawatt hour in 2009-10 to an average of $36.74 per megawatt hour in 2011. However, the retail price paid by residents and small business customers will increase by an average of 17.3 per cent in 2012.

‘Network costs and green scheme costs are the main drivers behind the retail electrical price increases, accounting for 87 per cent of the price increases,’ said Mr Achterstraat. ‘There is a concern that network costs may be higher than they need to be,’ he added.

The New South Wales Government has set a target of 20 per cent renewable energy consumption by 2020 in line with the national Renewable Energy Target scheme. Energy from renewable sources increased by 33.5 per cent and now provides seven per cent of total needs.

These are some of the findings in a report released today by the Auditor-General, Mr Peter Achterstraat on his financial audits of government agencies in the electricity sector.

‘I am pleased that the audits of the seven State-owned electricity corporations’ financial statements for the year ended 30 June 2011 each resulted in an unqualified audit opinion,’ said Mr Achterstraat. ‘I did note significant uncertainties in assessing the value of power station assets where Government still owns the production output due to the unknown impacts of the Australian Government’s carbon price scheme,’ he added.

Excluding the proceeds from the electricity sale transactions, dividends to government and profits after tax fell in 2010-11. Profits fell from $1.2 billion to $1.1 billion and dividends from $867 million to $637 million. Income tax paid increased from $528 million to $569 million in 2010-11.

The three government energy distributors recorded small falls in customer satisfaction in 2011. Ausgrid fell 3 per cent to 93 per cent, Endeavour Energy fell from 80 to 79 per cent and Essential Energy fell from 88 to 86 per cent.

‘Projected electricity demand in New South Wales is currently expected to exceed supply by 2018-19 and supply will fall below minimum reserve levels if additional capacity is not created by this time’ said Mr Achterstraat.
 
Further information

Barry Underwood, on 02 9275 7220 or 0403 073 664 and email barry.underwood@audit.nsw.gov.au