Objective

This audit assessed whether the NSW Reconstruction Authority (the Reconstruction Authority) is effectively administering the Resilient Homes Program (RHP) and the Resilient Lands Program (RLP) to meet the programs’ objectives.

Key findings

The Resilient Homes and Resilient Lands Programs were not effectively planned

Key elements of planning were not undertaken before the RHP and the RLP were rolled out, including the development of detailed project plans and risk mitigations. This had a significant impact on their ongoing implementation and led to delays. There was no business case or cost-benefit analysis to inform the design and establishment of the programs.

The Reconstruction Authority is prioritising Resilient Homes Program funding based on risk

The approach adopted in June 2023 has ensured that funding is targeted to the RHP properties assessed as having the highest flood risk.

The Reconstruction Authority has reallocated funding from buybacks to increase the number of resilient measures

Following the increase in the RHP budget to $880 million, the Reconstruction Authority estimated that it would be able to support 1,345 buybacks and 420 resilient measures.

In August 2025, it re-profiled program funding to work towards 1,000 buybacks and 600 resilient measures. This change was informed by community and local council feedback.

There have been persistent delays in the Resilient Homes Program

During early implementation of the RHP, it became clear that additional policy work was required, including the need for procedures on home relocations and the gifting of homes. This additional work, as well as changes to the delivery model for the resilient measures stream, contributed to delays in delivery.

The Reconstruction Authority has not effectively administered the Resilient Lands Program

The RLP was designed to help meet the demand for land and housing as estimated when the program was established. There have been significant delays in program delivery, including in finalising the Resilient Lands Strategy, and the program is yet to deliver any land for housing.

Recommendations

The report makes 5 recommendations for the Reconstruction Authority, including identifying opportunities to accelerate delivery of the RLP, improve planning for future disaster recovery and to ensure the appropriate use of bought-back land. These recommendations are outlined in Chapter 2.

Extreme rainfall across eastern Australia in 2021 and 2022 led to a series of major flood events in NSW, including extensive flooding in the Northern Rivers. Between late February and early April 2022, 13 people died as a result. Four thousand and fifty-five properties became uninhabitable, and another 10,849 properties were damaged.

Following these severe flooding events, the NSW Government launched a series of programs to support homeowners in their recovery and to build resilient housing in the Northern Rivers. This included the following programs:

• the Resilient Homes Fund consisting of 2 programs: the Resilient Homes Program (RHP) and the Resilient Lands Program (RLP)
• the Flood Property Assessment Program (FPAP), which provides free repair assessments for flood damaged properties, as well as free demolition services for homeowners
• Disaster Relief Grants (DRG), to help vulnerable community members make their homes safe and liveable after a disaster event.

This audit assessed the administration of the RHP and RLP, which are being delivered by the NSW Reconstruction Authority (the Reconstruction Authority). The initiation, planning and early delivery of the programs were conducted by the former Northern Rivers Reconstruction Corporation (NRRC) in conjunction with the former Department of Regional NSW. The NRRC was established in July 2022 to lead the reconstruction of the Northern Rivers region following the flooding events. It was establishing itself as an organisation at the same time that it was launching the RHP and RLP. The NRRC was responsible for the programs prior to July 2023, at which point the NRRC transitioned to the Reconstruction Authority, which then became responsible for the programs. The NRRC was dissolved in August 2023.

A first tranche of funding for the Resilient Homes Fund was approved in September 2022. The RHP is co-funded with the Commonwealth Government through the Disaster Recovery Funding Arrangements, and the RLP is funded solely by the NSW Government. The first tranche of funding for the Resilient Homes Fund was $800 million, which included $350 million in Commonwealth Government funding. In May 2024, the Reconstruction Authority sought and received an additional $90 million in funding from the NSW Government for the RHP and an additional $90 million in Commonwealth Government funding in late 2024.

There was no costed options analysis for the Resilient Homes Program but alternative methods for delivering parts of the program were identified

An important element of the business case process is an options analysis to consider alternative options before determining the preferred option to fulfil a program’s objectives, including costings for different options. Although some options were identified and assessed during the establishment of the Resilient Homes Program (RHP), the total cost of these were not considered at the time. These options included immediate mass retreat from flood zones, house relocations and land swaps to address flood risks. Assessment of these options did not consider their risks, costs, benefits or dependencies. While this was not the same as a full options analysis, it does show that alternative models of delivery were considered.

Different options were also considered for the delivery of the resilient measures stream. A range of models were considered to produce a shortlist of potential delivery methodologies. These included:

• awarding of grants directly to homeowners
• direct management, with agency management of the full delivery of project works
• a traditional managing contractor, with a head contractor to manage the development of the design and delivery of the project works
• early contractor involvement, that is, working with a contractor to produce the delivery methodology and if approved, engage this contractor to deliver the project works
• alliance, that is, working collaboratively with contractors to deliver the project works.

The shortlist was further analysed. It compared key features and suitability, as well as advantages and disadvantages in each delivery model. The analysis was presented to the Steering Committee along with ratings across the key capabilities of each model, including cost control, risk apportionment, delivery management efficiencies and quality and value of outcomes over cost.

The Reconstruction Authority will not meet its original funded target for the buyback stream and is increasing its focus on the resilient measures stream

In September 2022, it was estimated that the program would support approximately 2,000 buybacks and 4,400 resilient measures across 2 tranches of funding. These figures were based on SES impact data for the flood events.

In February 2024, based on the RHP’s first tranche of funding of $700 million, the NSW Reconstruction Authority (the Reconstruction Authority) estimated that the program would be able to support approximately 1,000 buybacks and 370 resilient measures. Following the increase in the program budget in May 2024 to $880 million, the Reconstruction Authority estimated that it would be able to support 1,345 buybacks and 420 resilient measures. The Reconstruction Authority treated these revised figures as targets.

In August 2025, the Reconstruction Authority re-profiled its program funding to work towards 1,000 buybacks and 600 resilient measures. At that time, 925 properties had been approved for a buyback and 682 buybacks had been finalised. Of the 925 properties approved, 87% (803) had accepted with 4% (39) declining the offer, and the remainder considering the offer.

The change in the program’s profile was guided by community and local council feedback. This feedback requested that sufficient funding be made available to people with a more limited capacity to pay for the resilient measures, and for the focus of the remaining budget to be on resilient measures. As part of re-profiling the budget, the Reconstruction Authority also identified that the remaining budget was not sufficient to support the targeted 1,345 buybacks and reduced this target to 1,000. Changes were made to the resilient measures stream to make it more accessible, particularly for people with a lower capacity to pay the co-contribution.

The Reconstruction Authority tried to meet this target of 1,345 buybacks before making the changes to the program. By the time it had made the changes, the Reconstruction Authority had contacted 1,300 homeowners who had either applied for a buyback or were identified as potential applicants to progress their home buybacks. However, some of these individuals did not apply, with some also deemed ineligible after applying.

The Reconstruction Authority adapted the Resilient Homes Program in response to community feedback

During the implementation of the RHP, the Reconstruction Authority responded to community feedback and developed policies to meet the more specific needs that arose during delivery. For example, the Reconstruction Authority received feedback from the Northern Rivers community that some homeowners wanted to relocate their homes or gift their bought-back homes to others to relocate. The Reconstruction Authority developed 2 policies in May 2024 to support this: the Relocation Policy and the Gifting Policy. As at March 2026, 30 private relocations had been completed, a further 8 relocations were completed by the Reconstruction Authority, and 180 private relocations were planned. This uptake indicates that the policy has addressed a demand that existed in the community.

The Relocation Policy allows buyback stream participants to secure and relocate their bought-back homes post-settlement. The Gifting Policy allows homeowners to gift their former dwelling to a third party before settlement if they do not want to relocate the home themselves. In addition, the Reconstruction Authority also developed a process to offer homes for sale to the public for relocation. Funds from the sale of these homes are re-invested back into the RHP to support additional buybacks in locations where there is a risk to life. This was also developed in response to community feedback, and maximises the opportunities for the reuse of bought-back properties.

In late 2023, the Reconstruction Authority identified that the requirement for properties to be empty at settlement was a barrier to program participation for homeowners. The Reconstruction Authority implemented a ‘Licence to Occupy’ arrangement so that the homeowner or tenant can remain in the property following settlement. This arrangement provides homeowners with access to settlement funds to support their relocation, and gives tenants additional time to find alternative housing. The Reconstruction Authority developed a series of mitigations to minimise the risks associated with these arrangements through specific licence terms, in conjunction with pre-occupancy inspections and the engagement of community housing providers to administer and manage the Licence to Occupy arrangements.

In 2025, the Reconstruction Authority developed an integrated plan for the delivery of the RHP, which was informed by input from local leaders, councils and community feedback. The plan outlines community feedback and corresponding changes made to the RHP. Some of the feedback identified financial barriers to participation in the resilient measures stream, including high upfront design and planning costs, and the co-contribution requirement for the grants. In response to this feedback and to encourage a higher take-up rate for the stream, the Reconstruction Authority implemented measures including the introduction of a new grant for upfront costs relating to feasibility, design and development approvals. The agency also introduced a hardship provision where the co-contribution requirement could be waived for eligible participants.

The Steering Committee monitors risks for the Resilient Homes Program, but mitigations are not always implemented and in some instances are not relevant

A risk register for the program was first created in March 2023 and was updated throughout the life of the program. This demonstrates a proactive approach to the identification of risks. The RHP Steering Committee began meeting in February 2023 and has included risk reporting as a standing agenda item from the beginning. However, the risk reporting included only a small number of risks until June 2023, when the risk reporting became more expansive. Discussion of risks by the Steering Committee has also included their treatment plan and residual risk rating.

Risk documentation comprehensively states the causes and impacts of the identified risks and largely assigns responsibilities for those risks to key individuals. Mitigations are also listed for most of the risks and these mitigations had the effect of reducing the identified risk to a moderate level or less. However, while mitigations were regularly stated, these did not always appear to clearly relate to the causes that were listed and in some cases it was clear that mitigations had not been implemented at the time.

For example, mitigations for the risk that the program would be unable to deliver against the delivery timeline included creating an evaluation plan, which does not address the potential causes for this risk as outlined in the register. Further, several of the mitigations that were in place related to an alternative model being in place for the resilient measures stream that was not ultimately used.

The Reconstruction Authority has extended timelines for completion of the Resilient Homes Program twice

In August 2022, the Reconstruction Authority’s request to the Commonwealth Government for the first tranche of co-funding for the Resilient Homes Fund showed that the combined state and Commonwealth governments’ $800 million would be spent by June 2024, which aligned with the Disaster Recovery Funding Arrangement’s maximum allowable initial time limit of 2 years. The Reconstruction Authority also indicated that a potential second tranche would be spent by June 2027. Limited program development work had been undertaken at the time of this request.

In September 2023, the Reconstruction Authority sought the National Emergency Management Agency’s (NEMA) approval of a one-year extension from June 2024 to June 2025. In late 2024, the Reconstruction Authority made another application to NEMA for a further extension of time, to extend the deadline to June 2027. The Commonwealth Government approved the extensions, shifting the deadline for expenditure of the first tranche of co-funding by 3 years from June 2024 to June 2027.

In February 2023 target milestones were established for the RHP. These were that tranche 1 of the buybacks would result in 850 offers by mid-August 2023, and that tranche 2 funding would begin in early 2024 to complete the remaining buybacks. Home raisings were due to start in July 2023, with an expected completion of 1,000 raisings by August 2025. In addition, a combined 1,000 home demolitions or retrofits were due to begin in November 2023, with expected completion in August 2025. These milestones were not achieved and were revised in February 2024. See Table 3 for planned and actual milestones for delivering the RHP and Table 4 for revised and actual milestones for delivering the RHP.

Source: Audit Office of NSW analysis.

Source: Audit Office of NSW analysis.

Timely support for recovery was not available to flood-affected homeowners due to delays in program delivery

The original milestone dates for the program were developed in February 2023. The Reconstruction Authority revised these dates as the RHP progressed and key milestones were not completed on time. The original and actual timelines for the program are outlined in Table 5.

Source: Audit Office of NSW analysis.

It became clear early in the RHP that additional policy work was required to address some of the key issues that were identified during the program’s implementation. This led to delays in the rollout of the program. These included procedures for home relocations, gifting homes for relocation and a large lot policy for land greater than 2 hectares. The former Northern Rivers Reconstruction Corporation (NRRC) developed these policies while delivering the program, leading to delays in program delivery. More detailed planning at the outset of the program may have identified issues earlier, and resulted in these policies being developed prior to program implementation.

Changes to the model used for delivering the resilient measures stream also led to delays. The former NRRC considered a variety of options for delivery based on the expected funding for the RHP and initially planned to implement them from April 2023 using a managed contractor model. This model would involve the former NRRC engaging a head contractor to manage the development of the design and the delivery of the works on its behalf. This was considered an appropriate model due to the complexities of delivering the stream and the potential risks to delivery.

The tender was released in April 2023 and the evaluation panel met to discuss the responses. However, a decision was made not to go ahead with awarding a contract following this tender. The Reconstruction Authority advised that this was because lower than estimated registrations for the resilient measures stream made the managed contractor model unviable.

Following a review of the resilient measures stream in October 2023, the Reconstruction Authority decided to undertake a pilot program: a homeowner-led approach to managing the retrofit of the homes. The intention was to refine the process before implementing it across the entire region. This change in approach meant that the first resilient measures payment was not made until December 2023, 21 months after the first of the major flood events in February 2022. The program involved both reimbursement to homeowners for works completed prior to the stream’s commencement and milestone payments made directly to contractors, referred to as ‘future works.’ The first resilient measures future works grant payment was made in October 2024, 4 months later than the target date for the first payment outlined in the Steering Committee papers.

The timely delivery of the program was important to ensure that the risk to flood-affected homeowners could be mitigated rapidly. For homeowners eligible for the resilient measures stream, this support was not able to be accessed until more than 2 years after the initial flood event.

Homeowners impacted by the first flood event were not able to apply for the RHP until 8 months after the event, and buyback offers did not start until 12 months after the initial flood event. The first buyback settlement did not occur until May 2023, 2 months later than planned.

Eligibility for the pilot of the buyback stream was informed by flood risk

The process developed for the pilot program prioritised higher risk properties. Properties that were within the 20% Annual Exceedance Probability (AEP) flood zone and had been destroyed were the highest priority, while properties that were within the 5% AEP flood zone and part of the NSW Voluntary Purchase Schemes (VPS) were the lowest priority. The pilot aimed to reduce risk to life by ensuring that only the highest risk homes were eligible. Prioritisation was divided into 6 tranches, which are outlined in Table 6.

Source: Audit Office of NSW analysis of Northern Rivers Reconstruction Corporation documentation.

The Department of Regional NSW gave briefings to an Approval Panel, which was responsible for approving the buyback of homes, that contained recommendations for each property being considered under the pilot. However, from the start of the pilot in February 2023 through to mid-March 2023, the briefings did not contain information about the reasons the properties had been prioritised. This amounted to a total of 26 homes that were sent to the approval panel without a rationale for their prioritisation, so it was not clear which tranche each home should fall under. From late March 2023 until the end of the pilot program period, these briefings were improved to include information about why homes were prioritised as part of the pilot program.

The approach adopted in June 2023 for assessing and prioritising homes ensures funding is distributed to homes assessed as having the highest flood risk

The eligibility criteria developed at the outset of the RHP are set out in the program guidelines. Properties must be located in one of the Northern Rivers Local Government Areas (LGA), have contained a lawful residential dwelling at the time of the flood event and the homeowner must be the registered proprietor of the property at the time of application and immediately prior to the start of the first flood event in February 2022. Homes are only eligible for the program if the primary residential dwelling footprint was inundated by flood waters in the flood event or affected by landslide as a result of the event. A prioritisation approach was also implemented for the pilot program in April 2023, which is discussed above.

A new prioritisation approach was implemented in June 2023 to inform the prioritisation of areas for inclusion in the buyback and resilient measures streams of the program.

As part of a mapping process to inform prioritisation, buyback zones were classified into 2 different eligibility categories. Category A contains the highest priority areas for buyback, and category B is made up of areas where a buyback is recommended, but are of a lower priority than category A areas. During the development of the prioritisation approach in May 2023, it was identified that it may not be possible to purchase all category B properties within the program’s funding envelope, and so a sub-prioritisation approach was developed for these areas. This approach considered socio-economic disadvantage and evacuation constraints, as these 2 factors influence the risk to life during a flood event. Category B zones were assigned a priority level ranging from 1 (highest priority) to 8 (lowest priority).

As at January 2026, 64.6% of buyback offers had been made to properties located in category A, and 13% of offers had been made to properties located in category B. The remaining offers were to properties included in the program under the appeals process, the Flood Property Assessment Program (FPAP), the VPS, or the pilot program. For a sample of applications reviewed for this audit, all properties bought back were located in either category A or category B.

An additional assessment methodology for homes outside of category A and category B was also developed to determine which homes should be prioritised for the resilient measures stream. This methodology was informed by flood-level survey data.

Given the value of the program and the need to ensure that the prioritisation approach was fair and reasonable, in December 2023, the Reconstruction Authority established a Peer Review Panel, which was responsible for reviewing the mapping methodology. They found that the program was using the best available flood and floor-level data, and that the methodology was aligned with recommended risk assessment principles.

In December 2024, the Reconstruction Authority updated its prioritisation approach based on more recent data. This was used to refine the methodology. The updated flood-mapping data did not result in any changes to the potential impact of flood events on homes, but the likelihood of flood events occurring was deemed to be higher for some homes.

The Reconstruction Authority followed documented assessment and appeal procedures for the buyback stream

The RHP guidelines outline the assessment, appeals and delivery processes for both streams of the program. In the first stage of the process, the Reconstruction Authority contacts registrants of the RHP to inform them of the stream they are indicatively prioritised for, or to inform them that they are not prioritised for either stream and provide review and appeals pathway information. Following this, homes eligible for buyback are valued by an independent valuer.

The Reconstruction Authority liaises with Valuation NSW to provide a quality assurance check of valuations. From the start of the program in September 2022 to December 2024, Valuation NSW undertook quality assurance checks of each valuation. From January 2025, the Reconstruction Authority changed to a sampling approach for these assurance checks. The Reconstruction Authority also assesses other compensation such as legal, valuation and advisory costs eligible under the program, as well as a ‘top-up’ amount to reflect the difference between the amount of the current valuation and the value of the property immediately before the start of the flood event. Where a homeowner has received a cash settlement or other benefit from their insurer for damage to the property as a result of the flood event, this benefit may be offset against the buyback offer.

In a sample of home buybacks reviewed for this audit, all offers made to applicants aligned with the valuation conducted by the independent valuer, incorporated the additional compensation and ‘top-up’ amounts, and deducted previously paid insurance claims. All valuations were reviewed by Valuation NSW except one, which was documented as not being selected for sample testing.

Once an applicant receives their letter of offer, they may accept or reject the offer. Applicants can request an internal review or appeal against the following 4 decisions made by the Reconstruction Authority:

• the applicant does not qualify for assistance under the program
• the applicant disagrees with their stream allocation
• the applicant disagrees with the amount of their offer
• the applicant disagrees with the scope of works proposed in a resilient measures offer.

An applicant may only seek an internal review or appeal under the following circumstances:

• The applicant has additional information and evidence which the Reconstruction Authority did not have when making its decision.
• The applicant believes the Reconstruction Authority considered incorrect information as part of their decision. The homeowner needs to identify the information they believe is incorrect and provide evidence to support their position.
• The applicant has individual and exceptional circumstances that the Reconstruction Authority has not considered when making their decision.

Applications for review are sent to the internal review panel and the independent appeals panel to make recommendations based on the relevant approved policies and guidelines, considering any additional information and documentation provided by the homeowners.

For a sample of applicants who appealed the Reconstruction Authority’s decision, the appeals panel considered the supporting information in line with the process. Consideration of this information was documented in meeting minutes and retained by the Reconstruction Authority for record-keeping. The sample represented both successful and unsuccessful applicants.

The Reconstruction Authority processed most milestone payments in line with documented procedures in a sample tested for the resilient measures stream

Homeowners participating in the resilient measures stream of the RHP are required to sign and submit Milestone Payment Claim Forms to authorise payment of submitted invoices. Milestone payments are made directly to the contracted building professional. Each milestone payment has information that must be submitted with the claim form to ensure that the requirements for the milestone claim have been met. This includes documentation such as works contracts, contractor’s invoices and inspection certificates. The Reconstruction Authority is responsible for reviewing this supporting evidence before issuing payment.

For each payment in a sample reviewed for this audit, the Reconstruction Authority reviewed the milestone claim form and supporting documentation relevant to the claim and retained this documentation for record-keeping. One of the milestones requires a site visit to be conducted before payment can be made. The audit team identified one payment that was issued to a contractor for the completion of this milestone without the site visit having been conducted. The Reconstruction Authority advised that it reviewed photographs of the works completed instead of conducting a physical inspection, which aligns with the current process set out in the building contract.

The Reconstruction Authority has developed plans for the future use of most land bought through the Resilient Homes Program

Given that it is planning to purchase approximately 1,000 parcels of land in the Northern Rivers, the Reconstruction Authority must make arrangements to manage these properties on an ongoing basis until it disposes of the land. It must also make these sites safe for disposal.

The Reconstruction Authority has contracted NSW Public Works, part of the Department of Primary Industries and Regional Development, to undertake management of the land on its behalf. NSW Public Works manages a contractor to conduct key aspects of securing the land and making it safe, including constructing fences, disconnecting services from the purchased properties, securing the properties, and conducting maintenance.

The Reconstruction Authority is also responsible for determining the future use of bought-back land. The RHP guidelines state that zoning restrictions will be placed on residential properties purchased through the buyback stream to prevent future residential use. The former NRRC and the Reconstruction Authority did not consider future planning for the land and properties other than these rezoning requirements as part of the design of the program.

Since July 2024, the Reconstruction Authority has worked with local councils and state government departments, as well as other stakeholders, to determine preferred land use to inform its rezoning and divestment strategy. Some locations with a large number of bought-back properties will require technical reports and planning proposals to rezone the land and determine its future use. The Reconstruction Authority is unsure if these activities will be eligible for funding under the Disaster Recovery Funding Arrangements (DRFA) as they were not considered in the development of the RHP. As a result, the Reconstruction Authority has not sought reimbursement for these expenses from the Commonwealth Government.

In August 2025, project plans for future land use in Lismore and South Murwillumbah were established, outlining the objectives, budget considerations and key milestones for the preparation of precinct plans and planning proposals for these locations. Throughout late 2025, further work was undertaken on other locations across various Northern Rivers LGAs.

As engagement with the program is voluntary, this has resulted in individual parcels of land being bought by the Reconstruction Authority that are isolated from other purchased sites. This has made precinct planning difficult in some areas. The Reconstruction Authority does not have a plan for these separate vacant lots, but it has engaged with councils on available land and has started to work on a divestment approach.

Additional planning at the start of the program may have shown that plans for the future use of bought-back land would be beneficial to develop at an earlier stage. Given that the future use of the land and properties was not considered during the RHP’s development, the Reconstruction Authority is now developing an approach during program implementation.

² Future works refers to home raising or retrofit works yet to be completed. Progress payments are made directly to contractors as works progress.

There was no costed options analysis for the Resilient Lands Program but alternative methods for delivering the specific sites were considered

An important element of the business case process is an options analysis to consider alternative options before determining the preferred option for fulfilling a program’s objectives, including costings for different options. A full options analysis was not undertaken for the Resilient Lands Program (RLP), but alternative delivery models were considered.

One alternative option considered was land swaps, which would have involved providing the Resilient Homes Program (RHP) participants with alternative land at higher ground for relocation. Early in the program design it was envisaged that the RLP may be delivered through land swaps, but a final decision on this approach had not been made at the time. This option was eventually replaced by an alternative option, namely seeking to accelerate land for residential use. This change in approach was made due to the scale of land required, a desire to ensure flexibility for impacted residents, and the cost of purchasing land for land swaps, which would have exceeded the $100 million available to the program. Preliminary analysis conducted by the former Northern Rivers Reconstruction Corporation (NRRC) estimated that a land swap program to service all tranche 1 buyback recipients would cost approximately $400 million for the purchase of land alone.

The NSW Reconstruction Authority (the Reconstruction Authority) uses different delivery models for different sites to meet the program’s objectives within the funding envelope. For example, it purchased the Mount Pleasant site in Goonellabah rather than deliver it through a third party. For other priority sites, such as that in Murwillumbah, the Reconstruction Authority is working with relevant local councils to move development forward by addressing existing constraints on infrastructure, progressing rezoning requirements, and providing funding for site studies and investigations. This demonstrates a flexible approach and a consideration of alternative options for delivery on a site-by-site basis.

While risks are regularly reported to the Resilient Lands Program Steering Committee, the controls in place have not been implemented effectively

The RLP Steering Committee (the committee) first met in October 2024. One of its roles is to provide guidance on decisions related to risk monitoring and management. The committee receives reporting on program risks on a quarterly basis. The risks presented include program administration risks related to budget, time and community perception, and 2 risks that relate specifically to the delay of the North Lismore and East Lismore sites.

While the Reconstruction Authority reports risks to the committee, the controls in place have not been implemented effectively. The risk relating to community perception and reputation states that this will be controlled through proactive community engagement and accelerating housing supply. Community engagement has occurred through a series of workshops, indicating that there has been some implementation of a mitigation for this risk. However, the controls related to accelerating housing have not been effective, given that the delivery of housing through the program has been largely delayed. Despite this, the risk continued to be rated as ‘moderate’ throughout 2025.

Similarly, the risk relating to delays in acquiring the North Lismore site was raised with the committee at its first meeting in October 2024. It was rated as a medium risk with controls that included working on the legal process, working with NSW Public Works and setting milestones for the project. These controls had not changed by June 2025 despite significant issues with acquiring this site. The lack of change to the risk profile despite the changes in circumstances demonstrates that the risk was not actively managed and the controls were not effective in preventing the risk materialising.

It does not appear that the committee discusses risks in its meetings, including whether further mitigations may be required. The meeting minutes only note that the risks were presented and do not indicate any further discussion of these risks.

The Reconstruction Authority has involved stakeholders in the delivery of the Resilient Lands Program

The Reconstruction Authority must work closely with stakeholders to deliver the RLP, particularly because the Reconstruction Authority is not directly delivering the sites. In addition to delivery agencies, the Reconstruction Authority needs to work with the community to ensure that their perspectives are considered as a number of the sites will lead to an increase in population for the towns that have RLP sites in them.

The draft Resilient Lands Strategy was released to the public in June 2023 and received 225 submissions from the public. Submissions related to what was most important to people in terms of the land that was selected for inclusion in the Resilient Lands Strategy, as well as which sites were selected. Feedback was incorporated into the final version of the Resilient Lands Strategy, showing that stakeholder views were incorporated.

Successful delivery of the RLP requires the Reconstruction Authority to work closely with a range of key stakeholders. In particular, councils play a key role in the delivery of sites, and funding is often used to assist councils with preparing site studies and plans. In line with this, the Reconstruction Authority has signed a series of memoranda of understanding (MoU) with the councils that set out responsibilities and what is expected to be delivered through the RLP. Similarly, for those sites where the Reconstruction Authority is working with other state government agencies as the delivery partner, MoUs are in place.

The land assessment process was consistent, but lacked oversight

The NRRC developed the ‘Resilient Lands Suitability Assessment Framework’ (the framework) in March 2023. The framework was largely followed, resulting in a selection of land that was not in a flood zone. However, one of the key oversight mechanisms, the Lands Governance Group, was never formed and so there was no oversight mechanism for the assessment.

The framework set out a 3-stage process, as follows:

• Stage 1 – Compliance check and initial screening
  • Step 1a – Compliance and desktop assessment
  • Step 1b – Qualitative screening
• Stage 2 – Expert panel assessment
  • Step 2a – Individual expert panel member assessments
  • Step 2b – Panel assessment and moderation
• Stage 3 – Recommendations and endorsement
  • Step 3a – Recommendations reporting
  • Step 3b – Governance endorsement.

Stage 1 involved a desktop review of the sites to gather information and to determine whether each site met the minimum eligibility requirements. Key information was drawn from a number of sources. To determine whether it was appropriate for selection, each site was analysed to determine whether it had significant risks around flooding, bushfire and biodiversity conservation. Sites were automatically removed if: most of the site had been impacted by the 2022 flood or were within the probable major flood (PMF) zone; there was a major bushfire risk over the majority of the area; or development would have a material biodiversity impact. This process reduced the list to 27 sites.

For Stage 2, a panel of experts was convened. Each panel member assessed the remaining sites individually against a set of criteria. These were collated and then the panel members came together to discuss their scores and agree a consensus score. Following the panel discussions, a recommendations report setting out the recommended sites was created. After further refinement, this list became the sites in the final Resilient Lands Strategy. This approach to site review was consistent with the framework and resulted in an evidence-based list of sites that met the established criteria of the RLP.

While the process for assessing the sites was consistent, there was a lack of oversight. Stage 3 provided for the results of the assessment process to be presented to the Lands Governance Group. The Lands Governance Group was also to be responsible for overseeing the implementation of the framework and ensuring that it had been followed in developing the recommendations. However, as noted above, the Lands Governance Group was never formed, and no other body fulfilled this function.

The Resilient Lands Strategy was not delivered according to the planned schedule, which significantly delayed the Resilient Lands Program

The Resilient Lands Strategy was a critical deliverable of the RLP, as it set out the land that would be delivered through the RLP. A broad timeline for the delivery of the Resilient Lands Strategy, refined in March 2023, set out when key stages were expected to be completed. These timelines were not met. Table 7 sets out the anticipated timelines for the program, alongside the actual dates on which those milestones were achieved.

* The second tranche of EoIs considered a small number of sites identified later in the EoI process.

Source: Audit Office of NSW analysis.

As can be seen in Table 7, while there were delays during the preparation of the draft Resilient Lands Strategy, the primary delay was in producing the final version of the Resilient Lands Strategy. Despite the strategy not being finalised, some work was undertaken as part of delivering the RLP, including site feasibility studies and entering into MoUs with key parties, though this was not enough to ensure that the individual sites were released according to their planned timelines. The Reconstruction Authority revised its milestones a number of times, aiming to receive ministerial approval for the Resilient Lands Strategy first in December 2023 and then in March 2024, but these timelines were also missed. As a result, the Resilient Lands Strategy was released a year later than initially planned and this has put the program behind schedule.

The Reconstruction Authority has not delivered the Resilient Lands Program sites according to its established timelines and the program is significantly delayed

The Resilient Lands Strategy establishes expected timelines for the delivery of each of the sites that form part of the RLP. The Reconstruction Authority has not met timelines for delivery of these sites. The timelines for the projects have been reviewed, and some projects are delayed by a year or more.

The Reconstruction Authority released the Resilient Lands Strategy in August 2024 with timelines for each of the programs. Table 8 sets out the timelines for each project as established in the Resilient Lands Strategy. The Reconstruction Authority is not responsible for delivering every aspect of these sites, as in some cases it is responsible only for providing relevant studies. However, the Resilient Lands Strategy still sets out timelines for these sites, as well as the expected timing for first new homes, and EoI process identified that these sites could be delivered within 5 years.

Note: All dates are calendar year.

Source: Resilient Lands Strategy and Audit Office of NSW analysis.

The Reconstruction Authority advised that some of the timelines in the Resilient Lands Strategy were not realistic. However, the deliverability of sites was considered through the EoI process by the expert panel and there is no evidence that the former NRRC or the Reconstruction Authority objected to the inclusion of these sites when creating the Resilient Lands Strategy.

In May 2025, the Reconstruction Authority revised the timelines for the program. By this time, the Reconstruction Authority had not met some of the Resilient Lands Strategy’s timelines. The timelines were further revised in October 2025, but the updated timelines were not published. These revised timelines represent significant delays in implementation. The revised timelines can be seen in Tables 9 and 10.

Note: All dates are calendar year.

Source: Resilient Lands Strategy and Audit Office of NSW analysis.

The Reconstruction Authority revised the timing of expected final completion at the same time that it revised the completion dates for the design and approval stages. While all of the design and approval stages were moved back, the final anticipated construction time was brought forward in some cases and delayed in others. The revised completion dates and changes from the Resilient Lands Strategy can be seen in Table 10; for most of the sites some land will be available for public purchase prior to the completion date of the overall sites.

The Reconstruction Authority is not accountable for delivering all aspects of these sites because it only provides supporting studies or works to some of the sites. By including these timelines in the Resilient Lands Strategy, the Reconstruction Authority created an expectation that sites would be completed within them. Not ensuring that these sites are delivered within the timelines would put the program’s ability to fulfil its objectives at risk.

Note: All dates are calendar year.

Source: Resilient Lands Strategy and Audit Office of NSW analysis.

The Reconstruction Authority advised that the RLP is due to be completed in 2027– 28. While some of the projects may continue after this date, the Reconstruction Authority’s ability to influence the pace of delivery of these projects will be limited.

The Resilient Lands Program has not yet met the demand created by the Resilient Homes Program

The most recent version of the RHP Guidelines and the Resilient Land Strategy make clear that the RHP and the RLP are meant to complement each other. While it is clear that the RLP is not only intended to meet the demand created by the RHP, parties who have had their homes bought back through the RHP fall into the flood-affected residents category outlined in the Resilient Lands Strategy. Further, the Reconstruction Authority has established a concierge service for RHP buyback participants to provide assistance, including by connecting participants to the RLP.

In mid-2023 a survey was created to understand RHP participants’ housing needs. Of the buybacks that had been processed by 21 November 2024, 125 participants were interested in RLP land. By this time approximately 725 homeowners had accepted offers through the RHP, indicating that approximately only 17% of the RHP buyback stream participants were interested in RLP land. This survey received only 182 responses and so it is possible that the true extent of demand generated through the RHP is underestimated. The Reconstruction Authority has not monitored the housing outcomes of homeowners who have had their property bought back to determine whether they are still seeking a new property or are waiting for land to be delivered through the RLP.

The Reconstruction Authority has attempted to connect RHP participants with the RLP. This includes the concierge service mentioned above, to provide assistance to buyback stream participants in seeking housing solutions, including through providing connections with the RLP. This concierge service has been used to determine interest in particular sites, particularly the Mount Pleasant site in Goonellabah. However, when the Reconstruction Authority has spoken to RHP participants about their interest in the RLP, some participants have said that the delays in the RLP are one of the reasons that they do not want to participate in the program.

While this demand has been identified, no lots or homes have yet been delivered through the RLP. While the RLP aims to eventually deliver the housing that was identified at the outset of the program, it is not yet fulfilling its role of supporting flood-affected residents of the Northern Rivers. Given the delays in the RLP, the program has not offset the reduction in housing created by the RHP buyback stream.

The land identified in the Resilient Lands Strategy is forecast to meet estimated demand, but program delays put this at risk

At first, destroyed and severely damaged properties were used to assess the potential demand for the RLP and to determine the land that would become part of the Resilient Lands Strategy. This information informed the estimated number of hectares of land that would need to be provided through the program in each Local Government Area (LGA) to support people leaving the flood-affected areas. The estimated land required was taken to represent the immediate need to be met in the Northern Rivers.

Table 11 compares the estimated required land with the land expected to be delivered through the RLP. In addition, Table 11 compares the number of destroyed and severely damaged homes in each LGA with the number of homes or lots that are estimated to become available across the RLP sites. The former NRRC identified demand for the program during the program’s establishment, and designed the EoI process to meet this identified demand.

The Reconstruction Authority anticipates a total of 4,382 homes or lots will be delivered through the implementation of the Resilient Lands Strategy. The Reconstruction Authority, in conjunction with partner agencies, is responsible for the direct delivery of 612 of these homes or lots. It is supporting the delivery of the other homes or lots through a variety of interventions that aim to accelerate the delivery of housing in the region.

* Rounded to the nearest whole figure.

Source: Northern Rivers Reconstruction Corporation documentation.

The former NRRC categorised the demand as an immediate need and sought to fulfil it by early 2028, that is, within 5 years from April 2023. As part of the selection process for the land, the former NRRC chose only sites that it assessed could be delivered within that 5-year period. Delays in the program have put the Reconstruction Authority’s ability to meet this demand in a timely manner at risk.

³ Projects that had already completed this stage are marked as N/A.

⁴ The Reconstruction Authority has split this into 2 stages of work; both are here compared to the original timeline.

Appendix 1 – Response from entity

Appendix 2 – About the audit

Appendix 3 – Performance auditing

© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.

Parliamentary reference - Report number #426 - released 20 May 2026

Objective

This audit assessed whether NSW Health efficiently and effectively provides access to planned surgery (also known as elective surgery) to public patients.

Key findings

NSW Health has mostly cleared the backlog of patients caused by pauses to planned surgery during COVID-19

Non-urgent planned surgery was paused several times during the COVID-19 pandemic between March 2020 and January 2022. This resulted in a backlog of overdue planned surgery patients, reaching a peak of almost 19,000 patients overdue for planned surgery in April 2022. At the end of the audit period in December 2025, this has dropped to approximately 3,900 overdue patients.

NSW Health is not completing planned surgery for all patients within clinically recommended timeframes

In 2024–25, only 4 of the 17 local health districts and specialty health networks met the goal of zero patients waiting longer than clinically recommended for surgery. There are also considerable variations in performance across districts.

NSW Health has not fully rolled out more efficient models for planned surgery

NSW Health has successfully trialled initiatives like surgery hubs and pooled waitlists to boost planned surgery efficiency but these are yet to be implemented across the state. NSW Health is focused on eliminating low-value surgical procedures that are not supported by strong clinical and patient outcome evidence.

NSW Health’s planned surgery access policy supports effective waitlist management

The planned surgery access policy provides clear directives on waitlist management and scheduling surgery in line with the ‘treat in turn’ principle and clinical urgency categories. Recent updates to the policy strengthen clinical governance review requirements and provide guidance that aligns with NSW Health’s efforts to increase planned surgery efficiency.

Despite local control weaknesses, NSW Health waitlist data can be relied upon

The administration of local planned surgery waitlists is reliant on manual data entry without automatic system checks. However, a system of structured clerical reviews mostly compensates for the control weaknesses. Waitlist data collected by NSW Health is suitable as a record of planned surgery access performance to inform decision-making.

Recommendations

The audit makes 3 recommendations to NSW Health.

• Define additional efficiency performance targets for inclusion in service agreements with local health districts.
• Identify and determine the planned surgery service delivery models that achieve greater efficiencies and surgical throughput, and target policy and investment accordingly.
• Develop additional risk-based guidance for local health districts to conduct regular reviews of waitlist management and compliance.

This chapter reports on overall NSW Health system planned surgery access performance and the Ministry of Health’s role as system steward in setting expectations for system performance.

The Ministry of Health purchases hospital and other health services from local health districts. The NSW Health Performance Framework sets out arrangements for how the Ministry of Health monitors and assesses the performance of local health districts in delivering those services. Service agreements set out detailed Ministry of Health expectations, including for planned surgery access, performance and the available funding allocation.

Local health districts are regarded as performing to expectations for planned surgery access when they achieve zero overdue patients across all 3 clinical urgency categories. The time patients spend waiting for surgery is calculated as the time between listing date and treatment date, less any time spent not ready for care due to clinical or personal reasons.

Previously, local health districts were also assessed against Elective Surgery Access Performance (ESAP), which measured the proportion of patients treated on time, with a target of 100% for urgent, and 97% for semi-urgent and non-urgent categories, aligned with National Health Reform Agreement targets. However, in 2024, the Ministry reduced the numbers of KPIs in service agreements by changing the ESAP measure to an improvement measure rather than a formal KPI. Achieving the target of zero overdue patients for all categories means that local health districts also achieve the ESAP targets.

This chapter considers how NSW Health understands the supply of, and demand for, planned surgery, and how it implements strategies to meet this demand. Some patient cohorts experience barriers before they are placed on a planned surgery waitlist; this chapter first considers waitlist access issues, then considers NSW Health’s management of waitlists.

This report relies on waitlist data collected and maintained by the Ministry of Health. This chapter provides an assessment of the quality of that data.

NSW Health planned surgery data is generally fit for purpose

The Ministry of Health maintains the Wait List Data Stream, which contains information on all patients currently on the planned surgery waitlist in NSW public hospitals, as well as cancellations and removals from the planned surgery waitlist. Data is updated via a monthly extract from local health districts’ patient administration systems. The Ministry of Health administers a series of system logic and completeness checks to the uploaded data and requires districts to correct errors within a 5-day window each month. As the Ministry of Health upgrades its data warehouses, error correcting is expected to be a more incremental task, resulting in fewer errors outstanding prior to the final upload to the Wait List Data Stream. Upgrades to data warehouses and medical records systems will also eliminate errors in calculating wait times for patients with periods of time that they are not ready for their surgery and changes in their clinical urgency category.

The Bureau of Health Information (BHI) is the NSW Health organisation charged with publishing regular information about the performance of the health system and advising the Minister and the Ministry of Health on the quality of key health datasets. The BHI extracts a copy of Ministry of Health planned surgery data from the Wait List Data Stream and conducts high-level quality assurance to assess reliability and validity prior to publication of the healthcare quarterly report. It engages with the Ministry of Health on actual or potential issues with data, such as impacts of industrial action, hospital or service-level changes, or changes in policy. The BHI has not flagged any issues with planned surgery access data over the review period and reports that it considers the data to be of high quality.

While Ministry of Health and BHI validity checks work to ensure that waitlist data is consistent and understood over time, both agencies are reliant on practices at local health districts. Nevertheless, the waitlist data is of reasonably high quality and fit for the purposes of monitoring and managing planned surgery access performance.

Local health district administration of planned surgery lacks preventative controls for managing the risks of non-compliance with the planned surgery access policy and the ‘treat in turn’ principle

The administration of planned surgery is reliant on paper Recommendation for Admission forms submitted by surgeons to the hospital. Hospital administrative staff receive the forms, date stamp them and then enter the data into the patient administration system within 3 business days. The planned surgery access policy sets out a minimum dataset that must be obtained to validly create a waitlist record for a patient within the patient administration system. Local health district staff are reliant on locally developed checklists, in the absence of electronic completeness and validity rules, to ensure that the minimum required data is correctly entered into the system.

The older patient administration systems at the 2 local health districts reviewed for this audit, which are of similar age to those used in the rest of the state, are not configured with segregation of duties controls and workflow approvals for changes to key fields such as clinical urgency category. This lack of preventative controls is significant as changes to these fields can affect the apparent planned surgery access performance of local health districts. The absence of preventative controls at the point of data entry means that local health districts are reliant on compensating ad hoc and routine detective controls to identify non-compliance with the ‘treat in turn’ principle.

A system of mandated, routine and ad hoc audits and reviews provides compensating controls over waitlist accuracy but could be improved

The planned surgery access policy requires local health districts to undertake a series of weekly, monthly and quarterly clerical reviews and audits of waitlist data to ensure accuracy. The audits maintain the accuracy of the list once it is entered into the patient administration system. Both local health districts reviewed for this review undertook these audits as required throughout the audit period.

Clerical reviews are supplemented by ad hoc reviews conducted by local health district internal audit divisions, sometimes with assistance or direction from the Ministry of Health. In the absence of preventative and system-enabled controls, these reviews provide an important compensating control. Both the Ministry of Health and local health districts are responsive to adverse findings of ad hoc reviews. None of the audits reviewed by this audit indicated systemic manipulation of waitlist data, and errors were attributed to mistake and misunderstanding of required processes. NSW Health does not currently require internal audits or similar compliance assurance reviews to be conducted at each district on a regular basis, nor is there a standardised control testing methodology for these reviews.

The planned surgery access policy states that clinical urgency categorisation should only be changed for clinical reasons. However, a consistent finding of ad hoc reviews is that clinical urgency categorisation is changed from more to less urgent due to operational and capacity issues. This is more likely to occur as patients approach the date on which they are recommended to have surgery. This pattern of changes in clinical urgency categorisation is inconsistent with holding local health districts properly accountable for waitlist performance. In September 2025, the Ministry of Health updated its planned surgery access policy, introducing facility-level clinical review panels. In the future, these panels may provide greater assurance that there are appropriate clinical reasons for a clinical urgency category deviating from NSW Health’s recommended clinical urgency. Additional guidance to local health districts on establishing a regular pattern of ad hoc reviews will assist the clinical review panels achieve their purpose.

Appendix 1 – Response from entity

Appendix 2 – Reviewed local health district profiles

Appendix 3 – Data tables

Appendix 4 – About the audit

Appendix 5 – Performance auditing

© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.

Parliamentary reference - Report number #425 - released 14 May 2026

Objective

This audit assessed whether the NSW Police Force efficiently and effectively planned and sourced key components to upgrade core policing technology systems.

Key findings

The NSW Police Force did not effectively plan and has not yet delivered the program

By December 2025, the NSW Police Force had spent over $155 million delivering some essential technology upgrades and replacing only 1 of 5 core systems in full, with most functions still dependent on outdated platforms.

The contract was awarded to a supplier that posed a high delivery risk

The NSW Police Force conducted a structured and competitive procurement that complied with NSW Government requirements. However, despite warnings from advisers and gateway reviews, it proceeded with a supplier whose solution promised operational benefits even though it posed known capability and delivery risks.

Supplier non‑performance caused delays and costs with no ongoing benefit

The selected supplier was unable to deliver key system components. The NSW Police Force terminated the contract in 2022 after significant delays and expenditure.

There was no effective oversight of timelines, budget controls or risks

Following contract termination, the NSW Police Force did not maintain effective governance, capability or appropriate financial controls. This slowed decision making and prolonged reliance on legacy systems. 

The NSW Police Force reset the program in mid-2024, reducing program delivery risks

Since mid-2024, there have been significant improvements to governance and program management, and the NSW Police Force has developed an enterprise digital strategy. These have stabilised the program.

The NSW Police Force estimates it needs additional funding to deliver the program

The program delivery date is now June 2031, 4 years later than originally planned. The NSW Police Force estimates that it will need an additional $78 million in capital funding and $415 million in recurrent funding to deliver the program.

Recommendations

The NSW Police Force should demonstrate effective program governance throughout the remaining life of the program and incorporate lessons learnt to manage risks to ensure program success.

In 2017, the NSW Police Force established the Integrated Police Operating System (IPOS) program to replace the Computerised Operational Policing System (COPS) and the computer aided dispatch (CAD) system, as well as forensics, investigations and custody management systems. The NSW Police Force estimated the cost to replace the COPS mainframe hardware and systems would be at least $400 million, so instead decided to procure a ‘software-as-a-service’ solution by choosing the most suitable commercial off-the-shelf product.

This chapter considers the period from 2018 to June 2022, which spans procurement activities until the NSW Police Force terminated the primary supplier contract. Subsequent chapters in this report consider the later time periods.

The NSW Police Force identified the risk of maintaining legacy systems and the need for investment in core policing systems

The NSW Police Force prepared a strategic business case in October 2018 that identified the risk of maintaining legacy systems and the need for investment in core policing systems. The business case noted that the software and hardware costs were high and increasing, that the skilled programmers who maintained the existing systems were approaching retirement and that recruiting new programmers was difficult. Core policing systems were assessed as having a medium to high risk of system failure, which would have a serious impact on operational policing activities.

The strategic business case presented 3 options:

1. do the minimum – maintain existing platforms
2. IPOS – a commercial modular system provided as a suite of packages
3. hybrid – a bespoke rebuild of COPS and key satellite systems plus purchase of a commercial system for CAD.

The NSW Police Force identified option 2 as the preferred option. It assessed the technology and police operational risks as low risk, and the implementation risk as medium. The gateway review of the strategic business case concluded that IPOS was a large-scale transformation program and that the NSW Police Force needed to undertake further work to identify, assess and mitigate major risks.

The NSW Police Force conducted a thorough assessment to identify a suitable replacement for its core systems

The NSW Police Force went to market for a commercial modular system in late 2018. Between October and December 2018, the NSW Police Force narrowed down 23 proposals to 3 possible vendors through short-listing, detailed assessments and requests for additional information. The IPOS procurement documents stated that proposals should be submitted by a prime contractor and consortium partners (if required).

At the beginning of the procurement process, the NSW Police Force developed a detailed evaluation framework and a Core Tender Evaluation Committee (CTEC), comprising 10 assistant commissioners responsible for front line policing and the chief information technology officer. Functional tender evaluation teams (FTET), involving around 100 operational police staff, ICT experts, and representatives from finance, procurement and legal teams, supported the CTEC.

The NSW Police Force received 23 submissions from individual vendors and consortia, 13 organisations received full Request for Proposal (RFP) materials, and 6 complying tenders were submitted in November 2018. Following scenario demonstrations and value-for-money assessments, the NSW Police Force selected 3 vendors to progress to the next stage. In March 2019, the NSW Police Force conducted ‘deep dive’ sessions with the 3 vendors, which involved scenario-based demonstrations and hands-on testing.

All 3 vendors demonstrated potential efficiency savings for the NSW Police Force. One consortium was ranked first on most of the assessable factors, scoring much higher than the other 2 vendors on operational factors. The NSW Police Force decided to continue assessing all 3 vendors, because the deep dive demonstrations only accounted for 35% of the overall evaluation weighting. The remaining 65% of the weighting applied to commercial, financial and technology criteria, which were assessed through a refined RFP evaluation stage.

Table 1 summarises the NSW Police Force’s compliance with NSW Government and internal procurement policies and guidelines.

Source: Audit Office of New South Wales analysis of IPOS procurement documents and NSW Government procurement policies, procedures and guidelines.

In May 2019, the NSW Police Force released its refined RFP and assessed vendors though site visits and reference checks, looking at products in use in other policing agencies. Following the site visits, the consortium that scored highest during deep-dive sessions was ranked first. The evaluation also included an independent financial assessment, which rated this consortium as third. All 3 proposals were non-complying with some of the NSW Police Force’s commercial requirements, for example by not agreeing to all the responsibilities of the prime contractor. However, following independent probity advice, the NSW Police Force decided to proceed with procurement.

The NSW Police Force engaged external reviewers to support decision making and identify key risks

During the IPOS procurement process, the NSW Police Force engaged external probity advisers who reviewed documents and attended vendor demonstrations. External reviewers and evaluators identified risks in contracting with an overseas start-up firm with current and forecast losses, and no experience of contracts as large as the NSW Police Force. While the firm had delivered records management and computer aided dispatch systems to police services in the US, these were for much smaller police services with fewer functions compared with the NSW Police Force. In addition, the product did not include an existing forensics and exhibits system, which would require development of a new module rather than adapting existing software.

In September 2019, the NSW Police Force conducted a whole-of-government review focused on vendor engagement risk and invited representatives from the NSW Department of Customer Service (DCS), the NSW Department of Finance, Services and Innovation (DFSI), and the NSW Chief Procurement Officer to participate. The reviewers considered the procurement risks and how to reduce the likelihood of the risks occurring, and recommended further negotiation with the prime contractor and consortium partner before entering into contracts.

Following this review, the core tender evaluation committee concluded that the proposal from supplier A as prime contractor and supplier B as a consortium partner was the best option, scoring much higher than the other 2 viable solutions on operational criteria. The NSW Police Force considered options for contracting and sought additional legal advice. In November 2019, the NSW Police Force considered going back out to market to find a complying solution but the program steering committee decided that this would create an unacceptable delay for the project.

The NSW Police Force extended the due diligence period after risks were identified in the choice of suppliers, while changing the technical requirements caused further delays

In March 2020, the NSW Police Force selected supplier A as the prime contractor and systems integrator, with responsibility to manage end-to-end delivery of the program, including coordinating program streams, testing the product developed by supplier B and providing system security. As the prime contractor, supplier A was responsible for supplier B’s performance and took on the commercial risk for the contract. The NSW Police Force entered into short-term phase 0 contracts with both suppliers to validate the RFP response, confirm scope, provide updated pricing and negotiate the final contract schedules. Before beginning phase 0 the NSW Police Force negotiated ‘term sheets’ with the suppliers, which set out the key commercial terms to be agreed before the contracts were signed.

The NSW Police Force extended the duration of phase 0 in the procurement process to allow for extensive due diligence. Phase 0 was originally planned to finish in September 2020, but it ran until February 2021.

During phase 0, the NSW Police Force revised the technical requirements for IPOS to increase its level of control over information and technology security. These changes included reconsideration of the original data storage and hosting location, clarification of security and sovereign ownership and responsibilities, and stronger alignment with government security requirements, including the Protective Security Policy Framework (PSPF). These changes had implications for system architecture and contractual arrangements. As a result, the NSW Police Force undertook extensive negotiations with supplier B to reassess security controls, hosting arrangements and delivery responsibilities.

Source: Audit Office of New South Wales review of NSW Police Force documents.

During the due diligence process, supplier A resigned from the prime contractor role, reducing its responsibilities and level of accountability for IPOS delivery, and proposed to continue with the systems integrator role. This increased the risk for the NSW Police Force because supplier A would no longer be responsible for supplier B’s performance. The NSW Police Force accepted supplier A's resignation from the prime contractor role but did not accept the proposal for supplier A to continue in the systems integrator role. This did not constitute a breach of contract because the program was still in the due diligence phase.

The NSW Police Force entered into a phase 1 contract for program delivery with supplier B, but not with supplier A

The NSW Police Force decided that the involvement of supplier A increased the complexity and risk of the program, especially in solution architecture. The NSW Police Force concluded that supplier A was not sufficiently familiar with supplier B’s products, was not working well with supplier B, and was not providing the expected leadership in solution design and risk management. The NSW Police Force removed supplier A as systems integrator in June 2020 and took on this role itself.

The NSW Police Force implemented proactive risk management strategies in the final contract with supplier B. This included:

• a bank guarantee from supplier B
• quarterly financial health checks to provide early warning of solvency issues
• payment for actual deliverables based on milestones
• relocating staff from supplier B to Australia to deliver the program
• NSW Police Force ICT staff learning the programming code.

To limit potential financial losses, the NSW Police Force built 5 exit points into the final contract with a ‘go/no-go’ decision required at each stage.

The NSW Police Force prepared business cases that were informed by operational needs

The NSW Government Business Case Guidelines, administered by Treasury, assist NSW Government agencies to seek approval for capital and recurrent funding. The guidelines set out the criteria that agencies should consider, including the case for change, economic and financial analysis, and benefits expected from the proposal.

Following the 2018 strategic business case, the NSW Police Force prepared a final business case in November 2019. This identified that critical information was not available to police and partner agencies in real time and noted that ICT systems were slow and limited collaboration. The final business case concluded that legacy systems were unnecessarily complex and inhibited operational policing.

In November 2020, the NSW Police Force prepared an addendum to the final business case (FBCA). This set out the expected costs and benefits of contracting with supplier B and presented a schedule for implementing core system upgrades. The FBCA estimated that IPOS would allow operational staff to create incident records more quickly, reduce data entry into different systems and provide reliable information on mobile devices. The NSW Police Force had selected supplier B based partly on the deep-dive assessments, where supplier B scored much higher than the other 2 vendors on operational factors.

Gateway reviews had identified the risks of remaining with existing ICT systems and the risks of contracting with an overseas start-up technology firm

The NSW ICT Digital Assurance Framework, administered by the DCS, applies to major ICT projects in NSW Government agencies. Gateway reviews occur at different points through the planning and procurement of major ICT projects and provide an independent assessment of activities. Appendix 3 provides more information on reviews and health checks throughout the audit period.

The Department of Finance, Services and Innovation (DFSI) conducted 2 gateway reviews in mid-2019. The Gate 1 review, which considered strategic alignment, assessed the 3 options for replacing core systems and found that the strategic business case understated the risk of maintaining the existing platforms. The review concluded that IPOS was the only viable option. The DFSI rated delivery confidence as medium.

The DFSI conducted the next gate review (Gate 3A and Gate 4A) in July 2019. This review, which was focused on procurement, tendering approach and evaluation, assessed delivery confidence as low. It noted that the program plan was inadequately resourced and based on overly optimistic timeframes. The DFSI raised concerns that the NSW Police Force planned to select the preferred provider before finalising key commercial terms.

The DCS conducted a Gate 2 review of the IPOS final business case and addendum in December 2020, once the costs and benefits of contracting with the selected suppliers were clear. The review assessed delivery confidence as medium, which was:

The DCS Gate 2 review of the IPOS business case raised concerns about the contract with supplier B, including a concern about fixed pricing throughout the contract duration. The review noted that ‘the IPOS Program Team needs to be vigilant to ensure that the contractual framework does not negatively impact [the supplier’s] preferred behaviours as an innovative supplier of contemporary software’. The review recommended that the NSW Police Force consider reward-sharing in future contracts.

Weaknesses in early governance and program management arrangements increased risks and hindered early program momentum

The NSW Police Force set up regular meetings from the start of the program in January 2019 for both the IPOS Program Control Group and the IPOS Steering Committee. However the gateway review during procurement in July 2019 found that the organisation did not operate effective decision making or program governance across much of the program. The review identified weaknesses in resourcing, risk and issue reporting, and overall program oversight. In response to these weaknesses, the NSW Police Force finalised a IPOS governance plan in November 2020.

The NSW Police Force also finalised a program management plan in November 2020 but did not establish a program management office until late 2021. The NSW Police Force engaged consultants to set up the program management office and to provide program management services at a cost of $3 million from July 2021 to June 2022. The delays contributed to poor program management in the early stages of the program. The NSW Police Force advised that it had not established a program management office earlier because it was focused on procurement activities in 2019 and 2020, before funding was approved in February 2021.

In December 2021, an internal audit health check found that leadership of the IPOS program was driven by the Technology Command and not led by the business. This had reduced the delivery focus on systems that directly supported operational policing. At that time, the program steering committee included 2 deputy commissioners, one acting as the program sponsor and the other as the business owner.

The NSW Police Force did not introduce a reliable process to prioritise changes to legacy systems until 2023. During 2021 and 2022, COPS enhancements were not logged and tracked in a single system. In 2023, the NSW Police Force introduced a prioritisation board and required issues papers to accompany each request.

The NSW Police Force's inflexible recruitment processes and challenges in recruiting and retaining skilled staff affected program delivery

The IPOS risk register created in July 2019 noted that ‘an inflexible and cumbersome internal bureaucracy (i.e. HR approvals) is prohibitive to timely recruiting’; it assessed this risk as almost certain to occur. The risk register also noted that the NSW Police Force was undertaking 2 large technology projects at the same time, with higher remuneration packages for staff working on the human resource management upgrade than on IPOS.

In July 2021, the program identified challenges in recruiting business and change analysts, project managers and testing staff. In December 2021, both the chief information and technology officer and the IPOS program director resigned. By June 2022, the program risk register had recorded that ‘Multiple project resources have left the NSW Police Force, and this has caused a gap in the project resourcing and has impacted project timelines’.

The NSW Police Force received capital funding for IPOS, but this was offset by reductions in its future recurrent budget

The final business case completed in November 2019 adopted a self-funding approach, described in the DCS Gate 2 review as a ‘unique cost-neutral financing model’ drawing on existing forward allocations over 17 years.

In May 2020, the final business case was approved and in February 2021, NSW Treasury approved the release of funds. Under this model, the NSW Police Force received $328 million in capital funding on the condition that its recurrent budget would be reduced for 11 years from 2027–28 to 2038–39.

As a result, the NSW Police Force faces a reduced recurrent expenditure budget of $25 million in 2027–28 and $26 million for each of the next 4 years, with these reductions already reflected in forward operating budgets. Unless the NSW Police Force receives additional funding, it will need to find savings from other operational areas to meet both these ongoing reductions and the program’s funding needs.

The NSW Police Force attempted to limit losses by terminating the contract when it was clear that supplier B could not deliver the systems

In June 2022, supplier B advised that it could not deliver a forensics and exhibits system, and that it could not deliver the minimum viable product for CAD until 2029, 6 years later than the original date in the signed contract. The NSW Police Force terminated the contract, relying on early termination clauses. This limited the contract duration and payments to the supplier, which had reached $15 million before the contract was terminated.

In addition to payments to supplier B, the NSW Police Force had spent $5 million on project management that provided no ongoing benefit. The total lost investment from the contract was almost $20 million.

After the contract was terminated, supplier B began legal action against the NSW Police Force. In August 2023, the NSW Police Force and supplier B reached a legal settlement that is subject to a non-disclosure clause.

This chapter considers the Integrated Policing Operations System (IPOS) program after the NSW Police Force terminated its contract with supplier B in June 2022. The chapter concludes in April 2024 when the NSW Police Force reviewed the program.

After the termination of supplier B’s contract, the program lacked direction and momentum

From 2022 to 2024, the IPOS steering committee met regularly, but the program lacked direction and coordination. Project teams worked largely in silos and the steering committee did not maintain sufficient oversight of timelines or budgets. During this period the NSW Police Force continued to upgrade its computer aided dispatch (CAD) system and found a suitable forensics and exhibits system but did not look for a replacement for the Computerised Operational Policing System (COPS).

Internal and external reviews also concluded that the IPOS program was unlikely to succeed. In September 2023, the Department of Customer Service (DCS) health check review rated delivery confidence as low and noted the absence of a clear delivery plan, an overarching digital policing strategy and a current business case. The review recommended that the NSW Police Force appoint a single sponsor for the program, develop a delivery plan, and update the business case and future funding model.

In September 2024, an internal audit into budget control found weaknesses in change management, budget control and executive reporting. The NSW Police Force also conducted a detailed financial reconciliation process to identify the actual capital and recurrent spending for each IPOS project, as this information had not been reported clearly to the steering committee.

The NSW Police Force hired consultants to improve program governance and project management

Following the DCS health check review, the NSW Police Force hired a member of the review team to help implement the review recommendations. This assurance and strategic adviser identified challenges with program governance and the operating model for the Technology Command, and worked with the program to clarify roles and responsibilities. The adviser worked with the program until December 2025.

In early 2024, the NSW Police Force hired consultants to review project planning and reporting. The review found that most managers for individual projects did not know or understand their budgets and were not managing them effectively. Project managers worked in silos and project plans presented different information in varied formats, which made comparison of projects difficult. The report identified that the steering committee was not maintaining effective oversight of the program budget and timelines. Exhibit 2 summarises the recommendations from the project management review.

Source: Audit Office of New South Wales review of NSW Police Force documents.

The review recommended improving program governance so that project and program managers could make the required decisions in real time. The review team introduced consistent project management templates and provided guidance and coaching to improve the capability of project management staff.

Since 2022, the NSW Police Force has introduced only one upgraded core policing system and completed procurement for a second system upgrade

The strategic business case in 2018 identified 5 core systems to be replaced by IPOS:

• COPS
• CAD
• forensics and exhibits (EFIMS)
• custody management
• major investigations and intelligence gathering (E@gle-i).

The final business case addendum in 2020 included a schedule for decommissioning these 5 legacy systems between 2023 and 2028.

After the IPOS contract was cancelled, the NSW Police Force needed to replace EFIMS and CAD urgently because the systems were no longer fit for purpose and existing contracts were ending. In February 2025, the NSW Police Force delivered an upgraded forensics and exhibits system (NEXUS, replacing EFIMS). By December 2025, only 1 of the 5 core policing systems had been replaced. Procurement for a new CAD system was well underway, with ‘go live’ planned for November 2027.

In 2022, the NSW Police Force used a closed procurement approach for forensics, awarding the contract to the supplier used by all other Australian jurisdictions. The NSW Police Force then went to market in late 2022 to procure a replacement exhibits system and awarded that contract to the same supplier. The combined forensics and exhibits system, NEXUS, went live in February 2025.

After determining that upgrading the existing CAD was not cost-effective, the NSW Police Force returned to market and selected a new supplier in early 2025. In June 2025, the NSW Police Force identified potential suppliers for a replacement for COPS and included a replacement for E@gle-i as a component of this procurement.

The NSW Police Force has delivered improvements to information and communications technology infrastructure that support core policing systems

In 2018, the IPOS strategic business case identified that the NSW Police Force needed to improve its system and data integration and take advantage of changes in technology such as cloud-based systems. The 2020 final business case addendum provided a schedule for critical infrastructure upgrades to support core policing systems.

During 2020 and 2021, the NSW Police Force initiated workstreams to upgrade its information and communications technology (ICT) infrastructure, including:

• platform and security enablement (P&SE) – cloud and network services, including support for mobile devices, encryption and monitoring system usage
• integration platform and processes – enhanced exchange of information between IPOS systems and other NSW Police Force systems such as staffing, rostering and finance, and equipment used by frontline staff, for example, body-worn video, as well as integration with other agencies, including NSW courts, Transport for NSW and the Australian Federal Police
• IT service management – tools and processes to support the delivery of IPOS systems
• data management capabilities – improved data integration to provide a unified single view of policing data, plus data analytics capabilities
• testing – to ensure new and upgraded systems perform as expected.

By December 2025, the NSW Police Force had spent $49.8 million on these ‘enabling streams’ to support core policing systems. P&SE accounted for almost two-thirds of the spending ($32.1 million) and has delivered cloud data centres, secure data transfer between mobile devices and cloud data centres, and stronger identity management.

The NSW Police Force has also introduced several smaller system enhancements, which are likely to have improved the efficiency of operational policing

In 2023, the NSW Police Force initiated a number of smaller projects identified by operational and technical staff. The NSW Police Force advised that these projects were initially considered impractical to deliver until COPS was replaced, but ICT infrastructure improvements enabled their earlier development. The NSW Police Force revised the IPOS scope and budget to include these smaller projects. The systems were developed through a mixture of contracts and in-house development, and the NSW Police Force plans to retain them as part of the COPS replacement system.

Projects delivered included mCOPS, a mobile application that simplifies the recording of high-volume incidents such as inspections, traffic infringements and domestic violence incidents. The NSW Police Force estimates that the inspections functionality reduced average time on scene from 24 minutes to 12 minutes, and reduced COPS event creation to 2 minutes, saving the equivalent of 610 12-hour shifts in the first 18 months.

The NSW Police Force also adapted the GoodSam health responder app (renamed BluLink) to enable police to interact directly with the public through location sharing and live video. The NSW Police Force rolled out BluLink in 2024, estimating that it saved at least $6 million in search and rescue costs in the first year.

The level of vacancies in the program and increasing contingent labour costs contributed to poor control of budgets and delays in delivering system upgrades

During 2023 and 2024, the NSW Police Force had difficulty recruiting the technical, project management and integration specialists needed to re-establish program direction. Inflexible recruitment processes and uncompetitive salary bands limited its ability to attract scarce ICT skills in a competitive labour market. In January 2023, the IPOS program had 191 approved positions, but 82 (43%) were vacant.

Throughout the program the NSW Police Force found it difficult to recruit programmers skilled in legacy technology. Specialist developers maintained the legacy systems and were integral to the IPOS data management capability workstream. The cost of temporary developers rose from $1,000 per day in December 2021 to $1,500 per day in December 2024, equivalent to $345,000 per year. In May 2024, the project management report found that prolonged vacancies in key technical roles had impacted the design and delivery of IPOS. Steering committee papers frequently reported that program vacancies contributed to poor control of budgets and delays in delivering system upgrades.

This chapter covers the time period after the Integrated Policing Operations System (IPOS) program was reviewed in mid-2024, and then rebranded as the Police Technology Program (PTP) in late 2024. The chapter also considers the state of the program in December 2025 and the risks the NSW Police Force must address as procurement progresses and systems are implemented.

In 2024, the NSW Police Force merged 2 commands and made changes to IPOS governance arrangements to improve project planning, budget control and decision-making processes

In May 2024, the NSW Police Force merged the Technology Command and the Communication Services Command. This resulted in a change of leadership for technology programs and provided an opportunity to reset the IPOS program. From July 2024, the NSW Police Force began implementing recommendations from the gateway review and project management report, including moving to a single sponsor for IPOS and making changes to governance arrangements.

Following the project management review, internal audit report and financial reconciliation exercise in mid-2024, the NSW Police Force developed consistent project plans and tracking for each IPOS project. During 2024, it also strengthened the governance of the Computerised Operational Policing System (COPS) replacement workstream and aligned it with the mainframe and application data decommissioning (MADD) project.

In September 2024, the DCS conducted a second health check review, which rated delivery confidence as medium, and noted improvements in leadership, governance structures and early delivery outcomes.

The NSW Police Force has significantly improved the governance of the program and the quality of project management

Following the merger of the Technology Command and the Communication Services Command in May 2024, the NSW Police Force improved its information and communications technology (ICT) maturity and developed a digital strategy. It strengthened governance through the PTP steering committee, which included representatives from several operational commands and the new Technology and Communication Services Command (TCSC). The committee was chaired by the PTP program sponsor, the Deputy Commissioner, Corporate Services, and had clear terms of reference.

Since April 2025, the steering committee has received more consistent and structured reporting for each PTP project, covering delivery status, financials, risks/issues/dependencies, benefits realisation and change management. The steering committee papers also detail the actions needed to move a project’s status from amber or red to green. This has improved transparency and supported better oversight of projects and decision making.

In November 2025, the NSW Department of Customer Service (DCS) conducted a health check review, which identified improvements in the program and rated overall delivery confidence as medium. The review assessed key scope areas, rating both the current phase and readiness for the next phase as high, and the delivery approach and risk management as medium.

The NSW Police Force does not expect to deliver the full suite of upgraded systems until 2031, 4 years after the program's original end date

Although the NSW Police Force identified the COPS replacement as its highest priority for the rebranded PTP, the delivery timeline for phase 1 of the core policing solution is now June 2029. The timeline for delivering future modules, including intelligence management and custody management, is June 2031, 4 years after the original IPOS end date.

When the NSW Police Force prepared the full business case for IPOS in 2020, it expected to implement 2 core policing systems: computer aided dispatch (CAD) and forensics by June 2023; and replacement COPS modules covering report writing, investigations and inspections by June 2025. The final core policing systems, including custody management, major investigations and legal process, were due by June 2027. In November 2024, the NSW Police Force determined that the program could not be delivered by June 2027 and the end date was extended to June 2029.

In June 2025, the IPOS steering committee was advised that $24.3 million had been transferred from the IPOS capital budget in 2025–26 to Infrastructure and Assets Command for the purchase of Mascot police station, with funds to be repaid in 2027–28 and 2028–29. The transfer of funds was approved by the Commissioner’s Executive Team and NSW Treasury, and extended the timeline for IPOS delivery by 2 years from June 2027 to June 2029, which better aligned with the NSW Police Force’s capacity to deliver the program.

In October 2025, the NSW Police Force prepared a revised business case for the PTP. This shows that phase 1 of the PTP, due by June 2029, includes several core policing systems, notably forensics and exhibits, CAD and 2 modules of the core policing solution (crime recording and investigation management). PTP phase 1 combines systems already delivered with systems where procurement was still underway.

Phase 2 of the PTP, due by June 2031, includes the remaining modules from the COPS replacement system, namely information and intelligence management, procedural justice, regulatory services, crime prevention and public safety. Phase 2 also includes modernisation of the firearms licensing system. Appendix 3 provides more information on the status of PTP projects at December 2025.

The NSW Police Force had spent over $155 million on core system projects and supporting ICT infrastructure, but major components are outstanding

By December 2025, the NSW Police Force had spent over $155 million of the $328 million capital budget, including: $36 million for forensics and exhibits; $32 million for cloud hosting and security; $18 million on other ICT infrastructure projects; $16 million on upgrading legacy systems; $19 million on ancillary systems, such as mCOPS; and $9 million on CAD.

The $50 million spent on cloud hosting, security and other ICT infrastructure projects was critical capital expenditure to support current delivery and future capabilities, such as CAD and the core policing solution project. While the NSW Police Force expects to deliver an upgraded CAD system in 2027, the timeline for core policing system modules cannot be determined until procurement is completed.

By December 2025, the NSW Police Force had spent $11 million on project and program management services and $9 million on system architecture services. The NSW Police Force had spent almost $18 million on consultants and contractors to support the IPOS program. The largest payments were $4.85 million to supplier A for phase 0 due diligence in 2020 and $3.6 million to consultants for program management services in 2021 and 2022.

The NSW Police Force estimates that delivering the PTP will cost an additional $78 million in capital funding by 2031

The revised PTP business case indicated that $184 million of the original $328 million capital allocation remained available for system development at 30 June 2025, but this was insufficient to fund the full program.

The DCS reviewed the business case in October 2025, and it was subsequently endorsed by the Commissioner’s executive team (CET). The NSW Police Force planned to submit it to Treasury in early 2026. At February 2026, the NSW Police Force had not presented a final business case to inform government that additional funding would be needed and that the delivery timeline is now 2031.

The NSW Police Force estimates that PTP phase 1 will cost a further $150 million to complete CAD, forensics, mobile systems and the modernisation of COPS investigation management modules. While phase 1 can be funded from within the approved capital allocation, phase 2 requires additional capital investment totalling $78 million. PTP phase 2 aims to deliver the remaining modules of the core policing solution and the firearms licensing modernisation project.

Exhibit 3 shows the capital budget presented in the 2020 business case, the actual capital expenditure incurred by the NSW Police Force from 2019–20 to 2024–25, and the revised capital expenditure forecast reported in the 2025 business case.

Appendix 1 – Response from entity

Appendix 2 – Timeline of key events

Appendix 3 – Gateway reviews and health checks

Appendix 4 – Status of PTP projects at December 2025

Appendix 5 – About the audit

Appendix 6 – Performance auditing

© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.

Parliamentary reference - Report number #424 - released 11 May 2026

Objective

This audit assessed the efficiency and effectiveness of NSW Health’s oversight and assurance of arrangements to engage and accurately remunerate Visiting Medical Officers (VMOs).

Key findings

NSW Health does not provide coordinated statewide governance of VMO engagement and remuneration

While there are established policies for VMO engagement and remuneration, these do not operate as an integrated governance framework across each stage. System stewardship elements including statewide oversight, monitoring, reporting and assurance are not in place.

NSW Health does not assess the long-term financial or workforce impacts of VMO use

There is an absence of statewide workforce planning or value for money criteria to guide Local Health Districts (LHDs) on when and how VMOs should be used. District decisions on VMO engagement are largely driven by short-term service needs.

LHDs do not have effective internal controls over VMO payments

There are significant and persistent weaknesses in NSW Health’s payment controls. These include failures to segregate claims checking from claims payment duties, limited oversight of higher-risk arrangements and insufficient monitoring of excessive hours or potential double billing. These weaknesses increase the risk of error, inappropriate payments and fraud.

Weaknesses in IT systems and data controls undermine compliance with policy

NSW Health practices for processing VMO claims undermine the accuracy and integrity of payments, including extensive use of ‘miscellaneous’ claim categories, lack of validation against Medicare item codes and inconsistent application of aged-claim discounting.

NSW Health does not monitor or report on VMO arrangements

There is a lack of routine, system-wide monitoring of VMO arrangements, including expenditure, compliance and emerging risks. NSW Health has limited visibility over the effectiveness of controls operating within LHDs. Decision making is not informed by consistent, reliable or comprehensive information.

Assurance methods are reactive and fail to quickly identify and address system-wide risks

NSW Health relies on LHDs to undertake assurance activities at the district level and has not routinely analysed or aggregated results across the state. This limits the timely identification and resolution of system-wide risks. Governance reforms are at an early stage of implementation and have not yet delivered effective system-wide assurance.

NSW Health is strengthening its system-wide oversight of the use of VMOs

NSW Health has recently undertaken work to improve assurance, monitoring and reporting for VMO engagement and remuneration. This includes an internal audit and legal review which are in the early stages of completion.

Recommendations

The report makes 3 recommendations targeted at strengthening system-wide governance, assurance, value for money consideration and controls for VMO engagement and remuneration.

Appendix 1 - Response from entity

Appendix 2 – NSW Health framework

Appendix 3 – About the audit

Appendix 4 – Performance auditing

Parliamentary reference - Report number #423 - released 7 May 2026

Objective

This audit assessed whether Transport for NSW (TfNSW) is effectively administering the $334 million Regional Roads Fund (RRF).

To date, $320.4 million has been allocated from the fund, comprising:

• $215 million for 10 projects led by TfNSW 
• $105.4 million to 11 local councils to deliver 19 projects.

Most of the RRF projects are election commitments.

Key findings

Projects led by TfNSW are being managed within the existing TfNSW governance framework

TfNSW manages RRF projects using established delegations and governance processes. Internal budget approvals and reporting are consistent with these delegations, and they are overseen and monitored by internal committees.

TfNSW has also responded to government expectations to accelerate the delivery of its RRF projects.

TfNSW did not provide detailed evidence to support the allocation of additional project funding

At the time additional funding was approved, TfNSW had not completed project business cases or short-form assessments to inform project assumptions, expected benefits and estimated project costs.

TfNSW projects are not following typical assurance lifecycles, increasing risk

TfNSW sought and released funding for some TfNSW-led projects earlier than is typical in its project development and delivery lifecycle, and approved contingency funding amounts above indicated levels in its policies. This increases project and budget risks.

TfNSW did not comply with some aspects of the Grants Administration Guide

TfNSW did not put in place practices and procedures to comply with the Grants Administration Guide when developing and issuing funding agreements to local councils. It also did not comply with other mandatory requirements of the Guide.

TfNSW has not defined outcomes to guide the administration of the RRF

TfNSW has not documented the expected outcomes of the expenditure to guide administration of the fund. This includes prioritisation of funding for project variations and new projects.

Recommendations

The audit recommends that TfNSW:

• strengthen documentation to support funding decisions
• clearly define RRF outcomes
• design and implement a process for one-off and ad hoc grants to ensure compliance with the Grants Administration Guide.

Appendix 1 – Response from entity

Appendix 2 – About the audit

Appendix 3 – Summary of key findings applicable TfNSW-led RRF Projects

Appendix 4 – Principles of public expenditure for major infrastructure projects and grants administration

Appendix 5 – Performance auditing

Parliamentary reference - Report number #422 - released 6 May 2026

Objective

This audit assessed whether Corrective Services NSW, Fire and Rescue NSW and NSW Ambulance are effectively and efficiently managing unplanned leave and overtime.

Key findings

The agencies have clear policies and procedures to monitor the use of sick and carers leave

The agencies require evidence like medical certificates when leave exceeds set limits. Managers monitor usage and meet with staff when thresholds are reached, ensuring leave is taken appropriately.

There are clear procedures to manage overtime but for some staff this is still significant

The agencies have clear, fair procedures for offering overtime shifts when this is operationally necessary. While this promotes transparency and helps prevent excessive hours for most staff, some employees, particularly those with specialist skills or in high-demand roles, still work significant overtime hours.

The agencies monitor trends in unplanned leave and overtime

The agencies have systems for tracking staff attendance, with executive oversight. They regularly compare unplanned leave and overtime rates across workgroups, monitoring trends over time. Agencies are also creating dashboards to give managers and executives real-time access to attendance and overtime data.

Condensed roster patterns limit opportunity for recovery between shifts

The agencies use roster patterns with long hours and clustered workdays, giving staff more days off between shifts. SafeWork NSW highlights that longer hours and condensed shifts raise fatigue risks, which must then be managed. Extra overtime hours can add to these risks, especially in emergency services and custodial roles.

The agencies are reviewing the factors that most impact staff availability

For Corrective Services NSW, higher workers compensation rates are a key factor. Fire and Rescue NSW faces ongoing shortages of on-call firefighters. NSW Ambulance is seeing steady changes in the workforce gender balance.

The agencies generally have enough staff for planned leave, but rising use of workers compensation and parental leave means current staffing formulas are falling behind. This leads to greater reliance on overtime to fill shifts.

The agencies are implementing tailored initiatives to target the causes of overtime

The agencies are developing targeted initiatives to address overtime. Progress is slower where extra funding or increased staffing is required. Agencies are actively monitoring and evaluating the effectiveness of these measures.

Recommendations

Recommendations have been made to each of the 3 agencies to consistently apply sick leave policies, review rostering and shift arrangements, update staffing formulas and relief staffing rates, and implement stronger monitoring and evaluation of workforce initiatives.

Appendix 1 – Response from entities

Appendix 2 – About the audit

Appendix 3 – Performance auditing

© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.

Parliamentary reference - Report number #421 - released 30 April 2026

Objective

The audit assessed whether the Racing for the Regions program is being administered and delivered effectively to meet government objectives. This included assessing oversight and management of the program by the Department of Creative Industries, Tourism, Hospitality and Sport (the Department), and Racing NSW’s compliance with the requirements of the funding deed.

Key findings

The terms of the funding deed do not enable effective oversight by the Department

The funding deed did not include delivery timelines or scopes of work for individual projects and did not specify an overall end date for the program.

The Department did not ask Racing NSW for updated project delivery dates and plans before finalising the funding deed. As a result, the project information in the funding deed was almost 2 years out of date.

Three projects were completed before the funding deed was signed. The deed stated that funding was for ‘upcoming projects’.

The funding deed does not require Racing NSW to assess whether the program is delivering the benefits set out in the business case.

The Department is not actively overseeing project delivery

The Department did not identify delivery risks or assess the adequacy of Racing NSW’s governance, probity or capability to deliver the projects.

The Department has not kept complete records of its grants administration activities. Less than half of its governance meetings were documented and it does not have any records for one of the projects.

Racing NSW has provided regular reporting on project progress since 2024, when construction started on some projects.

Grant payments were made in compliance with most of the required financial controls

The Department has used a consistent process to manage grant payments to Racing NSW since 2024. This includes a consistent acquittal process and approval by authorised delegates. However, payments for projects completed before the funding deed was signed did not fully comply with the requirement for expert certification of work completed.

Recommendations

The audit made 3 recommendations intended to improve the Department’s oversight and evaluation of the Racing for the Regions program and future programs.

The Department did not assess delivery risks and has not provided the Minister with comprehensive advice on the risks or progress of the program

The Department advised that it was not involved in the development of Racing for the Regions and was not aware of the program until after funding was announced. When the Department was assigned responsibility for the program and developed the funding deed, it did not identify likely delivery risks, such as skills or materials shortages, adverse weather or delays in obtaining development application approvals. It also did not assess the adequacy of Racing NSW’s governance systems, probity policies or project delivery capability.

Conducting a detailed program risk assessment could have informed the Department’s approach to administering the program and developing a funding deed with updated timelines and project information to support proactive oversight. Racing NSW and the Department stated that site issues and delays in the approval of development applications are the main reasons for projects not delivering to schedule. However, Racing NSW has stated that the Department did not require it to provide updates to project timelines and delivery risks when the deed was being developed.

The Department advised that the financial and delivery risk was a matter for Racing NSW. The Department also stated the funding deed, which it developed, placed no obligation on it (the Department) to ensure projects are delivered. However, the Department noted in an internal self-assessment of its compliance with grants administration guidelines that the Government Sector Finance Act 2018 requires government officers to identify and manage risks for all grants in accordance with agencies’ responsibilities.’

The Department did not provide advice to the Minister about the risks of the program before the Department finalised the funding deed. The Department has provided one written briefing to the current Minister, which summarised each project. This was prepared as advice in response to a question taken on notice by the Minister at a Budget Estimates Committee hearing in August 2025.

The funding deed for the program did not include critical information to enable effective oversight of the program by the Department

The funding deed for this grant program did not include timelines and scope for each project and an end date for the grant. The Department did not require Racing NSW to provide detailed project plans or estimates of project timelines and costs before the funding deed was finalised. The only information about project timelines, budgets and scope was Racing NSW’s business case for the program, which was prepared 21 months earlier in October 2020. The funding deed is a legally binding agreement that requires the Department to have visibility and oversight over the allocation and expenditure of the grant.

Racing NSW stated that the business case of October 2020 was based on high level indicative designs and that timelines were out of date by the time the deed was signed. For example, 8 of the 14 projects had estimated completion dates in 2021, 6 months or more before the funding deed was executed.

This was because Racing NSW started detailed design for most projects after the funding deed was signed in July 2022, 21 months after the business case was developed. The design process identified site issues and development application requirements not known when the business case was developed. The average difference between the estimated start of projects in the 2020 business case and actual project commissioning/commencement by Racing NSW was 17 months. The average difference between the estimated completion dates of projects in the business case and actual completion or the most recent estimate (as at January 2026) is 38 months. Despite the significant differences, there was no attempt to incorporate updated timelines in the deed which would enable proactive oversight.

The funding deed described the projects receiving NSW Government funding as ‘upcoming projects’ and did not state whether payments could be made for work that had been conducted prior to the NSW Government decision to provide funding. It did not specify that 3 projects had already been commissioned by Racing NSW before the NSW Government announced funding for the program in June 2021. These projects were completed before the funding deed was executed. Two of these projects were paid in full even though they did not comply with the funding deed’s payment requirements for certified statements by quantity surveyors.

The funding deed for the program does not include requirements for evaluation or reporting on benefits realisation

The Department did not examine or verify the cost-benefit analysis in the Racing NSW business case or consider how progress toward achieving the program’s objective of providing economic stimulus in regional areas following the COVID-19 pandemic would be measured. The Department did not include a requirement in the funding deed for Racing NSW to conduct an evaluation. This means Racing NSW is not required to assess whether the benefits set out in its 2020 business case are being realised.

The Department stated that it will develop an evaluation plan in 2026–27 with the evaluation process to follow. Including requirements for project and program evaluation in the program funding deed could have improved transparency and accountability as well as project management throughout the life of the program.

The 2010 Good Practice Guide for Grants Administration, which was in place when the program was established, recommended developing performance measures during the planning stage to enable ongoing review of program objectives and outcomes throughout the grant lifecycle. Subsequent updates to grants administration guidance for NSW Government agencies in 2022 and 2024 reinforced the importance of focusing on outcomes and value for money in grants administration, recommending an ex-post cost-benefit analysis for grants exceeding $50 million. This is consistent with the NSW Treasury policy on evaluation, which states that agencies are expected to plan and conduct evaluations for initiatives valued over $50 million to provide evidence of outcomes, net social benefits, and value for money.

Both the 2022 and 2024 versions of the NSW Grants Administration Guide were accompanied by a Premier’s Memorandum stating the Guide applies prospectively to all grant activities undertaken from the date the Guide came into effect. Although the Department has stated that it has complied with mandatory requirements in the 2022 Grants Administration Guide, it has not documented why it has not followed other grants guidelines and good practices or NSW Treasury evaluation policies.

The funding deed for the program includes a clause allowing for variations to the deed with the agreement of both parties. The Department has not sought to vary the deed to improve its alignment with updated NSW Government guidance on grants administration.

Other NSW Government agencies have included provisions in funding deeds that require the recipients of grants to complete regular reporting and evaluation activities. For example, the then Department of Premier and Cabinet required recipients of grants through the Western Sydney Infrastructure Grants Program (previously known as the WestInvest Program) to develop a monitoring and evaluation plan within 6 months of funding deed execution. Recipients of grants were required to collect and submit outcomes and benefits data, including for baseline measurements (before construction started) and for up to 2 years after the project was operational. Recipients with projects valued at over $1 million were also required to complete a process evaluation, an outcome evaluation and provide information for an economic evaluation.

The Department did not actively oversee the program or document decisions to change project timeframes and delivery approaches

Racing NSW and the Department stated that progress reports for the Racing for the Regions program are discussed in monthly governance meetings. The Department documented fewer than half of the monthly governance meetings between February 2024 and October 2025. These meetings discuss the monthly progress reports provided by Racing NSW. Minutes of these meetings document summaries of projects and one instance of discussion of payment requirements. They do not include any record of discussion of mitigation strategies for risks detailed in monthly reports or document follow up actions and the consequential impact on the program.

Racing NSW has reported high risks relating to budget overruns and project delays on 7 projects in progress reports since February 2024. The Department has not sought clarification about the impact of these risks on the scope of projects.

The funding deed specifies that Racing NSW must provide monthly progress reports on each project to the Department. Racing NSW has engaged a project management firm with expertise in racing infrastructure projects to conduct activities including project planning and reporting. Regular reporting started in February 2024, 19 months after the funding deed was signed. Prior to this, the Department and Racing NSW advised that governance meetings took place on an ad hoc basis because detailed designs and development applications were being prepared.

The Department does not have change control processes for the approval of project variations

There have been numerous changes to the timelines and delivery approaches of individual projects. For example, the approach to the delivery of stables at the Cessnock and Gosford racing clubs had to be staged due to development application requirements and site constraints including environmental considerations.

However, the Department has not implemented a change control process to ensure that any impacts on the realisation of program benefits are considered and approved before changes are made. This would enable more effective oversight against changed timelines and delivery approaches. The Department stated that any changes are dealt through the governance framework, status report and grant payment. However, the Department has not documented its consideration or approval of any of these changes through these processes and it has not varied the funding deed to reflect the changes. Such documentation would enable proactive oversight of changes to the program and provide greater visibility of progress with the grant program.

The Department has not kept complete records of its grants administration activities

The Department is required to keep full and accurate records of its grants administration activities to comply with the State Records Act 1998. The records relating to the program are incomplete. The audit found:

• no documentation of the rationale for decisions made during the preparation and negotiation of the funding deed for the program
• no documentation of grants administration activities undertaken between July 2022 and January 2024, such as detailed project design and development application processes (which the Department should have required Racing NSW to provide), or monitoring of risks to project schedules and budgets
• incomplete records of governance meetings between the Department and Racing NSW (as described above).

The Department did not provide any records for this audit related to the Sapphire Coast race day amenities project, which received NSW Government funding of $142,000. The Department advised that it has not had access to these records since the Office of Racing was moved from the Department of Customer Service in 2022 as part of a machinery of government change. Our 2021 performance audit report ‘Machinery of government changes’ noted that there is an increased risk of the loss of records when government functions are moved between departments.

Public reporting on the progress of the program has not been clear or comprehensive

The Department has not reported comprehensively on the progress of the program and has not required Racing NSW to do so. This reduces transparency about program expenditure and outcomes to key stakeholders, including NSW Parliament, race clubs and the public.

The Department has published the project names, locations and funding amounts on the NSW Government grants and funding website. Its 2022 and 2023 annual reports also refer to the execution of the funding deed and the completion of the Gosford training track. However, the Department has not published details of the scope of projects. It has also not published program-wide information, such as estimated completion dates or progress toward achieving the program’s outputs and objectives.

Other NSW Government agencies have proactively reported on infrastructure grant programs. For example, the Premier’s Department released an Interim Outcomes report on the Local Small Commitments Allocation Program in July 2025. This included detailed financial information and analysis of progress toward the objectives of the program. Premier’s Department reporting on the Western Sydney Infrastructure Grants Program (previously called the WestInvest Program), which was established in 2022, includes an overview of the scope and expected outcomes of each project and updates on project status.

Racing NSW does not have any obligation to report publicly on the progress of the program, but it has included updates on the progress of selected projects in its annual reports in 2024 and 2025.

Racing NSW has used competitive tender processes for its projects, but the Department has not checked whether Racing NSW has complied with the probity requirements in the funding deed

Under the funding deed, Racing NSW is required to comply with the Department’s Code of Ethics and Supplier Code of Conduct in the procurement and delivery of the program. Racing NSW provided evidence showing that it conducted competitive selective tenders for the head construction contractors on the projects that were managed by its appointed project manager.

Racing NSW said that the Department provided it with the Code of Ethics and Supplier Code of Conduct in early 2022. The Department has not undertaken formal checks on whether Racing NSW has complied with these documents as required in the funding deed although details of the tender processes are included in monthly status reports.

The Department has structured financial controls and processes to manage grant payments

The Department has implemented financial controls and processes to manage payments for the projects that are receiving NSW Government funding. Racing NSW is reimbursed for expenses that have already been incurred in the delivery of funded projects. All costs must be certified by a quantity surveyor for payment. Racing NSW engaged quantity surveyors and these appointments were approved by the Department in October 2024. The Department undertook due diligence checks to verify the qualifications of the quantity surveyors and the procurement process used for their engagement.

Since 2024, the Department has used a consistent acquittal process to review each claim for payment. This includes verifying that the claim is certified by a qualified quantity surveyor and includes all supporting documentation required under the funding deed. The Department has also used a consistent process to seek approval for the payment of claims, with a standard briefing package prepared for approval. A review of payment documentation found that briefings were provided for 23 of the 24 payments that were made. All of the 23 briefings were signed off and approved by the correct financial delegate. The payment that did not have a briefing was for the Sapphire Coast race day amenities, which was valued at $142,000 (discussed below).

The Department paid a total of $30.8 million to Racing NSW between August 2022 and January 2026. which is approximately 52.5% of the total NSW Government funding for the program covering 10 of the 14 projects.

The Department introduced a measure in November 2024 to withhold the final 10% of the funding allocated to each project until Racing NSW submits all required information, including a completed final project report. This aims to reduce the risk of final payments being made before project completion and encourages Racing NSW to meet final reporting requirements. The policy has not been documented in the funding deed.

The Department made 2 payments to Racing NSW that do not align with this recent policy. By June 2025, the Department had made $15.8 million in payments to Racing NSW for the Scone stabling project. The NSW Government’s total grant for this project was $16 million. This resulted in 98.6% of the grant funding for that project being paid prior to the project's estimated completion in November 2026. Racing NSW has also reported that by December 2025, it had received 92% of the NSW Government’s grant funding for the Muswellbrook function centre project. This is not estimated to complete until March 2026.

The Department’s payments deviated from funding deed processes in 3 of the 24 payments, 2 of which related to projects that Racing NSW completed before the funding deed was executed

Racing NSW did not use a quantity surveyor to certify financial information for projects completed before the funding deed was executed, because the requirement to do so was not in place at the time. The Department paid for 2 of the 3 projects that were completed before the funding deed was executed. To address this issue, the Department permitted an auditor, rather than a quantity surveyor, to certify the costs of these projects. These were included in final project reports that provided other documentation to support the claims.

In August 2022, the Department paid Racing NSW $3 million for the Gosford training track project after receiving financial statements certified by a private sector audit firm.

The Department paid $142,000 for the Sapphire Coast race day amenities project but did not provide this audit with documents relating to this payment. The Department advised it is unable to access these documents due to changes in IT systems following a machinery of government change in 2022, as described above.

The Department has withheld payments when Racing NSW has not met requirements of the funding deed

The Department has withheld 2 payments from Racing NSW for not meeting requirements set out in the funding deed. The Department has withheld payment for the Tamworth sand track project (completed in December 2021 – see Figure 6) and the final payment of 10% for the Sapphire Coast stabling project (completed in December 2024) because Racing NSW has not submitted final project reports, as required under the funding deed.

A complete final report is important because it provides assurance regarding the expenditure of funds and delivery of project outputs. Under the funding deed, these reports must include a certified profit and loss statement, confirmation that all invoices have been settled, plans for ongoing management and maintenance, lessons learned and feedback from stakeholders and photographs for evidence of outputs. Certification requires sign-off by both Racing NSW’s Chief Financial Officer and an independent qualified accountant.

Racing NSW stated that it is in discussions with the Department to resolve these issues.

Source: Racing NSW project reporting documents (unpublished).

Project delays have created an additional financial management burden for the Department and NSW Treasury

NSW Treasury policies on budget planning and forecasting require NSW Government agencies to submit a request to NSW Treasury that unspent funds are carried forward to the following financial year. According to the TPG22-05 Carry Forwards Policy, repeated carry forward requests for the same funding will not be automatically approved and will be evaluated on merit. This means the Department must develop and provide a rationale for each carry forward request.

In 2021–22, the Department estimated that all funds allocated for the program would be expended by the end of 2024–25. The most recent adjustment, made in July 2025, involved carrying forward $20.6 million for each of the 2025–26 and 2026–27 financial years. The Department does not have a program schedule to track progress against these timeframes.

Appendix 1 – Response from entity

Appendix 2 – About the audit

Appendix 3 – Performance auditing

© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.

Parliamentary reference - Report number #420 - released 9 April 2026

Objective

This audit assessed whether the Office of Local Government (OLG) administered the Local Government Recovery Grants program in line with the Grants Administration Guide and the Program Guideline.

The Local Government Recovery Grants program provided grant funding to local councils following the August and September 2022 flood events.

Key findings

Funding was administered in line with the Grants Administration Guide and the Program Guideline

The OLG administered grant funding in line with the mandatory requirements of the Grants Administration Guide, however it did not document:

• the reasons for all eligibility decisions as part of the assessment process
• fraud controls
• processes to manage conflicts of interest.

Some of the monitoring and reporting requirements were not implemented

The OLG collects quarterly financial progress reports from councils. However, the OLG has not implemented Program Guideline requirements relating to the establishment of performance measures and monitoring of project outcomes by local councils.

There is no clear plan to finalise the program

The OLG has approved a detailed program of works for 37 councils. This is yet to occur for 9 councils.

The OLG has not yet confirmed final reporting and acquittal processes for the program.

Roles and responsibilities have not been defined

The OLG and the NSW Reconstruction Authority have not documented their respective roles for the program. This has limited the accountability for some aspects of program administration and has impacted timely delivery.

Recommendations

Three recommendations were made for the OLG to improve practices in line with the Grants Administration Guide. One recommendation was made for the OLG and the NSW Reconstruction Authority to improve clarity of roles and responsibilities.

New South Wales (NSW) experienced multiple rain events between February and November 2022 which resulted in flooding across the state. In response, the NSW and Commonwealth governments announced a series of grant programs to support recovery in local government areas affected by the flooding. This included the establishment of the Local Government Recovery Grant program to support the recovery of communities impacted by flooding events in Southern and Central West NSW from 4 August 2022, and across NSW from 14 September 2022 (the Program). The Program is the subject of this audit.¹

The Program is the third in a series of Local Government Recovery Grants programs supporting recovery in local government areas affected by flooding events in 2022.² The Program was considered urgent to support emergency relief and enable immediate recovery efforts to proceed.

There is no clarity of roles and responsibilities between the OLG and the Reconstruction Authority

The Grants Administration Guide (GAG) notes the importance of collaboration and partnership where policy responsibility or grants administration is shared between different agencies, or where an agency is responsible for the grants administration of another agency. Since March 2024, the GAG has included expectations for how multiple agencies involved in grants administration should define responsibilities, including recommending that responsibilities for applicable mandatory requirements are captured in a memorandum of understanding at the planning and design phase of a grant program, particularly if funds are transferred between the agencies to deliver the grants. The March 2024 update is applicable to the management of the Program as the updated GAG applies to all grant programs including those underway before that date.

The Office of Local Government (OLG) within the Department of Planning, Housing and Infrastructure (DPHI) is the administering agency for the Program under the NSW Local Government Recovery Grant Program Guideline (AGRN 1030 and AGRN 1034) (the Program Guideline). The Program Guideline sets out the requirements and processes for the Program. It states that the OLG’s role includes supporting councils to make grant applications, assessing eligibility under the Program Guideline, making grant payments, and receiving financial progress reporting from councils.

The NSW Reconstruction Authority’s (Reconstruction Authority) role in the Program is not described in the Program Guideline. In practice, the Reconstruction Authority’s activities include ensuring that the Program meets Disaster Recovery Funding Arrangements (DRFA) requirements and reporting to the Commonwealth Government on Program delivery to seek reimbursement under the DRFA. It also oversees Program funding, including transferring funds to the OLG for grant administration costs and grant payments.

However, the roles and responsibilities around the extent to which the Reconstruction Authority supports the OLG in administering the Program are not defined in a memorandum of understanding or policies and procedures. This limits accountability for key aspects of grants administration. For example, the OLG and the Reconstruction Authority have not defined which agency is responsible for undertaking activities related to Program acquittals, risk management, or oversight of Program outcomes. The Reconstruction Authority’s role in supporting the OLG to assess and determine project eligibility, including expectations around timeframes for the Reconstruction Authority in providing this advice, is also not defined.

The Reconstruction Authority developed a ‘deed of funding agreement’ setting out roles and responsibilities for the Program in 2023 and shared this with the OLG. The OLG and the Reconstruction Authority discussed the draft deed during 2023 and 2024, but it was not finalised due to lack of agreement on responsibilities and resourcing for the Program. The lack of defined roles and responsibilities has impacted the timely delivery of the Program, including finalisation of the Program Guideline, transfer of grant payments to some councils and grant acquittal processes.

The Program completion date was initially 30 June 2025 but was extended to 30 June 2026. In September 2025, the Reconstruction Authority submitted a request to the Commonwealth Government to extend the Program completion date by an additional year to 30 June 2027. The Commonwealth Government’s decision on this request is pending. Defining roles and responsibilities for administering the remainder of the Program will improve accountability and timeliness for delivering the final stages of the Program, including monitoring and acquitting grants, and recouping funds if needed.

The OLG has identified some Program administration risks and has implemented mitigation strategies

The GAG requires officials to identify and manage risks for all grants. OLG documents some Program administration risks and mitigation strategies in a risks and issues log, assigning the OLG staff responsibility, and tracking outcomes for each risk.

The OLG has identified some key risks to the Program and associated mitigation strategies, including risks relating to:

• the time taken for the OLG to assess projects leading to delays in councils commencing projects, or councils spending funds on ineligible activities; mitigation strategies include eligibility form improvements and additional OLG resources to assess projects.
• the Program not being extended leading to incomplete projects and the need for councils to return grant funding; mitigation strategies include the OLG requesting updates for its program extension submission in discussions with the Reconstruction Authority, and the OLG regularly updating departmental executives on progress.
• reporting errors from councils, including councils reporting ineligible expenditure and incorrect reporting from previous financial years; mitigation strategies include emailing instructions to councils on how to report, holding webinars informing councils on reporting requirements, and the OLG reviewing council transactions from 2023/24 to identify incorrect or ineligible transactions.

The OLG has implemented the identified mitigation strategies, including holding a webinar with councils, escalating risks relating to Program administration delays to the Deputy Secretary, Office of Local Government, and regularly seeking updates from the Reconstruction Authority on its request for a time limit extension.

However, the OLG has not documented all key risks and associated mitigation strategies related to Program funding administration and completion. These include risks relating to grant payments being made in advance of deliverables, payment for works not completed to approved scope, and risks relating to multiple Program extensions.

The OLG is required to report monthly to the Reconstruction Authority on overall program progress. The OLG has provided 2 examples of reporting that include some Program administration risks and council-specific risks identified above, but do not detail the OLG’s mitigation strategies.

The OLG did not document processes to manage conflicts of interest

The GAG requires that officials must consider and develop a plan for managing any conflicts of interest that might arise when designing the assessment process.

The Program is subject to 2 assessment stages – an initial eligibility assessment stage where councils are required to provide an initial overview of projects before grant funding is paid, and a detailed eligibility stage where councils are required to provide a ‘Program of Works’ to address the eligibility requirements in the Program Guideline. The OLG did not have a process for declaring conflicts of interest at the initial eligibility assessment stage of the Program, before grant payment. The OLG advised that its procedures are being reviewed to address this oversight.

The OLG assessors were required to declare any conflicts of interests in assessment forms at the detailed assessment stage before they could proceed with conducting project eligibility assessments. The assessment forms detail what is considered a conflict of interest and instruct the assessor not to proceed with the assessment if a conflict is declared.

While OLG assessors made conflicts of interest declarations, the OLG did not document its process for identifying and managing conflicts of interest in its Procedures Manual or its Program risk register.

The OLG provided completed assessment forms for a sample of councils. These forms show that each assessor declared no conflicts of interest in all forms provided. The OLG has advised that, to date, its staff have not declared any instances of conflicts of interests under the Program.

OLG staff are required to comply with the department’s Code of Conduct and Ethics, which requires all employees to make an annual declaration of any conflicts of interest. Relevant OLG assessment staff completed annual conflicts of interest declarations in line with the requirements of departmental policies and did not declare any conflicts relevant to this Program.

The OLG has some fraud controls in place, but it has not documented its reasons for assessing the Program as low risk

The GAG requires officials to develop and implement fraud controls that are proportionate to the value and risk of the grant and consistent with NSW public sector risk management requirements.

The OLG has not documented its controls for managing fraud risks relating to its administration of Program funding. The OLG has advised that the risk of fraud in the Program is considered low, primarily because the value of the grants is relatively small and the grant recipients are government entities.

However, it has not documented its rationale for assessing the Program as low risk. The lack of documented fraud controls and the absence of a rationale for assessing the Program as low risk limits the effectiveness of ensuring the appropriate use of and accountability for public finances and assets.

In practice, the OLG is implementing some fraud controls. The OLG has:

• advised that, since April 2023, it has provided monthly fraud reports to the Reconstruction Authority and provided examples of these monthly fraud reports for this audit. The examples provided indicate that the OLG has not identified any instances of applications that are deemed to be fraudulent
• required regular financial progress reporting from councils that are required to be certified by the chief financial officer or equivalent.

The OLG also provides information to the Reconstruction Authority for audits to meet DRFA compliance requirements.

The OLG has not documented how DPHI’s fraud policy applies to the Program

Separately, the OLG is subject to the DPHI Fraud and Corruption Control Policy which applies to all employees and states that the department has zero tolerance for fraud and corruption. The policy outlines responsibilities for the development, coordination and execution of the department’s fraud and corruption control plan.

The policy states that it should be read in conjunction with the department’s fraud and corruption control framework, and the department’s fraud and corruption control program.

The policy and program require agency risk registers and risk management plans to include identified fraud and corruption risks and appropriate internal control measures. The framework also requires frontline and risk managers to work together to identify corruption risks and control measures for vulnerable business areas and functions.

The OLG has not set out in its Procedures Manual or its Program risk register how the department’s fraud requirements have been applied to the Program.

OLG has administered grant funding in line with the application and assessment stages in the Program Guideline

Under the Grants Administration Guide (GAG), officials must administer a grant in accordance with grant program guidelines. For this audit, the NSW Local Government Recovery Grant Program Guideline (AGRN 1030 and AGRN 1034) (the Program Guideline) are the relevant grant program guidelines.

The Office of Local Government (OLG) has operational procedures for administering the Local Government Recovery Grants Program (AGRN 1030 and AGRN 1034) (the Program). These procedures also relate to the 2 similar programs for flooding events that occurred earlier in 2022. This includes a Procedures Manual which was developed in June 2022 and updated in July 2025.

The Program Guideline provides information about Program requirements and administration, which differ from the previous flood grant programs. The OLG has not provided evidence of when its operational procedures were updated to reflect the specific requirements of this Program.

The OLG administered the grant in accordance with the application and assessment process set out in the Program Guideline (see Exhibit 1). In particular, the OLG:

• provided councils with a template to submit to the OLG an overview of the projects proposed for funding under the grant to the OLG
• made grant payments to councils after receipt of project overviews from councils
• provided councils with a detailed project plan (‘Program of Works’) template to address the eligibility requirements in the Program Guideline
• is implementing processes to confirm whether the proposed projects in each council’s detailed project plan meet Program eligibility requirements.

The OLG received quarterly financial progress reports from councils consistent with Program requirements

Under the NSW Local Government Recovery Grant Program Guideline (AGRN 1030 and AGRN 1034) (the Program Guideline), councils are required to provide quarterly financial progress reports to the Office of Local Government (OLG) showing how funds are being spent and how projects are being implemented.

The OLG received quarterly financial progress reports from councils by asking councils to complete templates with relevant financial information that must be certified by the council’s Chief Financial Officer or equivalent as being true and correct. The OLG also requires councils to submit a transaction listing showing grant expenditure for each project being funded by the Program. In line with the Program Guideline, the OLG informs councils that, for assurance purposes under the Disaster Recovery Funding Arrangements (DRFA), they may be requested at any time to provide further information or supporting evidence for any items included in transaction listings.

The OLG receives advice from the NSW Reconstruction Authority (Reconstruction Authority) on reporting requirements. The OLG has also updated quarterly reporting forms to require additional information from councils, such as information about previous years’ expenditure and project-level reporting rather than program-level reporting.

The OLG provides written instructions to councils on how to complete the reporting and provided a webinar to councils to explain reporting requirements in July 2024.

The OLG checks the accuracy of quarterly financial progress reports from councils, but it has not defined processes and responsibilities for acquitting reported information

The Program Guideline does not define the OLG’s role in reviewing and acquitting quarterly financial progress reporting received from councils, and this has not been clearly defined in the OLG policies and procedures.

The OLG’s Procedures Manual includes some general guidance for Program delivery staff to review quarterly reporting, such as checking that transactions match grant allocations and that reporting is correct. However, the OLG has not defined the specific steps that should be undertaken to verify and report on the accuracy and completeness of the reporting.

The OLG advises it is undertaking a review of its procedures for this Program to clearly document the quarterly expenditure reporting process.

The OLG provides information about councils’ financial progress reporting to the NSW Reconstruction Authority (the Reconstruction Authority). Since the end of financial year 2022–23, the OLG has also been required to acquit the information reported by councils.

Based on a review of examples of the OLG reporting to the Reconstruction Authority in 2025, the OLG included comments about whether it had identified inaccuracies and stated these were being checked with the relevant council. This is consistent with the OLG’s Procedures Manual which states that quarterly reporting data is checked for accuracy after submission to the Reconstruction Authority.

The OLG supports the Reconstruction Authority to undertake audits for the Program

In addition to quarterly progress reporting, the OLG responds to requests for information from the Reconstruction Authority to support assurance activities undertaken for the Program to meet DRFA compliance requirements.

The Reconstruction Authority engages an external auditor to conduct assurance activities at the end of each financial year. These audits cover the whole scope of the State’s claim to the Commonwealth under the DRFA and are not limited to the Program.

The Reconstruction Authority advises it has commenced assurance activities for the 2025 financial year for the Program and other emergency grant programs under the DRFA. The Reconstruction Authority plans to submit its audit report for the 2025 financial year to the Commonwealth Government by March 2026.

Assurance activities undertaken for the Program have involved the OLG obtaining evidence from a sample of councils that supports claimed expenditure under the Program, such as invoices, purchase orders and images of pre-construction and post-construction of assets.

The OLG has not implemented requirements relating to councils monitoring and evaluating their projects over the course of the Program

The Program Guideline includes requirements for councils to undertake monitoring and evaluation of their project over the course of the delivery of the Program. In summary, the Program Guideline states:

• councils must outline the correlation between the nominated project, related outcome(s) and measurement approaches in their Program of Works
• the OLG will provide council with a midterm progress report and a final progress report for council to complete
• councils will be required to provide evidence of how their projects have resulted in a measurable benefit to their community that is consistent with the objectives of the Program.

The Program Guideline does not specify when councils must submit midterm or final progress reports. The reporting is intended to support monitoring and evaluation requirements under the DRFA.

The OLG has not implemented the Program Guideline requirement relating to midterm reporting. The OLG has advised that this was due to considerations relating to the varied progress across the Program, the reporting burden on councils, and the OLG resourcing to manage reporting requirements.

The OLG’s detailed project plan template provided to councils includes a question about how the project/initiative aligns to one or more of the identified Program outcomes, including the planned approaches to measure outcomes. The OLG also requests information from councils on delivery against milestones and outcomes in quarterly progress report templates.

However, the OLG does not assess the quality and completeness of the information provided by councils. The OLG has not obtained performance measures from councils or assessed whether council reporting informs progress towards achieving Program objectives. In the absence of these processes, the OLG cannot demonstrate whether the funded activities have resulted in a measurable benefit that is consistent with the objectives of the Program.

The OLG has advised performance on project outcomes will be required from councils as part of the final acquittal and evaluation processes.

The OLG has provided limited evidence of reporting to the Reconstruction Authority on Program status

As the administering agency for the grant, the OLG is required to report regularly to the Reconstruction Authority on Program status. This reporting was required on a fortnightly basis up to November 2024, and monthly thereafter.

The OLG has provided 2 examples of this reporting which include reporting about the number of councils that have received the grants, the number of eligibility assessments completed and the number of councils that have completed projects under the Program.

The Reconstruction Authority is planning a process, outcome and economic evaluation of the Program, as part of a broader evaluation of the Local Government Recovery Grants programs administered by the OLG. The terms of reference for the evaluation state that it intends to:

• fulfil evaluation requirements under the TPG 22-22 Treasury Evaluation Guidelines, the Grants Administration Guide, and requirements under the DRFA
• gather and consolidate evidence regarding the program’s effectiveness, contribution to intended changes and unintended outcomes, and delivery of benefits against costs
• extract learnings to inform future decision-making on similar programs.

The Reconstruction Authority plans to engage a consultant to complete the evaluation by November 2026.

The OLG has not yet confirmed final reporting and acquittal processes for the Program

The Program Guideline states that councils need to submit a ‘Final Project acquittal report’ that captures information on the project, outcomes and outcome measures for the purposes of supporting monitoring and evaluation requirements.

The OLG has not yet confirmed final reporting and acquittal processes for the Program to ensure councils understand what is required to support Program evaluation and final acquittal of expenditure under the Program.

At 31 December 2025, the OLG was developing a final acquittal template in consultation with the Reconstruction Authority to request information from councils about the completion of their projects and to help understand and measure the effectiveness of projects and the Program.

The OLG has advised that the final acquittal process currently being developed will include a requirement that councils provide all supporting transaction listings and statutory declarations confirming eligible expenditure against the Program Guideline.

The Program Guideline states that councils will be required to repurpose or pay back all expenditure found not to have been spent in accordance with the guideline, and that any funds which are not expended by the Program completion date must be returned. The OLG has not yet determined processes to recover any unspent or ineligible expenditure.

The OLG advises that at 31 October 2025, 13 councils had completed all projects under the Program and were awaiting confirmation of the acquittal process. The OLG has advised that it has taken steps to assess any underspends by these councils, but it has not yet determined whether funds will need to be recouped.

The lack of a finalised process for final reporting and acquittal creates uncertainty for councils, creates risks to the effective management of the Program, and could further delay the completion of the Program.

The OLG does not publish Program information consistent with the GAG

The GAG states officials must ensure that information about grant opportunities and decisions made in relation to grants awarded are published on the NSW Government Grants and Funding Finder.

The OLG publishes general information about the Program and its purpose on its website, along with the current Program Guideline and the Eligible Expenditure Guideline. The OLG and the Reconstruction Authority do not publish decisions on grants awarded or Program information on the Grants and Funding Finder website or in their annual reports.

Appendix 1 – Responses from entities

Appendix 2 – List of local government areas eligible to apply for the grant

Appendix 3 – About the audit

Appendix 4 – Performance auditing

© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.

Parliamentary reference - Report number #419 - released 31 March 2026

This report focuses on 9 major capital projects across the total state sector and provides insights into transparency, costs and governance arrangements.

For the purposes of this report, we have defined a major capital project as an infrastructure project identified in the NSW Budget with total estimated costs greater than $100 million.

Key findings

There is limited public reporting of major capital project budgets, costs and timelines

There is limited public information on estimated total costs, delivery timelines, and changes to costs and timeframes for all major capital projects.

Over 75% of transport projects did not have an estimated total cost in the NSW Budget Papers.

The estimated total costs of some projects have increased significantly

Sydney Metro’s estimated total cost for the Metro City & Southwest and Metro West projects is significantly higher than originally estimated. Sydney Metro advises this is due to increases in material and building costs, scope changes, industrial action, condition of legacy assets, and additional requirements in the Sydney CBD as part of the ongoing tunnelling and excavation.

There is limited public information on the total costs of completed projects

There is no explicit requirement to publish the total costs of completed major capital projects. Publishing information on actual costs against budget is essential to promote transparency and accountability.

The State wrote off $907 million of capital project costs over the past 3 years

The written off costs of capital projects represent expenditure that, for various reasons, will not result in a usable physical asset or improved service delivery. These write offs typically occur when projects are cancelled, significantly rescoped or discontinued after substantial planning and development costs have already been incurred.

There is limited integration of risk oversight at the enterprise level in multi-agency led projects

In several cases, significant project risks were only recorded in the risk registers of the delivery agency and not reflected in the enterprise risk registers of the agencies that will ultimately own or operate the asset. This creates potential governance and accountability gaps, particularly for operational or asset performance risks that extend beyond the construction phase.

Infrastructure NSW (INSW) applies an investor assurance framework to provide scrutiny over capital projects

By embedding independent scrutiny into the lifecycle of major capital projects, the INSW Investor Assurance Framework seeks to reduce the risks of cost overruns, delays and project failure.

Recommendations

This report makes 5 recommendations for state agencies and NSW Treasury to implement to improve transparency and accountability, and to enhance project management for future capital projects (see Executive summary, Recommendations for full details).

The NSW Government is making significant investments in major infrastructure projects. In the 2025–26 State Budget the NSW Government committed to delivering the Essential Infrastructure Plan, with $118.3 billion in capital investment over 4 years to 2028–29.

The current and previous NSW governments have delivered significant capital projects over the past 5 years including CBD South East Sydney Light Rail, WestConnex, Parramatta Light Rail Stage 1, new and upgraded schools and hospitals and the progressive delivery of the Sydney Metro program.

Major capital projects provide essential upgrades to public infrastructure, but their scale and complexity entail risks of cost overruns, schedule delays, ineffective procurement management and accountability deficiencies. The NSW Budget Papers highlight key infrastructure related risks which include the management of labour shortages, supply-chain risks and escalating costs. Infrastructure NSW has also highlighted recurring challenges in project planning, scope definition, risk management and governance.

This report provides insights into the management of major capital projects by the NSW public sector; examining whether governance, risk management and reporting for these projects manage the risk of wasting public resources, and promotes probity and financial prudence in the management and application of public resources.

The report also summarises key insights and lessons learnt that can be applied to future capital projects across the sector.

This chapter outlines key insights and lessons learnt that can be applied to future major capital projects.

In the 2025–26 State Budget the NSW Government committed to delivering the ‘Essential Infrastructure Plan’, with $118.3 billion in capital investment over 4 years to 2028–29. The plan is central to meeting the state’s needs for housing, transport, health, education, water and energy. With capital investment of this scale, effective oversight is essential to safeguard public money, deliver on promised services and maintain community confidence.

The current and previous NSW governments have delivered significant capital projects over the past 5 years including CBD South East Sydney Light Rail, WestConnex, Parramatta Light Rail Stage 1, new and upgraded schools and hospitals and the progressive delivery of the Sydney Metro program.

Major capital projects provide essential upgrades to public infrastructure, but their scale and complexity entail risks of cost overruns, schedule delays, ineffective procurement management and accountability deficiencies. The NSW Budget Papers highlight key infrastructure related risks which include the management of labour shortages, supply-chain risks and escalating costs. Infrastructure NSW (INSW) also reports on trends and insights around major capital projects, highlighting recurring challenges in project planning and scope definition, risk management and governance.

This report provides insights into the management of major capital projects by the NSW public sector, examining whether governance, risk management and reporting for these projects manage the risk of wasting public resources, and promotes probity and financial prudence in the management and application of public resources.

This report is structured according to major capital projects focus areas and our key insights on major capital projects from 5 years of performance audit reports as listed in Appendix 2.

In the 2025–26 Budget the NSW Government committed $118.3 billion over 4 years towards delivering the Essential Infrastructure Plan.

Transparent reporting on the planning, delivery and performance of major capital projects is fundamental to maintaining public trust and accountability for the use of public funds. It ensures delivery agencies are accountable for cost, time and benefit realisation. With significant investment committed to infrastructure each year, clear, accessible information on project progress, costs and outcomes relevant to each stakeholder promotes accountability. This expectation is underpinned by the Government Sector Finance Act 2018, which requires agencies to ensure transparency and accountability in financial and performance reporting and Government Sector Employment Act 2013, which establishes accountability as a core government sector value, including the principle to provide transparency to enable public scrutiny.

This chapter examines the level of publicly available information on:

• project status and progress
• estimated total cost and estimated time for completion
• actual costs compared to budgeted costs for completed projects.

The chapter assesses the level of information available in the NSW Budget Papers for all capital projects. It also specifically covers the publicly available information on the selected 9 capital projects (see Appendix 1).

The written off costs of capital projects represent expenditure on projects that, for various reasons, do not result in a usable physical asset or improved service delivery. These write-offs typically occur when projects are cancelled, significantly rescoped or discontinued after substantial planning and development costs have already been incurred.

While some level of project attrition is expected in large infrastructure programs, material write-offs may be a sign of weaknesses in the planning, governance or decision-making processes. Significant resources may be expended without generating value for the state leading to an inefficient use of public resources.

Some level of write-offs may be inevitable, and in some cases appropriate, where projects are explored but ultimately deemed unfeasible or where government priorities for investment change. In these circumstances, ceasing a project and recognising a write-off may represent the better value for money decision, rather than continuing to commit further public funds to a sub optimal project.

Examining capital project write-offs can assist in understanding whether there are systemic issues in planning, project identification and approval processes, giving rise to preventable risks likely to result in expenditure that does not result in public benefit. Systematically analysing and documenting the causes of write-offs enables agencies to capture lessons learnt and reduce the likelihood of similar outcomes in future project activities.

$907 million in capital project costs written off over the past 3 years

We reviewed capital project write-offs over the past 3 years for the top 40 state agencies and found that $907 million had been written off over the period. The 3 agencies with the largest write-offs across the last 3 years are as follows:

Source: Audited financial statements.

Transport for NSW wrote off $366 million related to capital project costs in 2024–25

Transport for NSW wrote off $366 million related to infrastructure assets in 2024–25 ($288 million in 2023–24). This does not include intangible assets or IT-related projects written off as these were not in the scope of this report.

The write-offs were attributed to a range of factors including:

• projects that had been abandoned or discontinued
• further capital spends incurred on projects that had already been written off.

In 2023–24, approximately $265 million out of the $288 million of asset write-offs related to cancelled projects stemming from the State Strategic Infrastructure Review commissioned by the NSW Government and Independent Strategic Review of the Infrastructure Investment Program commissioned by the Commonwealth Government.

Transport Asset Manager of NSW wrote off $97.8 million related to capital project costs in 2023–24

A significant portion of the write-off ($74.9 million) related to the Fast Rail Program. The Fast Rail Program has been delayed and descoped following the 2023–24 State Strategic Infrastructure Review commissioned by the NSW Government. Project costs incurred to date such as planning and development activities for the Fast Rail Program have been written off.

Sydney Water Corporation wrote off $37.3 million related to capital project costs over the past 3 years

The largest write-off related to the Prospect Pre-treatment Water Filtration Plant ($22.6 million). This was related to costs incurred in previous planning and design works to investigate a potential filter-to-waste solution. After investigation, the solution was deemed not commercially viable and not able to meet the project objectives in full. Sydney Water has since progressed an alternate solution.

Robust governance arrangements over major capital projects minimise the risk of agencies failing to deliver their projects efficiently and effectively and to help ensure value for money for every dollar of public funds spent.

This chapter examines the governance arrangements and oversight mechanisms applied on 9 major capital projects, highlighting key principles, frameworks and better practices. It focuses on the structures, processes and controls currently in place to support project decision making, risk management, accountability and performance.

Refer to Appendix 1 for the list of projects selected.

Appendix 1 – Projects selected for review

Appendix 2 – Performance audit reports on major capital projects (2020–2025)

© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.

Objective

This audit examined whether Corrective Services NSW and Youth Justice NSW (the agencies) provide effective and efficient support and programs for First Nations peoples in custody and after release to reduce reoffending.

Key findings

The agencies have invested in support for First Nations peoples

The agencies have developed strategies aimed at reducing over-representation of First Nations peoples in custody, aligned with the National Agreement on Closing the Gap 2020 (Closing the Gap), and have invested in programs and initiatives to support First Nations peoples.

The agencies have not operationalised systemic and structural transformation

The agencies have not embedded formal partnerships and shared decision-making, or established a healing framework and therapeutic model of care for First Nations peoples, as required by Closing the Gap and the NSW Government’s Aboriginal Affairs Plan, OCHRE.

The agencies do not monitor, evaluate or report on expenditure and outcomes for First Nations peoples

Since 2019, the agencies have had 5 strategies in place at different times to reduce First Nations over-representation in custody. However, they did not track spending or outcomes, and public data shows they failed to meet their targets.

The agencies have not established governance and accountability arrangements to support their targets

Both agencies identify failure to reduce over-representation of First Nations peoples in custody as a strategic risk, but effective governance and accountability mechanisms have not been established to mitigate this risk.

The agencies’ assessment tools disproportionately impact First Nations peoples

First Nations peoples are disproportionately classified as high-risk in NSW custodial settings, reducing their access to reintegration programs and increasing the risk of institutional barriers that contribute to reoffending.

The agencies have not identified culturally appropriate post-release services 

The agencies do not have a referral framework to systematically support First Nations peoples exiting custody, including an endorsed list of culturally appropriate services in community. 

The agencies have not taken sufficient steps to adapt their systems to growth in remand 

The agencies have not sufficiently addressed the needs of First Nations peoples on remand, or highlighted the practices contributing to significant growth in remand population.

Recommendations

That the agencies establish governance and accountability in line with Closing the Gap and OCHRE; co-design a First Nations Healing Framework; establish formal partnerships; and review their assessment tools.

The term First Nations peoples is used by the Audit Office of NSW to reflect the diversity of the distinct Aboriginal Nations that make up New South Wales, each with their own unique stories, languages, histories, kinship systems and connections to Country. The use of the term First Nations also includes Torres Strait Islanders.

First Nations stakeholders advised this audit that specific factors such as poverty, community disadvantage and intergenerational trauma vary by location, which means a generic approach to service delivery and supports for First Nations peoples in custody is not appropriate. A 2025 review of Closing the Gap by the Australian Productivity Commission emphasised the need for agencies to coordinate place-based and community-led approaches, with shared accountability, informed by robust data.

The need for a place-based approach to respond to local priorities is required under Priority Reform One of Closing the Gap, Formal partnerships and shared decision-making. Priority Reform Four of Closing the Gap, Shared access to data and information at a regional level, also requires the provision of place-based data to First Nations communities, enabling community-led solutions, increased transparency and accountability, and demonstrated outcomes.

A 2011 NSW Ombudsman report Keep them safe?, in relation to the NSW child protection system emphasised the need for an intelligence-driven approach to service delivery and resource allocation. It found that a small proportion of families accounted for a large share of child protection reports, highlighting the importance of identifying and prioritising those families. The report recommended a comprehensive system where key agencies collaborate to collect, analyse and act on aggregated data to target extreme risks effectively, and enable the most efficient allocation of limited resources.

A similar need for data-driven service planning was highlighted in our 2020 performance audit, Their Futures Matter, in relation to a whole-of-government reform aimed at delivering improved outcomes for vulnerable children, young people and their families. This report recommended that the Department of Communities and Justice utilise the Human Services Dataset to identify the needs of vulnerable children and families, and undertake independent service mapping to assess whether existing services respond to these needs. Exhibit 5 below illustrates another example of utilising shared data to identify and support high-need clients, through the Maranguka Justice Reinvestment Project in Bourke, NSW, Australia’s first major First Nations-led, place-based justice reinvestment initiative.

Applying a comparable approach in the justice context, the use of a cross-agency, place-based and data-driven approach led by First Nations stakeholders would enable the agencies to better understand local drivers of over-representation and ensure that interventions and supports are available and appropriately targeted. Where the identified drivers of over-representation are outside the agencies’ direct control, the collection and analysis of relevant localised data would enable the formation of an evidence base to identify and raise service gaps and barriers to relevant agencies and community stakeholders.

Source: AONSW analysis of publicly available information.

The agencies do not use place-based approaches to identify and monitor the driving factors of over-representation, limiting their ability to design targeted interventions

The agencies have not developed place-based approaches to understand or monitor the factors contributing to the over-representation of First Nations peoples in custody, limiting their ability to design targeted interventions.

For example, although offence data by location is publicly available, the agencies do not routinely analyse it to identify localised root causes. Exhibit 6 highlights that the Local Government Areas (LGAs) of Bourke, Brewarrina, Central Darling, Moree Plains and Coonamble consistently recorded the highest number of First Nations custody admissions over the audit period. The highest expenditure on justice services and supports for First Nations peoples was also estimated to be concentrated in the same LGAs.

Closing the Gap requires that First Nations peoples are not merely consulted or included in advisory roles but are instead empowered to share decision-making authority with government. A 2020 federal government report noted that Closing the Gap:

Under Closing the Gap, the NSW Government agreed to establish formal partnerships and shared decision-making with First Nations stakeholders. This includes embedding First Nations-led approaches at all levels of policy, program design, service delivery and evaluation through formal partnership arrangements, to accelerate systemic and structural transformation.

OCHRE aims to devolve decision-making authority to First Nations Regional Alliances/Assemblies, in line with the principle of self-determination, defined by the Australian Human Rights Commission as the right of First Nations peoples to make decisions about matters that affect their lives, through choice, participation and control. This is supported through formal partnerships and shared decision-making with government agencies. For example, under the Local Decision Making model, the NSW Government and regional First Nations governance bodies enter into formal ‘Accords’ to jointly set priorities and work in partnership to improve outcomes for First Nations communities.

The agencies have not operationalised shared decision-making with First Nations stakeholders to drive systemic and structural transformation

Closing the Gap and OCHRE require government agencies to establish formal partnerships and shared decision-making with First Nations stakeholders. This includes clearly defining how shared decision-making will operate in practice, such as roles and responsibilities, and delegations for decision-making in relation to reforms and resource allocation.

Consistent with Closing the Gap and OCHRE, NSW Treasury’s TPG24–26 First Nations Partnership Assessment Policy (TPG24–26), issued 1 November 2024, mandates that government agencies complete a First Nations partnership assessment setting out their approach to governance and engagement with First Nations stakeholders. The assessment is to be completed for any new measure that is First Nations‑specific or that would significantly or disproportionately impact First Nations peoples.

The agencies do not have a comprehensive, agency-wide framework that translates these principles into practice. In the absence of such a framework, there is no consistent or coordinated mechanism for engaging First Nations stakeholders in shaping systemic and structural transformation. This gap limits the capacity of agencies to deliver system-wide change that reflects the rights, priorities and aspirations of First Nations communities.

Youth Justice advise it is currently commissioning a First Nations consultancy organisation to develop an agency-level shared decision-making framework, an important step toward embedding self-determination in its operations.

Both agencies have mechanisms to consult with First Nations stakeholders to develop discrete projects

While the agencies do not have an overarching framework for shared decision-making at the agency level, there are instances where First Nations stakeholders have been consulted in the design of specific projects.

In February 2024, both agencies implemented Aboriginal Impact Statements (AIS), a formal mechanism designed to ensure that First Nations perspectives are considered in the development and implementation of new programs and projects. An AIS encourages agency staff to engage with First Nations communities from planning, throughout the life of a project.

However, the AIS process positions First Nations communities as consultees. Whilst the input of First Nations stakeholders is sought and considered, the agencies have not demonstrated the existence or operation of mechanisms to support partnerships and shared decision-making, as required under OCHRE and Closing the Gap. The use of AIS’ is also limited to the introduction of new projects, meaning that ongoing programs, policies, and operational reforms proceed without First Nations input. Between February 2024 when AIS’ were introduced and December 2024, Corrective Services reported the completion of 4 AIS’ and Youth Justice reported the completion of one.

Corrective Services advised that it does not have a process in place for completion of TPG24–26 assessments, rather that its AIS process covers most of the requirements of the policy. However, TPG24–26 specifically states that internal impact statements such as AIS’ do not replace the requirement for agencies to complete the required assessment. It states, ‘this ensures consistency in the evidence provided to Cabinet and central agencies to inform advice and decision-making. Agencies can attach and cross-reference their own internal impact assessments to avoid duplication where relevant’. Youth Justice advised that it has completed 3 TPG24–26 assessments since the policy was introduced, noting that as a relatively small agency it has brought few new proposals to the Expenditure Review Committee or Cabinet since the policy commenced in November 2024.

Under OCHRE, healing is recognised as a central and non-negotiable principle for transforming relationships between government agencies and First Nations communities. OCHRE emphasises that healing cannot be achieved through a one-off event or program; rather, government must work with First Nations communities, policy practitioners and service providers to advance the dialogue in NSW about trauma and healing, and to develop responses informed by evidence of good practice.

The NSW Government has a responsibility to support and enable healing across First Nations communities and requires agencies, including Corrective Services and Youth Justice, to embed healing in their policies, practices and service delivery. A 2019 OCHRE Review Report by the NSW Ombudsman outlines 4 key areas in which agencies can support healing:

1. encouraging greater recognition and respect for First Nations peoples and culture
2. undertaking research to contribute to an evidence base
3. committing funding for First Nations healing programs
4. ensuring policies and programs expressly recognise healing for First Nations peoples and communities as an outcome.

OCHRE recognises that agencies must move beyond transactional service delivery and embed healing as a core principle in how they engage with First Nations communities. This includes creating culturally safe environments, supporting trauma-informed care and recognising and respecting First Nations ways of healing, including connection to Country, Elders and cultural practices. OCHRE requires healing to be community-led, with support from government agencies to identify evidence-based approaches and provide necessary resources and support.

Healing is not a one-off event or program, but rather a process that takes time and must be embedded within broader systemic and structural transformation. As healing is inseparable from self-determination, agencies must embed First Nations leadership and shared decision-making over the design, delivery and evaluation of healing initiatives, including upholding data sovereignty, respecting cultural governance and supporting local leadership.

Aligned with OCHRE, Priority Reform Three under Closing the Gap requires government agencies to: ‘identify their history with Aboriginal and Torres Strait Islander people and facilitate truth-telling to enable reconciliation and active, ongoing healing’, particularly through formal partnerships and engagement with First Nations communities.

The interdependence of Closing the Gap targets and the shared outcomes they influence mean that interagency cooperation and accountability, and partnerships with First Nations stakeholders are essential. Progress in one area can drive progress toward the other Closing the Gap targets. An interagency approach is challenging in an environment where core agency responsibilities frequently change through machinery of government processes.

Previous reports by the Audit Office of NSW and the NSW Ombudsman have highlighted the challenges of an interagency response to the systemic inequalities faced by First Nations peoples. The reports cite broader governance issues, including undefined authorising environments, undefined roles and responsibilities, fragmented accountability and an absence of consistent mechanisms for communication and escalation.

Appendix 1 - Relevant previous reports and inquiries

Appendix 2 - Timeline of relevant agency strategies, reports and inquiries, government policy, and legislation

Appendix 3 - Notes provided by First Nations Inmate Delegates

Appendix 4 - Response from entity

Appendix 5 - About the audit

Appendix 6 - Performance auditing

© Copyright reserved by the Audit Office of New South Wales. All rights reserved. No part of this publication may be reproduced without prior consent of the Audit Office of New South Wales. The Audit Office does not accept responsibility for loss or damage suffered by any person acting on or refraining from action as a result of any of this material.

Parliamentary reference - Report number #418 - released 12 March 2026.