The Racing for the Regions program was developed by Racing NSW to upgrade infrastructure at thoroughbred racecourses outside Greater Sydney. Racing NSW’s business case for the program included 21 infrastructure projects with a total estimated cost of approximately $126 million. The NSW Government provided $58.6 million funding for 14 of these projects. Racing NSW committed to making a co-contribution of $36.8 million to the program

The NSW Government-funded projects include new or improved tracks, stables and grandstands. The business case for the program stated that all projects would be completed by September 2024. As at January 2026, 6 of the 14 projects were complete, 4 were in the construction phase and 4 were yet to start construction. The projects are now expected to be completed by end of 2026.

The stated objective of the program was to provide economic stimulus to regional areas in response to the COVID-19 pandemic. The program is expected to create more jobs in regional areas and increased tourism generated by the capacity to host more high-quality race meets. The program continues to be funded through budget carry-forwards in subsequent financial years.

The Department of Creative Industries, Tourism, Hospitality and Sport (the Department) is responsible for administering the program. As the single grant recipient, Racing NSW is responsible for the delivery of funded projects in compliance with the terms of the grant funding deed executed in July 2022. Racing NSW is a body corporate established under the Thoroughbred Racing Act 1996. It is not a government agency and is not subject to direction or control by the NSW Government in the exercise of its legislative functions.

The objective of the audit was to assess whether the Racing for the Regions program is being administered and delivered effectively to meet government objectives. The audit addressed this objective by assessing the Department’s oversight and management of the program, with a focus on whether the Department supported and oversaw the achievement of government objectives, and assessing Racing NSW’s compliance with the requirements of the grant funding deed.

The audit covers the period from July 2021, when funding for the program was announced, until January 2026, when the conduct of the audit concluded. The audit does not comment on the merits of government policy objectives or on the merits of individual projects that received NSW Government funding.

The Department is not administering the Racing for the Regions program effectively to meet government objectives. The Department has not established effective oversight arrangements for projects funded through the program. The funding deed developed by the Department did not include up to date project timelines and scopes and did not specify an end date for the program. The delivery of most projects has been significantly delayed compared to initial business case estimates. The Department did not require Racing NSW to develop an evaluation plan to quantify and report on program outcomes. As a result, the Department cannot demonstrate whether the grant program is achieving its intended outcomes.

The Government Sector Finance Act 2018 and the Government Sector Employment Act 2013 require agency heads to ensure that public funds are used efficiently, effectively and prudently. The NSW Grants Administration Guide (the Guide) sets out NSW Government policy for grants administration. The Guide requires agencies to actively manage grant programs by managing risks and monitoring and acquitting the delivery of funded projects. The version of the Guide that was in place when the program was established included these requirements and they have remained in subsequent updates to the Guide. The Department is not responsible for delivering the individual projects funded through the program, but it is responsible for ensuring that the program delivers value for money in achieving its stated objectives.

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

When the Department was assigned responsibility for the program and developed the funding deed for the grant, it did not identify foreseeable 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, especially the development of the funding deed. The Department did not request Racing NSW to provide updated information on project status, schedules or risks when developing the funding deed. The Department did not provide advice to the Minister about the risks of the program before it finalised the funding deed.

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 scopes for each project and did not specify an end date for the program. For example, 8 of the 14 projects had estimated completion dates in 2021, 6 months or more before the funding deed was executed. The Department did not require Racing NSW to provide information on timeline, scope or cost before finalising the funding deed. The only source of information on timelines, scope and costs for funded projects was Racing NSW’s business case for the program, which was prepared 21 months earlier. 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.

Three of the projects had already been completed when the funding deed was executed although the funding deed described the projects receiving NSW Government funding as ‘upcoming projects’. The funding deed did not make any reference to the fact that 3 projects had been commissioned or completed before terms had been agreed between the Department and Racing NSW.

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 before executing the funding deed. It also did not consider how progress towards 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 for Racing NSW to conduct an evaluation in the funding deed. This means Racing NSW is not required to assess whether the benefits set out in its business case are being realised.

The Department stated that it plans to develop an evaluation plan in 2026–27, with the evaluation to follow. Including requirements for project and program evaluation in the program funding deed, could have improved transparency, accountability, and project management and delivery throughout the program.

The Good Practice Guide to Grants Administration 2010, which was in place when the program was established, stated that agencies should develop performance measures when planning a grant program 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 included similar requirements. The funding deed for the program includes a clause that permits amendments with the agreement of both parties, but the Department has not sought to make any variations to address weaknesses in the deed.

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

The Department documented less than half of the monthly governance meetings held between February 2024 and October 2025. Meeting minutes include summaries of projects and one instance of discussion of payment requirements, but they did not include any record of discussion of risk mitigation or any actions following the meetings.

Racing NSW has reported high risks relating to budget overruns and project delays on 7 of the projects in progress since February 2024. The Department has not sought clarification about the impact of these risks on the scope of projects. There have been changes to the delivery approach of individual projects since the business case was developed, for example staged construction of stables at Cessnock and Gosford. The Department has not implemented a change control process to ensure that any impacts on the realisation of program benefits are considered before changes are made.

Racing NSW has engaged a project management firm to conduct activities including project planning and reporting. Regular reporting and monthly meetings 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 has financial controls and processes to manage grant payments and has followed these in most cases

The Department has implemented financial controls and processes to manage grant payments. Since 2024, the Department has used a consistent acquittal process to review each claim for payment. This process included verifying that the claim is certified by a qualified quantity surveyor and includes all required supporting documentation. A review showed that all 23 payments made to Racing NSW since 2024 were supported by a full briefing and were signed and approved by the designated delegate.

The Department paid $142,000 for one project in 2022 but did not provide any supporting records to show whether this payment complied with its processes. The Department stated that it does not have access to these records due to IT changes associated with a machinery of government change in 2022.

The funding deed included a requirement that all claims for payment must include certification by a quantity surveyor. Payments for 2 projects made prior to 2024 did not comply with the requirement to provide a certification by a quantity surveyor, although the claims were supported by the final project reports. The 2 projects had been completed before the funding deed was executed and Racing NSW was unable to have the certification done retrospectively. The Department addressed this by allowing Racing NSW to provide certification from a private audit firm for paid invoices instead of a quantity surveyor certification of completed work and pricing.

By June 2026, the Department of Creative Industries, Tourism, Hospitality and Sport should:

1. actively monitor delivery of the remaining projects, with a focus on ensuring and fully documenting oversight of any changes to delivery method, timelines or project scope
2. request that Racing NSW evaluate and report to the Department on the achievement of benefits outlined in Racing NSW’s original business case, consistent with the grants administration guidelines that were in place at the time the program commenced.

The Department of Creative Industries, Tourism, Hospitality and Sport should strengthen its stewardship of public funds for grant programs by developing:

3. a documented risk‑based grants administration and assurance plan for each program, consistent with the NSW Grants Administration Guide, which includes:
   1. a framework to assess and demonstrate value for money, including defined performance measures and evaluation of outcomes and benefits
   2. processes for identifying, assessing, monitoring and addressing key risks, including financial, delivery and probity risks
   3. the program’s scope, delivery timeframes, and the program start and end dates
   4. key delivery milestones and how progress payments will be linked to delivery and evidence
   5. arrangements to monitor and document compliance with the NSW Grants Administration Guide, relevant legislative principles and other applicable guidance
   6. clear reporting arrangements for project scope, timelines, status, budget, outputs and outcomes, including public reporting where appropriate.

Thoroughbred racing is one of 3 racing codes in NSW, along with harness racing and greyhound racing. Thoroughbred racing in NSW is controlled and regulated by Racing NSW, which is a body corporate established under the Thoroughbred Racing Act 1996. Racing NSW is not a government agency and is not subject to control or direction by the NSW Government. It is governed by a Board appointed by the Minister for Gaming and Racing. Its responsibilities include, licencing thoroughbred racing participants, supervising race clubs and races, setting minimum standards, and managing commercial aspects such as insurance and media rights. It is also responsible for licencing bookmakers who provide betting services at racecourses.

It has received funding from several NSW Government grant programs totalling $77.6 million since 2020–21. This includes the $58.6 million grant funding for the Racing for the Regions program. According to Racing NSW’s 2024–25 Annual Report, it received $410 million in revenue (from various sources) and had an operating surplus of $13 million. The Auditor-General of New South Wales does not audit Racing NSW’s financial statements, as it is not an auditable entity under the Government Sector Audit Act 1983.

Many regional racecourses are located on Crown land. Most racecourses are managed by local race clubs or local councils. Clubs are responsible for managing facilities such as tracks, stables and amenities for participants, but most major upgrades at racecourses are paid for and managed by Racing NSW. Of the 9 racecourses that received funding under the program, 7 are directly owned and managed by the local race club. One is managed by the local race club as Crown Land Manager. One (Cessnock) is directly owned by Racing NSW.

The Minister for Gaming and Racing has legislative responsibilities including licensing racecourses and appointing members to the Racing NSW Board. The Office of Racing, a unit with the Department of Creative Industries, Tourism, Hospitality and Sport (the Department), is responsible for administering legislation related to thoroughbred racing and advising the Minister on the exercise of legislative functions. Key legislation includes the Thoroughbred Racing Act 1996, Betting and Racing Act 1998, and Totalizator Act 1997. The Office of Racing is also responsible for advising the Minister on policy and managing relations between the NSW Government and racing organisations, including Racing NSW and race clubs.

During the period covered in this audit, the Office of Racing has moved between 3 different departments as part of broader machinery of government changes. When the NSW Government funding for the program was announced, the Office of Racing was located within the Department of Customer Service. It was moved to the Department of Enterprise, Investment and Trade on 1 April 2022 and subsequently moved to its current location in the Department of Creative Industries, Tourism, Hospitality and Sport on 1 July 2024. In this report, a reference to the Department should be read as a reference to the Office of Racing unless specified otherwise.

A summary of roles and responsibilities for thoroughbred racing in NSW is shown in Figure 1.

Establishment of the Racing for the Regions program

In October 2020, Racing NSW submitted a business case to the NSW Government for the program, seeking funding for 21 infrastructure projects across 12 thoroughbred racecourses in regional NSW. These projects included new or upgraded training tracks, stables and grandstands. The 21 projects in the business case had an estimated total cost of approximately $126 million. The business case stated that the program would provide economic stimulus to support regional areas following the COVID-19 pandemic.

NSW Treasury reviewed the business case and Cabinet considered the proposal and approved an allocation of $58.6 million funding for 14 projects.¹ The government media release at this time stated that the program would create ‘more jobs for locals and more money coming into country towns through increased tourism generated by the capacity to host more high quality race meets’. The commitment to the program by the current government has been affirmed by way of budget carry-forwards in subsequent financial years.

The Department was given responsibility for administering the program after the funding commitment was announced. A funding deed covering the 14 projects² was signed by the Department in March 2022 and was executed in July 2022. The funding deed includes a schedule showing the funding allocation summary (projects funded and not funded). However, it does not specify completion dates for each funded project. The business case for the program was included as an appendix to the funding deed. This set out estimated timelines and budgets for the projects. Racing NSW stated that the project timelines in the 2020 business case were based on indicative project scoping. These substantially changed in detailed design investigations that took place during and after the funding deed was executed.

Racing NSW is the single grant recipient and is responsible for delivering all projects covered by the funding deed. It engaged a project management firm with expertise on racing infrastructure developments to manage 8 of the 14 projects, including procurement, financial and, risk management and reporting. It is also engaged 2 quantity surveyor firms to comply with requirements of the funding deed. Quantity surveying is a certified profession focused on estimating and monitoring the costs of construction projects. Figure 2 provides a chronology of events.

Source: Audit Office analysis of information provided by the Department and Racing NSW.

Figure 3 shows the projects that are receiving NSW Government funding. These were specified in the funding deed that was executed in July 2022. Racing NSW chose to deliver some of the projects from its business case that did not receive NSW Government funding from other funding sources. These projects were not included in the scope of this audit.

Source: Racing for the Regions Business Case Oct 2020 and Funding Deed, July 2022.

Current status of Racing for the Regions projects

The 2020 business case for the program stated that all projects would be completed by September 2024. As at January 2026, 6 of 14 projects had been completed, 4 were in the construction phase and 4 were yet to start construction (Figure 4). Racing NSW recently estimated that all projects would be completed by December 2026.

Racing NSW cited several factors as contributor to the delays to project delivery, including:

• the NSW Government announced funding for the program in June 2021, but the funding deed was not executed until July 2022
• most projects required additional work to finalise the scope and detailed design
• there were delays in obtaining approval for development applications for some projects.

Source: Racing for the Regions Master Project Schedule (January 2026).

The total budget for the projects that were allocated NSW Government funding in the 2021–22 NSW Budget has increased by approximately $53 million from the initial estimates in the business case. These cost increases will be paid for by Racing NSW, with NSW Government funding remaining the same.

¹ The Racing for the Regions program was part of a broader funding package for horse racing infrastructure. The NSW Government’s 2021–22 NSW Budget media release reported $67 million in funding, which combined the Racing for the Regions program with $8.4 million funding for projects from different NSW Government grant programs. The 2021–22 NSW Budget Papers reported $59.9 million for infrastructure projects at country race clubs. This combined the Racing for the Regions program funding with $1.3 million funding from one other grant program.
² The NSW Government Grants and Funding Finder website lists 13 projects because 2 projects at the same racecourse are combined in the grant funding deed. This audit has separated them for clarity.

Regulatory framework for grants administration in NSW

In NSW, the Grants Administration Guide (the Guide) provides the framework for the administration of grants. The Guide sets out NSW Government policy for grants administration and includes both principle-based guidance and mandatory requirements. All Ministers, ministerial staff and government employees must comply with the mandatory provisions of the Guide. Compliance with the Guide has been a legal obligation under the Government Sector Finance Act 2018 (GSF Act) since 1 July 2022. The Guide is issued under a Premier’s Memorandum.

The Guide defines a grant as:

An arrangement for the provision of financial assistance by the NSW Government whereby money:

• is paid to a grantee other than the NSW Government
• is intended to help address one or more of the NSW Government’s policy outcomes
• is intended to assist the grantee to achieve its objectives
• does not result in the return of goods or services by the grantee of an equivalent value to the NSW Government (i.e. it is a non-reciprocal exchange).

The term ‘grants administration’ covers all activities involved in the lifecycle of a grant from initial planning to final evaluation and reporting. Grants administered by the NSW Government must deliver value for money in achieving stated objectives and meet the key principles of transparency, accountability and probity.

The Cabinet Office is responsible for the Guide and for developing resources to support compliance with its requirements. The Guide covers all stages of grants administration, including planning and designing grant programs, making decisions about funding allocations, monitoring and acquitting grants, and evaluation of outcomes. The scope of this audit focuses on the last 2 of these stages: monitoring and acquittal, and evaluation of outcomes.

For this audit, the relevant mandatory requirements set out in the Guide include that officials must:

• put in place practices and procedures to ensure that grants are administered consistently with the key principles and requirements in the Guide
• identify and manage risks for all grants, in accordance with agencies’ responsibilities under the GSF Act
• ensure that grantees are subject to clear and specific written terms and conditions for a grant. This should be by way of a funding agreement, unless not practicable.

The Guide provides additional best practice guidance for government officials in areas including, the use and content of grant funding agreements, processes for monitoring and acquitting grants, and grants evaluation. This additional guidance is not mandatory but the Guide notes that Premier's Memoranda are binding on NSW Government agencies and states that compliance is expected.

Government employees who are administering grants are also required to comply with relevant provisions of other laws including:

• the Government Sector Employment Act 2013, which outlines the core values of the government sector, such as requirements to be fiscally responsible, to focus on efficient, effective and prudent use of resources and to provide transparency to enable public scrutiny
• the State Records Act 1998, which requires public offices to keep full and accurate records of the activities of the office.

Application of grants administration guidance to the Racing for the Regions program

This audit assessed how the program was managed according to the relevant NSW Government guidelines in place at the time. NSW Government grants administration guidance documents have been updated twice during the period the Department has been responsible for the administration of the Racing for Regions program, as shown in Figure 5.

Source: Audit Office analysis of information provided by the Department and Racing NSW.

The 2010 Good Practice Guide was in place when the funding deed was developed and executed. While its use was not mandatory, it recommended grant programs should have robust systems for accountability, including risk assessments throughout the grant program, clear performance measures to monitor progress. and regular evaluation of whether the funds are being used efficiently and objectives are being met.

The 2022 Guide was applicable to the delivery stage of the Racing for Regions program from September 2022 to March 2024. The 2024 Guide has been applicable to the program from March 2024. The 2022 and 2024 updates to the Guide strengthened the requirements on NSW Government agencies by adding more detailed guidance across all stages of grants administration and making some elements mandatory (as noted above).

The 2022 and 2024 Guides were accompanied by Premier’s Memoranda stating that the new Guides applied prospectively, but activities for the administration of grant programs already underway should adhere to the updated requirements from the date that the updated Guides took effect.

The 2010 Good Practice Guide, which was in place when the Racing for the Regions program started, did not include classifications for types of grants. The program would be classified as a one-off or ad hoc grant program under both the 2022 and 2024 Grants Administration Guides, as no open grant rounds or assessments were conducted.

The Audit Office of NSW’s Audit Work Program 2025–2028 includes a series of audits to assess the effectiveness of selected agencies in ensuring grants are being used by recipients for their intended purpose and planned benefits are being realised. The Racing for the Regions program is the first grant program in this series.

The audit objective was to assess whether the Racing for the Regions program is being administered and delivered effectively to meet government objectives. This includes assessing the Department’s oversight and management of the grant program and Racing NSW’s compliance with grant funding requirements. The audit covers the period from July 2021, when funding for the program was announced, until January 2026, when the conduct of the audit concluded. The audit does not comment on the merits of government policy objectives, or on the merits of individual projects that received government funding.

Racing NSW is receiving funding from the Department to deliver the Racing for the Regions program, so is included in this audit as a ‘related relevant entity’ under Section 38 of the Government Sector Audit Act 1983. The audit only assessed the activities of Racing NSW that are directly connected to the Racing for the Regions projects that received grant funding from the NSW Government.