Source: Audit Office of NSW analysis 2022.

Polymerase chain reaction (PCR) testing for COVID-19 commenced in March 2020 and was expanded in April 2020 to anyone with symptoms. PCR testing clinics were established across NSW. They were operated by NSW Health Pathology and private operators.

The graph below shows the number of COVID-19 PCR tests performed from March 2020 to December 2021 in NSW.

Up to 31 March 2020, 99,951 COVID-19 PCR tests were carried out in NSW. From then on, an average of 454,969 tests were performed each month till June 2021. By 30 June 2021, NSW had performed 6,924,488 COVID-19 PCR tests. The sharp increase in the number of tests in June 2021 was due to the outbreak of the COVID-19 Delta variant. This continued to result in high testing numbers till October 2021.

In December 2021, the number of PCR tests climbed again due to the outbreak of the COVID-19 Omicron variant. By the end of December 2021, NSW had performed 25.2 million PCR tests.

Under the Commonwealth National Partnership Agreement, NSW received a 50% contribution for hospital costs incurred for the diagnosis and treatment of COVID-19.

Quarantine arrangements

From 29 March 2020 to 1 November 2021, all travellers arriving in Australia, regardless of their vaccination status, were required to quarantine at a designated quarantine facility, typically hotels. Unless granted an exemption to isolate at home, arrivals had to spend a minimum of 14 days in this government-arranged accommodation (up to 24 days where the individual refused to be tested, or where the individual tested positive for COVID-19). Hotel quarantine in NSW was a joint operation led by NSW Police and NSW Health with support from other NSW Government agencies. From 18 July 2020, travellers were charged for their mandatory stay in quarantine. From 1 November 2021, hotel quarantine ceased for fully vaccinated persons. Since 30 April 2022, international travellers are not required to quarantine, regardless of vaccination status.

The principle cross-agency governance body is the Interagency Operational Protocol Governance Committee for Quarantine Services during COVID-19, chaired by the Chief Executive of the Sydney Local Health District. This group is responsible for overseeing the interagency agreements and arrangements under which individuals arriving in NSW are required to quarantine in a designated quarantine hotel or health facility pursuant to the public health order. Underneath this Interagency Governance Committee, sits the NSW Hotel Quarantine Operational Governance Committee during COVID-19, chaired by the Deputy Controller of the State Health Emergency Operations Centre. This group provides a forum for consultation between key stakeholders, including NSW Police and NSW Health, in relation to hotel quarantine.

Vaccine rollout

Australia's vaccination program was officially launched on 21 February 2021. The first high-risk priority group included quarantine and border workers, frontline healthcare workers and aged and disability care residents.

The Australian COVID-19 Vaccination Policy outlines the approach to providing COVID-19 vaccines in Australia including the roles and responsibilities.

Up to 30 June 2021 more than 7.6 million doses of vaccine were administered across Australia, including 2.2 million doses in NSW. The table below shows the NSW vaccination rates at 30 June 2021 and 31 December 2021.

As you would expect as more of the population became eligible for vaccines, the number of doses administered in the six months till 31 December 2021 was 6.3 times the number at 30 June 2021.

At 31 August 2021, the Australian Government Department of Health started reporting vaccination rates by local government area and also captured indigenous status. It was reported 72,437 (45.4%) Aboriginal and Torres Strait Islander people in NSW had received at least one dose and 33,116 (20.8%) were fully vaccinated. At 31 December 2021 these numbers climbed to 137,647 receiving at least one dose (86.2%) and 133,561 (83.7%) receiving two doses.

Our performance audit has commenced to examine the effectiveness and efficiency on NSW Health’s COVID-19 vaccine rollout. It will have a particular focus on whether NSW Health:

• set vaccination targets, supported by evidence
• effectively and efficiently managed the rollout of the COVID-19 vaccine
• effectively and efficiently managed demand.

Cluster agencies had spent $3 billion (just under 75%) of the COVID-19 heath and economic stimulus package by 30 June 2020. Unspent funding was primarily related to small business grants, land tax relief and personal protective equipment. Unspent funding was not carried forward to 2020–21.

Up to 30 June 2020, the unexpected nature of the pandemic meant most funding was provided via ‘Exigencies of Government’ measures under Section 4.13 of the Government Sector Finance Act 2018 (GSF Act) which allows funding for urgent and unforeseen expenditures such as natural disasters. The ongoing nature of the COVID-19 pandemic meant subsequent funding was provided through appropriations included as part of the 2020–21 State Budget.

The $171 million overspend in Health was due to additional costs incurred for public health activities, including:

• $367 million overspend for response measures covering hotel quarantine, cleaning, telehealth services, testing, and contact tracing
• $22 million overspend for health worker accommodation and medical research
• $17.1 million overspend for establishment and distribution of vaccines.

The amounts above were offset by underspends including:

• $179 million underspend for purchases of personal protection equipment
• $35 million underspend for private hospitals to reserve intensive care unit capacity and manage elective surgeries
• $18 million underspend for community based services, expanded virtual services and partnering with third party service providers.

Health funding in response to COVID-19 pandemic

The 2020–21 Budget included investment in public hospitals, ambulance and emergency health services, mental health services, as well as funding for recovery measures and for the continued public health response to the COVID-19 pandemic.

Health measures included (expenditure to 2023–24):

• purchase personal protective equipment (PPE) to protect frontline emergency services workers and the public (over $1.0 billion)
• increasing intensive care unit capacity, undertake additional COVID-19 testing and purchase additional medical equipment ($700 million)
• mental health support measures ($169 million)
• provide technology-enabled workforce support options ($50 million).

2020–21 Budget included new stimulus measures

The State's 2020–21 Budget included new stimulus measures aimed to kick-start the economy and create jobs. The following diagram summarises how the funding was allocated.

2021–22 Budget continues with health responses and economic stimulus

The State's 2021–22 Budget has continued to respond to and recover from COVID-19. There is a focus on investment and other initiatives to create jobs as well as packages to support the vulnerable. The funding includes:

• $340 million for personal protective equipment and associated storage costs to keep frontline health workers safe
• $261 million to support the COVID-19 vaccination rollout
• $200 million to support COVID-19 pop-up clinics, testing and contact tracing
• $145 million to provide medical care to returning travellers in quarantine
• $50 million for a new Dine & Discover voucher to be used on Fridays in the CBD, to increase activity in the CBD and support dining and entertainment businesses
• $20 million to provide 200,000 Sydney CBD accommodation vouchers worth $100 each.

The last two years budgets identified the global pandemic as continuing to add uncertainty to the economic outlook and as a risk that could postpone, if not derail, the recovery. A few days after the 2021–22 Budget was released, the risk became reality as the Delta variant of COVID-19 spread across the State leading to Sydney entering lockdown with the rest of NSW following.

In October 2021, the Sydney CBD accommodation vouchers were expanded to be Stay NSW accommodation vouchers as part of the government’s post-Delta Economic Recovery Strategy.

The table below shows the health and economic stimulus appropriated to clusters in the 2021–22 Budget and unaudited actual spending for the first six months of the financial year.

In addition to the State funding, the Ministry of Health continues to receive funding from the Australian Government, so its spending remains higher than the budget. Spending on some programs is slower than expected due to lockdowns and border closures. For example, the Premier and Cabinet's Job Plus program relied on businesses relocating to NSW due to incentives. The first payments are now expected to be in August 2022 when the applicants satisfy the criteria.

Post-Budget response to the Omicron and Delta variants

Since the State's 2021–22 Budget was published, more than $13 billion of supplementary support has been provided in response to the Delta outbreak. A significant portion is being administered by the Customer Service cluster as outlined in the table below.

This Delta outbreak placed pressure on the State Budget with a projected deficit of $19.5 billion for 2021–22.

On 30 January 2022 the NSW Government announced a $1 billion financial support package for businesses, workers and the performing arts hardest hit by the Omicron wave. This includes the following programs:

• small business support program
• small business fees and charges rebate
• commercial landlord hardship grant
• performing arts relaunch package.

The Ministry of Health received funding from both the Australian and State governments in response to the COVID-19 pandemic. Appropriations from the State Government increased from $13.3 billion in 2018–19 to $14.9 billion in 2019–20 and $15 billion in 2020–21. Income from grants and contributions increased from $7.4 billion in 2018–19 to $9.5 billion in 2019–20 and fell to $9.1 billion in 2020–21.

Appropriations were made for both recurrent funding requirements and to support additional demand for health services and additional operating costs arising from COVID-19. This included medical and surgical supplies, personal protective equipment, ventilators, fit-out of additional ambulances and increasing capacity of pathology and hospitals.

Health expenses increased by $2.3 billion over the last two years

Ministry of Health’s expenses increased from $23.5 billion in 2018–19 to $24.8 billion in 2019–20 and $25.8 billion in 2020–21.

Employee-related expenses increased from $14.4 billion in 2018–19 to $15 billion in 2019–20, and $15.1 billion in 2020–21. The Health cluster employed an additional 4,893 full time staff in 2020–21 (2,763 in 2019–20) and incurred an extra $28 million in overtime work mainly in response to COVID-19.

Operating expenses increased from $6.7 billion in 2018–19 to $7.1 billion in 2019–20, and $7.8 billion in 2020–21. Increases were mainly due to responding to the pandemic, including the purchase of additional medical and surgical supplies including personal protective equipment.

Grants and subsidies increased from $1.4 billion in 2018–19 to $1.5 billion in 2019–20, and $1.7 billion in 2020–21. This increase was mainly due to funding transferred to affiliated and controlled health organisations for continued COVID-19 support including providing personal protective equipment free of charge.

Private hospital capacity and viability payments refunded

Expenses for outsourced patient care increased during the pandemic, mainly due to movement of patients to private healthcare providers to free up capacity in public hospitals and delivery of elective surgeries through the private healthcare system. The Australian Government provided funding of $331 million in 2019–20 to NSW under the National Partnership Agreement to support additional hospital costs, public health measures and private hospital sector viability payments to ensure sufficient hospital capacity to respond to the ongoing pandemic.

The private hospital sector in NSW received $147 million over the two years till 30 June 2021 and $177 million was returned. These overpayments were the result of the financial impact on the private hospitals being shorter and less severe than anticipated.

COVID-19 inventory impaired and written off

At 1 July 2020, HealthShare NSW (a division of Health Administration Corporation) held $731 million in inventory. During 2020–21, $656 million of COVID-19 inventory was procured, of which $220 million was consumed and $776 million, was impaired or written off.

The $559 million impairment was an estimate of how much inventory would expire before being used based on anticipated future usage and the inventory items’ expiry dates. Due to the significant increase in usage of PPE arising from the Delta outbreak in June 2021, and issues with the verification of expiry dates of inventory held in stock, there was a high degree of uncertainty over the estimate.

The Health Administration Corporation (HAC) has, for financial reporting purposes, written off certain COVID-19 inventory comprised of:

• $159 million for inventories assessed by HAC not meeting regulatory standards. Protective masks were supplied by an overseas vendor which failed the Therapeutic Goods Administration (TGA) post market review
• $37.6 million for expired inventories mainly relating to protective equipment including masks, gloves, hand sanitisers, face shields, isolation gowns and swabs
• $20.7 million for inventories assessed by HAC as faulty, primarily ventilators acquired from overseas which were not performing in accordance with the supplier’s operation manual.

First-time recognition of COVID-19 vaccine inventory

Health began administering COVID-19 vaccinations to priority groups, such as staff from healthcare, emergency services, quarantine, border workers, and their households, in February 2021, and to the public via mass vaccination hubs from May 2021. Inventories of the Pfizer and AstraZeneca vaccines were recognised at $22.3 million and $17.1 million, respectively, at the end of the 2021 financial year. The supply of vaccines will increase in 2021–22 and future years, both in terms of brands and quantum.

$107 million in hotel quarantine receivables with a significant portion not recoverable

From 18 July 2020, returning travellers are being charged a fixed fee for staying in hotel quarantine. During 2020–21, Sydney Local Health District (Sydney LHD) reported $214 million in revenues associated with the hotel quarantine program. Of this, $107 million remained outstanding at 30 June 2021, and was recognised as a receivable. The Sydney LHD assessed $28.2 million as unlikely to be recovered. Our audit concluded this amount was understated.

Agile health services to meet new demand and modify service delivery

A new digital platform known as myVirtualCare was implemented in September 2020 for more accessible healthcare. myVirtualCare is a custom web-based videoconferencing platform aimed at helping patients, healthcare providers and carers in accessing and managing care. The platform provides patients with access to clinical and social care providers via a web link.

In February 2022, NSW Health released the NSW Virtual Care Strategy 2021–2026, which aims to support a coordinated, consistent and sustainable approach to scale virtual care across NSW. A performance audit is planned to examine the use of virtual care services, where clinically appropriate, and NSW Health’s focus on sustainably embedding the virtual care model.

The pandemic also required close contact tracers. Health Education and Training Institute (HETI) designed and delivered a rolling program of online training for close contact tracers in readiness for infection rate surges. Recordings of the virtual training were made available to local health districts.

Annual leave balances continued to rise during the pandemic

The operational demands in managing the COVID-19 pandemic, presented new challenges in managing excessive leave balances. Prior to the emergence of COVID-19, the Health cluster was actively reducing the percentage of employees with excess leave balances. With COVID-19 pandemic driving operational demand there was less capacity for employees to take leave. This led to over 35% of employees having excess leave balances at 30 June 2020 and 2021.

The table below shows the increase in annual leave provision over the past three years and percentage of employees with balances over 30 days.

Our report on Health 2021 made the following recommendations related to COVID-19:

• hotel quarantine fees – develop a tailored assessment methodology to estimate recoverability of fees and work with Revenue NSW to develop a tailored debt recovery strategy
• COVID-19 inventories – review the current stocktaking and impairment methodology to incorporate validation of data key to the management of COVID-19 related PPE
• COVID-19 vaccines – work with the Commonwealth to obtain primary price information on COVID-19 vaccines.

Customer Service

Major programs administered or managed by the Customer Service cluster include:

The Department of Customer Services received exigency funding of $713 million in 2020–21 ($319 million in 2019–20) and these amounts were primarily transferred to Service NSW and Revenue NSW to fund programs they administer.

Due to the NSW lockdowns the Dine & Discover vouchers were not able to be used by 30 June 2021 so actual expenditure was less than the budgeted amount. The date to use the vouchers was extended to 30 June 2022. In addition, the NSW Government provided an additional two vouchers for each NSW eligible resident from December 2021, which are available until 30 June 2022. Service NSW administers this program.

Service NSW delivered several COVID-19 response programs

Within the Customer Service cluster, Service NSW was the lead agency delivering several programs to support individuals and businesses through the pandemic. The graph below shows revenue and expenses over the past four years for Service NSW.

Service NSW’s income from grants and contributions increased from $175 million in 2018–19 to $200 million in 2019–20, and to $479 million in 2020–21. This increased funding was due to a change in Service NSW’s funding model whereby revenue it previously received from fee for service arrangements was replaced with grant funding. In addition, there was funding to deliver COVID-19 response programs.

Service NSW's revenue from providing goods and services decreased from $283 million in 2018–19 to $257 million in 2019–20, and $65.7 million in 2020–21. Reductions in revenue were mostly due to the change in the funding model mentioned above. The COVID-19 lockdowns also contributed to less fee for service revenue in 2019–20 as some service centres had reduced operating hours.

Employee-related expenses increased from $250 million in 2018–19 to $268 million in 2019–20, and $360 million in 2020–21. Service NSW recruited additional staff late in 2020 to assist with COVID-19, cleaning and administering bushfire and flood activities. There were additional staff hired in 2021 to undertake COVID-19 initiatives. Total number of employees increased by 719 to 4,154 employees in 2021 compared to 2020.

Service NSW also administered programs on behalf of the Crown so not all the funding and expenditure are recognised in its financial statements, they are disclosed as administered items. Other major programs delivered in conjunction with other clusters, such as Treasury, are detailed in other sections of this report.

Other cluster revenue decreased during the pandemic

The following license fees were waived in the Customer Service cluster:

• Liquor and Gaming NSW waived liquor licence fees for businesses in the hospitality and entertainment industries, resulting in $26.4 million (2020: $7 million) loss of revenue.
• NSW Fair Trading waived building and business licences resulting in approximately $31.9 million (2020: $10.6 million) loss in revenue.
• Safe Work NSW waived certain licence fees resulting in approximately $4.7 million (2020: $1.4 million) loss in revenue.

Expenses fell in 2019–20, but increased in 2020–21

The Department of Customer Service’s expenses fell from $2.0 billion in 2018–19 to $1.6 billion in 2019–20 but increased to $1.9 billion in 2020–21. The main drivers for these fluctuations were COVID-19, Machinery of Government changes and restructuring of cluster agencies. Movements relating to COVID included increase in grants and subsidies from the Department of Customer Service to Service NSW.

Treasury

The Treasury appropriations increased from $116 million in 2018–19 to $962 million in 2019–20 and $1.1 billion in 2020–21.

This funding related to several COVID-19 related programs and stimulus administered or delivered by Treasury or transferred through to other agencies, including:

Treasury’s expenses increased substantially over the course of the pandemic

Treasury’s expenses increased from $138 million in 2018–19 to $1.07 billion in 2019–20 and $1.13 billion in 2020–21.

Employee-related expenses increased from $85 million in 2018–19 to $134.2 million in 2019–20 and $133.7 million in 2020–21. This was partially due to additional staff engaged to deliver COVID-related programs.

Treasury’s operating expenses increased from $46 million in 2018–19 to $163 million in 2019–20, and again to $693 million in 2020–21. The main reason was due to accommodation and security costs associated with the hotel quarantine program ($82.6 million in 2019–20, increasing to $532 million in 2020–21). Treasury recouped $77 million of these costs from other states in 2021.

Treasury’s grants and subsidies increased from $263,000 in 2018–19 to $755 million in 2019–20, but decreased to $282 million in 2020–21, of which $554 million in 2019–20 and $129 million in 2020–21 related to COVID-19 programs. The decrease between the 2019–20 and 2020–21 financial years was primarily due to a change in the way Treasury recognised funding transferred to other Departments in 2020–21, (especially the Dine and Discover and Digital Voucher schemes administered by the Customer Service cluster), and hotel quarantine costs.

Support for businesses impacted by reduced demand, changed service delivery or closure due to public health orders

Small business support packages aimed to ease the financial pressure on small business affected by the COVID-19 pandemic by delivering immediate cashflow. An additional second round of funding for the $3,000 small business recovery grant introduced stricter eligibility requirements. Businesses had to be in a highly impacted industry and have had a significant decline in turnover. Grants were administered by Service NSW.

In November 2021, Service NSW and NSW Police announced Strike Force Sainsbery to investigate fraudulent applications for COVID-19 business support payments. At that time, Service NSW had uncovered $15.9 million in fraudulent applications and stopped the payment of another $4.6 million worth of grants.

Our 2021 report, Grants administration for disaster relief, found NSW Treasury met urgent timeframes to design the grants and Service NSW made timely payments in line with the grants' objectives and eligibility criteria.

Borrowings of $4.8 billion to fund the response to COVID-19

Borrowings of $4.8 billion (2020: $2.7 billion) from bonds issued through New South Wales Treasury Corporation helped to fund the NSW Government COVID-19 stimulus response in 2020–21. The proceeds from these bond issues were provided as loans largely to Treasury as it manages borrowings on behalf of the State and was responsible for allocating stimulus funding to cluster agencies.

Education

The Department of Education's appropriations increased from $14.5 billion in 2018–19 to $18.2 billion in 2019–20 and $18.9 billion in 2020–21. Education delivered several COVID-related programs and stimulus from these increased appropriations, including:

Education revenue lower than budgeted

The graph below shows revenue over the past four years for the Department of Education and the Technical and Further Education Commission (TAFE Commission).

The Department of Education’s revenue from providing goods and services decreased from $484 million in 2018–19 to $386 million in 2019–20 and $368 million in 2020–21. The drop in revenue was mainly due to restricted activities through the pandemic period, including excursions, subject contributions, school sport and extra curricular activities.

The TAFE Commission’s revenue from providing goods and services decreased from $397 million in 2018–19 to $343 million in 2019–20 and $322 million in 2020–21. The drop in revenue was mainly due to delivery of courses being paused or delayed throughout the pandemic.

The Department of Education's income from grants and contributions fell from $414 million in 2018–19 to $318 million in 2019–20, before increasing to $476 million in 2020–21. The decrease in 2019–20 was mainly due to a decrease in school-generated contributions, and a decrease in grants and contributions received from other public sector agencies for education services provided. Additional grants and contributions received in 2020–21 were mainly due to contributed assets and grant funding, mainly from additional Restart NSW funding.

The TAFE Commission’s income from grants and contributions increased from $1.2 billion in 2018–19 to $1.5 billion in 2019–20, and further increased to $1.6 billion in 2020–21. This was mainly due to increases in asset contributions and grants received from NSW public sector agencies for services provided, offsetting decreases in operational based funding.

Continuity of learning and operation of education and childcare services

With an estimated two to four months of student learning loss from the transition to home learning, the 2021 COVID-19 intensive learning support program was implemented to assist students who particularly suffered across primary, secondary and specialist schools. Funding of $337 million was provided to employ additional educators to deliver small group tuition for students.

Our report on the COVID Intensive Learning Support Program concluded the program is being effectively implemented.

In addition, for early childhood education, time-limited payments of $47 million were made to:

• NSW councils for eligible early childhood education and care services to support their continued operation and viability through the COVID-19 pandemic
• fund community preschools and mobile preschools on contract with the department. This supported staff retention and provided fee-free preschool to eligible children. The program aims to provide 600 hours of fee-free preschool for eligible children in the two years before school.

Significant increase in employee expenses and cleaning costs

Employee related expenses for the Department of Education increased by $611 million in 2020–21.

The Education cluster increased staff numbers by 2,418 full time equivalents in 2020–21 (4,866 in 2019–20), including an additional 175 full-time equivalents employed by TAFE (decrease of 113 in 2019–20). The Department of Education had planned to hire additional teaching staff in response to growth in student enrolments prior to the pandemic. The increase in staff numbers is not necessarily in response to COVID-19, though additional staffing was required for stimulus programs identified above.

The Department of Education's cleaning costs increased by $146 million (2020–21: $479 million; 2019–20: $333 million). Increases were partially offset by school operating expenses decreasing by $48 million due to reduced extra curriculum and excursion activities (2020–21: $384 million; 2019–20: $433 million). Education travelling and sustenance expenses also decreased by $18 million due to travel restrictions (2020–21: $6.8m; 2019–20: $24.8m).

The TAFE Commission’s operating expenses decreased from $433 million in 2018–19 to $418 million in 2019–20, and again to $398 million in 2020–21. Cleaning costs increased by $30 million over the two years of the pandemic ($11 million in 2019–20 and $19 million in 2020–21), and maintenance costs increased by $25.5 million in 2020–21. However, these increases were offset by decreases in minor stores and provisions consumed in 2019–20, and by decreased costs on contractors, service expenses and other operating expenses in 2020–21.

The Department of Education’s grants and subsidies increased from $1.8 billion in 2018–19 to $3.5 billion in 2019–20, and again to $4.2 billion in 2020–21. These were mainly disbursed to other entities for intensive learning and relief packages.

Fee-free TAFE short courses led to higher student enrolments

The NSW Government introduced fee-free short courses in 2020 to provide opportunities for people impacted by the COVID-19 to retrain or upskill. These courses include medical administration, digital literacy, coding, health, leadership, and business.

The overall number of TAFE student enrolments during the pandemic period increased compared to the 2018–19 financial year. While, commercial and international student enrolments decreased during the pandemic period, this was more than offset by uptake of fee-free TAFE short courses. In 2019–20, there were more than 100,000 fee-free short course intakes. The graph below shows the impact of fee-free TAFE courses on student enrolment numbers over the past three years.

Transport

Passenger revenue and other transport revenue streams decreased

The graph below shows the decline in revenue and patronage for public transport services in NSW.

The overall number of trips decreased by 41.5% from pre COVID-19 numbers during 2018–19 to the 2020–21 financial year. The decrease in number of trips resulted in $716 million (52.2%) decline in revenue since 2018–19, with $654 million during 2020–21. The decrease was mainly due to capacity restrictions on public transport services and border closures during the COVID-19 pandemic.

Between the 2020–21 and 2019–20 financial years, the following other revenue streams of the Transport cluster decreased to a lesser extent due to COVID-19:

• toll/e-tag revenue by $4.8 million
• collection of fines and penalties by $7.5 million since normal fare compliance operations ceased for parts of the year
• rental income by $51.5 million.

These revenue streams decreased to a lesser extent, as these were driven by road traffic, which recovered more quickly to pre-pandemic levels than those related to public transport.

Reduced patronage on public transport led to $131 million payments to private operators

Contract costs were $131 million higher as ferry, private bus, light rail and Metro operators had lower farebox revenue. Opal collections prior to the onset of COVID-19 were approximately $160 million per month; dropping to about $80 million a month in June 2021.

Reduce transmission on public transport

Public transport is an essential service, which health workers, other workers and students need to get to and from work and school. The confined spaces and limited ventilation of public transport vehicles may increase the risk of transmission among passengers and frontline transport workers. Protection of frontline transport workers is a priority to maintain services. To reduce transmission and improve safety the following steps were taken:

• increased frequency and intensity of cleaning across all public transport hubs, stations and vehicles
• implemented measures to ensure safe capacities including visual distancing indicators and access to real-time monitoring data of capacities
• introduction of green dots to ensure physical distancing on trains, buses and ferries to show passengers the safest places to sit and stand
• artificial intelligence/machine learning to monitor mask compliance across the transport network.

While these measures were implemented to reduce the spread of COVID-19 on public transport, the Transport cluster also introduced pop-up cycleways for people as a safe alternative. These were low-cost temporary cycleways linking existing bike networks and connecting people with employment hubs in the Greater Sydney region and areas of Regional NSW ($9.8 million spent in 2020–21).

Expenses impacted by COVID-19

The Transport cluster's cleaning costs increased by $51 million (2020–21: $107 million; 2019–20 $56.0 million) largely due to cleaning activity on all modes of public transport.

Employee-related expenses increased gradually from $3 billion in 2018–19 to $3.1 billion in 2019–20 and $3.2 billion in 2020–21. Part of this increase is due to additional staff costs for COVID-19 marshalling and cleaning. This included an additional 1,900 staff to conduct daily cleaning of trains, buses, and transport infrastructure, requiring 2.75 million extra hours of cleaning during the financial year.

Reduced patronage and travel restrictions resulted in a $11.8 million decrease in fuel costs in 2020–21 compared to prior financial year.

Other clusters and key agencies

Australian Government assistance to State for COVID-19 emergency

Over the last two years the State requested assistance from the Australian Government to help deal with its response to the COVID-19 pandemic. These services were provided to the State free of charge under Defence Assistance to the Civilian Community (DACC) agreements, including supporting quarantine, reception and repatriation efforts at Sydney airport, hotels and borders.

The NSW Police Force (NSWPF) received assistance under DACC agreements. The received services had an estimated value of $94.4 million. The NSWPF determined the value of received services was not material and did not record the assistance provided free of charge within its 2020–21 financial statements.

NSW Police Force costs were recovered from Ministry of Health

The NSWPF incurred costs in response and recovery operations for COVID-19. These costs were for hotel quarantine, Victorian Border closure operations, personal protective equipment and cleaning. Ministry of Health reimbursed costs of $31.9 million in 2020–21 ($3.9 million in 2019–20).

The Premier and Cabinet cluster administered tourism and arts programs

The Department of Premier and Cabinet's appropriations increased from $480 million in 2018–19 to $1.7 billion in 2019–20 and $2.4 billion in 2020–21 while grants and contributions increased from $47 million in 2018–19 to $137 million in 2019–20, and $201 million in 2020–21.

A significant portion of these additional appropriations were due to Machinery of Government changes or were otherwise part of non-COVID-related programs. The significant COVID-19 related programs, particularly for arts and tourism, are included below.

The Department of Premier and Cabinet's expenditure increased due to these new programs, with expenditure on grants and subsidies increasing from $297 million in 2018–19 to $1.3 billion in 2019–20, and again to $2.1 billion in 2020–21. However, part of these movements is more attributable to Machinery of Government changes, rather than COVID-19.

The new Department of Enterprise, Investment and Trade (DEIT) was established on 1 April 2022, to drive the NSW Government’s commitment to economic transformation. Programs previously administered by the Premier and Cabinet cluster will move to DEIT.

Lower visitation and attendance at venues and events

Restrictions such as international border closures, community lockdowns and physical distancing requirements impacted visitation and attendance at major arts and tourism venues resulting in significantly lower revenue during 2020–21. The graph below shows the decline in visitors/attendance since pre COVID-19 levels during 2019.

The Art Gallery of New South Wales and the Museum of Applied Arts visitation decreased by 33.5 per and 57.1% respectively in 2020–21. The Art Gallery's revenue from providing goods and services decreased by 2.9 million (29 % in 2020–21 compared to prior year.

The Sydney Opera House Trust's tour attendance decreased by 97.6 % from the prior year, while attendance at performances decreased by 68.9%. The total number of performances held in 2020–21 by the Sydney Opera House almost halved decreasing from 1,473 to 750. Performance revenue in 2020–21 decreased by $24.9 million compared to prior year. Some of the movement was due to closure of the Concert Hall for planned renovations. Precinct revenue also decreased by $18.5 million compared to prior year.

The Sydney Opera House Trust obtained a letter of financial support from the Minister for the Arts.

In 2018–19, 1.4 million paid to visit Taronga Zoo and 230,000 paid to visit Western Plains Zoo. By 2020–21, Taronga Zoo paid visitors had decreased by 723,207 (51.6%). However, Western Plains Zoo paid visitors decreased by a small amount over the same period as there were less restrictions in regional areas. Revenue from providing goods and services was more than $80 million in 2018–19. This dropped to $66.2 million in 2019–20 and $65.6 million in 2020–21.

Agencies lodged insurance claims with the NSW Government’s insurer, Treasury Managed Fund (TMF), for revenue losses incurred due to business disruptions from the COVID-19 pandemic. Some agencies have received payments for claims during 2020–21 and others were still being assessed and likely to be paid during 2021–22.

Provide housing to people sleeping rough to reduce the risk of transmission

People sleeping without shelter or in public places (sleeping rough) typically live in communal arrangements, with some having limited access to basic hygiene supplies or showering facilities. These factors may increase the risk of transmission of COVID-19 amongst this population.

In response to the pandemic, the NSW Government provided additional funding for the Department of Communities and Justice to institute a range of actions aimed at preventing vulnerable people from becoming homeless, and people sleeping rough from contracting or transmitting the virus. These initiatives included:

• securing temporary accommodation for people in Sydney sleeping rough and people in large crisis care facilities
• $34.1 million to prevent people experiencing homelessness ($26 million spent in 2020–21)
• $65.1 million in funding for Together Home, a program that aims to move people sleeping rough into more stable housing.

The $34.1 million funding (split over two years) announced in March 2020 was part of the second economic stimulus package, targeted at preventing homelessness. This included greater access to private rental subsidy with increased supply and flexibility of temporary accommodation, and through Rent Choice for youths aged 16–24 and those escaping domestic and family violence.

The Together Home Program delivered social housing head lease subsidies for an initial 400 places, and further extended to an additional 400 places. This included wrap around support in partnership with community housing providers and specialist support services targeting rough sleepers and other complex needs cohorts for up to two years. The Program also provides specialised support for those with severe mental health conditions and Aboriginal people.

Our 2021 audit, Responses to homelessness, found the Department of Community Services and Justice had effectively planned and implemented a crisis response to assist people sleeping on the streets during the COVID-19 pandemic. However, the COVID-19 response to homelessness will not be sufficient to address forecast demand in 2021 and beyond.

The Productivity Commission Report on Government Services 2022 reported unmet demand for homelessness accommodation services continued to grow year on year, from 45.2% in 2018–19 to 48.2% in 2020–21.

Support for vulnerable people and communities

Households and communities required support for basic needs and the following programs were established (approved funding in 2020–21):

• Social Sector Transformation Fund to support small and medium-sized charities and not-for-profits organisations working in health and social service to help them modernise their operations including better digital service delivery, improving business strategies and service delivery models and retaining employees ($50 million).
• Food relief program to provide pantry and hygiene supplies for Aboriginal people in communities impacted by the COVID pandemic particularly in remote and rural communities. This targeted the elderly, sick and most vulnerable households. Focus was also on remote and rural communities who had suffered existing food security issues as well as those in border towns who relied on access to food across borders ($663,000).
• COVID-19 Aboriginal Community Controlled Organisations (ACCOs) Grants Program to provide grants of up to $50,000 to ACCOs who provide culturally appropriate, locally-based support to Aboriginal community members. The support involves mental health, community wellbeing and healing, education and employment, and provision of supplies supporting compliance with health advice ($1.3 million).
• Domestic Family Violence Support package to adapt service delivery, meet increased demand and enhance victim safety ($3.1 million).
• OzHarvest and Foodbank funding to support people experiencing food insecurity ($8.3 million).
• Energy Accounts Payment Assistance (EAPA) scheme to send energy retailers $50 vouchers towards electricity or gas accounts of eligible household ($25 million). Households struggling with energy bills due to a short-term financial crisis or emergency due to COVID-19 were provided with $50 vouchers from the EAPA scheme.
• Return to Work program to assist women who lost their jobs to re-enter the workforce ($5 million).

Reduce transmission at correctional centres and maintain inmate social connection and access to services

Correctional centres are a higher risk environment for outbreaks as inmates live in close proximity and have shared living arrangements with a large group of people, making it difficult to physically distance. Inmates are at great risk of harm and even death should they contract COVID-19, due to many having underlying medical conditions or disability. The following measures were implemented to reduce transmission while maintaining social connection and access to services:

• postponing many district and local court matters, changes in bail decisions and the review of previous remand decisions
• greater use of audio-visual link technology to maintain contact with families and friends and for court attendance
• continuing to use alternative service delivery methods, including virtual courtroom hearings, contactless registry services and telephone/virtual meeting room hearings
• using offsite venues for COVID-safe jury empanelment, to create additional capacity to finalise more cases and reduce backlogs
• quarantining and testing of new inmates for COVID-19 in a controlled setting.
• providing vaccination opportunities for staff and inmates
• delivering training sessions for young people on COVID-19 and social distancing upon intake
• stimulus package for NSW Youth Justice Program to support the Youth Justice reform program in the priority reform areas of staff coaching and infrastructure/information technology enhancements. A total of $7.5 million was spent in 2020–21.

The COVID-19 pandemic impacted the number of people being received into and discharged from prison. Productivity Commission Report on Government Services 2022 reported the following movements in key indicators:

• decreased percentage of eligible prisoners participating in accredited education and training courses from 22.7% in 2019–20 to 18.5% in 2020–21
• increase in real net recurrent expenditure per prisoner per day from $294.31 in 2019–20 to $383.04 in 2020–21
• slight decrease in imprisonment rate per 100,000 adults from 213.1 in 2019–20 to 203.1 2020–21.

COVID-19 was unlikely to be the only driver for the changes in these indicators.

Right-of-use assets were impaired by $257 million

Cluster agencies recorded impairment losses on right-of-use assets of $257 million for year ended 30 June 2021, due to rental market conditions being negatively impacted by COVID-19. The Ministry of Health incurred the largest loss of $99.2 million. Right-of-use assets represents a lessee’s right to use an underlying asset, such as a building, for the lease term. Market rents for office accommodation were impacted by lockdowns and restrictions and a move to work-from-home arrangements. Impairment of right-of-use assets is assessed annually and has no impact on cash flows.