Reports
Workers compensation claims management
What this report is about
Workers compensation schemes in NSW provide compulsory workplace injury insurance. The effective management of workers compensation is important to ensure injured workers are provided with prompt support to ensure timely, safe and sustainable return to work.
Insurance and Care NSW (icare) manages workers compensation insurance. The State Insurance Regulatory Authority (SIRA) regulates workers compensation schemes. NSW Treasury has a stewardship role but does not directly manage the schemes.
This audit assessed the effectiveness and economy of icare’s management of workers compensation claims, and the effectiveness of SIRA’s oversight of workers compensation claims.
Findings
icare is implementing major reforms to its approach to workers compensation claims management - but it is yet to demonstrate if these changes are the most effective or economical way to improve outcomes.
icare’s planning and assurance processes for its reforms have not adequately assessed existing claims models or analysed other reform options.
icare's activities have not focused enough on its core responsibilities of improving return to work and maintaining financial sustainability.
SIRA has improved the effectiveness of its workers compensation regulatory activities in recent years. Prior to 2019, SIRA was mostly focussed on developing regulatory frameworks and was less active in its supervision of workers compensation schemes.
NSW Treasury's role in relation to workers compensation has been unclear, which has limited its support for performance improvements.
Recommendations
icare should:
- Ensure that its annual Statement of Business Intent clearly sets out its approach to achieving its legislative objectives.
- Monitor and evaluate its workers compensation scheme reforms.
- Develop a quality assurance program to ensure insurance claim payments are accurate.
NSW Treasury should:
- Work with relevant agencies to improve public sector workers compensation scheme outcomes.
- Engage with the icare Board to ensure icare's management is in line with relevant NSW Treasury policies.
SIRA should:
- Address identified gaps in its fraud investigation.
- Develop a co-ordinated research strategy.
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Parliamentary reference - Report number #393 - released 2 April 2024
Regulation insights
What this report is about
In this report, we present findings and recommendations relevant to regulation from selected reports between 2018 and 2024.
This analysis includes performance audits, compliance audits and the outcomes of financial audits.
Effective regulation is necessary to ensure compliance with the law as well as to promote positive social and economic outcomes and minimise risks with certain activities.
The report is a resource for public sector leaders. It provides insights into the challenges and opportunities for more effective regulation.
Audit findings
The analysis of findings and recommendations is structured around four key themes related to effective regulation:
- governance and accountability
- processes and procedures
- data and information management
- support and guidance.
The report draws from this analysis to present insights for agencies to promote effective regulation. It also includes relevant examples from recent audit reports.
In this report, we also draw out insights for agencies that provide a public sector stewardship role.
The report highlights the need for agencies to communicate a clear regulatory approach. It also emphasises the need to have a consistent regulatory approach, supported by robust information about risks and accompanied with timely and proportionate responses.
The report highlights the need to provide relevant support to regulated parties to facilitate compliance and the importance of transparency through reporting of meaningful regulatory information.
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Effectiveness of SafeWork NSW in exercising its compliance functions
What this report is about
This report assesses how effectively SafeWork NSW, a part of the Department of Customer Service (DCS), has performed its regulatory compliance functions for work health and safety in New South Wales.
The report includes a case study examining SafeWork NSW's management of a project to develop a realtime monitoring device for airborne silica in workplaces.
Findings
There is limited transparency about SafeWork NSW's effectiveness as a regulator. The limited performance information that is available is either subsumed within DCS reporting (or other sources) and is focused on activity, not outcomes.
As a work health and safety (WHS) regulator, SafeWork NSW lacks an effective strategic and data-driven approach to respond to emerging WHS risks.
It was slow to respond to the risk of respirable crystalline silica in manufactured stone.
SafeWork NSW is constrained by an information management system that is over 20 years old and has passed its effective useful life.
While it has invested effort into ensuring consistent regulatory decisions, SafeWork NSW needs to maintain a focus on this objective, including by ensuring that there is a comprehensive approach to quality assurance.
SafeWork NSW's engagement of a commercial partner to develop a real-time silica monitoring device did not comply with key procurement obligations.
There was ineffective governance and process to address important concerns about the accuracy of the real-time silica monitoring device.
As such, SafeWork NSW did not adequately manage potential WHS risks.
Recommendations
The report recommended that DCS should:
- ensure there is an independent investigation into the procurement of the research partner for the real-time silica detector
- embed a formal process to review and set its annual regulatory priorities
- publish a consolidated performance report
- set long-term priorities, including for workforce planning and technology uplift
- improve its use of data, and start work to replace its existing complaints handling system
- review its risk culture and its risk management framework
- review the quality assurance measures that support consistent regulatory decisions
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Parliamentary reference - Report number #390 - released 27 February 2024
State Finances 2023
What this report is about
Results of the audit of the Consolidated State Financial Statements of the New South Wales General Government Sector (GGS) and Total State Sector (TSS) for the year ended 30 June 2023.
Findings
The audit opinion on the 2022–23 Consolidated State Financial Statements was qualified in relation to two issues and included an emphasis of matter.
The first qualification matter is a continuation of the prior year limitation of scope on the audit relating to the Catholic Metropolitan Cemeteries Trust (CMCT), a controlled state entity, who continued to deny access to its management, books and records for the purposes of a financial audit. As a result, the Audit Office was unable to obtain sufficient appropriate audit evidence to support the assets, liabilities, income and expenses relating to CMCT recorded in the TSS and the equity investment recognised in the GGS relating to the net assets of CMCT.
The second qualification matter relates to the limitations on the accuracy and reliability of financial information relating to Statutory Land Managers (SLMs) and Common Trust entities (CTs) controlled by the State and were either exempted from requirements to prepare financial reports, or who were required to submit financial reports and have not done so. The Audit Office was unable to obtain sufficient appropriate audit evidence to determine the impact on the value of non-land assets and liabilities, income and expenses that should be recognised in the 2022–23 Consolidated State Financial Statements and which have not been recorded in the Consolidated State Financial Statements.
The independent audit opinion also includes an emphasis of matter drawing attention to key decisions made by the NSW Government regarding the future of the Transport Asset Holding Entity of New South Wales (TAHE).
Recommendations
The report includes recommendations for NSW Treasury to address several high-risk findings, including:
- ensuring accurate and reliable financial information is available to recognise the non-land balances of SLMs and CTs
- ensuring the CMCT, SLMs and CTs meet their statutory reporting obligations
- conducting a broader review of the financial reporting exemption framework
- continued monitoring of TAHE's control over its assets
- providing timely guidance to the sector relating to legislative or policy changes that impact financial reporting
- developing an accounting policy for the reimbursement of unsuccessful tender bid cost contributions.
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Internal controls and governance 2023
What this report is about
This report analyses the internal controls and governance of the 25 largest agencies in the NSW public sector, excluding state owned corporations and public financial corporations, for the year ended 30 June 2023.
Findings
Internal control trends
The proportion of control deficiencies identified as high-risk this year decreased to 4.5% (8.2% in 2022).
Repeat findings of control deficiencies represent 38% of all findings (48% in 2022).
Information technology
Over half of the agencies reviewed have deficiencies in managing user access to their information systems. Over a third of agencies had deficiencies in their controls over privileged user accounts within their information technology environments.
Cyber security
Over 80% of assessments for maturity levels against the NSW Cyber Security Policy have reported one or more self-assessed Mandatory Requirements are not practiced on a consistent and regular basis.
Essential Eight cyber controls have not improved, and they need to.
Governance framework
Deficiencies were noted in agencies' governance and risk management frameworks, namely: outdated risk management policies, lack of risk appetite statements, and internal audit functions not being externally evaluated.
Payroll and work health and safety (WHS)
Overtime expenses increased by 40% between 2020 and 2023, compared to salaries and wages which increased by 16% over the same period.
Five agencies have WHS policies that do not reflect current WHS regulations.
Recommendations
Several important recommendations were made for agencies to prioritise efforts to improve cyber security controls and cyber resilience measures.
It was also recommended that agencies periodically review their risk management maturity and implement action plans, and ensure their WHS policies and procedures reflect current legislation requirements including the need to manage psychosocial risks.
Internal controls are processes, policies and procedures that help agencies to:
- operate effectively and efficiently
- produce reliable financial reports
- comply with laws and regulations
- support ethical government.
This chapter outlines the overall trends for agency controls and governance issues, including the number of audit findings, the degree of risk those deficiencies pose to the agency, and a summary of the most common deficiencies found across agencies.
For consistency and comparability, we have adjusted the 2022 results to incorporate additional audit findings that were reported after the date of the Internal controls and governance 2022 report. Therefore, the 2022 figures will not necessarily align with those reported in our 2022 report.
Section highlights
- The Audit Office identified 12 high-risk findings, compared to 23 last year, with eight repeated from last year. Eleven of the high-risk findings related to financial controls while one related to other (governance) controls.
- The proportion of repeat deficiencies has decreased from 48% in 2021–22 to 38% in 2022–23.
This chapter outlines our audit observations, conclusions and recommendations arising from our review of agency controls to manage key financial systems.
Section highlights
- Over half of the agencies reviewed have deficiencies in managing user access.
- Thirty-six per cent of agencies had deficiencies in their controls over privileged accounts.
- Weaknesses were identified in how agencies manage service providers or other organisations which have access to their systems and data.
- Inadequate records were kept to demonstrate approvals for key system implementation milestones, including successful data migration testing and approval for go-live.
- Thirty-two per cent of agencies had not implemented segregations of duties over key payroll functions.
This chapter outlines our audit observations, conclusions and recommendations arising from our review of agencies' cyber security.
Section highlights
- Eighty-three per cent of maturity assessments have reported one or more Mandatory Requirements below level three, which is the level at which the requirement is self-assessed and considered to be practiced on a consistent and regular basis.
- Essential Eight maturity levels have remained unchanged or have declined, and may not be suitable for the level of risk agencies face.
- All 25 agencies reviewed have a cyber incident response plan and all but two newly created agencies tested their plan.
- Systems to detect cyber incidents across agencies could improve.
- There is a risk of under reporting cyber incidents at six agencies that kept insufficient records to support their cyber incident classifications.
- Overall, agencies need to increase their focus and prioritise efforts to ensure effective cyber security and resilience measures are in place.
Governance in the context of the NSW public service refers to the structures, processes, and mechanisms by which government departments and agencies are held to account when they make decisions and implement policies and programs in the service of the public interest. It also includes the principles and practices that guide how these agencies work together.
This chapter outlines our audit observations, conclusions and recommendations from our review of agencies' governance frameworks and practices, with consideration of NSW Treasury issued policies and best practices. It focuses on two key areas: governance arrangements and risk management.
Section highlights
- Whilst agencies have generally adopted governance and risk management frameworks that align with Treasury issued policies and best practices, we noted deficiencies, including:
- 20% of governing boards operated without a board charter
- 16% of agencies had risk management policies that were beyond their scheduled review date
- 16% of agencies did not have a risk appetite statement
- 28% of agency internal audit functions have not been externally evaluated in the last five years.
- Agencies should perform periodic assessments/reviews of their risk maturity and implement action plans where required.
This chapter outlines our audit observations, conclusions and recommendations arising from our review of agencies' payroll controls and management of work health and safety (WHS).
Section highlights
- Agencies should improve their controls around payroll masterfile maintenance, such as enforcing segregation of duties in system access levels and ensuring changes to data are reviewed by an independent officer.
- On average, overtime expenses represented three per cent of total salaries and wages in 2023 and have increased by 40.2% since 2020, compared to salaries and wages which increased by 16.3% over the same period.
- Five agencies have outdated WHS policies, which do not reflect changes to WHS regulations. Sixteen per cent of agencies have not included psychosocial hazards in their WHS procedures or risk assessment process.
Treasury 2023
What this report is about
Result of the Treasury portfolio of agencies’ financial statement audits for the year ended 30 June 2023.
The results of the audit of the NSW Government’s consolidated Total State Sector Accounts (TSSA), which are prepared by NSW Treasury, will be reported separately in our report on ‘State Finances 2023’.
The audit found
Unqualified audit opinions were issued on all general purpose financial statement audits.
Qualified audit opinions were issued on two of the 24 other engagements prepared by portfolio agencies. These related to payments made from Special Deposit Accounts that did not comply with the relevant legislation.
The number of monetary misstatements identified in our audits increased from 29 in 2021–22 to 39 in 2022–23.
The new parental leave policy impacted agencies across all portfolios. NSW Treasury should perform annual assessments to identify changes in legislation and regulation and provide timely guidance to the sector.
Transport for NSW and Sydney Metro have capitalised over $300 million of tender bid costs paid to unsuccessful tender bidders relating to significant infrastructure projects. Whilst NSW Treasury policy provides clarity on the reimbursement of unsuccessful bidders’ costs, clearer guidance on how to account for these costs in agencies’ financial statements is required.
The key audit issues were
Five high-risk issues were reported in 2022–23. Three were new findings on contract management, accounting treatments for workers compensation renewal premium adjustments and the management and oversight of a Special Deposit Account. Two repeat issues referred to the need to improve quality review processes over financial reporting and the timely approval of administration costs.
Portfolio agencies should prioritise and action recommendations to address internal control deficiencies.
This report provides Parliament and other users of the Treasury portfolio of agencies’ financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision-making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Treasury portfolio of agencies (the portfolio) for 2023.
Section highlights
- Unqualified audit opinions were issued on all Treasury portfolio agencies’ 2022–23 financial statements.
- Two qualified audit opinions were issued on special purpose financial reports, relating to whether payments from the Electricity Retained Interest Corporation – Ausgrid (ERIC-A) Fund and the Electricity Retained Interest Corporation – Endeavour (ERIC-E) Fund, complied with the relevant legislation.
- The total number of errors (both corrected and uncorrected) in the financial statements increased from 29 in 2021–22 to 39 in 2022–23.
Reported corrected misstatements increased from 15 in 2021–22 to 25 with a gross value of $7.1 billion in 2022–23. Reported uncorrected misstatements increased from 13 in 2021–22 to 14 in 2022–23, with a gross value of $277.6 million in 2022–23.
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Treasury portfolio.
Section highlights
- Five high-risk issues were reported in 2022–23. Three were new findings on contract management, accounting treatments for workers compensation renewal premium adjustments and the management and oversight of a Special Deposit Account.
- A further 35 moderate risk findings were reported in 2022–23, of which ten were repeat findings.
- Some agencies have again spent monies without an authorised delegation.
- The quality of information provided for audit purposes needs to improve.
Appendix one – Misstatements in financial statements submitted for audit
Appendix two – Early close procedures
Appendix three – Timeliness of financial reporting
Appendix four – Financial data
Appendix five – Acquittals and other opinions
© 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.
Health 2023
What this report is about
Results of the Health portfolio of agencies' financial statement audits for the year ended 30 June 2023.
The audit found
Unmodified audit opinions were issued for all Health portfolio agencies' financial statements.
The number of monetary misstatements increased in 2022–23, driven by key accounting issues, including the first-time recognition of paid parental leave and plant and equipment fair value adjustments.
The key audit issues were
NSW Health identified errors regarding the recognition and calculation of long service leave entitlements for employees with ten or more years of service that had periods of part time service in the first ten years, resulting in prior period restatements.
Comprehensive revaluation of buildings at the Graythwaite Charitable Trust found errors in the previous year's valuation, resulting in prior period restatements.
New parental leave legislation increased employee liabilities for portfolio agencies. The Ministry of Health corrected the consolidated financial statements to record parental leave liabilities for all agencies within the Health portfolio.
A repeat high-risk issue relates to processing time records by administrators that have not been reviewed prior to running the pay cycle.
Thirty per cent of reported issues were repeat issues.
The audit recommended
Portfolio agencies should ensure any changes to employee entitlements are assessed for their potential financial statements impact under the relevant Australian Accounting Standards.
Portfolio agencies should address deficiencies that resulted in qualified reports on:
- the design and operation of shared service controls
- prudential non-compliance at residential aged care facilities.
This report provides Parliament and other users of the Health portfolio of agencies’ financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision-making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Health portfolio of agencies (the portfolio) for 2023.
Section highlights
- Unqualified audit opinions were issued for all portfolio agencies required to prepare general purpose financial statements.
- The total number of errors (including corrected and uncorrected) in the financial statements increased compared to the prior year.
- The Ministry of Health retrospectively corrected an $18.9 million adjustment in its financial statements relating to long service leave entitlements for certain employees.
- Graythwaite Charitable Trust retrospectively corrected a $4.2 million adjustment in its financial statements related to prior period valuations.
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.
This chapter outlines observations and insights from our financial statement audits of agencies in the Health portfolio.
Section highlights
- The 2022–23 audits identified one high-risk and 57 moderate risk issues across the portfolio.
- The high-risk matter related to the forced-finalisation of time records.
- The total number of findings increased from 67 to 111 in 2022–23.
- Thirty per cent of the issues were repeat issues. Most repeat issues related to internal control deficiencies or non-compliance with key legislation and/or central agency policies.
- Forced-finalisation of time records, accounting for the new paid parental leave provision and user access review deficiencies were the most commonly reported issues.
- Qualified Assurance Practitioner's reports were issued on:
- the design and operation of controls as documented by HealthShare NSW
- the Ministry's Annual Prudential Compliance Statements in relation to residential aged care facilities.
Appendix one – Misstatements in financial statements submitted for audit
Appendix two – Early close procedures
Appendix three – Timeliness of financial reporting
Appendix four – Financial data
© 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.
Regional NSW 2023
What this report is about
Results of the Regional NSW financial statements audits for the year ended 30 June 2023.
What we found
Unqualified audit opinions were issued on all completed audits in the Regional NSW portfolio agencies.
The number of monetary misstatements identified in our audits increased from 28 in 2021–22 to 30 in 2022–23.
What the key issues were
Effective 1 July 2023, staff employed in the Northern Rivers Reconstruction Corporation Division of the Department of Regional NSW transferred to the NSW Reconstruction Authority Staff Agency.
The Regional NSW portfolio agencies were migrated into a new government wide enterprise resourcing planning system.
The total number of audit management letter findings across the portfolio of agencies decreased from 36 to 23.
A high risk matter was raised for the NSW Food Authority to improve the internal controls in the information technology environment including monitoring and managing privilege user access.
What we recommended
Local Land Services should prioritise completing all mandatory early close procedures.
Portfolio agencies should:
- ensure any changes to employee entitlements are assessed for their potential financial statements impact under the relevant Australian Accounting Standards
- prioritise and address internal control deficiencies identified in audit management letters.
This report provides Parliament and other users of the Regional NSW portfolio of agencies financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision-making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Regional NSW portfolio of agencies (the portfolio) for 2023.
Section highlights
- Unqualified audit opinions were issued on all completed 30 June 2023 financial statements audits of the portfolio agencies. Two audits are ongoing.
- The total number of errors (including corrected and uncorrected) in the financial statements increased compared to the prior year.
- Portfolio agencies met the statutory deadline for submitting their 2022–23 early close financial statements and other mandatory procedures.
- Portfolio agencies continue to provide financial assistance to communities affected by natural disasters.
- A change to the NSW paid parental leave scheme, effective October 2023, created a new legal obligation that needed to be recognised by impacted government agencies. Impact to the agencies' financial statements were not material.
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Regional NSW portfolio.
Section highlights
- The 2022–23 audits identified one high risk and nine moderate risk issues across the portfolio. Of these, one was a moderate risk repeat issue.
- The total number of findings decreased from 36 to 23 which mainly related to deficiencies in internal controls.
- The high risk matter relates to the monitoring and managing of privilege user access at NSW Food Authority.
Appendix one – Misstatements in financial statements submitted for audit
Appendix two – Early close procedures
Appendix three – Timeliness of financial reporting
Appendix four – Financial data
© 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.
Premier and Cabinet 2023
What this report is about
Results of the Premier and Cabinet portfolio of agencies' financial statement audits for the year ended 30 June 2023.
What we found
Unqualified audit opinions were issued for all Premier and Cabinet portfolio agencies.
What the key issues were
The Administrative Arrangements Orders, effective 1 July 2023, changed the name of the Department of Premier and Cabinet to the Premier's Department and transferred parts of Department of Premier and Cabinet to The Cabinet Office.
The number of monetary misstatements identified in our audits decreased from 15 in 2021–22 to 12 in 2022–23.
The total number of management letter findings across the portfolio of agencies increased from ten in 2021–22 to 20 in 2022–23.
Thirty per cent of all issues were repeat issues. The most common repeat issues related to deficiencies in controls over financial reporting.
What we recommended
Portfolio agencies should:
- ensure any changes to employee entitlements are assessed for their potential financial statements impact under the relevant Australian Accounting Standards
- prioritise and address internal control deficiencies identified in Audit Office management letters.
This report provides Parliament and other users of the Premier and Cabinet portfolio of agencies’ financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision-making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Premier and Cabinet portfolio of agencies (the portfolio) for 2023.
Section highlights
- Unqualified audit opinions were issued on all the portfolio agencies 2022–23 financial statements.
- The total number of errors (including corrected and uncorrected) in the financial statements decreased compared to the prior year.
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision-making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Premier and Cabinet portfolio.
Section highlights
- The 2022–23 audits identified eight moderate risk issues across the portfolio of agencies. Of these, two were repeat issues, and related to password and security configuration and management of excessive annual leave.
- The total number of findings increased from ten to 20, which mainly related to deficiencies in controls over financial reporting and governance and oversight.
- The most common repeat issues related to weaknesses in controls over financial reporting.
Appendix one – Early close procedures
© 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.
State heritage assets
What the report is about
This audit assessed how effectively the Department of Planning and Environment (Heritage NSW) is overseeing and administering heritage assets of state significance.
Heritage that is rare, exceptional or outstanding to New South Wales may be listed on the State Heritage Register under the Heritage Act 1977. This provides assets with legal recognition and protection. Places, buildings, works, relics, objects and precincts can be listed, whether in public or private ownership.
Heritage NSW has administrative functions and regulatory powers, including under delegation from the Heritage Council of NSW, relevant to the listing, conservation and adaptive re-use of heritage assets of state significance.
In summary, the audit assessed whether Heritage NSW:
- is effectively administering relevant advice and decisions
- is effectively supporting and overseeing assets
- has established clear strategic priorities and can demonstrate preparedness to implement these.
What we found
Heritage NSW does not have adequate oversight of state significant heritage assets, presenting risks to its ability to promote the objects of the Heritage Act.
Information gaps and weaknesses in quality assurance processes limit its capacity to effectively regulate activities affecting assets listed on the State Heritage Register.
Heritage NSW has adopted a focus on customer service and recently improved its timeliness in providing advice and making decisions about activities affecting listed assets. But Heritage NSW has not demonstrated how its customer-focused priorities will address known risks to its core regulatory responsibilities.
Listed assets owned by government entities are often of high heritage value. Heritage NSW could do more to promote effective heritage management among these entities.
What we recommended
The report made eight recommendations to Heritage NSW, focusing on:
- improving quality assurance over advice and decisions
- improving staff guidance and training
- defining and maintaining data in the State Heritage Register
- clarifying its regulatory intent and approach
- sector engagement and interagency capability to support heritage outcomes.
The Heritage Act 1977 (the Heritage Act) and accompanying regulation provide the legal framework for the identification, conservation and adaptive re-use of heritage assets in New South Wales.
The Department of Planning and Environment (Heritage NSW) has responsibility for policy, legislative and program functions for state heritage matters, including supporting the Minister for Heritage to administer the Heritage Act.
Heritage assets that are rare, exceptional or outstanding beyond a local area or region may be listed on the State Heritage Register under the Heritage Act. These assets include places, buildings, works, relics, moveable objects and precincts, and assets that have significance to Aboriginal communities in New South Wales. Assets nominated for and listed on the State Heritage Register ('listed assets') may be owned privately or publicly, including by local councils and state government entities.
The Heritage Act establishes the Heritage Council of NSW (the Heritage Council) to undertake a range of functions in line with its objectives. Heritage NSW provides administrative support to the Heritage Council, for example providing advice on assets that have been nominated for listing on the State Heritage Register. Many of Heritage NSW’s core activities also relate to exercising functions and powers under delegation from the Heritage Council. These include making administrative decisions about works affecting listed assets, and exercising powers to regulate asset owners’ compliance with requirements under the Heritage Act.
Heritage NSW states that heritage:
| …gives us a sense of our history and provides meaningful insights into how earlier generations lived and developed. It also enriches our lives and helps us to understand who we are. |
According to Heritage NSW, an effective heritage system will facilitate the community in harnessing the cultural and economic value of heritage.
The objective of this audit was to assess how effectively the Department of Planning and Environment (Heritage NSW) is overseeing and administering heritage assets of state significance.
For this audit, ‘heritage assets of state significance’ refers to items (including a place, building, work, relic, moveable object or precinct) listed on the State Heritage Register ('listed assets'), and those which have been nominated for listing.
ConclusionThe Department of Planning and Environment (Heritage NSW) does not have adequate oversight of state significant heritage assets. Information gaps and weaknesses in certain assurance processes limit its capacity to effectively regulate activities affecting assets listed on the State Heritage Register. These factors also constrain its ability to effectively support voluntary compliance and promote the objects of the Heritage Act, which include encouraging conservation and adaptive re-use.Heritage NSW has adopted a focus on customer service and recently improved the timeliness of its advice and decisions on activities affecting listed assets. But Heritage NSW has not demonstrated how its customer service priorities will address known risks to its regulatory responsibilities. It could also do more to enable and promote effective heritage management among state government entities that own listed assets.The information that Heritage NSW maintains about assets listed on the State Heritage Register ('listed assets') is insufficient for its regulatory and owner engagement purposes. Data quality and completeness issues have arisen since the register was established in 1999. But Heritage NSW's progress to address important gaps in the register, and its other information systems, has been limited in recent years. These gaps limit Heritage NSW’s capacity to detect compliance breaches early and implement risk-based regulatory responses, and to strategically target its owner engagement activities to promote conservation and re-use. Heritage NSW makes decisions on applications for works on listed assets, requiring technical skills and professional judgement. But Heritage NSW does not provide its staff with adequate guidance to ensure that consistent approaches are used, and it lacks sufficient quality assurance processes. There are similar weaknesses in Heritage NSW's oversight of decisions on applications that are delegated to other government entities. Heritage NSW has prioritised the implementation of customer service-focused activities, policies, and programs to reduce regulatory burdens on asset owners since 2017. For example, Heritage NSW has refreshed its website, introduced new information management systems, and implemented new regulation for the self-assessment of exemptions for minor works. However, Heritage NSW has not taken steps to mitigate oversight and quality risks introduced with the reduced regulatory burdens. Heritage NSW has made some, but to date insufficient, progress on a key project to update its publications. These documents (over 150 publications) are intended to play an important role in promoting voluntary compliance and supporting heritage outcomes. Heritage NSW started a new project to update relevant publications in April 2023. Heritage NSW has recently implemented processes to improve its efficiency, such as screening new nominations for listing on the State Heritage Register. Heritage NSW has also reported improvements in the time it takes to decide on applications for works affecting listed assets. In the third quarter of 2022–23, 87% of decisions were made within the statutory timeframes. This compares to 48% in 2021–22. Heritage NSW has similarly improved how quickly it provides heritage advice on major projects, with 90% of advice reported as delivered on time in the third quarter of 2022–23, compared to 44% in 2020–21. Assets owned by state government entities comprise a large proportion of State Heritage Register listings. These assets are often of high heritage value or situated within large and complex precincts or portfolios. But Heritage NSW does not implement targeted capability building activities to support good practice heritage management among state government entities and to promote compliance with their obligations under the Heritage Act. The expected interaction between Heritage NSW's strategic plans and activities, and the priorities of the Heritage Council of NSW, is unclear. Actions to clarify the relevant governance arrangements have also been slow following a review in 2020 but this work re-commenced in late 2022. Heritage NSW has been progressing work to draft reforms to the Heritage Act. This follows recommendations made in a 2021 Upper House Inquiry into the Heritage Act. To build preparedness for future reforms, Heritage NSW will need to do more to address the risks and opportunities identified in this audit report. In particular, it will need to ensure it has sufficient information and capacity to implement a risk-based regulatory approach; clear and effective governance arrangements with the Heritage Council of NSW; and enhanced engagement with government entities to promote the conservation and adaptive re-use of listed assets in public ownership. |
This chapter assesses the effectiveness of Heritage NSW's oversight of state heritage assets, including its visibility of listed assets, and its oversight of regulatory decision-making. It also assesses Heritage NSW's activities to engage with owners to meet their obligations under the Heritage Act and to support heritage outcomes.
This chapter assesses the timeliness of Heritage NSW’s provision of advice, recommendations, and decisions on heritage issues to support heritage management outcomes with respect to listed assets.
This chapter assesses whether the Department of Planning and Environment (Heritage NSW) has established clear strategic priorities to effectively oversee and administer activities related to listed assets, and its preparedness to implement reforms. It also assesses the adequacy of planning activities and governance arrangements to support the achievement of strategic directions.
Appendix one – Response from agency
Appendix two – About the audit
Appendix three – Performance auditing
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Parliamentary reference - Report number #384 - released 27 June 2023
