What this report is about

Extreme rainfall across eastern Australia in 2021 and 2022 led to a series of major flood events in New South Wales.

This audit assessed how effectively the NSW Government provided emergency accommodation and temporary housing in response to the early 2022 Northern Rivers and late 2022 Central West flood events.

Responsible agencies included in this audit were the Department of Communities and Justice, NSW Reconstruction Authority, the former Department of Planning and Environment, the Department of Regional NSW and the Premier’s Department.

Findings

The Department of Communities and Justice rapidly provided emergency accommodation to displaced persons immediately following these flood events.

There was no plan in place to guide a temporary housing response and agencies did not have agency-level plans for implementing their responsibilities.

The NSW Government rapidly procured and constructed temporary housing villages. However, the amount of temporary housing provided did not meet the demand.

There is an extensive waitlist for temporary housing and the remaining demand in the Northern Rivers is unlikely to be met. The NSW Reconstruction Authority has not reviewed this list to confirm its accuracy.

Demobilisation plans for the temporary housing villages have been developed, but there are no long-term plans in place for the transition of tenants out of the temporary housing.

Agencies are in the process of evaluating the provision of emergency accommodation and temporary housing.

The findings from the 2022 State-wide lessons process largely relate to response activities.

Audit recommendations

The NSW Reconstruction Authority should:

• Develop a plan for the provision of temporary housing.
• Review the temporary housing waitlist.
• Determine a timeline for demobilising the temporary housing villages.
• Develop a strategy to manage the transition of people into long-term accommodation.
• Develop a process for state-wide recovery lessons learned.

All audited agencies should:

• Finalise evaluations of their role in the provision of emergency accommodation and temporary housing.
• Develop internal plans for implementing their roles under state-wide plans.

Extreme rainfall across eastern Australia in 2021 and 2022 led to a series of major flood events in New South Wales. In response, the NSW Government declared each of these events a natural disaster and made available a wide range of support for affected individuals and businesses. The flooding experienced by the State was widespread and its severity caused significant destruction in communities across the State. Some of the most significant damage occurred in the Northern Rivers and Central West regions of New South Wales.

Whilst areas of the Northern Rivers are prone to regular flooding, the scale of flooding in 2022 had not been experienced in the region before. On 28 February 2022, the Wilsons River in Lismore reached a height of 14.4 metres, approximately 2.3 metres higher than the previous record. A second flood occurred on 30 March 2022, with the river reaching 11.4 metres. The flooding in the region was extensive, affecting towns including Lismore, Coraki, Woodburn and Ballina. Between late February and early April 2022, 13 lives were lost in the Northern Rivers floods. In addition, 4,055 properties were deemed uninhabitable, and a further 10,849 properties were assessed as damaged. Approximately 4,000 people had to be evacuated from Lismore alone during this period, with thousands displaced from their homes across the region.

In the Central West, on 14 November 2022, the Lachlan River at Forbes peaked at 10.6 metres and was categorised as major flooding due to the inundation of extensive rural areas with properties, villages and towns isolated. On the same day in Eugowra, the Mandagery Creek peaked at 9.8 metres, passing the previous record of 9.6 metres in 1950. Flooding occurred in other areas of the Central West including Parkes, Molong, Cowra and Canowindra. Two lives were lost in the town of Eugowra with 80% of homes and businesses in the town damaged.

This audit assessed the following two areas of NSW Government support provided in response to these flood events:

• Provision of emergency accommodation: short-term accommodation provided to displaced persons unable to return to their own home in an emergency situation.
• Provision of temporary housing provided in the form of temporary pods and caravans.

The Department of Communities and Justice (DCJ) is responsible for the provision of emergency accommodation and other welfare services in response to a disaster event. With regards to temporary housing, the following agencies were involved in this audit:

• Resilience NSW was the lead agency responsible for recovery and led the implementation of the temporary housing program under the oversight of the Chair, Housing Taskforce (HTF) from July 2022. On 16 December 2022, Resilience NSW was abolished, with some staff transferred to the NSW Police Force, Department of Premier and Cabinet (DPC) and DCJ. The remaining staff were transitioned to the newly established NSW Reconstruction Authority.
• The Department of Planning and Environment (DPE) chaired the HTF until July 2022 and led the process for the identification and evaluation of temporary housing village sites. On 1 January 2024, DPE was abolished and the DPE functions discussed in this report now form part of the Department of Planning, Housing and Infrastructure.
• NSW Public Works (NSWPW), a branch of the Department of Regional NSW (DRNSW) procured and managed the construction of the pods used in this program, and procured the caravans used as part of the temporary housing response.

The then DPC (now Premier’s Department (PD)) was responsible for whole-of-government policy advice, convening the Crisis Policy Committee of Cabinet, and whole-of-government communications.

This audit assessed how effectively the NSW Government provided emergency and temporary housing in response to the early 2022 Northern Rivers and late 2022 Central West flood events. We addressed this objective by examining whether the audited agencies:

• effectively planned for the provision of emergency accommodation and temporary housing prior to the flood events
• provided emergency accommodation and temporary housing to meet the needs of affected communities in response to the flood events
• are effectively capturing lessons learned in relation to their provision of emergency accommodation and temporary housing as part of the flood response.

There is a State-level plan in place to guide the approach to emergency accommodation

The Welfare Services Functional Area Supporting Plan (WSFASP, the plan) is a supporting plan to the New South Wales Emergency Management Plan (EMPLAN). The plan outlines the responsibilities of the Department of Communities and Justice (DCJ) for the coordination and delivery of disaster welfare services in New South Wales. This includes the provision of emergency accommodation services. The plan in place during the flood events outlined the responsibilities of DCJ and the former Office of Emergency Management (OEM), some responsibilities of which have since transitioned to the NSW Reconstruction Authority (the Reconstruction Authority). The plan sets out a framework for government and non-government organisations to coordinate to provide key welfare services during an emergency, and outlines agreed roles and responsibilities. The plan outlines preparedness measures and arrangements for the provision of key welfare services during the response to and recovery from emergencies in New South Wales.

The plan details the organisations and key positions involved in welfare services, including their overall roles and responsibilities, and a basic structure for the delivery of disaster welfare services. For example, the plan states that both the former Department of Families and Communities Services and the not-for-profit Adventist Development and Relief Agency (ADRA) are responsible for emergency accommodation but does not clarify the detailed responsibilities associated with this role. These provide a State-wide, though not detailed, approach to emergency accommodation and welfare services in a disaster recovery context.

There was no plan in place to guide the temporary housing response, despite the NSW Government utilising this type of response in a previous emergency event

The State-level emergency planning documents do not contemplate the need for temporary housing as a government disaster response. Although there was a temporary housing response to the Black Summer bushfires in 2019–20, albeit on a smaller scale, no specific plans were in place to guide this response or the flood events in 2021–22. The NSW Government therefore had to develop its approach to addressing demand for temporary housing whilst responding to the flood emergency as it was occurring.

A partnership was established between the NSW Government and the Minderoo Foundation in 2020 to provide 100 pods to people whose homes were destroyed in the Black Summer bushfires. The initial rollout consisted of four-person pods, however the need for greater capacity was identified, with larger, family-sized pods developed for up to six people. The implementation of this program did not include formalising the work completed in documented plans for future use in response to other emergency events.

A plan that sets out how temporary housing should be used is in place in Queensland. The Queensland Government released a Temporary Emergency Accommodation (TEA) plan in 2021 which describes the arrangements, roles and responsibilities of key organisations critical to supporting displaced community members after the closure of an evacuation centre. The TEA plan outlines the five phases in the provision of accommodation support which includes temporary housing recovery. This demonstrates that a plan for the use of temporary accommodation would not be unprecedented.

Without plans in place to respond to all aspects of an emergency, decision makers are forced to be reactive in their decision making or to develop these plans while also responding to the events. In this specific instance, the government was forced to develop governance structures and perform tasks such as options analysis and site selection for temporary housing during the immediate aftermath of the flood events.

The Reconstruction Authority has acknowledged the need for a formalised plan for temporary housing responses and has started work to develop this in preparation for future flood events. It advised that the Housing Taskforce (HTF) has begun this work by performing assessments and reviews of high-risk areas and engaging with local councils and community groups. The Reconstruction Authority is also developing a Recovery Readiness Checklist, which will include preparedness for the provision of temporary housing in an emergency. Pre-event recovery planning specific to Local Government Areas (LGAs) is also underway, with the Reconstruction Authority developing tailored checklists which cover the provision of temporary housing. These tools will form part of the State's recovery response under the NSW Recovery Plan, which the Reconstruction Authority is currently in the process of updating. The Reconstruction Authority advises that this update will include identifying responsibilities in relation to the temporary housing response and recovery more broadly.

The WSFASP in place during the flood events had not been reviewed and updated in line with its planning requirements

Plans which outline the coordination and delivery of services in response to an emergency are imperative to ensure all required activities are completed, and the needs of affected communities are met. Plans also serve as a common reference point for decision making. Out of date plans can result in unclear roles and responsibilities, requiring agencies to make improvised decisions due to the urgent nature of emergency response. This creates a risk of key activities not being fulfilled and community needs going unmet.

The WSFASP in place during the flood response was last updated and endorsed by the State Emergency Management Committee (SEMC) in June 2018. As part of the planning requirements outlined in the plan, the State Welfare Services Functional Area Coordinator (WelFAC) is required to ensure the plan is reviewed every five years, or when relevant aspects require review following emergency operations or changes to legislation. The State WelFAC is an officer from DCJ responsible for the monitoring, support and coordination of disaster welfare services in New South Wales.

In 2020, a machinery of government change was implemented which established Resilience NSW as a public service executive agency and transferred persons employed in OEM to Resilience NSW. Despite these legislative changes, the plan had not been updated in line with its requirements to reflect these and subsequent changes, as OEM was still listed as one of the two agencies responsible for the coordination and delivery of disaster welfare services. Similarly, the plan had not been updated to reflect emergency operations changes with ADRA listed as the responsible coordinator for the provision of emergency accommodation services, despite no longer being responsible for this service.

The WSFASP has since been updated to reflect these changes and was endorsed by the SEMC in September 2023. The current WSFASP aligns with the welfare services responsibilities following the transfer of the welfare services functional area to DCJ in 2023. This includes the role of DCJ as the lead agency for the WSFASP, and DCJ and the Housing Contact Centre (HCC) within DCJ as the coordinator of emergency accommodation. The updated plan also provides an outline of the key welfare services that are delivered by the functional area, including emergency accommodation, personal support, essential food and grocery items, and transition from emergency accommodation. The outline provides a description of each service and the agency, team or non-government organisation responsible for coordinating the service.

Agencies did not have agency-level plans in place for implementing their responsibilities under State-level emergency accommodation and temporary housing plans

The State EMPLAN establishes a framework for sub plans, supporting plans and related policy instruments and guidelines. It states that a supporting plan should describe the support which is to be provided to the controlling or coordinating authority during emergency operations and be an action plan which describes how an agency or functional area is to be coordinated in order to fulfill the roles and responsibilities allocated. Without this more detailed guidance being in place, there is no common reference point for individuals within an agency to refer to when implementing the broader State-level plans, such as the WSFASP.

The WSFASP defines emergency accommodation and outlines the government and non-government organisations responsible for its provision. It does not provide a detailed description of the specific roles and responsibilities related to its provision. DCJ does not have an agency-level plan in place that specifies these in more detail, and did not have any standard operating procedures (SOPs) in place to guide the process of housing displaced persons in emergency accommodation.

The absence of SOPs to guide this process can increase the chance of inconsistent implementation of the WSFASP, with a reliance on the experience of staff to complete tasks to house people in emergency accommodation. For example, at the onset of an emergency, staff in the HCC contact local accommodation venues such as hotels and motels to determine availability in the area. They may also book blocks of rooms in preparation for housing displaced persons. At the time of the flood events, there was no documentation which detailed the process for DCJ staff to follow and these tasks were not recorded anywhere as requiring completion before a disaster occurred.

DCJ has advised that they have since developed internal processes which form part of the training program for Disaster Welfare staff. In addition to this, the HCC has developed a guide which steps out the various processes relating to the provision of emergency accommodation, as well as outlining the different roles and responsibilities within the HCC in relation to these processes.

As noted, there is no State-level plan in place to guide the temporary housing response. As a result, there is no framework to guide this process at an agency level for the Reconstruction Authority. The absence of both State and agency-level plans guiding the provision of temporary housing at the time of the flood events meant that agencies were required to develop a process to follow at the same time as responding to the flood events.

Appropriate governance structures were established quickly and changed as needed to reflect recovery needs

The State Recovery Committee (SRC) was activated following the 2019–20 bushfires and was still operating at the time of the 2022 floods. As part of this, the SRC had a terms of reference which included responsibilities of the SRC and a membership list. The responsibilities of the SRC in the terms of reference are to:

• provide strategic direction in relation to disaster recovery
• oversee reconstruction and recovery efforts in disaster impacted areas
• provide senior leadership to facilitate whole-of-government coordination
• monitor and report to the Premier, Deputy Premier and Cabinet on the progress of recovery efforts in disaster impacted areas.

Once the flood events commenced on 28 February 2022, the SRC increased its meeting frequency to every two days initially, for a total of 13 meetings in March. The SRC continued to meet at least twice a week from mid-April until the end of May, at which point it reduced gradually in frequency to weekly and then fortnightly. The SRC continued to meet throughout all of 2022 and 2023.

The SRC established a range of subcommittees to assist with recovery efforts. These subcommittees were operational from March 2022 onwards. Subcommittees had terms of reference setting out their role and were chaired by appropriate agencies with operational responsibilities that aligned with those roles. The Health and Wellbeing subcommittee was established as part of this and initially had responsibility for the provision of both emergency accommodation and temporary housing. This subcommittee was chaired by a relevant Senior Executive in DCJ.

As noted above, none of the whole-of-government plans prior to the flood events allocated responsibility to an agency or subcommittee for constructing and managing temporary housing. Although temporary housing had been utilised by the government previously in response to the 2019–20 bushfires, its provision had never been implemented on the scale required in response to the flood events.

In early March, the SRC created a new subcommittee: the Housing Taskforce (HTF). The HTF contained key staff from a wide variety of agencies, as well as other key stakeholders like local councils where appropriate, and was chaired by a Senior Executive from the Planning Branch of the Department of Planning and Environment (DPE). A terms of reference was quickly developed for the subcommittee. The HTF’s initial purpose included developing a strategy for identifying locations and pathways for temporary housing. This allowed the Health and Wellbeing subcommittee and the HTF to provide more focus on their particular areas of responsibility.

The SRC helped to manage issues but did not provide strategic risk management

Subcommittees regularly reported to the SRC throughout the flood response period. The SRC was able to manage issues with these programs as they arose, often by connecting relevant staff and providing a forum for these issues to be resolved across agencies. In this way, the SRC was able to manage issues, which aligns with its role in facilitating whole-of-government coordination.

Given that all relevant agencies were represented on the SRC, it was uniquely placed to provide strategic risk management across all aspects of the recovery effort including provision of accommodation and housing following the floods. This would fall within the SRC’s role of providing strategic direction in relation to disaster recovery. Strategic risk management involves addressing external risks, including those which may impact the government’s ability to achieve its objectives. The SRC did not undertake strategic risk management to proactively identify issues that could hinder the recovery effort, such as through developing risk registers and assigning mitigation strategies to agencies or specific individuals.

In regards to the flood temporary housing response, this may have included identifying and mitigating risks that could impact on the quantity of housing provided, risks to the overall flood recovery budget, and risks related to further flood events occurring that might hinder flood recovery. While the SRC did not consider this work during the flood response, Resilience NSW and the Reconstruction Authority both documented some whole-of-government risks to the delivery of the response to natural disasters as part of their enterprise risk management processes, including throughout 2022. However, this work was not undertaken specifically in relation to the unfolding flood events, but was instead done as part of the agency's regular review of its enterprise risks. Given that only one agency was involved in this risk identification, it was not a substitute for whole-of-government risk identification through the SRC.

The HTF did undertake some separate risk identification for the temporary housing response in the Northern Rivers, but not until October 2022. The HTF had been in operation since March 2022 without undertaking formal risk assessments to determine key risks to the provision of temporary housing that required mitigation. Some of the risks identified included expenditure on temporary housing exceeding its allocated budget, temporary housing sites failing to deliver agreed outcomes, and that there would be inappropriate or ineffective engagement with Aboriginal communities. This risk identification from the HTF was also reflected in Resilience NSW's and the Reconstruction Authority’s enterprise risk registers, where it is identified that there is a risk that the agencies do not effectively deliver on short and medium term housing.

The SRC provided oversight of the work of subcommittees

As noted above, one of the roles of the SRC is to oversee reconstruction and recovery efforts in disaster impacted areas. To fulfil this role of providing oversight, the SRC received updates on the activities of each subcommittee at each meeting.

In March 2022, each subcommittee developed a 100-Day Flood Action Plan that set out actions that would be completed in the first 30, 60 and 100 days. Each subcommittee was required to update its Flood Action Plan and report progress on implementation to the SRC every two weeks. The SRC received this regular reporting from each subcommittee, which included the status of each item, actions undertaken to date, and the next steps that each subcommittee was undertaking. This served to provide the SRC with oversight of the actions of each group to supplement the subcommittee updates with greater detail.

The quality of reporting from the HTF to the SRC reduced throughout August and September 2022. At this time the updates from the subcommittee included either only a verbal update or only statistical updates on the temporary housing response. This means that throughout this period, the SRC was providing only limited oversight of the temporary housing response. From October 2022, the HTF provided more detailed updates to the SRC, providing data on the temporary housing villages including the number of dwellings, estimated capacity and the status of each of the village sites (whether operational or estimated date of construction completion).

DCJ adapted its usual procedures to house a large number of people in emergency accommodation following the Northern Rivers flood event

The HCC, a branch within DCJ, is responsible for arranging emergency accommodation during a disaster, although this responsibility was not outlined in a specific emergency accommodation plan or procedure at the time of the flood events. Once a disaster is declared, the HCC is activated for a disaster welfare response. The team is required to estimate the number of people who will be displaced by the disaster and may seek emergency accommodation. The team is also required to contact local accommodation providers such as hotels, motels and caravan parks to determine vacancy information, as well as obtain information about the facilities such as wheelchair accessibility and pet-friendly rooms. The HCC team will then make direct contact with staff at evacuation centres and facilitate bookings based on the demand. A central internal database is utilised by the HCC, which enables them to see providers and book within the system.

In following these procedures, DCJ housed 788 people in the two weeks following the initial flood event by utilising the standard local accommodation providers. On 27 April 2022, 1,440 people were reported as staying at local accommodation providers as part of the emergency accommodation response. Exhibit 5 shows the number of people housed in emergency accommodation across the North Coast from March 2022 to early April 2023.

Governance structures continued to operate as previously established in response to the Central West flood event

The governance structures established in response to the 2019–20 bushfires and the flood event in the Northern Rivers mostly operated in the same capacity for the management of the Central West flood event. In October 2022, the meeting frequency for the SRC reduced to fortnightly, following the same structure with subcommittee updates discussed as part of the agenda. There was no increase in meeting frequency during or in the immediate aftermath of the response to the Central West flood event.

Resilience NSW continued to document whole-of-government risks to the delivery of the response to natural disasters during the response to the Central West flood event, and this work was continued by the Reconstruction Authority once established. Resilience NSW also continued to develop risk dashboard heatmaps each quarter, monitoring any changes in the residual risk rating of these risks, as well as outlining issues identified, and any new and emerging risks.

DCJ housed displaced persons in the Central West quickly, considering additional needs during the process

DCJ, through the HCC, advised that it followed its standard process outlined above for the provision of emergency accommodation during the Central West flood event. The evacuation order for Eugowra was made on 15 November 2022, and by 8 December 2022, DCJ had housed 93 people from the community in emergency accommodation. The HCC was able to utilise alternative accommodation such as rooms at Charles Sturt University to meet the increasing demand for emergency accommodation in the Central West.

Through the initial consultation process conducted with displaced persons at evacuation centres, the HCC was also able to consider their additional needs and meet these where possible. For example, companion animals were supported by Local Land Services and the Royal Society for the Prevention of Cruelty to Animals through the provision of boarding services. DCJ advised that local needs were also considered as part of the intake process. For example, displaced persons were accommodated as close to their hometown as possible. Those evacuated from Forbes were given priority for emergency accommodation in Forbes. This did impact evacuees from other towns. Ordinarily, those displaced in Eugowra would also be housed in Forbes, but due to limited accommodation options, they were evacuated to Orange instead. Other considerations made for displaced persons included level access and accessible rooms for those with disabilities, and baby care items, such as cots, where required.

The At-home Caravans program was implemented as immediate shelter for displaced persons awaiting pods on their property in the Central West

By 28 November 2022, Resilience NSW made the decision to activate the At-home Caravans program in the Central West, with applications from displaced persons being taken within a week after the flood event in Eugowra. Caravans were temporarily set up on private properties in Eugowra. Displaced persons are able to live in these caravans while waiting for a pod to be installed on their property. By 10 January 2023, 102 caravans had been delivered to the Central West and started to be located on private properties. At 30 May 2023, Resilience NSW had delivered 124 out of the 129 required caravans to properties. A plan was implemented to provide immediate shelter in the community through the caravans, organise medium-term housing in the form of pods, and support displaced persons to repair or rebuild their homes. Caravans were provided to households where properties required demolition, those that were damaged but reparable, and rental properties with owner’s consent.

Other options for immediate shelter were considered but not progressed. Placing caravans on site at showgrounds or caravan parks was considered, however a NSWPW assessment found that 95% of impacted homes could accommodate caravans on property. Caravans on property require less ongoing case management, site works and utilities. Private farm house rental accommodation was also considered, however extremely low availability of these in the area resulted in the decision to not progress this option.

Resilience NSW was able to meet the demand for housing in the Central West by placing temporary housing on people’s property

Resilience NSW conducted early analysis of potential temporary housing village sites in the aftermath of the floods in the Central West. However, after reviewing the situation in Eugowra and the relatively larger blocks, it was decided a more appropriate solution would be to place temporary pods on private property. Part of this decision was the impact a centralised village located in Eugowra would have on displaced persons from other affected towns. At 30 May 2023, 59 out of 100 pods had been installed on private properties. These pods replaced caravans initially installed on private properties, although at the time of the audit some disaster-affected persons were still living in caravans while they wait for pod installation on their property.

Resilience NSW was able to utilise the excess pods from the Northern Rivers to reduce the wait time for displaced persons to move into the pod from the caravan located on their property. Once their eligibility had been confirmed, the resident met with NSWPW and the builders contracted to install the pods. The resident confirmed where they would like the pod placed and the size needed. Applicants were then prioritised by Resilience NSW and pods installed in order of this prioritisation. NSWPW engaged the same third-party contractor used in the Northern Rivers construction to expedite the installation process.

Resilience NSW used measures to adapt the pods for suitable use in the Central West, as well as configuring them to meet mobility needs of residents. Cabonne Shire and Forbes Shire Councils required pods to be built at a height of 1.5 metres. The pods were therefore installed on scaffolding to raise their height. As the pods were designed and constructed for the Northern Rivers climate, insulation was installed on the base of the pods to ensure the inside temperature was appropriate for residents in the Central West. The raised height of the pods also impacted their accessibility, so the contractor was also engaged to install ramps instead of stairs where needed.

The first demobilisation of a pod occurred on 7 August 2023, after the resident’s home had been repaired and it was suitable for them to move back home. The Reconstruction Authority advised that as pods continue to be demobilised, they will be cleaned, any required repairs completed, and then moved onto the next property as needed. There was no long-term plan initially developed for the transition of tenants out of temporary housing, although the Reconstruction Authority has advised that the newly developed Temporary Housing Plan will include these considerations to inform processes at the end of the lease period. There has been consideration for returning the pods to the Northern Rivers once the work in the Central West is complete.

The Reconstruction Authority advised that due to the delays residents are facing in accessing trades and payment of insurance claims, the HTF is currently seeking the support of councils to extend the placement of pods beyond the two years that were initially planned.

There was no clear process in place to support displaced persons in emergency accommodation who were ineligible for temporary housing in the Central West

The WSFASP in place during the flood events did not outline a transition plan for displaced persons staying in emergency accommodation. Resilience NSW took over responsibility for the transition of displaced persons from emergency accommodation to temporary housing. It was not always possible to house rental tenants by placing a pod on the property they were occupying because they were unable to obtain landowner permission. It was necessary to find an alternative property to install these pods, usually on property owned by a family member. This was able to address most tenants’ issues.

It was unclear which agency was responsible for the support of renting households in the medium to long-term. The lack of a documented process for the provision of emergency accommodation created a gap in relation to the support for displaced persons. The WSFASP has since been updated to include provision for coordinated case management support to assist people in emergency accommodation with longer-term housing needs.

DCJ maintained a list of displaced persons who had been staying in emergency accommodation and were unable to exit without assistance. This list was provided to Resilience NSW weekly. Resilience NSW provided updates to DCJ on the status of those who were being transitioned into temporary housing, but no assistance was provided by Resilience NSW to those who were ineligible for temporary housing. DCJ was therefore required to provide case management to these people to assist in their transition to more stable housing.

Agencies learned and applied lessons from the Northern Rivers floods to the Central West flood event, but most have not formalised these for future consideration

Agencies involved in the provision of emergency accommodation and temporary housing learned key lessons from the Northern Rivers floods that could be applied in the Central West response. These lessons included the Reconstruction Authority rapidly standing up the At-home Caravans Program to provide immediate accommodation to displaced persons, and instigating a community reference group to provide feedback on the proposed housing response plan. These lessons learned were largely undocumented, with many staff being involved across both the Northern Rivers and Central West flood response, and able to directly apply lessons learned from their experience in the earlier response. It is good practice to formalise lessons learned to ensure that future responses may have access to contemporary information to learn from both positive and negative experiences in previous situations.

DCJ and Premier’s Department (PD) have not yet documented any lessons learned from their roles in the flood events. Some lessons were documented by Resilience NSW in April 2022 as part of a process to identify emerging insights. These lessons covered a broad range of activities, including findings relevant to the provision of temporary housing.

In June 2023, the Reconstruction Authority formally documented its own lessons learned from the provision of temporary housing. This includes identifying actions to avoid repeating some of the negative experiences, such as Aboriginal communities not being consulted at the appropriate time, and not having adequate program design processes in place for the temporary housing program. In addition, NSWPW has commissioned an evaluation of its work in the construction and provision of temporary housing, which includes a formal lessons learned component.

External reviews have also been conducted and have captured interim lessons learned, including the 2022 NSW Flood Inquiry and the ‘Response to major flooding across New South Wales in 2022’ Parliamentary Inquiry.

Agencies are in the process of evaluating the provision of emergency accommodation and temporary housing

Agencies have commenced the process of evaluating their role in the provision of emergency accommodation and temporary housing. DCJ advised that an external evaluation would commence shortly and that it was in the process of engaging a consultancy firm to conduct this. NSWPW has also commenced an external review of its provision of temporary housing. DPE and PD have not commenced a review, although PD has established a new unit for strategic communications during disasters in response to the agency's involvement in crisis communications during the flood events. This unit has been developed to deliver overarching whole-of-government messaging during disaster events.

Similarly, the Reconstruction Authority advised that an evaluation was planned for the provision of temporary housing. In addition, Resilience NSW commissioned an evaluation of the use of the Minderoo Foundation pods in response to the 2019–20 bushfires. This review reported in November 2022, though it had limited consideration of the role of the Minderoo Foundation pods as a source of temporary housing in the Northern Rivers. This report made 19 recommendations to the Reconstruction Authority and the Minderoo Foundation, and found that the Minderoo pods had largely been delivered in line with the original intended objectives.

There is no State-wide process in place to capture lessons learned from all agencies involved in recovery

Each year, the SEMC conducts a State-wide lessons learned exercise, incorporating learnings from all of the emergency events in the previous year. This exercise has commenced for the 2022 emergency events, however at the time of the audit it was in draft and not yet formally endorsed by the SEMC.

The agencies involved in the State lessons learned process are agencies with emergency response responsibilities. The findings largely relate to these response activities, with very few lessons learned relating to recovery. Only a limited number of agencies are involved in this activity, and the 2022 review did not incorporate the views of a number of agencies that were involved in the recovery phase of the Northern Rivers and Central West flood events.

While it is important that lessons are learned from the response phase of an emergency, it is equally important that State-wide lessons are learned from the recovery phase to ensure that appropriate State-wide changes can be made, or positive experiences can be continued. There is currently no process in place to capture these lessons learned from the recovery phase from all agencies involved in the recovery phase.

Appendix one – Responses from entities

Appendix two – About the audit

Appendix three – Performance auditing

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Parliamentary reference - Report number #389 - released 22 February 2024

What this report is about

Transport for NSW (TfNSW) uses the Driver vehicle System (DRIVES) to support its regulatory functions. The system covers over 6.2 million driver licences and over seven million vehicle registrations.

DRIVES first went live in 1991 and has been significantly extended and updated since, though is still based around the same core system. The system is at end of life but has become an important service for Service NSW and the NSW Police Force.

DRIVES now includes some services to other parts of government and non-government entities which have little or no connection to transport. There are 141 users of DRIVES in total, including commercial insurers, national regulators, and individual citizens.

This audit assessed whether TfNSW is effectively managing DRIVES and planning to transition it to a modernised system.

Audit findings

TfNSW has not effectively planned the replacement of DRIVES.

It is now working on its third business case for a replacement system but has failed to learn lessons from its past attempts.

In the meantime, TfNSW has not taken a strategic approach to managing DRIVES’ growth.

TfNSW has been slow to reduce the risk of misuse of personal information held in DRIVES. With its delivery partner Service NSW, TfNSW has also been slow to develop and implement automatic monitoring of access.

TfNSW uses recognised processes for managing most aspects of DRIVES, but has not kept the system consistently available for users. TfNSW has lacked accurate service availability information since June 2022, when it changed its technology support provider.

TfNSW needs to significantly prioritise cyber security improvements to DRIVES. TfNSW is seeking to lift DRIVES’ cyber defences, but it will not achieve its stated target safeguard level until December 2025.

Even then, one of the target safeguards will not be achieved in full until DRIVES is modernised.

Audit recommendations

TfNSW should:

• implement a service management framework including insight into the views of DRIVES users, and ensuring users can influence the service
• ensure it can accurately and cost effectively calculate when DRIVES is unavailable due to unplanned downtime
• ensure implementation of a capability to automatically detect anomalous patterns of access to DRIVES
• ensure that DRIVES has appropriate cyber security and resilience safeguards in place as a matter of priority
• develop a clear statement of the future role in whole of government service delivery for the system
• resolve key issues currently faced by the DRIVES replacement program including by:
  • clearly setting out a strategy and design for the replacement
  • preparing a specific business case for replacement.

The DRIver VEhicle System_¹ (often known as DRIVES) is the Transport for NSW (TfNSW) system which is used to manage over 6.2 million driver licences and over seven million vehicle registrations in New South Wales.

DRIVES first went live in 1991 and has been significantly extended and enhanced over the past 33 years. DRIVES is a significant NSW Government information system — containing personal information such as home addresses for most of the NSW adult population, sensitive health information such as medical conditions, and biometric data in photographs.

Service NSW, part of the Department of Customer Service, is the NSW Government's 'one stop shop' for services to NSW citizens and businesses. It uses DRIVES when it delivers many transport-related services to NSW citizens such as licence renewals and checks the identity information stored in DRIVES as part of other services delivered to NSW citizens, such as a 'working with children check'.

DRIVES supports TfNSW's regulatory functions and the collection of more than $5 billion in revenue annually for the NSW Government. The system is also used by many organisations outside of the NSW Government including commercial insurers and national regulators, as well as individual citizens who access DRIVES for services such as 'Renew my registration' or 'Book a driver knowledge test'.

TfNSW owns and manages DRIVES. It intends to replace DRIVES with a modernised system to improve its cost, performance, and security.

The objective of this performance audit was to assess whether TfNSW is effectively:

• managing the current system, and 
• planning to transition DRIVES to a modernised system.

The auditee is TfNSW. We have consulted with the Department of Customer Service as a key stakeholder during the audit process.

This part of the report considers whether Transport for NSW (TfNSW) is effectively managing the current system. It considers DRIVES’:

• role in NSW Government service delivery
• ease of use and appropriateness for a modern system
• mechanisms to ensure the service is available for users.

This part of the report considers whether Transport for NSW (TfNSW) is effectively planning to transition DRIVES to a modernised system. It makes findings on the:

•  effort to develop a business case to fund the replacement of DRIVES
• issues which have contributed to the slow progress of the replacement program.

Appendix one – Response from entity 

Appendix two – Statutory and regulatory framework related to DRIVES 

Appendix three – About the audit 

Appendix four – Performance auditing 

Parliamentary reference - Report number #388 - released 20 February 2024.

What this report is about

Result of the Transport portfolio of agencies' financial statement audits for the year ended 30 June 2023.

The audit found

Unqualified audit opinions were issued for all Transport portfolio agencies.

An 'emphasis of matter' paragraph was included in the Transport Asset Holding Entity of New South Wales' (TAHE) independent auditor's report, which draws attention to management's disclosure regarding proposed changes to TAHE's operating model.

Government's decision to convert TAHE into a non-commercial Public Non-Financial Corporation may impact the future valuation and the control of TAHE's assets.

Transport for NSW's valuation of roads and bridges resulted in a net increase to its asset value by $15.7 billion.

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 agency's financial statements is required.

The key audit issues were

The number of issues reported to management decreased from 53 in 2021–22 to 49 in 2022–23.

High-risk findings include:

• gaps in how Sydney Metro manages its contractors and how conflicts of interest are recorded and managed
• future financial reporting implications to account for government's proposed changes to TAHE's future operating model, including asset valuations and control assessments of assets and operations
• Parramatta Park Trust's tree assets' valuation methodology needs to be addressed.

Recommendations were made to address the identified deficiencies.

This report provides Parliament and other users of the Transport 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 Transport portfolio of agencies (the portfolio) for 2023.

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 Transport portfolio.

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.

What this report is about

Around one-third of the state’s population lives in regional NSW, but deaths on regional roads make up around two-thirds of the state’s road toll.

Transport for NSW (TfNSW) is responsible for managing road safety outcomes across the NSW road network. This audit assessed the effectiveness of TfNSW’s delivery of road safety strategies, plans and policies in regional areas.

The NSW Road Safety Action Plan 2022–2026 has the stated goal of ‘no death or serious injury occurring on the road transport network’ by 2050.

What we found

There is a disproportionate amount of trauma on regional roads, but there are no specific road safety plans or trauma reduction targets for regional NSW.

TfNSW advises that the setting of state-wide road safety targets is consistent with other jurisdictions and international best practice. However, the proportion of road fatalities and serious injuries in regional NSW is almost the same as ten years ago.

There is no regional implementation plan to assist TfNSW to target the Road Safety Action Plan 2026 to regional areas.

TfNSW considers that local road safety outcomes should be managed by councils, but only 52% of regional councils participated in its Local Government Road Safety Program (LGRSP) in 2022–23. This program has not been updated since 2014, despite commitments to do so in 2021 and 2022.

TfNSW has not undertaken a systematic and integrated analysis of the combined impact of its road safety strategies and plans in regional NSW since 2012.

TfNSW reports against the Community Road Safety Fund (CRSF) annually but there is no consolidated, public reporting on total road safety funding allocated to regional NSW. The Fund underspend increased from 12% in 2019–20 to 20% in 2022–23.

What we recommended

We recommended TfNSW:

• develop a regional implementation plan to support the NSW Road Safety Action Plan, including a framework to annually measure, analyse and publicly report on progress
• develop a plan to measure and mitigate risks causing underspend in the CRSF
• expedite the review of the LGRSP including recommendations to increase involvement of regional councils.

Disclosure of confidential information

Under the Government Sector Audit Act 1983 (the Act), the Auditor-General may disclose confidential information if, in the Auditor-General’s opinion, the disclosure is in the public interest, and that disclosure is necessary for the exercise of the Auditor-General’s functions.

Confidential information in the Act means Cabinet information or information subject to legal privilege. This performance audit report contained confidential information.

The NSW Premier has certified that in his opinion the disclosure of the confidential information was not in the public interest.

The confidential information has been redacted from this report.

Under section 36A(2) of the Government Sector Audit Act 1983, the Auditor-General may authorise the disclosure of confidential information if, in the Auditor-General’s opinion, the disclosure is in the public interest and necessary for the exercise of the Auditor-General’s functions. Confidential information under the Government Sector Audit Act 1983 means Cabinet information, or information that could be subject to a claim of privilege by the State or a public official in a court of law. This performance audit report contained confidential information which, in the opinion of the Auditor-General, is in the public interest to disclose and that disclosure is necessary for the exercise of the Auditor-General’s functions.

On 26 October 2023, pursuant to section 36A(2)(b) of the Government Sector Audit Act 1983, the Auditor-General notified the NSW Premier of the intention to include this information in the published report, having formed the opinion that its disclosure is in the public interest and is necessary for the exercise of the Auditor-General’s functions.

On 23 November 2023, pursuant to section 36A(2)(c) of the Government Sector Audit Act 1983, the NSW Premier certified that, in his opinion, the proposed disclosure of the confidential information contained in this report was not in the public interest. The Premier’s certificate follows. Section 36A(4) states that a certificate of the Premier that it is not in the public interest to disclose confidential information is conclusive evidence of that fact.

The issuance of the certificate by the NSW Premier prevents the publication of this information. The relevant sections of the report containing confidential information have been redacted.

One-third of the New South Wales population resides in regional areas, but two-thirds of the state’s road crash fatalities take place on regional roads.

Between 2017 and 2021, the average number of fatalities for every 100,000 of the population living in regional New South Wales was 8.33 — approximately four times higher than the equivalent measure for Greater Sydney. Similarly, the average number of serious injuries in regional New South Wales over the same period was 75.24 per 100,000 of the population, compared with 50.53 in Greater Sydney. Further, more than 70% of people who lose their lives in accidents on regional roads are residents of regional areas.

Residents of regional areas face particular transport challenges. They often need to travel longer distances for work, health care, or recreation purposes, yet their public transport options are more limited than metropolitan residents. Vehicle safety is also an issue. According to the NSW Road Safety Progress Report 2021, of the light vehicles registered in New South Wales that were manufactured in or after 2000, 48.4% of light vehicles in regional areas had a five-star Australasian New Car Assessment Program (ANCAP) rating, compared to 54.8% in metropolitan areas. Road conditions in regional areas can also be more challenging for drivers.

Regional New South Wales covers 98.5% of the total area of the state. The road network in New South Wales is vast — spanning approximately 200,000 kilometres.

The road network includes major highways, state roads and local roads. Speed limits range from 10 km/hr in high pedestrian shared zones, up to 110 km/hr on high volume and critical road corridors. Eighty per cent of the network has a 100 km/h speed limit, which is mostly applied as a default speed limit, regardless of the presence of safety features and treatments.

Speed is the primary causal factor in more crashes in New South Wales than any other factor, and car crashes in regional areas are more likely to be fatal because of the higher average speeds involved.

The responsibility for managing road safety outcomes across the entire New South Wales road network lies with Transport for NSW (TfNSW), pursuant to Schedule 1 of the Transport Administration Act 1988.

While its safety responsibilities are state-wide, TfNSW does not own or directly manage all of the road network in regional New South Wales, which spans approximately 200,000 kilometres. Approximately 80% of the roads are classified as Local Roads and are administered and managed by local councils. Local councils also maintain Regional Roads that run through their local government areas. TfNSW is responsible for managing State Roads (approximately 20% of roads), which are major arterial roads. It also provides funding for councils to manage over 18,000 km (approximately 10%) of state-significant Regional Roads.

According to TfNSW, between 2016 and 2020, there were 9,776 people killed or seriously injured on roads in regional New South Wales. Adding to the tragic loss of life, according to TfNSW, the estimated cost to the community between 2016 and 2020 resulting from regional road trauma and fatalities was around $13.7 billion.

TfNSW also noted that the ‘risk of road trauma is pervasive, and a combination of effective road safety measures is required to systematically reduce this risk’.

TfNSW released its first long-term road-safety strategy in December 2012, which introduced the goal of ‘Vision Zero’ — a long-term goal of zero deaths or serious injuries on NSW roads. The terminology was changed to ‘Towards Zero’ in the 2021 Road Safety Plan and has been retained in the NSW Road Safety Action Plan 2022–2026. Towards Zero has the stated goal of ‘no death or serious injury occurring on the road transport network’ by 2050.

The objective of this audit is to assess the effectiveness of TfNSW’s delivery of ‘Towards Zero’ in regional areas.

In making this assessment, the audit examined whether TfNSW:

• is effectively reducing the number of fatalities and serious injuries on regional roads
• has an effective framework, including governance arrangements, for designing and refreshing the NSW Road Safety Strategy 2012–2021 and the NSW Road Safety Action Plan 2022–2026
• effectively makes use of whole-of-government and other relevant sources of data to support decision-making, and to evaluate progress and outcomes
• effectively manages accountabilities, including roles and responsibilities, with respect to road safety outcomes and the use of data.

This audit focused on the policies and strategies used by TfNSW for managing road safety outcomes in regional areas. We did not evaluate individual road safety projects, programs and initiatives as part of this audit.

Whilst Regional Roads and Local Roads (as defined by the Road Network Classifications) are owned and maintained by local councils, we included these roads in this audit as TfNSW may advise and assist councils to promote and improve road safety, as well as manage grant programs that focus on improving road safety outcomes on these roads. Hereafter, unless otherwise stated, references to ‘regional roads’ refer to all classifications of roads in the state which are in regional New South Wales, irrespective of their ownership.

Local councils in regional areas are key stakeholders for the purposes of this audit, and we interviewed eight as part of the audit process (noting that this was not intended to be a representative sample). Road asset management by local councils is also out of scope for this audit as it is the focus of a subsequent performance audit by the Audit Office of New South Wales.b

The Audit Office of New South Wales has undertaken several performance audits relating to road safety since 2009 and these have been referenced while undertaking this audit. They include:

• Condition of State Roads (August 2006)
• Improving Road Safety: Heavy Vehicles (May 2009)
• Improving Road Safety: School Zones (March 2010)
• Improving Road Safety: Speed Cameras (July 2011)
• Regional Assistance Programs (May 2018)
• Mobile speed cameras (October 2018)
• Rail freight and Greater Sydney (October 2021).

Appendix one – Response from Transport for NSW

Appendix two – The Safe Systems framework and NSW road safety strategies and plans

Appendix three – About the audit

Appendix four – Performance auditing

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

Parliamentary reference - Report number #386 - released 30 November 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.

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.

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.

What this report is about

Results of the Education portfolio of agencies’ financial statements audits for the year ended 30 June 2023.

What we found

Unqualified audit opinions were issued for all Education portfolio agencies.

An ‘other matter’ paragraph was included in the TAFE Commission’s independent auditor’s report as it did not have a delegation or sub-delegation from the Minister for Education and Early Learning to incur expenditure on grants from other portfolio agencies.

What the key issues were

Comprehensive valuations of buildings at the Department of Education (the department) and at the TAFE Commission found that certain assumptions applied in previous years needed to be updated, resulting in prior period restatements.

The department prepaid a building contractor for early works on a project and some of the prepayment is in legal dispute.

The department duplicated a claim for project funding from Restart NSW in 2021.

New parental leave legislation increased employee liabilities for portfolio agencies. The department and the NSW Education Standards Authority (the Authority) updated their financial statements to record parental leave liabilities.

A high risk matter was raised for the Authority to improve the quality and timeliness of information to support their financial statement close process.

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.

The department should:

• improve processes to ensure project claims are not duplicated
• assess the risks associated with providing prepayments to contractors.

This report provides Parliament and other users of the Education 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 Education portfolio (the portfolio) for 2023.

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 Education portfolio.

Appendix one – Early close procedures

Appendix two – 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.

What this report is about

This report draws together the financial impact of natural disasters on agencies integral to the response and impact of natural disasters during 2021–22.

What we found

Over the 2021–22 financial year $1.4 billion from a budget of $1.9 billion was spent by the NSW Government in response to natural disasters.

Total expenses were less than the budget due to underspend in the following areas:

• clean-up assistance, including council grants
• anticipated temporary accommodation support
• payments relating to the Northern Rivers Business Support scheme for small businesses.

Natural disaster events damaged council assets such as roads, bridges, waste collection centres and other facilities used to provide essential services. Additional staff, contractors and experts were engaged to restore and repair damaged assets and minimise disruption to service delivery.

At 30 June 2022, the estimated damage to council infrastructure assets totalled $349 million.

Over the first half of the 2022–23 financial year, councils experienced further damage to infrastructure assets due to natural disasters. NSW Government spending on natural disasters continued with a further $1.1 billion spent over this period.

Thirty-six councils did not identify climate change or natural disaster as a strategic risk despite 22 of these having at least one natural disaster during 2021–22.

What the report is about

Sydney Metro is Australia’s largest public transport project. It requires the acquisition of many private properties, including residential and business properties.

This audit assessed the effectiveness of the acquisition of private properties for the Sydney Metro project. The audited agencies were Sydney Metro, the Department of Planning and Environment (Valuer General NSW) and Transport for NSW (the Centre for Property Acquisition).

The audit assessed agencies against the framework for property acquisitions in New South Wales. It did not re-perform the valuations done for individual properties that were acquired by Sydney Metro.

What we found

Acquisitions of private property for the Sydney Metro project were mostly effective in the sample of acquisitions we assessed. We found Sydney Metro:

• complied with legislative and policy requirements for compensation and communication with people subject to property acquisitions
• kept accurate records of its acquisitions and applied probity controls consistently
• did not complete detailed plans or negotiation strategies for the high-risk and high-value acquisitions we reviewed
• did not comply with legislative timelines for most compulsory acquisitions because of delays in receiving the required information from the Valuer General in these cases.

The Centre for Property Acquisition has overseen the implementation of reforms to residential acquisition processes, but its assessment of the effectiveness of these reforms has not been comprehensive.

What we recommended

The audit made four recommendations to the audited agencies to improve:

• plans and strategies for the acquisition of high-risk and high-value properties
• timeliness of issuing compensation determinations for compulsory acquisitions
• data quality on the experience of people subject to property acquisitions.

The NSW Government has the power to acquire land that is owned or leased by individuals or businesses, if it is needed for a public purpose. The power arises from the Land Acquisition (Just Terms Compensation) Act 1991 (the Just Terms Act). Government agencies that have the power to compulsorily acquire private property are referred to as ‘acquiring authorities’. People who are subject to acquisitions are referred to as ‘affected parties’ and include property owners (business or residential), businesses with a commercial lease on a property, or individuals with residential tenancy leases. In recent years, the vast majority of acquisitions by the NSW Government have been for public transport or road projects.

Sydney Metro is a NSW Government agency with responsibility for building the Sydney Metro railway project. Sydney Metro is Australia’s largest public transport project. The project requires the acquisition of a large number of private properties. Sydney Metro has been one of the largest acquirers of private property in recent years, completing over 500 acquisitions between 2020 and mid-2022, with a total acquisition value of over $2 billion. Other agencies and statutory officers involved in the acquisition of property for the Sydney Metro project include:

• the Department of Planning and Environment (DPE), which supports the minister responsible for the Just Terms Act. DPE also provides staff to the Valuer General of NSW
• the Valuer General of NSW, an independent statutory officer that determines compensation in cases where the acquiring authority and the affected party cannot agree on compensation for property that has been acquired
• Transport for NSW, which includes the Centre for Property Acquisition (CPA). The CPA does not have a direct role in acquiring properties, but its responsibilities include developing guidance for acquiring agencies and monitoring and reporting on their activities.

About this audit

The objective of this audit was to assess the effectiveness of acquisitions of private properties for Sydney Metro projects. The audit assessed agencies against the legislative and policy requirements in place for government acquisitions of private property in New South Wales. In line with the Audit Office's legislative mandate, the audit does not comment on the merits of the policy objectives reflected in the Just Terms Act.

The audit examined a sample of 20 property acquisitions. This was not a statistically representative sample. While our report provides comments on Sydney Metro’s overall acquisition processes, it does not provide assurance regarding the acquisitions that were not examined for this audit.

The audit did not re-perform the valuations done for individual properties that were acquired by Sydney Metro. Affected parties who disagree with the valuation of their property have the right to seek independent assessment of this via the Valuer General and the Land and Environment Court.

This chapter presents our findings on Sydney Metro's acquisition of industrial and commercial properties. Industrial properties include construction businesses and manufacturing facilities. Commercial properties were mostly properties such as shopping centres and office towers. Many of these acquisitions involve businesses and properties that are relatively complex and have high values. This means the valuation process can require multiple experts and can be lengthy and contested. Adherence to governance and probity requirements is important for these acquisitions in order to demonstrate that the acquiring authority has achieved value for money.

This chapter presents our findings on Sydney Metro's acquisition of residential properties, which include apartments and houses, and small business leases, which mostly affected businesses in small shopping centres or arcades. Most of these acquisitions were lower value compared to industrial and commercial property acquisitions and did not require as much expert advice on complex technical issues. However, residential property acquisitions can be personally distressing for the affected parties and require staff from the acquiring authority to provide support and show empathy while ensuring legislative compliance and value for money.

Appendix one – Responses from agencies

Appendix two – About the audit 

Appendix three – Performance auditing 

Copyright notice

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

Parliamentary reference - Report number #375 - released 9 February 2023

What the report is about

The Transport Asset Holding Entity (TAHE) is the State's custodian of rail assets. It is a state owned corporation and commenced operating on 1 July 2020.

This audit assessed the effectiveness of NSW Government agencies' design and implementation of TAHE. We audited TAHE, Transport for NSW (TfNSW) and NSW Treasury.

Separate and related audits on TAHE are reported in 'State Finances 2022', 'State Finances 2021' and 'Transport and Infrastructure 2022' reports.

What we found

The design and implementation of TAHE, which spanned seven years, was not effective.

The process was not cohesive or transparent. It delivered an outcome that is unnecessarily complex in order to support an accounting treatment to meet the NSW Government's short-term Budget objectives, while creating an obligation for future governments.

The benefits of TAHE were claimed in the 2015–16 NSW Budget before the enabling legislation was passed by Parliament in 2017. This committed the agencies to implement a solution that justified the 2015–16 Budget impacts, regardless of any challenges that arose.

Rail safety arrangements were a priority throughout TAHE's design and implementation, and risks were raised and addressed.

Agencies relied heavily on consultants on matters related to the creation of TAHE, but failed to effectively manage these engagements. Agencies failed to ensure that consultancies delivered independent advice as an input to decision-making. A small number of firms were used repeatedly to provide advice on the same topic. The final cost of TAHE-related consultancies was $22.6 million compared to the initial estimated cost of $12.9 million.

What we recommended

We recommended that the audited agencies should:

• improve accountability and transparency for major new fiscal transformation initiatives
• ensure entities do not reflect the financial impact of significant initiatives in the Budget when there is uncertainty, or it creates perverse incentives
• review record keeping practices, systems and policies to ensure compliance with the State Records Act 1998, and the NSW Government Information Classification, Labelling and Handling Guidelines
• review procurement policies to ensure that consultant use complies with all NSW Government policy requirements.

The NSW Government established the Transport Asset Holding Entity (TAHE), a statutory State Owned Corporation (SOC), on 1 July 2020 to replace the former rail infrastructure owner – RailCorp. It is the State's custodian of rail network assets, including rail tracks and other infrastructure, rolling stock, land, train stations and facilities, retail space, and signal and power systems, within metropolitan and regional New South Wales. It is responsible for $2.8 billion of major capital projects in 2022–23.

TAHE was established under Part 2 of the Transport Administration Act 1988 and is governed by a decision-making board. The Treasurer and the Minister for Finance and Employee Relations are the Shareholding Ministers of TAHE, and they annually agree performance expectations articulated in a Statement of Corporate Intent.

Whereas TAHE is the custodian of rail assets, Sydney Trains and NSW Trains operate public rail services. TAHE does not have responsibility for the operation of the heavy rail network or train services, nor does it have network control functions. TAHE, Sydney Trains and NSW Trains are in the Transport and Infrastructure cluster in the public sector (formerly the Transport cluster and renamed in April 2022), which also includes Sydney Metro and Transport for NSW (TfNSW).

TfNSW leads the Transport and Infrastructure cluster. Its role is to set the strategic direction for transport across the State. This involves the shaping of planning, policy, strategy, regulation, resource allocation and other service and non-service delivery functions for all modes of transport.

TAHE's Operating Licence is granted by the Portfolio Minister and authorises the entity to perform the functions required to acquire, develop, finance, divest and hold assets, pursuant to the Transport Administration Act 1988. The Portfolio Minister also issues a Statement of Expectations which outlines the government’s expectation for the business for the next three to five years.

TAHE's original Portfolio Minister was the Minister for Transport who approved, on 30 June 2020, the issuing of an interim 12-month Operating Licence to enable TAHE to commence operating on 1 July 2020. The Portfolio Minister then granted TAHE's current Operating Licence in 2021. After TAHE requested a 12-month extension to its current Operating Licence, its next Operating Licence is due on 1 July 2024. The current Portfolio Minister is the Minister for Infrastructure, Cities and Active Transport.

About this audit

This audit assessed the effectiveness of NSW Government agencies' design and implementation of TAHE. In making this assessment, we considered whether: 

• the process of designing and implementing TAHE was cohesive and transparent, and delivered an effective outcome
• agencies' roles and responsibilities were clear in the planning of TAHE
• agencies effectively identified and managed certain risks.

Appendix one – Responses from audited agencies, and Audit Office clarification of matters raised in the TAHE formal response 

Appendix two – Classification of government entities 

Appendix three – About the audit 

Appendix four – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #372 - released 24 January 2023

What the report is about

Result of the Transport and Infrastructure cluster agencies' financial statement audits for the year ended 30 June 2022.

What we found

Unmodified audit opinions were issued for all Transport and Infrastructure cluster agencies' financial statements.

An 'other matter' paragraph was included in TAHE's Independent Auditor's Report for its 30 June 2022 financial statements which draws attention to Transport and Asset Holding Entity's (TAHE) reliance on government-funded customers.

We included an ‘emphasis of matter’ paragraph in the Independent Auditor’s Report for State Transit Authority of New South Wales’ (the authority) 30 June 2022 financial statements, which draws attention to the financial statements being prepared on a liquidation basis as the authority’s principal activities ceased operations on 3 April 2022.

What the key issues were

The 2021–22 audits identified five high-risk findings:

• detailed business modelling to support returns from TAHE
• valuation of assets at TAHE
• control of assets at TAHE
• accounting and valuation of tree assets at Centennial Park and Moore Park Trust and Parramatta Park Trust.

Access and licence fees - TAHE

Revised commercial agreements were signed between TAHE, the operators and Transport for NSW on 23 June 2022 to reflect increased access and licence fees detailed in the 18 December 2021 Heads of Agreement.

TAHE’s ability to generate the expected return of 2.5% based on the current modelling is heavily reliant on the government funding the public rail operators (TAHE's customers).

There are risks that:

• TAHE will not be able to recontract for access and licence fees at a level that is consistent with current projections
• future governments' funding to TAHE's key customers will not be sufficient to fund payment of access and licence fees at a level that is consistent with current projections
• TAHE will be unable to grow its non-government revenues.

Valuation of assets - TAHE

Although TAHE's selected valuation of assets falls within an acceptable range, there remains a significant gap between what has been assessed as an acceptable range and TAHE's range.

What we recommended

Control of assets - TAHE

While we accepted TAHE’s position on control for the current year, NSW Treasury and TAHE should continue to monitor the risk that control of TAHE assets could change in future reporting periods. TAHE must continue to demonstrate control of its assets or the current accounting presentation would need to be reconsidered.

This report provides Parliament and other users of the Transport and Infrastructure cluster’s 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 Transport and Infrastructure cluster (the cluster) for 2022.

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 cluster.

Appendix one – Misstatements in financial statements submitted for audit

Appendix two – Early close procedures

Appendix three – Timeliness of financial reporting

Appendix four – Financial data

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