Reports
Members' additional entitlements 2021
What the report is about
The Auditor-General's review analyses claims made by members of the NSW Parliament during the 2020–21 financial year by testing a sample of transactions. Our sample consisted of 67 claims submitted by 52 of the 137 members.
What we found
While we did not identify any instances of material non-compliance with the Parliamentary Remuneration Tribunal's Determination, we did identify 31 departures from the Determination, which were of an administrative nature.
What we recommended
The Department of Parliamentary Services (the department) should continue to work with the Presiding Officers, members, the Clerk of the Parliaments and the Clerk of the Legislative Assembly to enhance reporting of members' expenditure.
In 2020, we recommended the department work with the Tribunal to provide additional guidance to members to clarify:
- the definition of 'parliamentary duties'
- the activities that meet the definition
- requirements for retaining documents.
The department will work with the Tribunal to clarify these items as part of its submission to the 2022 annual Determination.
Fast facts
- 12 claims were submitted after 60 days
- 7 Sydney allowance reconciliations were submitted late
- 10 annual loyalty scheme declarations were submitted late
- 2 publications had not made the required authorisations and attributions
- $22.5m of additional entitlements were claimed in the 2020–21 financial year. This was 4.2% higher than in the 2019–20 financial year.
The Auditor-General has reviewed the compliance of the members of the NSW Parliament (members) with certain requirements outlined in the Parliamentary Remuneration Tribunal's Determination (the Determination) for the year ended 30 June 2021.
The Auditor-General's review analyses claims made by members during the 2020–21 financial year by testing a sample of transactions. Our sample consisted of 67 claims submitted by 52 of the 137 members.
Results
Although our review did not identify any instances of material non-compliance with the Determination for the year ended 30 June 2021, we did identify 31 departures from the Determination, which were of an administrative nature. Such departures may help identify areas in the current processes where greater clarity is needed or where training or education for members is needed. These departures were as follows:
- 12 claims were not submitted for payment within 60 days of receipt or occurrence of the expense
- 10 annual loyalty scheme declarations were submitted by members after the due date specified in the guideline
- 7 reconciliations for the Sydney Allowance were submitted after the due date
- 2 publications claimed under the Communications Allowance had not made the required authorisations and attributions on the publication.
Background
The Parliamentary Remuneration Tribunal (the Tribunal) determines the salary and additional entitlements of members of the NSW Parliament (members), details of which are set out in the Tribunal's annual Determination. The NSW Parliament, through the Department of Parliamentary Services (the department), administers payments of additional entitlements to members in accordance with the Tribunal's annual Determination. An overview is presented below:
Twelve claims were not submitted for payment within 60 days of receipt or occurrence of the expense
The Determination requires members' expense claims to be submitted to the department within 60 days of when the expense is incurred or receipted. Our audit procedures identified 12 instances where members submitted their claims between six and 248 days late.
Ten annual loyalty/incentive scheme declarations were submitted by members after the due date specified in the guidelines
At the end of each financial year, members must declare they have not used loyalty/incentive scheme benefits accrued from their parliamentary duties for private purposes. The Determination requires current members to complete the declarations at the end of each year (by 27 August 2021 per the department's administrative process). Former members must complete the declarations within 30 days of leaving Parliament. We found ten current members submitted their declarations between three and 18 days late. The declaration is important as it affirms that loyalty benefits accrued using the members' parliamentary allowances and entitlements were not used for private purposes.
Seven reconciliations for the Sydney Allowance reconciliations were submitted after the due date
Open prior period recommendations
Enhanced public reporting
In 2016, the Auditor-General's Report to Parliament recommended the Tribunal consider requiring the department to regularly publish full details of members' expenditure claims on its website in an accessible and searchable format. The Tribunal had developed a plan requiring greater public reporting of members' additional expenditure from 1 July 2019 but does not have the power to require the department to facilitate this.
The Annual Reports of the Legislative Assembly and the Legislative Council, published on the Parliament's website, currently list the total amount claimed during the year by each member for each allowance. However, transparency around members’ claims would be enhanced if information was more extensively and regularly published on the Parliament’s website. The department should continue to work with the Presiding Officers, members, the Clerk of the Parliaments and the Clerk of the Legislative Assembly to enhance reporting of members' expenditure.
Clarifying key parameters of the annual Determination
In 2020, the Auditor-General's Reports to Parliament recommended the department work with the Tribunal to provide additional guidance to members to clarify:
- the definition of 'parliamentary duties'
- the activities that meet the definition
- requirements for retaining documents.
To address this recommendation, the department has performed a review of the definitions and activities used by other jurisdictions, in their administration of members' entitlements. The department is also continuing to monitor for changes in the administration of members' entitlements occurring at the Federal level. The department will work with the Tribunal to clarify these items as part of its submission to the 2022 annual Determination.
Resolved prior period recommendations
Recommendations resolved since the 2020 Auditor-General's report
The 2019 Auditor-General's Report recommended the department work with the Tribunal to clarify whether members can claim the cost of travel from their General Travel Allowance when the travel was used to produce communications during the blackout period. Members are not permitted to use their Communications Allowance for the production and distribution of publications that they intended to distribute in a State Election year in the period from 26 January to the election date (the ‘blackout period’).
The 2021 Determination has clarified this matter by stating that during the 'blackout period' travel necessary for parliamentary duties rather than electioneering is acceptable. The 2021 Determination has also included the condition that a member may not use their General Travel Allowance to fund communications that would normally be funded from the Communications Allowance during a 'blackout period'.
Appendix one - Response from Department of Parliamentary Services
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Engagement of probity advisers and probity auditors
Three key agencies are not fully complying with the NSW Procurement Board’s Direction for engaging probity practitioners, according to a report released today by the Acting Auditor-General for New South Wales, Ian Goodwin. They also do not have effective processes to achieve compliance or assure that probity engagements achieved value for money.
Probity is defined as the quality of having strong moral principles, honesty and decency. Probity is important for NSW Government agencies as it helps ensure decisions are made with integrity, fairness and accountability, while attaining value for money.
Probity advisers provide guidance on issues concerning integrity, fairness and accountability that may arise throughout asset procurement and disposal processes. Probity auditors verify that agencies' processes are consistent with government laws and legislation, guidelines and best practice principles.
According to the NSW State Infrastructure Strategy 2018-2038, New South Wales has more infrastructure projects underway than any state or territory in Australia. The scale of the spend on procuring and constructing new public transport networks, roads, schools and hospitals, the complexity of these projects and public scrutiny of aspects of their delivery has increased the focus on probity in the public sector.
A Procurement Board Direction, 'PBD-2013-05 Engagement of probity advisers and probity auditors' (the Direction), sets out the requirements for NSW Government agencies' use and engagement of probity practitioners. It confirms agencies should routinely take into account probity considerations in their procurement. The Direction also specifies that NSW Government agencies can use probity advisers and probity auditors (probity practitioners) when making decisions on procuring and disposing of assets, but that agencies:
- should use external probity practitioners as the exception rather than the rule
- should not use external probity practitioners as an 'insurance policy'
- must be accountable for decisions made
- cannot substitute the use of probity practitioners for good management practices
- not engage the same probity practitioner on an ongoing basis, and ensure the relationship remains robustly independent.
The scale of probity spend may be small in the context of the NSW Government's spend on projects. However, government agencies remain responsible for probity considerations whether they engage external probity practitioners or not.
The audit assessed whether Transport for NSW, the Department of Education and the Ministry of Health:
- complied with the requirements of ‘PBD-2013-05 Engagement of Probity Advisers and Probity Auditors’
- effectively ensured they achieved value for money when they used probity practitioners.
These entities are referred to as 'participating agencies' in this report.
We also surveyed 40 NSW Government agencies with the largest total expenditures (top 40 agencies) to get a cross sector view of their use of probity practitioners. These agencies are listed in Appendix two.
Conclusion
We found instances where each of the three participating agencies had not fully complied with the requirements of the NSW Procurement Board Direction ‘PBD-2013-05 Engagement of Probity Advisers and Probity Auditors’ when they engaged probity practitioners. We also found they did not have effective processes to achieve compliance or assure the engagements achieved value for money.
In the sample of engagements we selected, we found instances where the participating agencies did not always:
- document detailed terms of reference
- ensure the practitioner was sufficiently independent
- manage probity practitioners' independence and conflict of interest issues transparently
- provide practitioners with full access to records, people and meetings
- establish independent reporting lines reporting was limited to project managers
- evaluate whether value for money was achieved.
We also found:
- agencies tend to rely on only a limited number of probity service providers, sometimes using them on a continuous basis, which may threaten the actual or perceived independence of probity practitioners
- the NSW Procurement Board does not effectively monitor agencies' compliance with the Direction's requirements. Our enquiries revealed that the Board has not asked any agency to report on its use of probity practitioners since the Direction's inception in 2013.
There are no professional standards and capability requirements for probity practitioners
NSW Government agencies use probity practitioners to independently verify that their procurement and asset disposal processes are transparent, fair and accountable in the pursuit of value for money.
Probity practitioners are not subject to regulations that require them to have professional qualifications, experience and capability. Government agencies in New South Wales have difficulty finding probity standards, regulations or best practice guides to reference, which may diminish the degree of reliance stakeholders can place on practitioners’ work.
The NSW Procurement Board provides direction for the use of probity practitioners
The NSW Procurement Board Direction 'PBD-2013-15 for engagement of probity advisers and probity auditors' outlines the requirements for agencies' use of probity practitioners in the New South Wales public sector. All NSW Government agencies, except local government, state owned corporations and universities, must comply with the Direction when engaging probity practitioners. This is illustrated in Exhibit 1 below.
Fraud Survey
In a report released today, the NSW Auditor-General, Margaret Crawford provides a snapshot of reported fraud in the NSW public sector and an analysis of NSW Government agencies’ fraud controls based on a survey of 102 agencies.
Agency compliance with the GIPA Act
In a report released today, the NSW Auditor-General, Margaret Crawford found some NSW Government agencies were not publicly releasing all the required information on contracts with the private sector, nor were they publishing it in a timely manner.
This report assessed whether 13 agencies were complying with Part 3 Division 5 of the Government Information (Public Access) Act 2009 (GIPA Act), relating to Government contracts with the private sector.
