About this report

Results and key themes from our audits of the state agencies’ financial statements for the year ended 30 June 2024.

It also includes observations on the following areas of focus:

• risk management
• capital projects
• shared service arrangements.

Findings

The Treasurer did not table the audited Total State Sector Accounts (TSSA) in Parliament as required by the Government Sector Finance Act 2018, and Responsible Ministers did not table 16 annual reports in Parliament by the required date.

Audit results

Unqualified opinions were issued for all but one agency.  The quality of financial statements submitted for audit improved, with reported misstatements down to a gross value of $3.9 billion in 2023–24, compared to $10.8 billion in 2022–23.

Key themes

Errors in accounting for assets led to financial statements adjustments of $1.4 billion. 

Our audits identified deficiencies in key controls across financial management, payroll, contract management and procurement.

Risk management

Risk management maturity is low across most agencies. Some of the largest 40 agencies self-assess their risk maturity as requiring improvement.

Capital projects

There is a lack of transparency in the NSW budget papers relating to significant capital projects. The estimated total costs for some major projects are not published as the amounts are considered commercially sensitive. The budget papers do not provide a complete and accurate reflection of the actual costs of large infrastructure projects.

Shared service arrangements

Three of the five agencies that provide shared services to 108 customer agencies did not obtain independent assurance over the effectiveness of their control environment. 

Recommendations

The report makes recommendations to agencies to improve controls and processes in relation to:

• financial reporting
• financial management
• risk management
• shared service arrangements
• capital projects.

Read PDF version of report
 

About this report 

This report reviews compliance by members of the Parliament of New South Wales with certain requirements outlined in the Parliamentary Remuneration Tribunal’s (the Tribunal) 2024 Annual Determination (the Determination). 

Claims made by members for additional entitlements totalling $12.7 million were within the scope of our review. The remaining payments of $12.1 million were not reviewed as there are certain salaries and allowances that the Determination excludes from our compliance review requirements. 

Claims relating to annual basic and additional salaries, additional expense allowances, and electoral and committee allowances are excluded by the Determination from the scope of our compliance review.

Findings 

From a sample of 56 claims, our compliance review procedures identified 27 departures from requirements of the Determination and/or the administrative guidelines of the Department of Parliamentary Services (the Department). 

There were fewer departures this year than in previous years, however late submission of claims and declarations by members continued. The Department needs to provide clarity to members on expenditure claim requirements and processes.

Recommendations 

The Department should: 

• enhance its assessment as to whether members’ expenditure claims comply with requirements and advise members promptly about whether their claims are ineligible 
• improve its quality review processes when reporting the total number and dollar value of members’ additional entitlements claims for each year 
• ensure internal audits of members’ additional entitlements are adequately scoped and endorsed prior to their commencement and reflect the requirements of the Determination. These internal audits should be completed prior to the compliance review performed by the Audit Office 
• continue to work with members to provide them additional training or education and better help them comply.

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About this report

Internal controls are key to the accuracy and reliability of agencies’ financial reporting processes. This report analyses the internal controls and governance of 26 of the NSW public sector’s largest agencies for the 2023–24 financial year.

Findings

There are gaps in key business processes, which expose agencies to risks. These gaps are identified in 121 findings across the 26 agencies—including 4 high risk, 73 moderate risk and 44 low risk findings. All four high-risk issues related to IT controls and 19% of control deficiencies were repeat issues. Thirty-five per cent of agencies had deficiencies in control over privileged access.

Shared IT services

Six agencies provide IT shared services to 120 other customer agencies. All six had control deficiencies—three of these were high risk. Four agencies provide no independent assurance to their customers about the effectiveness of their own IT controls.

Cyber security

Eighteen agencies assessed cyber risk as being above their risk appetite. Fourteen of these agencies had not set a timeframe to resolve these risks and two agencies have not funded plans to improve cyber security.

Fraud and corruption control

Agencies need to improve fraud and corruption control. Instances of non-compliance with TC18-02 NSW Fraud and Corruption Policy were identified, including gaps such as a lack of comprehensive employment screening policies and not reporting matters to the audit and risk committee.

Gifts and benefits

Management of gifts and benefits requires better governance and transparency. All agencies had policy and guidance but all had gaps in management and implementation—such as not publishing registers nor providing ongoing training.

Information Technology

Nine agencies did not effectively restrict or monitor user access to privileged accounts.

Recommendations

The report makes recommendations to agencies to implement proper controls and improve processes in relation to:

• organisational processes
• information technology
• cyber security
• fraud and corruption, and
• gifts and benefits.

Read the PDF report

Internal controls are processes, policies and procedures that help agencies to:

• operate effectively and efficiently
• produce reliable financial reports
• comply with laws and regulations
• support ethical government.

This chapter outlines the overall trends for agency controls and governance issues, including the number of audit findings, the degree of risk those deficiencies pose to the agency, and a summary of the most common deficiencies found across agencies.

This chapter outlines our audit observations, conclusions and recommendations arising from our review of agency controls to manage key financial systems.

This chapter outlines our audit observations, conclusions and recommendations arising from our review of agencies' cyber security.

This chapter outlines our audit observations, conclusions and recommendations from our review of agencies' fraud and corruption control framework, policies and practices. Our Internal Controls and Governance 2018 found a number of fraud and corruption control gaps in NSW Government.

The NSW Treasury Circular TC18-02 NSW Fraud and Corruption Control Policy (the Circular) requires NSW government agencies to develop, implement and maintain a fraud and corruption control framework. The Circular sets out minimum standards for a NSW Government agency’s fraud and corruption control framework.

Previous Audit Office report on agency fraud and corruption control

This chapter outlines our audit observations, conclusions and recommendations arising from our review of agencies' managing of gifts and benefits.

Australian Registry Investments (trading as NSW Land Registry Services) was granted the right to operate the titling and registry operations of New South Wales in April 2017, under a 35-year concession which commenced on 1 July 2017. The NSW Government continues to own the land titles register and guarantees title under the Torrens Assurance Fund. The Office of the Registrar General regulates NSW Land Registry Services (NSW LRS) as the operator of the NSW land titles registry under a regulator-operator model. 

This audit will assess the effectiveness of the Office of the Registrar General in overseeing and monitoring the operation and maintenance of the land titles registry by a private operator to ensure the integrity and security of the registry. The audit will address the following questions: 

• Does the Office of the Registrar General ensure that appropriate measures are taken to establish, maintain and protect the integrity (including quality) and security of information held on the land titles registry?
• Does the Office of the Registrar General ensure that there are effective arrangements for responding and resolving breaches of performance standards or obligations relating to the integrity, quality or security of information held on the land titles registry?

The Office of the Registrar General is situated in the Better Regulation Division of the Department of Customer Service.

Estimated tabling date: February 2025

Department of Customer Service and NSW Treasury.

About this report

Over 1,100 native animals, plants and ecological communities are listed as threatened in New South Wales. The Department of Climate Change, Energy, the Environment and Water (DCCEEW) delivers programs and activities aiming to reduce the risk of extinction for threatened species and ecological communities. 

This audit assessed whether DCCEEW has effectively delivered outcomes to support threatened species and ecological communities across New South Wales including delivery of the statutory Biodiversity Conservation Program (Saving our Species). 

Findings

DCCEEW uses a risk‑based approach to guide and deliver a range of programs aiming to improve the outcomes for threatened species and ecological communities.

However, DCCEEW has not effectively determined departmental priorities, coordinated programs to align efforts, or reported on the overall outcomes it is delivering for threatened species and ecological communities. 

Further, DCCEEW does not capture sufficient data to monitor species that it is not actively managing, creating a risk that it cannot readily identify or respond to further decline.

Under the Saving our Species program, DCCEEW is delivering conservation actions for less than one‑third of all threatened species and ecological communities. This number has reduced over time, in line with reduced program funding. 

Gaps in core program planning and risk management frameworks create program delivery risks. 

Recommendations

The report made several recommendations to DCCEEW, focusing on:

• Strengthening Saving our Species program compliance, governance, planning and risk management frameworks.
• Developing a long‑term framework to coordinate and align efforts across DCCEEW for the delivery of threatened species outcomes.
• Expanding activities to improve coordination with other parts of government delivering activities that impact on outcomes for threatened species.

This chapter assesses the effectiveness of DCCEEW’s ability to report on threatened species outcomes across its various programs and activities, and its strategic planning for the delivery of these outcomes at a departmental level.

Under Part 4, Division 6 of the BC Act, DCCEEW is required to deliver a Biodiversity Conservation Program. The program’s statutory objectives are to:

• maximise the long-term security of threatened species and ecological communities in nature
• minimise the impacts of key threatening processes on biodiversity and ecological integrity.

Under Section 4.36 of the BC Act, the program must have:

• strategies to achieve the objectives of the program in relation to each threatened species and threatened ecological community
• a framework to guide the setting of priorities for implementing the strategies
• a process for monitoring and reporting on the overall outcomes and effectiveness of the program.

Appendix one – Response from agency

Appendix two – Legislative and regulatory provisions relevant to threatened species

Appendix three – Programs and activities relevant to threatened species

Appendix four – Comparison of statutory provisions for the conservation of threatened species

Appendix five – About the audit

Appendix six – 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 #399 released 15 August 2024.

About this report

The Government Advertising Act 2011 requires the Auditor-General to undertake a performance audit of the activities of one or more government agencies in relation to government advertising campaigns in each financial year.

This year, we examined two campaigns run by Transport for New South Wales (TfNSW) - 'Don't trust your tired self' (DTYTS) and 'Saving lives on country roads' (SLCR).

The audit assessed whether they were carried out effectively, economically, and efficiently, and complied with regulatory and policy requirements.

Audit findings

The DTYTS campaign complied with all requirements set out in the Act, the Regulation, and Government Advertising Guidelines - except for the requirement to complete an approved and complying cost-benefit analysis (CBA), as per the Guidelines.

The campaign had a clear target audience. It achieved many of its stated objectives and other performance measures and represented an economical and efficient spend.

However, TfNSW has not measured the campaign's long-term impact and this, combined with the lack of a complying CBA, meant that TfNSW could not confidently demonstrate the campaign's effectiveness.

The SLCR campaign (which commenced in 2017) was last run fully in 2021–22. TfNSW could have improved the formal documentation of its decision-making process when it cancelled the SLCR campaign.

TfNSW continued to run state-wide advertising campaigns – with regional components - to address road safety in regional NSW.

Recommendations

By 31 October 2024, TfNSW should implement processes that ensure:

1. CBAs prepared for government advertising campaigns comply with the Government Advertising Guidelines
2. long-term impacts of advertising campaigns are evaluated
3. strategic and operational decision-making about advertising campaigns, such as starting, stopping or significantly changing a campaign, is well-documented and follows good practice.

The Government Advertising Act 2011 (the Act) sets out requirements that must be followed by a government agency when it carries out a government advertising campaign. The requirements prohibit any political advertising and require a peer review and cost-benefit analysis to be completed before the campaign commences. The accompanying Government Advertising Regulation 2018 (the Regulation) and 2012 NSW Government Advertising Guidelines (the Guidelines) address further matters of detail.

Section 14 of the Act requires the Auditor-General to conduct a performance audit on the activities of one or more government agencies in relation to government advertising campaigns in each financial year. The performance audit must assess whether a government agency (or agencies) has carried out activities in relation to government advertising campaigns in an effective, economical and efficient manner and in compliance with the Act, the Regulation, other laws and the Guidelines.

This audit examined Transport for NSW's (TfNSW) advertising campaigns 'Don't Trust Your Tired Self' and 'Saving Lives on Country Roads' for the 2022–23 financial year.

TfNSW is the NSW Government agency responsible for leading the development of safe, integrated and efficient transport systems for the people of New South Wales.

The Don't Trust Your Tired Self (DTYTS) campaign, which cost $3.04 million in 2022–23, aimed to educate drivers on how to avoid driving tired and encouraged them to consider how tired they were before driving.

The Saving Lives on Country Roads (SLCR) campaign, which commenced in December 2017, aimed to encourage country drivers¹ to re-think the common excuses used to justify their behaviour on the road. In early 2024, after the audit commenced, the Department of Customer Service (DCS) advised the audit team that TfNSW did not run the SLCR campaign in 2022–23. This was subsequently confirmed by TfNSW. Instead, the SLCR branding was used for the regional element of the state-wide drink driving campaign. As a result, this audit examined the reasons and decision-making process for its cancellation.

The SLCR campaign cost $3.11 million in 2021–22, the last full year in which it was run, and $17,038 in 2022–23.

This part of the report sets out key aspects of Transport for NSW's (TfNSW) compliance with the Government Advertising regulatory framework for Don't Trust Your Tired Self (DTYTS). It considers whether the agency complied with the:

• Government Advertising Act 2011 (the Act)
• Government Advertising Regulation 2018 (the Regulation)
• NSW Government Advertising Guidelines 2012 (the Guidelines) and other relevant policy.

This part of the report considers whether Transport for NSW's (TfNSW) advertising campaign Don't Trust Your Tired Self (DTYTS) was carried out in an effective, efficient and economical manner.

This part of the report examines the cancellation of the Saving Lives on Country Roads (SLCR) campaign. It focuses on the decision-making process and evidence for the cancellation of this campaign following its last delivery in 2021–22. It also draws out key implications.

Appendix one – Response from agencies

Appendix two – About the campaigns

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 #396 released 25 June 2024.

About this report

Financial audit results of the NSW public universities’ financial statements for the year ended 31 December 2023.

Audit findings

Unmodified audit opinions were issued for all ten universities.

Eight universities reported net deficits. Three of these improved on their 2022 results.

Total fees and charges returned to pre-pandemic levels, with 40.5% earned from overseas students from three countries.

Employee related expenses increased 10.2% in 2023 mainly due to an additional 2,830 full time equivalent staff, in response to increased teaching and research activities.

Key issues

The number of findings reported to management has increased to 111 matters in 2023 up from 88 in 2022.

These included one high risk finding and 62 moderate risk findings, a 72% increase from last year.

Gaps identified in universities governance processes included delays in responding to findings and recommendations; staff not attesting compliance with codes of conduct annually; and not capturing and recording staff conflicts of interests within central registers.

Seven of the ten universities have cyber security risks above what they determine as an acceptable risk. Four universities did not have a cyber security uplift program.

Recommendations

Universities should address all recommendations made in the report (see Appendix one for a summary of these).

In particular, there should be a focus on prioritising remediation of wage underpayments to affected employees; ensuring a centralised conflict of interest register is maintained for all staff; considering emerging risks in university risk registers; ensuring controlled entities are considered when determining internal audit plans; and focusing efforts to improve cyber security risk management and cyber resilience capability.

This report provides NSW Parliament with the results of our 2023 financial audits of universities in New South Wales and their controlled entities, including analysis, observations and recommendations in the following areas:

• financial reporting
• internal controls and governance
• teaching and enrolments
• cyber security.

Financial reporting is an important element of good governance. Confidence and transparency in university sector decision-making are enhanced when financial reporting is accurate and timely.

This chapter outlines audit observations related to the financial reporting of universities in NSW for 2023.

Appropriate financial controls help to ensure the efficient and effective use of resources and administration of policies. They are essential for quality and timely decision-making. Effective governance is essential for the stability, sustainability and ethical operation of universities. It ensures accountability, transparency and promotes responsible decision making.

This chapter outlines our observations and insights from our financial statement audits of NSW universities.

Our audits do not review all aspects of internal controls and governance every year. The more significant issues and risks are included in this chapter. These, along with the less significant matters, are reported to universities for management to address.

Universities' primary objectives are the functions of teaching and research. They invest most of their resources aiming to achieve quality outcomes in academia and student experience. Universities have committed to achieving certain government targets and compete to advance their reputation and their standing in international and Australian rankings.

This chapter outlines teaching and enrolment outcomes for universities in NSW for 2023.

This chapter of the report focuses on the cyber risk environment for universities, how universities have assessed that risk, what frameworks they use to strategically identify controls that respond to those risks, and the extent to which they have implemented or have plans to implement those controls. We also address some specific controls in respect of cyber resilience.

Appendix one – List of 2023 recommendations

Appendix two – Status of 2022 recommendations

Appendix three – Universities' controlled entities

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.

About this report

This audit assessed the effectiveness of the Department of Communities and Justice (DCJ) in planning, designing, and overseeing the NSW child protection system.

The audit used 'follow the dollar' powers to assess the performance of five non-government organisations (NGOs), that were contracted to provide child protection services. More information about how we did this is included in the full report.

Findings

The NSW child protection system is inefficient, ineffective, and unsustainable.

Despite recommendations from numerous reviews, DCJ has not redirected its resources from a ‘crisis driven’ model, to an early intervention model that supports families at the earliest point in the child protection process.

DCJ's organisational structure and governance arrangements do not enable system reform.

DCJ has over 30 child protection governance committees with no clarity over how decisions are made or communicated, and no clarity about which part of DCJ is responsible for leading system improvement.

DCJ's assessments of child protection reports are labour intensive and repetitive, reducing the time that caseworkers have to support families with services.

DCJ has limited evidence to inform investments in family support services due to a lack of data about the therapeutic service needs of children and families. This means that DCJ is not able to provide relevant services for families engaged in the child protection system. DCJ is not meeting its legislated responsibility to ensure that families have access to services, and to prevent children from being removed to out of home care.

DCJ does not monitor the wellbeing of children in out of home care. This means that DCJ does not have the information needed to meet its legislative responsibility to ensure that children 'receive such care and protection as is necessary for their safety, welfare and well-being’.

In August 2023, there were 471 children living in costly and inappropriate environments, such as hotels, motels, and serviced apartments. The cost of this emergency accommodation in 2022–2023 was $300 million. DCJ has failed to establish ‘safe, nurturing, stable and secure’ accommodation for children in these environments.

Since 2018–19, the number of children being returned to their parents from out of home care has declined. During the five years to 2022–23, families have had limited access to restoration services to support this process.

Recommendations

The audit made 11 recommendations to DCJ. They require the agency to identify accountability for system reform, and to take steps to ensure that children and families have access to necessary services and support.

The child protection system aims to protect children and young people under 18 years old from risk of abuse, neglect, and harm. In NSW, child protection services can include investigations of alleged cases of child abuse or neglect, referrals to therapeutic services for family members, the issuing of care and protection orders, or the placement of children and young people in out of home care if it is deemed that they are unable to live safely in their family home.

A key activity in the child protection process is to determine whether a child is at ‘risk of significant harm’ as defined by Section 23 of the Children and Young Persons (Care and Protection) Act 1998. The Act describes significant harm as when ‘the child's or young person's basic physical or psychological needs are not being met or are at risk of not being met'. The Department of Communities and Justice (DCJ) has developed a process for determining risk of significant harm. It requires multiple assessments of child concern reports and at least two separate assessments of the child in the home. This process can take a number of months, and until all of these activities are complete, DCJ describes the child as suspected or presumed to be at risk of significant harm.

DCJ has primary responsibility for the child protection system in NSW. DCJ is both a provider of child protection services and a purchaser of child protection services from non-government organisations (NGOs). As system steward, DCJ has a role to establish the policy environment for child protection services and operations. In addition, DCJ is responsible for all governance and reporting arrangements for the commissioned NGOs that deliver services on its behalf, as well as for the governance and reporting arrangements of its own DCJ staff. DCJ must ensure that the child protection system is achieving its intended outcomes – to protect and support children in ways that meet their best interests - as described in legislation.

This audit assessed the effectiveness of DCJ’s planning, design, and oversight of the statutory child protection system in NSW. We assessed whether DCJ was effective in ensuring:

• there is quality information to understand and effectively plan for child protection services and responses
• there are effective processes to manage, support, resource, and coordinate child protection service models and staffing levels
• there is effective oversight of the quality and outputs of child protection services and drivers of continuous improvement.

To do this, the audit assessed the statutory child protection system with a particular focus on:

• initial desktop assessments and triaging of child protection reports
• family visits and investigations of child protection reports
• case management services and referrals to services
• the management of all types of care and protection orders
• the assessments and placements of children in out of home care.

The audit also assessed the performance of five NGOs that provide commissioned child protection services. Collectively, in 2021–2022, the five audited NGOs managed approximately 25% of all out of home care services in NSW. The policies, practices, and management reporting of the five NGOs was assessed for effectiveness in relation to the following:

• quality of data used to understand service requirements
• arrangements for operational service delivery to meet identified needs
• governance arrangements to deliver safe and quality out of home care services under contract arrangements with DCJ.

This audit was conducted concurrently with another audit: Safeguarding the rights of Aboriginal children in the child protection system.

The child protection system aims to protect children and young people (aged less than 18 years) from the risks of abuse, neglect, and harm. Child protection services can include investigations, (which may or may not lead to substantiated cases of child abuse or neglect), care and protection orders, and out of home care placements.

The Department of Communities and Justice (DCJ) has statutory responsibility for assessing whether a child or young person is in need of care and protection. DCJ’s Child Protection Helpline receives and assesses reports of possible child abuse or neglect. If the information in the report is assessed as meeting a threshold for risk of significant harm, DCJ caseworkers at Community Service Centres investigate the report and decide on a course of action. Follow-up actions can include referring the family to services, visiting the family to conduct ongoing risk and safety assessments of the child, or closing the case. If a child is determined to be unsafe, the child may be removed from the family home and placed in out of home care.

Non-government organisations (NGOs) are funded by the NSW Government to provide services to children and young people who require out of home care and other support services. NGOs provide approximately half of all out of home services in NSW, and DCJ provides the other half.

Government agencies such as Health, Education and Police also play a role in child protection processes, particularly in providing support for children and families where there are concerns about possible abuse or neglect. NSW Health provides some support services for families, along with the Department of Communities and Justice. Exhibit 1 shows some headline child protection statistics for NSW in 2022–2023.

Source: Audit Office summary of DCJ data on child protection statistics.

DCJ has not made progress in shifting the focus and resources of the child protection system to an early intervention model of care, as recommended by major system reviews

DCJ has not readjusted its resource profile so that its operating model can take a more preventative approach to child protection. A preventative approach requires significant early intervention and support for families and children soon after a child has been reported as being at risk of significant harm. This approach has been recommended by a number of reviews into the child protection system.

In 2015, the Independent Review of Out of Home Care in New South Wales recommended an investment approach that uses client data and cost-effective, evidence-based interventions to reduce entries to out of home care and improve outcomes for families and children.

The NSW Government response to the Independent Review of Out of Home Care in New South Wales was a program entitled: Their Futures Matter. This program commenced in November 2016 and was intended to place vulnerable children and families at the heart of services through targeted investment of resources and services. A 2020 report from our Audit Office found that ‘while important foundations were laid and new programs trialled, the key objective of establishing an evidence-based whole of government early intervention program … was not achieved. The majority of $380 million in investment funding remained tied to existing agency programs, with limited evidence of their comparative effectiveness.’

DCJ’s expenditure since 2018–2019 shows that most additional funding has been used to address budget shortfalls for out of home care, and to expand the numbers of frontline case workers. Budget increases show that during the period from 2018–2019 to 2022–2023, DCJ’s expenditure on out of home care increased by 36%, and expenditure on caseworkers increased by 26%. DCJ’s expenditure on family support services, including early intervention and intensive support services, increased by 31% during the audit period.

These resourcing priorities indicate that DCJ has not shifted its focus or expenditure in ways which reorient the child protection system. DCJ has not dedicated sufficient resources to early intervention, and therapeutic support for families and children, in order to implement the recommended changes made by systemwide child protection reviews.

In 2019, the Family is Culture Review recommended increased investment in early intervention support services to prevent more Aboriginal children entering out of home care, with a preference for these services to be delivered by Aboriginal Community Controlled Organisations. Progress towards enhancing a culturally appropriate service profile has been limited. DCJ last published progress against the Family is Culture recommendations in August 2021, when it reported that projects to increase financial investment in early intervention services were under review.

Data from March 2023 shows that 89% of the DCJ-funded, family support service volume across NSW is delivered by mainstream providers compared with ten per cent provided by Aboriginal Community Controlled Organisations, and one per cent by culturally specific providers. Given that Aboriginal children make up approximately half of all children in out of home care, there is still significant work required to shift the service profile.

DCJ’s governance arrangements are not structured in a way that ensures transparency and accountability for system reform activity and service improvements

DCJ’s organisational structure reflects multiple operational and policy functions across its three branches - the Commissioning Branch, the Operational Branch, and the branch responsible for Transforming Aboriginal Outcomes. Some branches have responsibility for similar functions, and it is not clear where overall executive-level accountability resides for system reform. For example, all three branches have a policy function, and there is no single line of organisational responsibility for this function, and no indication about which branch is responsible for driving system reform.

DCJ has over 30 governance committees and working groups with responsibilities for leadership and oversight of the statutory child protection and out of home care system. DCJ’s governance committees include forums to provide corporate and operational direction, to make financial and resourcing decisions, and to provide leadership and program oversight over the different functions of child protection and out of home care. Some committees and working groups oversee DCJ’s activity to meet government strategic priorities and respond to the findings and recommendations of child protection and out of home care reviews and commissions of inquiry.

Much of DCJ’s work in child protection and out of home care is interdependent, but its governance arrangements have not been structured in a way that show the lines of communication across the Department. There is no roadmap to show the ways in which decisions are communicated across the various operational and corporate segments of DCJ’s child protection and out of home care business operations.

In 2022, DCJ commenced activity to reorganise its operational committees into a four-tier structure, with each tier representing a level in the hierarchy of authority, decision-making and oversight. Draft documents indicate the ways in which the new organisational structure will facilitate communication through the different business areas of DCJ to the Operations Committee where most of the high-level decisions are made or authorised before being referred to the Executive Board for sign off. The new governance arrangements indicate a more transparent process for identifying Department and divisional priorities across policy and programs, though the process for reforming governance processes was not complete at the time of this audit.

DCJ’s strategic planning documents do not contain plans to address the pressure points in the child protection system or address the increasing costs of out of home care. After the merger of the Department of Family and Community Services (FACS) and the Department of Justice, DCJ’s Strategic Directions 2020–2024 document sets out the direction for the expanded Department in generalised terms. While it describes DCJ’s values, and describes an intention to improve outcomes for Aboriginal people and reduce domestic and family violence, it does not contain enough detail to describe a blueprint for Departmental action.

In April 2023, DCJ published a Child Safe Action Plan for 2023 to 2027. This plan includes a commitment to hear children’s voices and to ‘improve organisational cultures, operations and environment to prevent child abuse’. In September 2023, the NSW Government committed to develop ‘long-term plans to reform the child protection system and repair the budget, as part of its plan to rebuild essential services and take pressure off families and businesses'. Any activity to implement these commitments was not able to be audited, as it was too soon to assess progress at the time of this report publication.

DCJ’s expenditure priorities predominantly reinforce its longstanding operating model – to focus on risk assessments and out of home care services rather than early intervention

More than 60% of DCJ’s budget for child protection is spent on out of home care. In the five years from 2018–2019, DCJ’s expenditure on out of home care increased by 36% from $1.39 billion in 2018−19 to $1.9 billion in 2022–23.

During the same timeframe, DCJ’s expenditure on risk report assessments and interventions at the Helpline and Community Service Centres increased by 25%. It grew from $640 million in 2018–2019 to $800 million in 2022–2023. This not only reinforced the existing model of child protection, it expanded upon it, at the expense of other activity.

While DCJ’s expenditure on family support services increased by 31% from $309 million in 2018–2019 to $405 million in 2022–2023, it remains a small component of DCJ’s overall expenditure at 13% of the total budget spend in 2022−2023, as shown at Exhibit 6.

Note: Expenditure is actual spending in each year, not adjusted for inflation. Totals may be more than the sum of components due to rounding. percentages may not sum to 100 due to rounding.

Source: Audit Office analysis of Productivity Commission data published in Reports on Government Services 2024, Table 16A.8.

DCJ has not done enough to support the transition of Aboriginal children to the Aboriginal community controlled sector as planned

In 2012, the NSW Government made a policy commitment to ensure the transfer of all Aboriginal children in out of home care to Aboriginal Community Controlled Organisations. DCJ acknowledges that over the past 12 years, the NSW Government has made limited progress in facilitating this transition.

In June 2023, a total of 1,361 children were managed by Aboriginal Community Controlled Organisations across NSW. At the same time, 1,746 Aboriginal children were being case managed by non-Aboriginal NGO providers, and 3,456 Aboriginal children were case managed by DCJ. In total there were 5,202 Aboriginal children waiting to be transferred to Aboriginal Community Controlled Organisations in June 2023.

The transition process was planned and intended to occur over a ten year timeframe from 2012 to 2022. This has not been successful. DCJ has revised its timeframes for the transition process, and now aims to see the transfer of the ‘majority’ of Aboriginal children to Aboriginal Community Controlled Organisations by June 2026. At the current rate of transition, it would take over 50 years to transfer all 5,202 children to Aboriginal Community Controlled Organisations, so this timeframe is ambitious and will require close monitoring by DCJ.

The cost of transitioning all 5,202 Aboriginal children from DCJ and the non-Aboriginal NGOs to the Aboriginal Community Controlled sector will add close to $135 million to the NSW Government out of home care budget. The increased costs are due to the higher costs of administration, accreditation, and oversight of services provided by the Aboriginal Community Controlled sector.

DCJ has prioritised the transfer of Aboriginal children from non-Aboriginal NGOs to Aboriginal Community Controlled Organisations before the transfer of Aboriginal children from DCJ’s management. This prioritisation is due, in part, to the fact that most of the non-Aboriginal carers of Aboriginal children are with NGOs. NGO contract requirements should have been one of the drivers of the transition of Aboriginal children to Aboriginal Community Controlled Organisations.

The most recent NGO contracts, issued in October 2022, required that NGOs develop an Aboriginal Community Controlled transition plan by 31 December 2022. This timeframe was extended to 30 June 2023. All of the NGOs we audited have now prepared detailed transition plans for the transition of Aboriginal children, including service plans that identify risks and document collaborative efforts with Aboriginal Community Controlled Organisations.

One important requirement in the success of the transitions, is the willingness of carers to switch from their existing NGO provider to an Aboriginal Community Controlled Organisation. During the period of this audit DCJ failed to provide sufficient information to carers, to assure them of the NSW Government’s commitment to the transition process. Since July 2023 DCJ has written to carers of Aboriginal children case managed by non-Aboriginal Community Controlled Organisations and provided them with more information about the transition process.

NGOs have had limited success in transitioning Aboriginal children to Aboriginal services, and can do more to report on activity, so that system improvements can be made

Non-Aboriginal NGOs have had limited success in transferring Aboriginal children to the Aboriginal-controlled out of home care sector. For example, of the approximately 1,700 Aboriginal children that were managed by non-Aboriginal providers in 2022–2023, 25 Aboriginal children were transferred from non-Aboriginal NGOs to Aboriginal Community Controlled Organisations in that year. While DCJ controls the key drivers in this transition, there is limited evidence that NGOs have initiated consultations with Aboriginal Community Controlled Organisations during the audit period.

NGOs advised that some of their carers do not want to transition to Aboriginal Community Controlled Organisations, and this is slowing the transfer process. NGO contracts in force until September 2022 required that: ‘The express agreement of carers must be sought prior to the transfer of an Aboriginal Child to an Aboriginal Service Provider.’ This audit was not able to verify the extent to which carers have resisted the move to Aboriginal Community Controlled Organisations.

DCJ did not provide NGOs with sufficient direction, coordination, or governance through its contract arrangements to effect transitions from non-Aboriginal NGOs to Aboriginal NGOs. DCJ has established a project control group with representatives from NGO peak bodies and has set up an internal program management office to manage the transition.

There are limited drivers for the transition of Aboriginal children to Aboriginal-controlled services, and financial risks for both Aboriginal Community Controlled Organisations and non-Aboriginal NGOs in the process

Aboriginal Community Controlled Organisations and non-Aboriginal NGOs are carrying significant financial risk due to a lack of certainty in the transition process of Aboriginal children to the Aboriginal Community Controlled sector. These agencies are responsible for planning and making changes to their business models in order to facilitate the transition process. DCJ does not provide funds for this activity.

Some non-Aboriginal NGOs have high numbers of Aboriginal children in their care. These agencies risk financial viability if children and their carers are transitioned in a short space of time. There is a degree of uncertainty about the timelines for transitions to Aboriginal Community Controlled Organisations, and the numbers of children that will be transitioned at any given time.

Non-Aboriginal NGOs are not in a position to require Aboriginal Community Controlled Organisations to take Aboriginal children. Similarly, Aboriginal Community Controlled Organisations cannot compel the transition of children to their care. There are no real system drivers for this activity, and some financial disincentives for NGOs supporting large Aboriginal caseloads.

Throughout 2023, some Aboriginal Community Controlled Organisations have been upscaling their businesses to prepare for the transition of Aboriginal children to their care. They have employed additional caseworkers and enhanced administrative and infrastructure arrangements to take on new children, without receiving new intakes. They report that they have been financially disadvantaged by the failure of the transition process. Aboriginal Community Controlled Organisations advise that they don’t expect confirmation of the child transition process and timelines until 2024 and must carry the financial consequences of upscaling.

DCJ does not collect sufficient data to assess the effectiveness of its child protection service interventions and does not know whether they lead to improved outcomes

DCJ does not collect sufficient information to understand whether its child protection risk and safety interventions are effective in protecting children from abuse, neglect, exploitation, and violence.

DCJ is the sole entity with responsibility to make assessments of children after there has been a child protection report. After a child has been reported, DCJ caseworkers conduct a range of assessments of the child and family context, to determine whether the child is at risk of significant harm. If DCJ caseworkers determine that a child is ‘in need of care and protection,’ Section 34 of the Care Act requires DCJ to ‘take whatever action is necessary to safeguard and promote the safety, welfare and well-being of the child or young person’, including ‘providing, or arranging for the provision of, support services for the child or young person and his or her family’.

DCJ has limited measures to assess the effectiveness of its service interventions. DCJ monitors and reports on the number of children who are re-reported within 12 months after receiving a DCJ caseworker intervention. However, DCJ does not monitor or report any comparative data that would potentially demonstrate the effectiveness of its service interventions. For example, DCJ does not collate and publish data on re-report rates of children who do not receive a DCJ service intervention. This comparative data would give DCJ greater understanding about the effectiveness of its service interventions.

In addition, DCJ’s re-report data does not differentiate between re-reports of children that are substantiated, from those that are not. Children can be re-reported for a variety of reasons. Some re-reports are of children who are not at increased risk of significant harm. Therefore, the current re-report data is a limited measure of the effectiveness of DCJ’s service interventions.

DCJ does not collect data or compare outcomes based on the kinds of services that are accessed by children and families. For example, DCJ does not report on instances where families were denied service interventions because support services were full, or did not exist in their region. DCJ does not collect data or report on children who were taken into out of home care in areas where there were no available services to support the family.

DCJ caseworkers can support families by making referrals to drug and alcohol rehabilitation services, family violence services, parenting support courses, or mental health services. It is not known whether families receive services that are relevant to their needs. Some services are offered as additional DCJ caseworker support, some are NGO funded support packages, some offer therapeutic interventions, and some are provided via external government agency services, such as NSW Health. Support services are highly rationed in NSW, and many families engaged in the child protection system do not have access to them.

Limited outcomes data and reporting means that DCJ cannot demonstrate how its actions and service interventions are reducing risks and harms to children, and promoting their safety, welfare, and wellbeing in line with the Care Act.

While child protection reports have significantly increased over the past ten years, around 40% do not meet the threshold for suspected abuse and neglect to warrant a response

The overall number of child protection reports received by the Helpline has increased significantly over the past ten years. Reports to the Helpline ensure that children at risk of significant harm come to the attention of DCJ, but around 40% of reports do not meet the threshold of abuse and neglect to warrant a child protection report and response from child protection caseworkers. DCJ has finite resources, and responding to reports that do not require intervention reduces the capacity of DCJ to effectively respond to children who are at risk of significant harm.

In 2022–2023, the Helpline received 404,611 concern reports, an increase of over 60% since 2012–2013 when there were 246,173 reports. Between 2012–2013 and 2017–2018, reports grew slowly, then increased rapidly for three following years up until 2021. While the number of Helpline reports fell in 2021–2022, this reduction was partly due to a drop in reports by teachers during COVID school closures, and was not maintained in 2022–2023.

DCJ attributes the rapid growth in child protection reports to increasing awareness amongst mandatory reporters about their statutory responsibilities to report, along with the introduction of the online reporting option. Mandatory reporters include medical practitioners, psychologists, teachers, social workers, and police officers. These personnel are legally required to report children that they suspect are at risk of significant harm. In one 3-month period from April to June 2021 there were over 40,000 reports from mandatory reporters that did not meet the threshold that activates a statutory child protection response from DCJ caseworkers. The assessment of these reports consumes significant resources, costing over $4 million during the three month period in 2021, which equates to over $15 million per annum.

In 2010, Child Wellbeing Units were established so that mandatory reporters from Education, Police and Health could be assisted in child protection reporting. The units were established in response to recommendations made by the Wood Special Commission of Inquiry into Child Protection Services. They aimed to reduce the number of reports to the Helpline and to support mandatory reporters to assist children and families to receive an appropriate response. DCJ managers advise that the units are underutilised, and mandatory reporters continue to submit reports to the Helpline. The Child Wellbeing Units have not successfully reduced the overall number of reports to the Helpline.

DCJ advised that it is evaluating the Child Wellbeing Units and is developing new guidance for mandatory reporters that aims to address the culture of over-reporting.

Exhibit 7 shows the ten years of Helpline reports from 2012–2013 to 2022–2023.

DCJ does not collate or analyse its service referral data, and as a result, is unable to commission relevant services for families engaged in the child protection system

DCJ lacks data to understand the supply and demand requirements for therapeutic services across the child protection system. DCJ does not collect or report aggregate data about service referrals for children and families, nor does DCJ report data about service uptake across its Districts. DCJ does not collect the necessary information to plan for commissioned therapeutic services, or to fill its service gaps. DCJ does not know whether its funded services are competing with, or complimentary to, services funded by other agencies.

DCJ is required to monitor its therapeutic service interventions in order to comply with the objectives and principles of the Care Act. The Care Act requires that ‘appropriate assistance is rendered to parents and other persons … in the performance of their child-rearing responsibilities in order to promote a safe and nurturing environment’, and that any intervention ‘must … promote the child’s or young person’s development.

DCJ does not collect reliable data on the success of service referrals after a child has been identified as being at risk of significant harm. DCJ does not collect information or report on the uptake and outcomes of its referrals where there is a low to intermediate risk of significant harm to the child or young person. In most cases, DCJ does not know whether children or families received a therapeutic service after a referral. The uptake of referrals is voluntary, and families may decide that they do not want to access therapeutic services. DCJ does not routinely record data about the numbers of families that decline services.

DCJ does not collect data on instances where a referral was needed but not made because there was no available service in the District or there were no available places in the service. It is well known within DCJ that therapeutic services are lacking in regional and remote NSW. These include poor access to paediatricians and adolescent psychiatrists, disability assessors, mental health services, alcohol and other drug rehabilitation services, and domestic violence services.

Over the past five years, there is no evidence that DCJ has conducted an assessment of the statewide therapeutic service needs of children and families in NSW, or matched its statewide service profile to these needs through the targeted commissioning of therapeutic services. There has been a lack of system stewardship to ensure there is equity of service access for children and families in all Districts.

In each District, Commissioning and Planning units undertake market analyses at the point when programs are due for recommissioning, generally every three to five years. This market analysis includes an assessment of the availability of local services. There is no consistency in how this work is done across the Districts. While the purpose of District-level, market analysis is to identify gaps and opportunities for services, we did not find evidence of services being newly commissioned where gaps were identified.

District-level Commissioning and Planning units conduct some assessment of the demographics of the local area, as well as information about socio-economic characteristics, and expected population growth. For example, one DCJ District identified that their population is expected to grow by 33% by 2031. This means that more contracts for family preservation places will be needed. Another District identified that they do not have culturally appropriate services. However, the contracts for this District are in place for at least three years, so the District cannot provide the required service profile for local families.

While DCJ is taking some steps to arrange an expanded service profile, the efforts are piecemeal. Different programs are managed and commissioned across different parts of DCJ. For example, one District has developed a localised partnership with the Ministry of Health, but DCJ has not developed a state-wide Memorandum of Understanding with NSW Health to give priority access to all children engaged in the statutory child protection system.

In 2015, the Independent Review of Out of Home Care in New South Wales recommended that DCJ ‘establish local cross-agency boards in each … district to provide local advice, and commission services in line with its priorities and defined outcomes.’ In response, DCJ developed a program known as Their Futures Matter. In 2020, the NSW Audit Office’s assessed this program and found that DCJ had not established any cross-agency boards with the power to commission services. At the time of this audit, in 2024, there is no evidence that DCJ has created cross-agency boards.

DCJ advises that, in future, it plans to issue extra contracts to increase the number of intensive therapeutic care services. DCJ is using data on the locations of children in emergency out of home care placements as part of its needs analysis. The process includes mapping the service system across the State. DCJ’s work to date, has identified a lack of intensive therapeutic care places in Western NSW. The lack of services in Western NSW impacts on the ability of DCJ to keep Aboriginal children on their traditional country, and connected to family and kin.

DCJ is using District-level data in its future-focused recommissioning for family preservation services. DCJ advises that, commencing in 2024, the agency will identify family support service requirements by matching data on instances of risk of significant harm to children by category of harm, and assess service availability at the District level. This audit has not received evidence that the work has begun.

DCJ lacks an integrated performance management system to collect, collate, and compare data about the effectiveness of NGO providers or the outcomes of child support programs

DCJ does not have an integrated performance management system to manage its many programs and contracts with NGO service providers. DCJ advises that at March 2024, it had 1,816 active contracts in its contract management system. DCJ has multiple reporting systems for its different program streams, with information on early intervention programs provided through a different information technology system than the system that is used for out of home care placements. Central program teams do not have good oversight of historical data or trends.

Until 2022, data related to DCJ’s Family Preservation Program was collected separately from each NGO provider, via quarterly spreadsheets. There was no consistency in the ways in which the data was collated or analysed. This means that DCJ does not know how many families entered the Brighter Futures program in each District, even though contracts were issued at a District level and over 7,000 families entered Brighter Futures program in 2018–2019, 2019–2020 and 2020–2021. DCJ does not have a statewide view of the location or effectiveness of this, or any of its other family preservation services.

Contracts with NGOs for out of home care contain service volume requirements, for example a minimum number of children in out of home care each year. Contracts also include performance measures and financial penalties for underperformance. Underperformance includes failure to notify DCJ about out of home care placement changes within contracted time periods. Due to problems with NGOs accessing the ChildStory system, DCJ does not collect reliable data on out of home care placements provided by NGOs and therefore DCJ is not able to issue financial penalties.

DCJ has also failed to deliver expected outcomes from the Human Services Dataset. The dataset was recommended by the 2015 Independent Review of Out of Home Care, and approved by the NSW Government in August 2016. The aim of the dataset was to bring together a range of service demand data in order to prioritise support for the most vulnerable children and families. It was intended to deliver whole-of-system reform that would lead to improved outcomes for children and families with the highest needs.

The dataset brings together 27 years of data, and over seven million records about children, young people, and families. The records contain de-identified information about all NSW residents born on or after 1 January 1990 (the Primary Cohort) and their relatives such as family members, guardians, and carers (the Secondary Cohort). The Independent Review of Out of Home Care recommended that the dataset include information about the service requirements of the most vulnerable families. This recommendation has not been implemented to date. The Human Services Dataset does not contain records about the service interventions made by NGOs, and has minimal child protection and out of home care placement data.

DCJ’s package-based funding system has not been successful in tailoring services to children in out of home care

When a child is transferred to an NGO for out of home care services, DCJ provides the NGO with relevant funding packages to support the child. NGOs receive different funding packages according to the care needs of the child. Some packages relate to the placement of the child, whether it be a foster care placement, or an intensive therapeutic care placement for children with complex needs. Other packages relate to the permanency goals for each child. These goals can include restoring the child to their parents, establishing the child in long-term foster care, or supporting the child through an adoption process. Each funding package is based on an average cost for the different service type.

While the funding packages are attached to individual children, in practice, NGOs can allocate this funding flexibly. NGOs can integrate the funds from the packages into their global budgets and use the funds for a range of activities. The package-based system that was intended to deliver tailored services to individual children in out of home care, is not being implemented in the ways it was intended.

NGOs do not receive funding for administrative or management costs. They are not funded for supporting Children’s Court work, or the recruitment of new foster carers. NGOs calculate how much they need for these different activities, and use the required funds from funding packages and other sources of income.

DCJ does not collect data from NGOs to determine the nature of the services that were delivered to the child against the funding for each package. In fact, NGOs are not required to report on the expenditure of package funds in relation to any outcomes that relate to the child’s health, wellbeing, cultural, or educational needs.

An external evaluation of the permanency support package system was completed in 2023. It found that children receiving permanency support packages did not achieve better outcomes than children in a control group who did not receive them. This indicates that the package-based system has not achieved its objective to shift the out of home care system from a bed per night payment model, to a child-centred funding model, aimed at supporting safety, wellbeing, and permanency in out of home care.

DCJ’s contract arrangements for NGO funding are overly complex and administratively burdensome

NGO recipients of package-based funding must liaise with separate DCJ contract managers for the different types of funding packages they receive. Within each DCJ District, a range of contract managers have oversight of the different package types – including the packages for out of home care placements, and for the family preservation program. In addition, many NGOs have contracts in more than one DCJ District. This means that NGOs must liaise with a number of different contract managers and operational teams across different units in multiple DCJ Districts. NGOs advise that the time spent navigating the DCJ system reduces the time they can spend actively supporting children and families.

NGOs report that DCJ District personnel can vary in their preferred communication styles and channels. Some District staff prefer email contact, others prefer phone calls, and some prefer service requests that are entered into ChildStory. NGOs must adapt to these different styles depending on the District.

DCJ Districts also vary in the processes that NGOs must follow to have a child’s needs reassessed. This is a routine process, but some Districts take three months to consider and approve a reassessment, while others complete the process more rapidly. If a child is reassessed as requiring a higher category of support, DCJ does not back-pay any increased allowances. This is regardless of the time during which the NGO has provided the child with increased services. In these Districts, NGOs must carry the financial burden for the time it takes for re-assessment approval processes.

The NSW Procurement Policy Framework includes an objective of ‘easy to do business’. This includes a requirement to pay suppliers within specific timeframes, and recommends that government agencies should limit contract length and complexity.

An external evaluation of the package-based system found that that the funding packages are complex and administratively burdensome, and that DCJ Districts have different models and approaches to implementing them. As a result, a child and family living in one District could receive very different care from a child in another District. In 2023, DCJ advised that it is considering the recommendations of the evaluation with the aim of operationalising relevant system reforms, while not increasing the administrative burden on NGOs.

Exhibit 16 shows the multiple stages that NGOs must navigate in DCJ’s complex, contract environment.

DCJ’s case management system lacks an effective business to business interface with NGO partners, and has not produced data on key deliverables

DCJ’s case management system promised a single entry point for NGOs to interact with DCJ. In 2017, DCJ commenced the rollout of ChildStory, its new case management system, at a cost of more than $130 million. While the ChildStory system has become an important repository for information about children in the child protection system, it has failed to deliver on some of its key intended functionalities. ChildStory does not provide an integrated business to business system interface with commissioned NGOs where they can record information about children and families in their care.

Most of the ChildStory system is locked off to NGOs, meaning that NGOs cannot use it as a case management system. NGO personnel must enter data into their own client information systems before manually replicating any required data into the ChildStory system. Until June 2022, NGO staff lost access to ChildStory if they did not log onto the system for a three month period, and staff had to reapply for access, increasing the administrative burden on some NGO personnel.

The lack of an integrated business to business interface between DCJ’s ChildStory and the NGO case management systems, has vastly increased levels of administrative handling for all parties, and frequently results in mismatched data between DCJ and NGOs. The process for NGOs to correct data errors in ChildStory requires contact with DCJ, and the process can be protracted. NGOs advise that they spend significant time on complex data reconciliation processes and that these processes have financial implications. In some instances, NGOs are asked to repay contract ‘underspends’ as a result of DCJ data errors.

The lack of system interface between DCJ and NGOs has been a lost opportunity to produce and report NGO trend data on a wide range of metrics. While some data is manually entered by NGOs into ChildStory Partner, and some systemwide data produced, it is only available for a limited number of key performance indicators. For example, it was intended that ChildStory would be used to collect and collate information about the status and wellbeing of children. According to DCJ, this has not been possible, as the system does not have the functionality to collate data from questionnaires or instruments that assess child wellbeing.

Given that many of the smaller NGO data systems have limited sophistication and functionality, the failure of ChildStory to become a case management system for all NGOs, means they are not able to produce trend data on a wider range of metrics. The inability to collate key data from all NGO service providers limits the statewide data that is available for service planning.

Until 2022−2023, DCJ did not contribute all required data to a national, publicly-reported dataset on child protection. The Australian Institute for Health and Wellbeing (AIHW) collates data from Australian states and territories every year. Child protection information is published on the AIHW website and provided to the Productivity Commission for the annual Report on Government Services. Since 2014−2015, AIHW requested that all states and territories provide anonymised child-level data for reporting and research purposes. DCJ did not provide this requested child-level data until 2022−2023. In previous years, DCJ provided the AIHW with aggregated data tables that lacked some of the required information.

ChildStory has not been effective for the contract management of NGOs and commissioned services. The system cannot be used to report and generate information about NGO contract activity, nor can it be used to make payments to NGOs.

Caseworkers advise that they spend significant time updating the case management system, limiting the time they have for child and family visits

DCJ has not quantified the amount of time that staff spend entering information and updating records. While DCJ completed a time and motion study on caseworker activity in 2021, the study did not include information on the time it takes for caseworkers to enter data for individual tasks. The DCJ caseworkers who were interviewed for this audit, advised that they spend a large proportion of their total working week entering data into the case management system, rather than visiting families or providing phone support to families.

DCJ’s ChildStory system does not display all of the summary information that caseworkers need in order to be efficient and effective in their role. For example, triage caseworkers need to know when a report was made to the Helpline, in order to meet the statutory period for response of 28 days after the report was received. This information is not shown in the triage transfer list and is only visible by clicking into case notes for each child, one at a time.

ChildStory does not contain accurate information about decisions made by frontline staff. Caseworkers are required to choose a reason when they close a child protection case. Reasons can include that the family was referred to an external service. There is no field for a caseworker to indicate that a case was closed because the child protection report related to a person who was external to the family. ChildStory does not have a case closure field to record that the parents were protective in instances when a child was at risk from someone outside the home. These cases are closed with the reason ‘No capacity to allocate’, resulting in inaccurate management reporting. This incorrect record keeping can be problematic for the family. It can mean that if the child is re-reported, there may be unnecessary interventions by DCJ in future.

DCJ advises that ChildStory is not being used to its full functionality and that District DCJ Offices have created arrangements that increase the administrative burden on staff. For example, in some Districts before a caseworker can submit an approval request in ChildStory to the relevant Director, the caseworker must attach an email with the same Director’s written approval. DCJ managers advise that ChildStory is not being used in ways that would allow for efficient approvals of ‘out of guidelines’ expenses. It is not known whether this is a training deficit, or related to another matter.

Up until recently, DCJ’s information management system did not have functionality to record and collate information about the service needs of children and families. DCJ advises that in 2022, a referral function was added to ChildStory. While DCJ advise that this functionality is being used for referrals to family preservation services, there is no evidence that caseworkers are using the function, or that referral data is collated and reported. Prior to July 2022, decisions to refer a child or family to therapeutic services were recorded in individual ChildStory case notes, and could not be extracted and reported as trend data.

Some Districts have developed local monitoring systems to track vacancies in local family preservation and targeted early intervention services. These local initiatives go some way to improving the planning for child protection services responses at the local level, but they are yet to be systematised.

DCJ advises that it is developing a service vacancy dashboard and it is due to be rolled out to all Districts in late 2023. In order for service information to be visible to DCJ staff, NGO partner agencies will need to regularly update their service vacancy information in the dashboard. Initially DCJ will collect data on which families were referred to services, and NGOs will be expected to enter information on attendance at program sessions at a later date.

DCJ has management reporting systems to track activity and outputs for child protection work, however some key metrics are missing

DCJ’s interactive internal dashboards effectively report against an agreed performance framework that measures caseworker activity. This provides DCJ managers with caseworker progress against targets such as seeing new children and families within specified timeframes. Managers can drill into the dashboard data to see individual cases and the caseworkers behind the numbers. This assists managers in allocating new cases to their frontline staff. While DCJ managers advise that they use the dashboards on a daily or weekly basis, they raised concerns that dashboards did not account for staff vacancies or new recruits who cannot carry a full caseload.

DCJ dashboards do not allow managers to focus on groups of children who are at greater risk of harm, or on children who require a tailored service. This limits the effectiveness of DCJ’s response. While Aboriginal children are identified on most internal dashboards, there are gaps in the identification of Aboriginal children, especially at the early Helpline assessments of child protection reports and at the initial caseworker assessment of child safety and risk. There is no indication in DCJ’s system to show whether a family has experienced intergenerational removal, despite these families needing a specific trauma-informed response. Children from Culturally and Linguistically Diverse (CALD) backgrounds are not reported clearly on dashboards and refugee children are not flagged.

Children and parents with disability are not identified accurately in ChildStory and are not reported on dashboards. The Disability Royal Commission found that parents with disability are over-represented in all stages of the child protection system, and that they are more likely to have their children removed from their care. The Commission found that child protection agencies are less likely to try to place children back in the care of parents with disability.

DCJ data is stored in a Corporate Information Warehouse, which combines child protection data and data about children in out of home care. This information is sourced from ChildStory. The Corporate Information Warehouse also includes staffing data, and contract management data from the Contracting Online Management System. The Warehouse is updated every night to ensure that management reports and dashboards are current. However, some key datasets are not included in the Warehouse, such as the Helpline report backlog, which means that the DCJ Executive does not have easy visibility of Helpline workload or delays in responding to electronic reports.

DCJ’s external dashboards provide limited public transparency about child protection and out of home care activity. Until early 2024 the dashboards did not show the numbers of children in emergency out of home care. In addition, the main quarterly and annual dashboards do not show the average time that children have been in out of home care. 

External reporting is managed by DCJ’s Insights Analysis and Research directorate, known as FACSIAR. In addition to quarterly and annual dashboards reporting key statistics, FACSIAR hosts monthly seminars presenting research findings aimed at improving caseworker practice. The seminars are well attended by DCJ and NGO caseworkers. FACSIAR also maintains a public evidence hub summarising research papers and evaluations.

While regular quantitative data is necessary for day-to-day management purposes, it is not sufficient to understand the experience and outcomes of children in out of home care. In order to deliver additional insights, DCJ has invested in a long-term study of children in out of home care through the Pathways of Care Longitudinal Study. This study follows children who entered care in NSW for the first time between May 2010 and October 2011 and includes data from external sources such as Medicare data, health and education records, and youth offending data. DCJ has used this data for research studies on topics such as outcomes for children with disability in out of home care, and to assist caseworkers in working with children and families through Evidence to Action notes.

DCJ’s system for requesting out of home care placements is ineffective, resulting in multiple unsuccessful requests to NGOs to place children

DCJ does not have a centralised system where its NGO service providers can indicate that they are able to take on new children requiring out of home care. There are almost 50 providers of out of home care services across the State, but no consolidated database showing that there are foster carers who are able to take on new children by location.

DCJ uses a system (known as the broadcast system) to notify NGOs that it needs a foster care placement or another placement type for a child. The number of placement broadcasts has increased from around 450 per month in 2018–2019, to over 1200 per month in 2022–2023, even though the number of children in out of home care has not risen during this timeframe.

Exhibit 17 shows the monthly numbers of children that were ‘broadcast’ to NGOs as requiring out of home care placements from July 2018 to June 2023.

Appendix one – Response from entities

Appendix two – DCJ Organisational Structure for Child Protection

Appendix three – Child protection flowchart from Family is culture review report 2019

Appendix four – About the audit

Appendix five – Performance auditing

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Parliamentary reference - Report number #394 - released 6 June 2024

About this report

The Department of Communities and Justice (DCJ) is responsible for safeguarding the rights of Aboriginal children, families, and communities when they encounter the child protection system. These rights are known as the Aboriginal and Torres Strait Islander Principles (the Principles), which are set out in legislation.

DCJ provides early intervention, prevention and out of home care services and also subcontracts non-government organisations to provide these services.

This audit assessed whether DCJ, and five funded non-government organisations that provide out of home care services, are effectively safeguarding the rights of Aboriginal children in the child protection system.

Findings

DCJ cannot demonstrate its compliance with the Principles. DCJ has not embedded the Principles in its governance, accountability arrangements, policy and day-to-day casework practice.

Insufficient governance and accountability arrangements have contributed to DCJ's failure to deliver on Aboriginal strategies and reforms in the last five years.

DCJ has not developed holistic family preservation models based on Aboriginal ways of healing.

DCJ is aware that its structured decision-making tools, used to make significant casework decisions, adversely affect Aboriginal children and their families. However, DCJ continues to use the tools.

DCJ has no quality assurance mechanisms over its child protection system and casework practice.

As system steward, DCJ has not provided non-government organisations with means to satisfy the Principles.

Recommendations

The audit recommends that DCJ:

• establish governance and accountability arrangements that provide oversight of the safeguards and outcomes for Aboriginal children and families
• develop and implement a quality assurance framework to ensure compliance with safeguards for Aboriginal children at all points in the child protection system
• fulfil its commitment to develop and implement a healing framework for child protection services
• commission family preservation services consistent with the principles of self-determination and participation set out in the Principles.

In this report, the term Aboriginal people is used to describe Aboriginal and Torres Strait Islander peoples. The Audit Office of NSW acknowledges the diversity of traditional Nations and Aboriginal language groups across the state of New South Wales.

The Department of Communities and Justice (DCJ) is responsible for the administration of the child protection system in NSW.

Aboriginal children and their families' rights in the child protection system are contained in the Children and Young Persons (Care and Protection) Act 1998 and the United Nations Conventions on the Rights of the Child and the Declaration on the Rights of Indigenous Peoples. These rights are also binding on DCJ funded non-government organisations (NGOs) through the administration of service contracts.

In 2022–23, DCJ spent $3.1 billion on child protection and out of home care services. This includes $1.9 billion on out of home care services, $800 million on child protection services and $405 million on early and intensive family preservation services.

DCJ subcontracts various early intervention, prevention programs and out of home care services to NGOs. However, DCJ is responsible, as system steward, for the effectiveness of the entire child protection system.

This audit assessed whether DCJ and five of its funded NGOs are effectively safeguarding the rights of Aboriginal children in the child protection system. The audit period was June 2018 to June 2023 (five years). In this report, children and young people under 18 are described together as children.

We addressed the audit objective by answering three questions:

1. Does DCJ and its funded non-government organisations have established governance and accountability arrangements to understand and track performance in safeguarding the rights of Aboriginal children in the child protection system?
2. Does DCJ and its funded non-government organisations have effective policies, practices, systems, and resources to support and enable staff to safeguard the rights of Aboriginal children in the child protection system?
3. Does DCJ and its funded non-government organisations have effective monitoring and quality assurance systems to ensure that the outcomes for Aboriginal children in the child protection system are consistent with their legislative rights and their human rights?

This audit was conducted concurrently with the Oversight of the child protection system performance audit.

The child protection system aims to protect children and young people from the risks of abuse, neglect and harm. This report refers to several parts of the child protection system including:

• Helpline: DCJ receives and triages reports about children suspected to be at risk of significant harm
• Investigation of reports (mostly performed at community service centres): DCJ determines if reports meet the suspected risk of significant harm threshold and the subsequent assessment and investigation of suspected risk of significant harm reports
• Case work: where risk of significant harm has been substantiated, DCJ provides and procures services to prevent a child’s entry into the child protection system
• Entry into care decisions: DCJ determines when a child enters out of home care
• Out of home care services: where a child cannot safely remain at home, DCJ or a contract service provider, place the child in foster care, kinship care, temporary care arrangements or residential care.

DCJ is not monitoring or reporting on safeguards for the rights of Aboriginal children 

Decisions and actions that affect families and children in contact with the child protection system are often made within the context of complex circumstances. They are also deeply impactful on children and their families and can have lifelong implications in areas such as mental health and wellbeing, social inclusion and the likelihood for descendants to also be in contact with the child protection system. Legislative safeguards exist to ensure that the rights of children are paramount.

DCJ governance arrangements are not informed by, and do not reflect, legislative safeguards for the rights of Aboriginal children. Such safeguards include the Convention on the Rights of the Child or the Declaration on the Rights of Indigenous Peoples and the Aboriginal and Torres Strait Islander Principles (the Principles) contained in sections 11 to 13 of the Children and Young Persons (Care and Protection) Act 1998.

DCJ has not established mechanisms to:

• address the reasons, including those arising from its own process deficiencies, that Aboriginal children are disproportionately reported at suspected Risk of Significant Harm, seen by caseworkers and enter statutory out of home care
• assess and hold its funded non-government organisations (NGO) accountable for the quality and outcomes of family preservation services that aim to prevent Aboriginal children entering out of home care
• hold departmental districts and NGOs accountable for outcomes for Aboriginal children in out of home care.

Department districts are instead held accountable against nine key performance indicators at Quarterly Business Review Meetings. The performance indicators reflect activity in the child protection and out of home care system. None are disaggregated by Aboriginality, and no indicators require districts to demonstrate casework outcomes for Aboriginal children and families.

DCJ has not developed effective accountability mechanisms for its staff to safeguard the rights of Aboriginal children in the child protection system

DCJ does not have formal accountability mechanisms for any of its staff to safeguard the rights of Aboriginal children. Because of this, DCJ does not have a framework to address staff non-compliance with safeguards for Aboriginal children and their families.

DCJ does not collect data to demonstrate adherence to the Principles or consistently collect feedback from the Aboriginal community to understand its performance. Without Aboriginal outcomes focused data and feedback from Aboriginal stakeholders, DCJ cannot understand its performance or hold its staff accountable for complying with the Principles.

DCJ advises that it plans to introduce a new performance framework that will require senior executives to demonstrate their performance with respect to Aboriginal children in the child protection system. DCJ has not nominated when the framework will come into effect.

DCJ has made negligible progress in implementing key recommendations, strategies and reforms designed to improve outcomes for Aboriginal children and their families

DCJ has not delivered on any Aboriginal specific child protection reform strategy and made negligible progress in implementing key recommendations from the Family is Culture report.

Exhibit 5 identifies major Aboriginal specific reforms to address longstanding issues that impact Aboriginal children and their families. These reviews attempted to reorient the system toward preventing children from entering care and focused on improving outcomes for Aboriginal children in contact with the child protection and out of home care system.

DCJ’s organisational structure and governance arrangements are not enabling the system reform needed to meet the NSW Government’s commitment to Closing the Gap Target 12

The NSW Government is a signatory to the National Agreement on Closing the Gap 2021-2031. The objective of the Agreement ‘is to overcome the entrenched inequality faced by Aboriginal and Torres Strait Islander people so that their life outcomes are equal to all Australians’. The agreement commits the NSW Government to ‘mobilise all avenues and opportunities available, to meet the objectives’.

DCJ established a temporary Deputy Secretary Transforming Aboriginal Outcomes (TAO) role and associated unit in November 2021 to lead its Closing the Gap targets, which includes Target 12 (to reduce the proportion of Aboriginal children in out of home care by 45% by 2031). The TAO unit does not have decision-making powers over policy, commissioning of DCJ funded services or operational decisions. Instead DCJ has nominated a series of 18 disparate projects to achieve Target 12, which are monitored by TAO.

DCJ districts make significant child protection decisions that would likely contribute to achieving Target 12, including whether Aboriginal children enter out of home care and whether Aboriginal children currently in out of home care are restored to their families. However, there are no targets, measures or data to hold districts accountable to demonstrate progress in these key areas which would likely contribute to achieving Target 12.

Although senior executives meet regularly, the meetings are not used to drive the structural reform needed to achieve Target 12. DCJ is not on track to achieve Target 12.

Aboriginal children are over-represented in the child protection system. Approximately 6,500 Aboriginal children were in out of home care as at 30 June 2023, making up 45% of the out of home care population. By comparison, around seven per cent of children in NSW are Aboriginal. Aboriginal children are three times more likely than non-Aboriginal children to be reported at risk of significant harm and four times more likely to be allocated to a community service centre for a caseworker to undertake a face-to-face safety assessment. One in eight Aboriginal children seen by caseworkers enters out of home care.

DCJ does not have a quality assurance framework in child protection to safeguard the rights of Aboriginal children

DCJ has no quality assurance framework over systems and processes prior to the removal of a child into out of home care. Without such a framework, DCJ cannot be assured of its compliance with legislative safeguards afforded to Aboriginal children.

In late 2022, DCJ engaged a consultant to examine Aboriginal quality assurance for the child protection system. In July 2023, the consultant report highlighted deficient quality assurance systems and concerns with cultural capacity of staff to support Aboriginal families and children. DCJ has not indicated how or when it plans to address this deficiency.

DCJ does not have assurance that out of home care services are safeguarding the rights of every Aboriginal child in out of home care

The Office of the Children’s Guardian accredits out of home care providers, including DCJ and its funded NGOs, to a minimum standard set out in the Child Safe Standards for Permanent Care. As a result, DCJ and NGOs can demonstrate a range of internal quality controls and processes for children in out of home care to support the Office of the Children’s Guardian accreditation process.

However, the Office of the Children’s Guardian cannot provide qualitative assurance that DCJ and the NGOs have adhered to safeguards for each of the approximately 6,500 Aboriginal children in statutory out of home care at any given time. For example, the Office of the Children’s Guardian looks at whether a cultural plan exists for an Aboriginal child, but generally does not provide feedback for agencies to improve cultural plans.

DCJ, as the system steward, has a duty of care to ensure that it, and all NGOs it contracts with, have quality assurance processes to demonstrate compliance with safeguards for every Aboriginal child that is placed in out of home care. DCJ needs to do more than the minimum requirements of Office of the Children’s Guardian accreditation to gain assurance, commensurate with the risk of poor compliance and practice set out in this report, that it is adequately safeguarding the rights of every Aboriginal child in out of home care.

DCJ contracts NGOs to provide out of home care services through Service Level Agreements, aligned with the Principles in the Children and Young Persons (Care and Protection) Act 1998. This audit assessed whether NGOs are effectively safeguarding the rights of Aboriginal children in out of home care.

Five NGOs were selected as auditees for this performance audit. Selection of the providers was based on criteria which included:

• a mix of faith- and non-faith-based entities
• Aboriginal and non-Aboriginal entities
• number of children in care
• funding
• location
• service model.

Collectively, the NGOs selected for this audit were contracted to provide 2,600 foster care places in the 2021–22 financial year. This equated to one third of the total number of contracted foster care places in NSW in 2021–22. The two Aboriginal Community Controlled NGOs selected case managed about 20% of Aboriginal children in out of home care who were contracted out to NGOs.

Appendix one – Response from entities

Appendix two – The Aboriginal and Torres Strait Islander Principles (extract from the Children and Young Persons (Care and Protection) Act 1998

Appendix three – Data tables

Appendix four – About the audit

Appendix five – Performance auditing

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Parliamentary reference - Report number #395 - released 6 June 2024.

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