What the report is about

The Auditor-General's review analyses claims made by members of the NSW Parliament during the 2020–21 financial year by testing a sample of transactions. Our sample consisted of 67 claims submitted by 52 of the 137 members.

What we found

While we did not identify any instances of material non-compliance with the Parliamentary Remuneration Tribunal's Determination, we did identify 31 departures from the Determination, which were of an administrative nature.

What we recommended

The Department of Parliamentary Services (the department) should continue to work with the Presiding Officers, members, the Clerk of the Parliaments and the Clerk of the Legislative Assembly to enhance reporting of members' expenditure.

In 2020, we recommended the department work with the Tribunal to provide additional guidance to members to clarify:

• the definition of 'parliamentary duties'
• the activities that meet the definition
• requirements for retaining documents.

The department will work with the Tribunal to clarify these items as part of its submission to the 2022 annual Determination.

The Auditor-General has reviewed the compliance of the members of the NSW Parliament (members) with certain requirements outlined in the Parliamentary Remuneration Tribunal's Determination (the Determination) for the year ended 30 June 2021.

The Auditor-General's review analyses claims made by members during the 2020–21 financial year by testing a sample of transactions. Our sample consisted of 67 claims submitted by 52 of the 137 members.

Results

Although our review did not identify any instances of material non-compliance with the Determination for the year ended 30 June 2021, we did identify 31 departures from the Determination, which were of an administrative nature. Such departures may help identify areas in the current processes where greater clarity is needed or where training or education for members is needed. These departures were as follows:

• 12 claims were not submitted for payment within 60 days of receipt or occurrence of the expense
• 10 annual loyalty scheme declarations were submitted by members after the due date specified in the guideline
• 7 reconciliations for the Sydney Allowance were submitted after the due date
• 2 publications claimed under the Communications Allowance had not made the required authorisations and attributions on the publication.

Background

The Parliamentary Remuneration Tribunal (the Tribunal) determines the salary and additional entitlements of members of the NSW Parliament (members), details of which are set out in the Tribunal's annual Determination. The NSW Parliament, through the Department of Parliamentary Services (the department), administers payments of additional entitlements to members in accordance with the Tribunal's annual Determination. An overview is presented below:

Twelve claims were not submitted for payment within 60 days of receipt or occurrence of the expense

The Determination requires members' expense claims to be submitted to the department within 60 days of when the expense is incurred or receipted. Our audit procedures identified 12 instances where members submitted their claims between six and 248 days late.

Ten annual loyalty/incentive scheme declarations were submitted by members after the due date specified in the guidelines

At the end of each financial year, members must declare they have not used loyalty/incentive scheme benefits accrued from their parliamentary duties for private purposes. The Determination requires current members to complete the declarations at the end of each year (by 27 August 2021 per the department's administrative process). Former members must complete the declarations within 30 days of leaving Parliament. We found ten current members submitted their declarations between three and 18 days late. The declaration is important as it affirms that loyalty benefits accrued using the members' parliamentary allowances and entitlements were not used for private purposes.

Seven reconciliations for the Sydney Allowance reconciliations were submitted after the due date

Open prior period recommendations

Enhanced public reporting

In 2016, the Auditor-General's Report to Parliament recommended the Tribunal consider requiring the department to regularly publish full details of members' expenditure claims on its website in an accessible and searchable format. The Tribunal had developed a plan requiring greater public reporting of members' additional expenditure from 1 July 2019 but does not have the power to require the department to facilitate this.

The Annual Reports of the Legislative Assembly and the Legislative Council, published on the Parliament's website, currently list the total amount claimed during the year by each member for each allowance. However, transparency around members’ claims would be enhanced if information was more extensively and regularly published on the Parliament’s website. The department should continue to work with the Presiding Officers, members, the Clerk of the Parliaments and the Clerk of the Legislative Assembly to enhance reporting of members' expenditure.

Clarifying key parameters of the annual Determination

In 2020, the Auditor-General's Reports to Parliament recommended the department work with the Tribunal to provide additional guidance to members to clarify:

• the definition of 'parliamentary duties'
• the activities that meet the definition
• requirements for retaining documents.

To address this recommendation, the department has performed a review of the definitions and activities used by other jurisdictions, in their administration of members' entitlements. The department is also continuing to monitor for changes in the administration of members' entitlements occurring at the Federal level. The department will work with the Tribunal to clarify these items as part of its submission to the 2022 annual Determination.

Resolved prior period recommendations

Recommendations resolved since the 2020 Auditor-General's report

The 2019 Auditor-General's Report recommended the department work with the Tribunal to clarify whether members can claim the cost of travel from their General Travel Allowance when the travel was used to produce communications during the blackout period. Members are not permitted to use their Communications Allowance for the production and distribution of publications that they intended to distribute in a State Election year in the period from 26 January to the election date (the ‘blackout period’).

The 2021 Determination has clarified this matter by stating that during the 'blackout period' travel necessary for parliamentary duties rather than electioneering is acceptable. The 2021 Determination has also included the condition that a member may not use their General Travel Allowance to fund communications that would normally be funded from the Communications Allowance during a 'blackout period'.

Appendix one - Response from Department of Parliamentary Services

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Three key agencies are not fully complying with the NSW Procurement Board’s Direction for engaging probity practitioners, according to a report released today by the Acting Auditor-General for New South Wales, Ian Goodwin. They also do not have effective processes to achieve compliance or assure that probity engagements achieved value for money.

Probity is defined as the quality of having strong moral principles, honesty and decency. Probity is important for NSW Government agencies as it helps ensure decisions are made with integrity, fairness and accountability, while attaining value for money.

Probity advisers provide guidance on issues concerning integrity, fairness and accountability that may arise throughout asset procurement and disposal processes. Probity auditors verify that agencies' processes are consistent with government laws and legislation, guidelines and best practice principles. 

According to the NSW State Infrastructure Strategy 2018-2038, New South Wales has more infrastructure projects underway than any state or territory in Australia. The scale of the spend on procuring and constructing new public transport networks, roads, schools and hospitals, the complexity of these projects and public scrutiny of aspects of their delivery has increased the focus on probity in the public sector. 

A Procurement Board Direction, 'PBD-2013-05 Engagement of probity advisers and probity auditors' (the Direction), sets out the requirements for NSW Government agencies' use and engagement of probity practitioners. It confirms agencies should routinely take into account probity considerations in their procurement. The Direction also specifies that NSW Government agencies can use probity advisers and probity auditors (probity practitioners) when making decisions on procuring and disposing of assets, but that agencies:

• should use external probity practitioners as the exception rather than the rule
• should not use external probity practitioners as an 'insurance policy'
• must be accountable for decisions made
• cannot substitute the use of probity practitioners for good management practices
• not engage the same probity practitioner on an ongoing basis, and ensure the relationship remains robustly independent. 

The scale of probity spend may be small in the context of the NSW Government's spend on projects. However, government agencies remain responsible for probity considerations whether they engage external probity practitioners or not.

The audit assessed whether Transport for NSW, the Department of Education and the Ministry of Health:

• complied with the requirements of ‘PBD-2013-05 Engagement of Probity Advisers and Probity Auditors’
• effectively ensured they achieved value for money when they used probity practitioners.

These entities are referred to as 'participating agencies' in this report.

We also surveyed 40 NSW Government agencies with the largest total expenditures (top 40 agencies) to get a cross sector view of their use of probity practitioners. These agencies are listed in Appendix two.

There are no professional standards and capability requirements for probity practitioners

NSW Government agencies use probity practitioners to independently verify that their procurement and asset disposal processes are transparent, fair and accountable in the pursuit of value for money. 

Probity practitioners are not subject to regulations that require them to have professional qualifications, experience and capability. Government agencies in New South Wales have difficulty finding probity standards, regulations or best practice guides to reference, which may diminish the degree of reliance stakeholders can place on practitioners’ work.

The NSW Procurement Board provides direction for the use of probity practitioners

The NSW Procurement Board Direction 'PBD-2013-15 for engagement of probity advisers and probity auditors' outlines the requirements for agencies' use of probity practitioners in the New South Wales public sector. All NSW Government agencies, except local government, state owned corporations and universities, must comply with the Direction when engaging probity practitioners. This is illustrated in Exhibit 1 below.

Appendix one – Response from agencies

Appendix two – List of selected agencies

Appendix three – About the audit

NSW Government agencies engage consultants to provide professional advice to inform their decision‑making. The spend on consultants is measured and reported in different ways for different purposes and the absence of a consistently applied definition makes quantification difficult.

The NSW Government’s procurement principles aim to help agencies obtain value for money and be fair, ethical and transparent in their procurement activities. All NSW Government agencies, with the exception of State Owned Corporations, must comply with the NSW Procurement Board’s Direction when engaging suppliers of business advisory services. Business advisory services include consultancy services. NSW Government agencies must disclose certain information about their use of consultants in their annual reports. The table below illustrates the detailed procurement and reporting requirements.

We examined how 12 agencies complied with their procurement and reporting obligations for consultancy services between 1 July 2016 and 31 March 2018. Participating agencies are listed in Appendix two. We also examined how NSW Procurement supports the functions of the NSW Procurement Board within the Department of Finance, Services and Innovation.

This audit assessed:

• agency compliance with relevant procurement requirements for their use of consultants
• agency compliance with disclosure requirements about consultancy expenditure in their annual reports 
• the effectiveness of the NSW Procurement Board (the Board) in fulfilling its functions to oversee and support agency procurement of consultancy services. 

Appendix one - Response from agencies

Appendix two - List of selected agencies

Appendix three - Performance auditing

A report released today by the Auditor-General for New South Wales, Margaret Crawford, presents key findings from four years of performance audits. The report findings are presented around six areas of government activity including planning for the future, meeting community expectations for key services, investment in infrastructure, managing natural resources, ensuring good governance and digital disruption.

In this report, we present common findings and lessons from the past four years of performance audits, and offer insights to the public sector on elements of effective performance. We have analysed the key findings and recommendations from 61 performance audits tabled in the NSW Parliament between July 2014 and June 2018, spanning varied areas of government activity. We will also use this report to help determine areas of unaddressed risk across all parts of government, and to shape our future audit priorities.

Governments play an important stewardship role. Their decisions need to consider intergenerational equity by ensuring that investment strategies are sustainable. Governments also need to consider the impact of their decisions on different parts of the community. We recognise that governments face challenges in delivering programs and services, targeting complex social issues with finite resources.

Governments are changing how they deliver services to respond to citizen needs and deliver greater value for money. In this section, we reflect on audits that looked at how government entities are planning their activities to meet the needs of the community into the future.

State and local government exist to provide services to citizens, and citizens are playing a greater role in defining what services they want or need. Expectations about consultation, ease of access, timeliness, and customisation of services are rising. Governments face challenges to continually improve the way they plan and deliver services to meet these expectations. Governments also need to provide quality services for a growing and ageing population whilst working within a constrained financial environment.

Over the past four years, our performance audits have assessed aspects of State and local government services, including education, health services, disability support, corrective services, and many others. In this section, we draw together common findings that government entities should reflect on when providing services to the community.

The NSW Government’s 2018–19 Budget forecasts an $87.2 billion infrastructure investment program over the next four years. Infrastructure investment of this size carries significant opportunities and risks. Competition for resources is high and maintaining the capability to manage and deliver projects effectively is challenging. Governments also need to plan effectively to ensure infrastructure built today will meet future needs.

Over the past four years, we have looked at some of the ways NSW Government agencies justify and prioritise projects for funding, work with contractors to deliver projects, and track and report on progress. In this section, we draw together common findings from our audits that government entities should consider when planning future infrastructure projects.

Governments face challenges in balancing the use of natural resources to meet diverse interests, while supporting a sustainable natural environment for the future. They need to supply communities with water, produce energy, protect natural habitats, and support farming, industry, and economic development.

Some of our recent audits have considered how government agencies are managing natural resources and protecting the environment for future generations. In this section, we have drawn together common findings across our audits that government entities should consider in managing the environment and natural resources.

A range of checks and balances is needed to support public confidence in government decision making. To maintain trust, government agencies should act transparently, and in accordance with relevant legislation and policy. This is particularly important as the public sector increasingly engages with external partners to deliver services and provide a more contestable environment.

Good governance arrangements should result in improved service delivery and more effective and efficient use of resources. Our audits have looked at many different elements of governance, including making sure the necessary processes and workplace cultures are in place to help government entities achieve their aims. In this section, we have drawn together various aspects of governance that government entities should consider.

The global increase in digital technology provides governments with opportunities to interact with citizens in more immediate and responsive ways than was previously possible. Data can be used in powerful ways such as predicting future demand for services, targeting interventions, responding to crises, and evaluating outcomes. Governments face challenges in doing this while maintaining secure digital environments that protect citizen interests, privacy, and autonomy.

Our audits have assessed some of the ways that government entities are incorporating digital change into their work. In this section, we draw together common themes that governments could consider in protecting their digital assets, or expanding their digital capabilities.
 

Appendix one – Performance audits 2014 to 2018

Appendix two – Performance auditing

Appendix three – About this report