The Auditor‑General for New South Wales, Margaret Crawford, released a report today examining procurement management in Local Government.

The audit assessed the effectiveness of procurement management practices in six councils. All six councils had procurement management policies that were consistent with legislative requirements, but the audit found compliance gaps in some councils. The audit also identified opportunities for councils to address risks to transparency and accountability, and to ensure value for money is achieved when undertaking procurement.

The Auditor‑General recommended that the Department of Planning, Industry and Environment review the Local Government (General) Regulation 2005 and publish updated and more comprehensive guidance on procurement management for the Local Government sector. The report also generated insights for the Local Government sector on opportunities to strengthen procurement practices.

Effective procurement is important in ensuring councils achieve their objectives, demonstrate value for money and deliver benefits to the community when purchasing goods and services. Procurement also comes with risks and challenges in ensuring the purchased goods and services deliver to expectations. The risks of fraud and conflicts of interest also need to be mitigated.

The legislative requirements related to procurement in the Local Government sector are focused on sourcing and assessing tender offers. These requirements are included in the Local Government Act 1993 (the Act), the Local Government Amendment Act 2019 (the Amendment), the Local Government (General) Regulation 2005 (the Regulation), the Tendering Guidelines for NSW Local Government 2009 (the Tendering Guidelines), the Government Information (Public Access) Act 2009 (the GIPA Act) and the State Records Act 1998.

General requirements and guidance relevant to councils are also available in the Model Code of Conduct for Local Councils in NSW 2018 (the Model Code), the NSW Government Procurement Policy Framework 2019 and in publications by the Independent Commission Against Corruption (ICAC).^₁

Individual councils have developed their own procurement policies and procedures to expand on the legislative requirements. Understandably, these vary to reflect each council’s location, size and procurement needs. Nevertheless, the general principles of effective procurement management (such as transparency and accountability) and risk-mitigating practices (such as segregation of duties and the provision of training) are relevant to all councils.

The Audit Office of New South Wales Report on Local Government 2018 provided a sector-wide summary of aspects of procurement management in Local Government (see Section 2.1 of this report). This audit builds on this state-wide view by examining in detail the effectiveness of procurement management practices in six councils. This report also provides insights on opportunities to strengthen procurement management in the sector.

The selected councils for this audit were Cumberland City Council, Georges River Council, Lockhart Shire Council, Tweed Shire Council, Waverley Council and Wollongong City Council. They were selected to provide a mix of councils of different geographical classifications, sizes, priorities and levels of resourcing.

Recommendations

1. By June 2022, the Department of Planning, Industry and Environment should:
   1. publish comprehensive and updated guidance on effective procurement practices – including electronic tender submissions and procurements below the tender threshold
   2. review and update the Local Government (General) Regulation 2005 to reflect the increasing use of electronic tender submissions rather than paper copies.
2. By December 2021, the six audited councils should consider the opportunities to improve procurement management in line with the improvement areas outlined in chapter three of this report.
3. Cumberland City Council should immediately:
   1. ensure contract values are consistent between the contract register and the annual report
   2. introduce procedures to ensure supplier performance reviews are conducted as per the council’s policy
4. Georges River Council should immediately:
   1. ensure contract values are consistent between the contract register and the annual report
   2. introduce procedures to ensure all the steps up to the awarding of a contract are documented as per the council’s policy
   3. introduce procedures to ensure outcome evaluations are conducted as per the council’s policy.
5. Lockhart Shire Council should immediately:
   1. include additional information in the council’s contract register to ensure compliance with Section 29(b), (f), (g), (h) and (i) of the GIPA Act
   2. ensure contract values are consistent between the contract register and the annual report.
6. Waverley Council should immediately ensure contracts are disclosed in the annual report as per Section 217(1)(a2) of the Regulation.

While all six councils had procurement policies in place and were generally compliant with legislative requirements, this report has identified common gaps in processes and practices that expose risks to transparency, accountability and value for money.

This section discusses how councils can mitigate risks and ensure the best outcomes are achieved from their procurements.

Documented justification of procurement needs

The ICAC notes that determining what goods and services an agency requires is the first step of procurement, and the scope for corruption in how need is determined is significant. Without documenting how procurement needs have been justified, councils cannot demonstrate that they fulfill business needs, nor how the procurements may link to the councils’ strategic plans to deliver to the community.

This audit found that none of the six councils’ policies required them to document justification of procurement needs, and none did so consistently in practice. Councils can address this gap by building into their procurement planning process a requirement for staff to document the justification of procurement needs. For higher value procurements, this could be extended to include analysis of options, an assessment of risks and defining intended outcomes. Similarly, clearly establishing and documenting how relevant procurements relate to a council’s community strategic plans or operational plans helps ensure transparency.

Although a formal business case may not be required for many procurements (for example, low-value procurements or routine replacements), some form of documented justification for the expenditure should still be kept on record to demonstrate that the procurement relates to business purposes and is needed.

Segregation of duties

Segregation of duties is an effective control for reducing risks of error, fraud and corruption in procurement. It works on the principle that one person should not have end-to-end control of a procurement. Effective segregation of duties also often involves managerial or independent oversight that is built into the process. Four of the audited councils (Cumberland City Council, Georges River Council, Lockhart Shire Council and Wollongong City Council) appropriately addressed segregation of duties in their procurement frameworks. For example:

• All procurements in Cumberland City Council required a delegated officer’s approval before commencing, and the requisitioning department is responsible for ensuring the completion of the goods, works or services associated with each contract. For contracts over $50,000, a specific ‘Authority to Procure’ form had to be completed by the requesting staff, signed by an approver and then forwarded to the procurement team.

• Reflecting its small size, all procurements in Lockhart Shire Council were managed by one senior staff member. Nevertheless, this staff member had to bring contract management plans to the rest of the Executive Leadership Team for review and discussion, with large contracts such as those above the tender threshold referred to Council for approval.

The ICAC notes that segregation of duties helps to control discretion, which has particular risk implications for some types of procurement.₂ This includes those involving low-value and high-volume transactions, restricted tenders, long-standing procurements and ‘pet projects’ (projects advocated by individual staff members). In cases where corruption risks are low, ICAC notes that monitoring staff’s involvement in procurement may be a cost-effective alternative to total segregation of duties.

Assessment of supplier performance

Councils need to monitor and assess supplier performance to ensure suppliers deliver the goods and services as agreed. The audit found that all six councils consistently monitored progress in capital works and for externally funded projects. Contract monitoring in these cases included ensuring timelines, funding, and legislative requirements were met. This is positive, as capital works made up the bulk of procurements (in terms of volume) in all of the audited councils.

That said, in all six councils, the level of scrutiny was lower for other types of procurements, and there is scope for improvement. For instance, the approach to monitoring capital works or externally funded projects could be replicated across other procurements of a similar nature and value. Conducting assessments and keeping records of supplier performance on all procurements does not need to be onerous, but instead provides useful information to inform future decision-making—including by helping ensure supplier pricing remains competitive, and avoiding re-engaging underperforming suppliers.

The NSW Government Procurement Policy Framework requires that NSW Government agencies establish systems and processes jointly with the suppliers to ensure compliance with contract terms and performance requirements. It also advises that agencies should drive continuous improvement and encourage innovation in coordination with suppliers and key stakeholders.

Centralised contract register

Centrally registering a contract provides improved transparency of procurement activities and facilitates monitoring and compliance checks. While councils are already required to maintain a contract register for all contracts above the reporting threshold (as per the GIPA Act), given the threshold is set at a relatively high benchmark ($150,000), there is merit in councils extending the practice to procurements below the reporting threshold. A central and comprehensive register of contracts helps avoid duplication of procurements and re-contracting of underperforming suppliers.

Three of the audited councils (Georges River Council, Tweed Shire Council and Wollongong City Council) had contract register policies that applied to procurements below the reporting threshold during the audited period. For example, Georges River Council required contracts valued at $10,000 or above to be registered with the procurement team, and Tweed Shire Council had a threshold of $50,000.

Evaluation of community outcomes and value for money

Councils may be progressing procurements to fulfill their strategic and business plans, or using them to fulfill commitments to the community. In these instances, outcomes evaluation is an important way to demonstrate to the community that the intended benefits and value for money have been delivered.

Five of the six audited councils did not require evaluations of community outcomes and value for money. While Georges River Council required contracts valued at $50,000 or more to be monitored, evaluated and reported on at least annually throughout the contract and also at its conclusion, in the procurements we examined the only ‘outcome evaluations’ that the council had conducted were community surveys that did not refer to individual procurements. Councils can miss opportunities to understand the impact of their work on the local community if evaluations of procurement outcomes are not completed. Evaluation findings are also valuable in guiding future resource allocation decisions.

Value for money in the procurement of goods and services is more than just having the specified goods delivered or services carried out. The NSW Government Procurement Policy Framework requires that state government agencies track and report benefits to demonstrate how value for money is being delivered. The framework notes that value for money is not necessarily the lowest price, nor the highest quality good or service, but requires a balanced assessment of a range of financial and non-financial factors, such as: quality, cost, fitness for purpose, capability, capacity, risk, total cost of ownership or other relevant factors.

Procurement training

Effective procurement management relies on the capability of staff involved in various stages of the process. Guidance can be provided through training, which is an important element of any procurement management framework. It ensures that staff members are aware of the councils' policies and procedures. If structured appropriately and provided in a timely manner, training can help to standardise practices, ensure compliance, reduce chances of error, and mitigate risks of fraud or corruption.

The ICAC notes that effective procurement management depends on the competence of staff undertaking procurements and the competence of those who oversee procurement activities. As the public sector is characterised by varying levels of procurement expertise, the ICAC notes that the sector would benefit from a structured approach to training and the application of minimum standards.₃

At the time of this audit, only Wollongong City Council addressed staff training requirements in its procurement management framework. Exhibit 8 details its approach.

Two of the audited councils have now also introduced procurement training:

• Georges River Council implemented online training, which is mandatory for new staff and serves as refresher training for existing staff. The council also provides in-person training for selected staff (covering contract management, contract specification writing and contractor relationship management) and has developed quick reference cards for all staff to increase awareness of the council's procurement processes.
• Tweed Shire Council implemented mandatory online training for all staff members. The training covers the council's procurement policy and protocol as well as relevant legislation. It is linked to relevant council documents such as the Procurement Toolkit on the council's intranet, and includes a quiz for which training participants must score at least 80 per cent to have the training marked as completed.

Appendix one – Responses from councils and the Department of Planning, Industry and Environment

Appendix two – Councils’ procurement contracts

Appendix three – About the audit

Appendix four – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #345 - released 17 December 2020

This report analyses the results of our audits of financial statements of entities within the Regional NSW cluster for the year ended 30 June 2020. The table below summarises our key observations and recommendations.

The Regional NSW cluster aims to respond to regional issues, creating and preserving regional jobs, driving regional economy, growing existing and supporting emerging industries. The key areas of focus across the New South Wales (NSW) State is shown below:

MoG changes impact on Department of Regional NSW

The Department was created as result of the MoG changes during 2019–20. The Administrative Arrangements Order 2020, effective on 2 April 2020 created the Department of Regional NSW. These changes had a significant administrative impact on the cluster agencies. The MoG change resulted in a transfer of net assets ($446 million) and budget ($284 million) from DPIE to the newly created Department of Regional NSW on 2 April 2020. A summary of the MoG impacts on the Regional NSW cluster is shown below.

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

The COVID-19 Legislation Amendment (Emergency Measures–Treasurer) Act 2020 amended legislation administered by the Treasurer to implement further emergency measures as a result of the COVID-19 pandemic. These amendments:

• allowed the Treasurer to authorise payments from the consolidated fund until the enactment of the 2020–21 budget – impacting the going concern assessments of cluster agencies
• revised budgetary and financial and annual reporting time frames – impacting the timeliness of financial reporting
• exempted certain statutory bodies and departments from preparing financial statements.

This chapter outlines our audit observations related to the financial reporting of agencies in the Regional NSW cluster for 2020, including any financial implications from the recent emergency events.

Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision making.

This chapter outlines our:

• observations and insights from our financial statement audits of agencies in the Regional NSW cluster
• assessment of how well cluster agencies adapted their systems, policies and procedures, and governance arrangements in response to recent emergencies.

Appendix one - List of 2020 recommendations

Appendix two - Financial data

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.

The Auditor-General for New South Wales, Margaret Crawford, released a report today that examined the effectiveness of the waste levy and grants for waste infrastructure in minimising the amount of waste sent to landfill and increasing recycling rates.  

The audit found that the waste levy has a positive impact on diverting waste from landfill. However, while the levy rates increase each year in line with the consumer price index, the EPA has not conducted a review since 2009 to confirm whether they are set at the optimal level. The audit also found that there were no objective and transparent criteria for which local government areas should pay the levy, and the list of levied local government areas has not been reviewed since 2014. 

Grant funding programs for waste infrastructure administered by the EPA and the Environmental Trust have supported increases in recycling capacity. However, these grant programs are not guided by a clear strategy for investment in waste infrastructure. 

The Auditor-General made six recommendations aimed at ensuring the waste levy is as effective as possible at meeting its objectives and ensuring funding for waste infrastructure is contributing effectively to recycling and waste diversion targets.

Overall, waste generation in New South Wales (NSW) is increasing. This leads to an increasing need to manage waste in ways that reduce the environmental impact of waste and promote the efficient use of resources. In 2014, the NSW Government set targets relating to recycling rates and diversion of waste from landfill, to be achieved by 2021–22. The NSW Waste and Resource Recovery (WARR) Strategy 2014–21 identifies the waste levy, a strong compliance regime, and investment in recycling infrastructure as key tools for achieving these waste targets.

This audit assessed the effectiveness of the NSW Government in minimising waste sent to landfill and increasing recycling rates. The audit focused on the waste levy, which is paid by waste facility operators when waste is sent to landfill, and grant programs that fund infrastructure for waste reuse and recycling.

The waste levy is regulated by the Environment Protection Authority (EPA) and is generally paid when waste is disposed in landfill. The waste levy rates are set by the NSW Government and prescribed in the Protection of Environment Operations (Waste) Regulation 2014. As part of its broader role in reviewing the regulatory framework for managing waste and recycling, the EPA can provide advice to the government on the operation of the waste levy.

The purpose of the waste levy is to act as an incentive for waste generators to reduce, re-use or recycle waste by increasing the cost of sending waste to landfill. In 2019–20, around $750 million was collected through the waste levy in NSW. The government spends approximately one third of the revenue raised through the waste levy on waste and environmental programs.

One of the waste programs funded through the one third allocation of the waste levy is Waste Less, Recycle More (WLRM). This initiative funds smaller grant programs that focus on specific aspects of waste management. This audit focused on five grant programs that fund projects that provide new or enhanced waste infrastructure such as recycling facilities. Four of these programs were administered by the Environmental Trust and one by the EPA.

Achievement of the 2014–21 state targets for waste and resource recovery (WARR targets) is reliant in part on the availability of infrastructure that supports waste diversion and recycling. The state WARR targets dependent on waste infrastructure are:

• Increase recycling rates to 70 per cent for municipal solid waste and commercial and industrial waste, and 80 per cent for construction and demolition waste.
• Increase waste diverted from landfill to 75 per cent.

A further target — manage problem waste better by establishing or upgrading 86 drop-off facilities or services for managing household problem wastes state-wide — is dependent on accessible community waste drop-off facilities across NSW.

Exhibit 7 identifies the five grant programs that provide funding for new or enhanced waste infrastructure to increase capacity for reuse or recycling of waste. All five of these programs were examined in the audit.
In addition to the grant programs shown in Exhibit 7, other programs provide funding for infrastructure, but at a smaller scale. Examples of these include:

• Bin Trim which provides rebates to small businesses for small scale recycling equipment such as cardboard and soft plastic balers.
• Litter grants which provide funding for litter bins.
• Weighbridges grants for installation of a weighbridge at waste facilities.
• Landfill consolidation and environmental improvement grants for rural councils to replace old landfills with transfer stations or to improve the infrastructure at landfill sites.

Appendix one – Responses from audited agencies

Appendix two – About the audit

Appendix three – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #343 - released 26 November 2020

The Auditor-General for New South Wales, Margaret Crawford, released a report today titled Education 2020. This report focuses on key observations and findings from the most recent audits of agencies in the Education cluster.

Unqualified audit opinions were issued for all cluster agencies’ financial statements. However, internal control deficiencies were identified across the cluster agencies, including deficiencies in the management of purchasing cards and 15 internal control issues that were repeated from the previous year.

The 2019–20 natural disasters caused widespread damage in both Northern and Southern NSW. The COVID‑19 pandemic further challenged agencies, requiring social distancing and other infection control measures which disrupted the traditional means of teaching students. Agencies have adjusted their operations to respond to these emergency events.

The TAFE Commission’s revenues 2019–20 were impacted by the pandemic. Lower enrolments and an increase in fee-free short courses offered during the year contributed to the result.

Read the PDF report

This report analyses the results of our audits of financial statements of entities within the Education cluster for the year ended 30 June 2020. The table below summarises our key observations and recommendations.

1. Financial reporting 

2. Audit observations

This report provides parliament and other users of the Education cluster’s financial statements with the results of our audits, our observations, analysis, conclusions and recommendations in the following areas:

• financial reporting
• audit observations
• the impact of emergencies and the COVID-19 pandemic.

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

The COVID-19 Legislation Amendment (Emergency Measures–Treasurer) Act 2020 amended legislation administered by the Treasurer to implement further emergency measures as a result of the COVID-19 pandemic. These amendments:

• allowed the Treasurer to authorise payments from the consolidated fund until the enactment of the 2020–21 budget – supporting the going concern assessments of cluster agencies
• revised budgetary, financial and annual reporting time frames – impacting the timeliness of financial reporting
• exempted certain statutory bodies and departments from preparing financial statements.

This chapter outlines our audit observations related to the financial reporting of agencies in the Education cluster for 2020, including any financial implications from the recent emergency events.

Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision making.

This chapter outlines our:

• observations and insights from our financial statement audits of agencies in the Education cluster. It also comments on our review of elements of the financial control framework applied by schools in NSW whose financial results form part of the Department of Education's (the Department) financial statements.
• assessment of how well cluster agencies adapted their systems, policies and procedures, and governance arrangements in response to recent emergencies.

Appendix one – List of 2020 recommendations

Appendix two – Status of 2019 and 2018 recommendations

Appendix three – Financial data

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.

The Auditor-General for New South Wales, Margaret Crawford today released her report on the findings and recommendations from the 2019–20 financial audits that relate to internal controls and governance at 40 of the largest agencies in the NSW public sector.

The bushfire and flood emergencies and the COVID‑19 pandemic continue to have a significant impact on the people and public sector of New South Wales. The scale of the government response to these events has been significant. The report focuses on the effectiveness of internal controls and governance processes, including relevant agencies’ response to the emergencies. In particular, the report focuses on:

• financial and information technology controls
• business continuity and disaster recovery planning arrangements
• procurement, including emergency procurement
• delegations that support timely and effective decision-making.

Due to the ongoing impact of COVID‑19 agencies have not yet returned to a business‑as‑usual environment. ‘Agencies will need to assess their response to the recent emergencies and update their business continuity, disaster recovery and other business resilience frameworks to reflect the lessons learnt from these events’ the Auditor-General said.

The report noted that special procurement provisions were put in place to allow agencies to better respond to the COVID-19 pandemic. The Auditor-General recommended agencies update their procurement policies to reflect the current requirements of the NSW Procurement Framework and the emergency procurement requirements.

Read the PDF report

This report analyses the internal controls and governance of 40 of the largest agencies in the NSW public sector for the year ended 30 June 2020. These 40 agencies constitute an estimated 85 per cent of total expenditure for all NSW public sector agencies.

1. Internal control trends

2. Information technology controls

3. Business continuity and disaster recovery planning

4. Procurement, including emergency procurement

5. Delegations

6. Status of 2019 recommendations

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 we found across agencies. The rest of this report presents this year’s controls and governance findings in more detail.

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 agency business continuity and disaster recovery planning arrangements.

This chapter outlines our audit observations, conclusions and recommendations, arising from our review of procurement agency procurement policies and procurement activity.

This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency compliance with financial and human resources delegations.

Appendix one – List of 2020 recommendations 

Appendix two – Status of 2019 recommendations

Appendix three – Cluster agencies

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.

A report released today by the Auditor-General for New South Wales, Margaret Crawford found that select advertising campaigns conducted by Service NSW and the NSW Rural Fire Service met most requirements of the Government Advertising Act, regulations, Guidelines and other laws. However, the audit found that Service NSW inappropriately used its post campaign evaluation to measure sentiment towards and confidence in the NSW Government.  

While agency analysis shows that the ‘Cost of Living’ (phases 2 and 3)  and ‘How Fireproof is Your Plan?’ campaigns achieved most of their objectives, the campaign objectives and targets set by both agencies were not sufficient to measure all aspects of campaign effectiveness. 

The report makes two recommendations to the Department of Customer Service. The first is to review its guidance to ensure agencies are not using post campaign evaluations to measure sentiment towards the government. The second, to review its guidance and the new process of peer review to ensure they support agencies to comply with the Act, the regulations and the Guidelines. 

The Government Advertising Act 2011 requires the Auditor General to conduct an annual performance audit of one or more government agencies to see whether their advertising activities were carried out in an effective, economical and efficient manner and in compliance with the Government Advertising Act 2011.
 

Read full report (PDF)

The Government Advertising Act 2011 (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 assesses whether a government agency or agencies have carried out activities in relation to government advertising in an effective, economical and efficient manner and in compliance with the Act, the regulations, other laws and the Government Advertising Guidelines (the Guidelines). This audit examined two campaigns run during the 2018–19 and 2019–20 financial years respectively:

• the 'Cost of Living' campaign run by Service NSW (phases 2 and 3 delivered in 2018–19)
• the 'How Fireproof Is Your Plan?' (Fireproof) campaign run by NSW Rural Fire Service (year two of a three-year campaign delivered in 2019–20).

Section 6 of the Act prohibits political advertising. Under this section, material that is part of a government advertising campaign must not contain the name, voice or image of a minister, member of parliament or a candidate nominated for election to parliament or the name, logo or any slogan of a political party. Further, a campaign must not be designed to influence (directly or indirectly) support for a political party.

In 2018–19, Service NSW delivered phases 2 and 3 of the 'Cost of Living' campaign. The Cost of Living advertising campaign aimed to build awareness of the help available to ease the cost of living for people under financial pressure including awareness of specific rebates that can be claimed. As part of the Cost of Living program, Service NSW developed a webpage designed as a single portal to access more than 40 NSW Government savings, rebates and initiatives (which originated from over 12 different agencies). It also launched the Cost of Living service which includes face to face meetings and phone interviews to help people claim rebates from the NSW Government. Phase 2 of the campaign ran from September 2018 to August 2019. Phase 3 of the campaign ran from January 2019 to July 2019. The budgets for phases 2 and 3 were $4.127 million and $934,800 respectively. See Appendix two for more details on this campaign.

Campaign materials we reviewed did not breach section 6 of the Act

The audit team reviewed campaign materials developed as part of the paid advertising campaign including radio transcripts, digital videos and display. The audit team did not review the use of social media outside paid social media content as section four of the Act defines government advertising as the dissemination of information which is funded by or on behalf of a government agency. See Appendix two for examples of campaign materials for this campaign.

Section 6 of the Act prohibits political advertising as part of a government advertising campaign. A government advertising campaign must not:

• be designed to influence (directly or indirectly) support for a political party
• contain the name, voice or image of a minister, a member of parliament or a candidate nominated for election to parliament
• contain the name, logo, slogan or any other reference to a political party.

The audit found no breaches of section 6 of the Act in the campaign material we reviewed. 

Post-campaign evaluations measured sentiment towards and confidence in the NSW Government

The post-campaign evaluation for phases 2 and 3 measured levels of confidence with the statement ‘the NSW Government has your best interests at heart’, despite the fact this was not a stated objective of the campaign. This is not an appropriate use of the post-campaign evaluation, which should measure the success of the campaign against its stated objectives. The post-campaign evaluation for phase 3 found that exposure to the campaign improved sentiment towards the government amongst those who did not have confidence in the NSW Government.

Service NSW advised that it was important to measure the sentiment of the advertising including the wording 'best interests' as it did not want the whole of government brand to be detrimental to customer engagement with applying for the rebates.

Following phase 2, Service NSW conducted analysis of media sentiment using the key words 'cost of living' and the names of the Premier, Treasurer and Minister for Customer Service. The analysis presented the level of positive, negative and neutral media sentiment. The Government Advertising Guidelines 2012 list the purposes that government advertising may serve which do not include improving the perception of the government. The inclusion of this analysis in Service NSW's post-campaign evaluation creates a risk that the results may be used for party political purposes.

Section 10 of the Act restricts agencies from carrying out a campaign after 26 January in the calendar year before the Legislative Assembly is due to expire and before the election for the Legislative Assembly in that year. Service NSW authorised a media agency to book media in line with the media plans for the campaign. The media plans for the campaign show that Service NSW did not authorise or plan to run any advertisements between 27 January 2019 and 23 March 2019.

Service NSW did not set targets for all rebates advertised in phase 2

Service NSW did not set targets for four of the seven rebates that were advertised as part of phase 2 of the campaign. These rebates were the Family Energy Rebate, Appliance Replacement Offer, National Parks Concession Offer and the Pensioner Travel Voucher. As a result, it was unable to evaluate whether the advertisements for these rebates were effective. Service NSW advised that at the time the campaign went to peer review, when campaign objectives are set, it did not know which rebates would be included in the advertisements.

Service NSW stated in its submission to the Department of Premier and Cabinet that it may change the creative content for phase 2 as it announced new initiatives and rebates. The peer review process should have ensured that Service NSW set targets for any additional rebates or savings it intended to advertise before that advertising commenced to ensure a strategic approach to the campaigns that clearly demonstrated anticipated benefits were in place.

The post-campaign evaluation for phase 2 shows that the advertising campaign met most of its objectives

Service NSW set overall campaign objectives and specific targets for some rebates advertised as part of phase 2 of the campaign. The objectives, targets and results for phase 2 are shown in Exhibit 5. In phase 2, Service NSW established baseline data on levels of awareness of government rebates during the peer review process. The baseline level of awareness for government rebates was 44 per cent. The level of awareness for specific rebates was 46 per cent for the Compulsory Third Party (CTP) green slip refund, and 21 per cent for both Active Kids and Toll Relief.

Post-campaign evaluation reports for phase 2 show that the campaign met its objective to raise awareness of NSW Government rebates, achieving a 16 per cent increase in awareness from 44 per cent to 51 per cent. The campaign did not meet its target to increase awareness of the CTP green slip refund by ten per cent.

Service NSW did not report the results of the uptake of the CTP green slip refund, Active Kids and Toll Relief in its post campaign effectiveness report submitted to the Department of Premier and Cabinet. However, other post-campaign evaluation documentation, which Service NSW advise was submitted to the Department of Premier and Cabinet, show that these targets were met.

Service NSW did not report to the Department of Premier and Cabinet on whether it achieved the target of a ten per cent increase of average monthly visits to the Cost of Living webpage. Service NSW reported that it had achieved an average of 11,753 visitors to the webpage per day during the campaign. These average daily results indicate that the target was met.

Exhibit 5: Phase 2 - campaign objectives, targets and results

Campaign objectives and targets	Does the post-campaign evaluation show that the target was met?
1. a) Increase awareness of rebates from the NSW Government by ten per cent.	Image
b) Increase average monthly visits to the Cost of Living webpage by ten per cent.	Image
2. Increase awareness of rebates and savings by ten per cent for:
CTP green slip refund	Image
Active Kids	Image
Toll Relief.	Image
3. Increase awareness that NSW Government initiatives relating to the cost of living are available via Service NSW by ten per cent.	Image
4. Increase the uptake of rebates and savings for the CTP green slip refund, Active Kids and Toll Relief by ten per cent.	Image

Key

Image

Yes

Image

Not Fully

The post-campaign evaluation for phase 3 shows that the advertising campaign met most of its objectives

Service NSW set overall campaign objectives and specific targets for the two rebates advertised as part of phase 3 of the campaign. The objectives, targets and results for phase 3 are shown in Exhibit 6.

In phase 3, Service NSW established baseline data on levels of awareness during the peer review process. The baseline level of awareness for government rebates was 44 per cent. This is the same baseline that was used to measure performance for phase 2 of the campaign. Service NSW did not set baselines for awareness and uptake of Energy Switch and Creative Kids as these were new services.

Post-campaign evaluation reports for phase 3 show that the campaign met its objective to raise awareness of NSW Government rebates by ten per cent, achieving a 30 per cent increase in awareness from 44 per cent to 57 per cent. The overall increase in message take-out was met with 43 per cent agreeing with the message that the NSW Government is taking steps to ease the cost of living. The campaign achieved awareness and uptake targets for the specific rebates included in phase 3, except for awareness of Creative Kids which achieved 28 per cent awareness, falling short of the 30 per cent awareness target.

Exhibit 6: Phase 3 - campaign objectives, targets and results

Campaign objectives and targets	Does the post-campaign evaluation show that the target was met?
1. Increase message takeout that ‘The NSW Government is taking steps to help ease the cost of living in NSW’ by ten per cent for those who can recall the campaign.
2. Increase awareness that the NSW Government has a range of rebates and savings by ten per cent.
3. Generate awareness with NSW residents aged 18+ of:
Energy Switch (15 per cent awareness)
Creative Kids (30 per cent awareness).
4. Create uptake of Energy Switch and Creative Kids (8,356 clicks on the Energy Switch website and 107,938 Creative Kids vouchers downloaded with 70 per cent conversion).

Key

Yes

Not Fully

The timing of campaign phases meant that it was difficult for Service NSW to evaluate each distinct campaign phase and reduced opportunities to incorporate learnings from previous phases

Service NSW commenced planning for phase 2 of the campaign while phase 1 was still underway. This limited the opportunity for Service NSW to incorporate learnings from phase 1 into phase 2. There was some overlap in the timing of phase 2 and the start of phase 3 of the campaign, making it difficult to evaluate the effectiveness of each distinct campaign phase. Both phases 2 and 3 had the same high-level outcome objective to raise awareness of rebates by ten per cent. The baseline measures that were used to evaluate performance for phase 3 were the same as those used to evaluate phase 2. As a result, Service NSW was not able to separately evaluate these two phases of the campaign. This is important given the budgets for phases 2 and 3 were $4.127million and $934,800 respectively.

Service NSW allocated 7.5 per cent of its media budget to communications with culturally and linguistically diverse (CALD) and Aboriginal audiences

The NSW Government CALD and Aboriginal Advertising Policy requires that agencies spend at least 7.5 per cent of an advertising campaign media budget on direct communications with CALD and Aboriginal audiences. Service NSW authorised a media company to book media in line with the media plans for the campaign. The media plans for phases 2 and 3 of the campaign indicate that Service NSW met this requirement, with 7.5 per cent of the budget allocated to these audiences in phase 2 and 10.4 per cent in phase 3.

The post campaign evaluation for phases 1 and 2 of the Cost of Living campaign contained a recommendation to look at other opportunities to reach CALD audiences. Effective communication with CALD audiences was particularly important in phase 3 of the campaign, where they made up 30 per cent of the target audience for the Creative Kids advertisement. The post-campaign analysis for phase 3 showed that the campaign performed well with some, but not all CALD audiences. The post-campaign analysis also showed low awareness and uptake with Aboriginal audiences. Pre-campaign focus groups in phase 3 found Aboriginal audiences had a negative reaction to the campaign tag line ‘NSW Government is helping with the cost of living’ however this tagline was still used in some advertisements in phase 3.

The cost-benefit analysis (CBA) for phase 2 did not accurately assess the benefits of the campaign and did not assess the costs and benefits of alternatives to advertising

Under the Government Advertising Act 2011, agencies are required to prepare a CBA when the cost of the campaign is likely to exceed $1 million. The CBA conducted by Service NSW for phase 2 includes $8 million in benefits attributed to the advertisements for the Energy Switch tool and $6.9 million in benefits attributed to the advertisements for Creative Kids vouchers. These benefits should not have been included in the CBA for phase 2 as they were not included in this phase of the campaign. The CBA did not estimate the benefits of some other rebates and savings advertised in phase 2 of the campaign. This means that the CBA did not accurately assess the benefits of the campaign. Service NSW advised that at the time the CBA was developed it had not selected the rebates to be included in the campaign.

The Government Advertising Guidelines require agencies to consider options other than advertising to achieve the desired objective including a comparison of costs and benefits. The CBA developed as part of phase 2 identified using existing NSW Government communication channels as an alternative to advertising but did not assess the costs and benefits of this alternative.

This is a repeat finding from two previous government advertising audits. The report ‘Government Advertising: 2015–16 and 2016–17’ found that both agencies subject to the audit did not meet the requirements in the guidelines to consider alternatives to advertising. The report made a recommendation to the Department of Premier and Cabinet to work with Treasury to ensure the requirements of the guidelines are fully reflected in the 'Cost-Benefit Analysis Framework for Government Advertising and Information Campaigns'. The report ‘Government advertising 2017–18’ found that one agency subject to the audit did not identify to what extent the benefits could be achieved without advertising, nor did it consider alternatives to advertising which could achieve the same impact as the advertising campaign.

Service NSW negotiated with a single creative agency in phase 2, making it difficult to demonstrate value for money

Agencies are required to obtain three quotes when procuring a creative agency on the prequalification scheme if the estimated cost of the creative content is greater than $150,000. In phase 2 of the campaign, Service NSW extended the contract with the creative agency used for phase 1 of the campaign and did not obtain three quotes despite the cost of the creative content for phase 2 being $731,480. The requirement to obtain three quotes was met in phase 1 when initially selecting this creative agency.

Service NSWs procurement policy details that direct negotiation may be appropriate where there is a compelling reason to renew or rollover a contract beyond temporal or convenience reasons or in the cases of a genuine emergency. In its briefing to the Chief Executive, Service NSW stated that this contract extension was sought due to the time-sensitive nature of the project and that if work was delayed by a tender process, Service NSW may not be able to meet marketing milestones and this could result in limited customer uptake. This reason is not a genuine emergency and is not compelling as it does not explain what consequences would occur if it did not meet the marketing milestones or if there was limited customer uptake.

Service NSW's procurement policy also states that under no circumstances must Service NSW employees enter into discussions with a supplier until the delegate has formally made their decision to enter into direct negotiation. Service NSW briefed the Chief Executive of Service NSW in relation to extending the contract on 5 September 2018. The briefing states that the creative agency had already begun developing creative content for phase 2 and Service NSW had already received quotes from the creative provider for the proposed work prior to 5 September 2018. Procurement sign-offs were not completed until 7 September 2018. The engagement of the creative provider prior to appropriate approvals was contrary to Service NSWs procurement policy.

The economy of the campaign may have been limited by not meeting the procurement requirements in phase 2. It is possible that the creative provider may have offered a more competitive rate if it was aware that Service NSW was seeking quotes from other creative providers. Additionally, it is possible that another creative provider could have provided better value for money.

In phase 3 of the campaign, the estimated cost of the creative exceeded $150,000 however Service NSW chose to contract two different creative agencies, and the cost for each agency fell below the threshold to obtain three quotes. Agencies are permitted to obtain one quote when using a creative provider on the prequalification scheme if the cost is between $50,000 to $150,000. Service NSW advised that it contracted two creative providers as two different project teams were responsible for the rebates, each with separate marketing budgets.

Service NSW allowed sufficient time for cost-efficient media placement

During the peer review process, the Department of Premier and Cabinet advised agencies about the time they should allow to ensure cost-efficient media placement. For example, the Department of Premier and Cabinet advised that agencies book television advertising six to 12 weeks in advance and that agencies book radio advertising two to eight weeks in advance.

Service NSW allowed sufficient time between the completion of the peer review process and the commencement of the first advertising. Service NSW signed the agreement with the approved Media Agency Services provider with sufficient time to achieve cost-efficient media placement for all types of media used in this campaign.

The campaign may have been misleading for some people who were not eligible for rebates

Advertisements we reviewed focused on the amount of savings that could be obtained from rebates, for example ‘Save up to $285’, and ended with a statement ‘To save, visit service.nsw.gov.au. This directed viewers to the Cost of Living website which contains eligibility information. However, the advertisements in phases 2 and 3 we reviewed did not contain any details on the eligibility for these rebates and not all advertisements stated that eligibility criteria apply. Service NSW advised that the eligibility criteria for each rebate is extensive and that it was not possible to include this in the creative material.

Post-campaign evaluations in phase 3 recommended that advertisements for Creative Kids should indicate eligibility (e.g. age criteria) as statements on savings have the potential to be misleading when not all viewers will be eligible for rebates. Social media analysis conducted following phase 2 showed ineligibility or inability to claim rebates or refunds caused anger for some respondents.

Some advertisements in phase 2 stated ‘we've got something for everyone’. However, as rebates were subject to eligibility criteria, it is possible that some residents in NSW would not be eligible for any rebates as part of the Cost of Living initiative. As such, this statement has the potential to be misleading.

The campaign included statements that underestimated the savings that some customers could obtain

The Guidelines require accuracy in the presentation of all facts, statistics, comparisons and other arguments. The Guidelines also require that all claims of fact included in government advertising campaigns must be able to be substantiated.

In phase 2, the possible savings customers could obtain for two rebates or savings exceeded the amounts stated in the advertising campaign. Exhibit 7 shows some advertisements in phase 2 which stated, ‘My Green Slip Saving Save up to $60’. However, the State Insurance Regulatory Authority website shows that savings for some types of motor vehicles under the 2017 CTP scheme exceed $60. The State Insurance Regulatory Authority website states that the average saving under this scheme has been $129. Service NSW advised that these advertisements were designed for regional markets and that it used different advertisements for metropolitan areas which contained different amounts of savings.

Some advertisements in phase 2 stated, ‘My Toll Relief save up to $700’. The Service NSW website states that drivers can obtain free vehicle registration if they have spent $1,352 or more in tolls in the previous financial year. The cost of registration for some vehicles exceeds $700. This means the savings detailed in the advertisement were lower than what some customers could actually save.

NSW Rural Fire Service conducted the 'How FireProof Is Your Plan?' (Fireproof) campaign. The Fireproof campaign is a three-year campaign which ran in 2018–19 (year one), 2019–20 (year two) and is planned for 2020–21 (year three). This audit examined year two of the campaign (2019–20).

The Fireproof campaign is a public safety campaign encouraging people to plan and prepare for bush fires across the summer period. The campaign aims to improve the quality of bush fire planning and preparation in the community and decrease the impact of fires on the community when they occur.

Campaign materials we reviewed did not breach section 6 of the Act

The audit team reviewed campaign materials developed as part of the paid advertising campaign for example radio advertisements, television commercials and digital displays. The audit team did not review the use of social media outside paid social media content as section four of the Act defines government advertising as the dissemination of information which is funded by or on behalf of a government agency. Examples of campaign materials are shown in Appendix two.

Section 6 of the Act prohibits political advertising as part of a government advertising campaign. A government advertising campaign must not:

• be designed to influence (directly or indirectly) support for a political party
• contain the name, voice or image of a minister, a member of parliament or a candidate nominated for election to parliament
• contain the name, logo, slogan or any other reference to a political party.

The audit found no breaches of section 6 of the Act in the campaign material we reviewed. 

NSW Rural Fire Service did not set targets for the second year of the campaign

The second year of the Fireproof campaign (2019–20) had the same objectives as the first year of the campaign (2018–19), however no specific targets were set for the second year. The advertising submission for the first year of the campaign (2018–19) details the targets for each objective as an increase of ten per cent against the baseline data to be achieved by March 2021, at the end of the three-year campaign.

The second year of the Fireproof campaign (2019–20) was one of the first campaigns approved under the new budget and peer review processes introduced by the Department of Customer Service in 2019–20. The new process for peer review introduced a new template for campaign submissions. The former template for campaign submissions contained more prompts for agencies to ensure the submission contained sufficient detail of campaign objectives, baseline measures, targets, dates for measurement and detail on how they would measure objectives. Despite this, the peer review process should have identified that NSW Rural Fire Service did not set targets for the second year of the campaign.

The 2016 Guidelines for Implementing NSW Government Evaluation Framework for Advertising and Communications requires campaign objectives to be SMART (specific, measurable, achievable, realistic and timed). NSW Rural Fire Service did not meet this requirement for year two of the Fireproof campaign.

Post-campaign evaluations showed increases against four out of five objectives, however there were no specific targets

NSW Rural Fire Service set three campaign objectives at the time it submitted the second year of the campaign (2019–20) to the Department of Customer Service for peer review. However, the post-campaign effectiveness report submitted to the Department of Customer Service measured campaign effectiveness against five campaign objectives. The objectives in the post-campaign effectiveness report were the same objectives set for the first year of the campaign, which is appropriate as this was a repeat campaign.

NSW Rural Fire Service achieved increases against four of their five objectives. However, as noted above there were no specific targets (such as percentage increases) against which performance of the 2019–20 campaign could be measured. Despite this, at the end of the second year, the Fireproof campaign had already achieved some of the targets that NSW Rural Fire Service had set for the end of the third year of the campaign. The post-campaign research showed that both audience recall and exposure to the campaign increased significantly from the prior year. The campaign objectives and results are shown in Exhibit 8.

For those people who already have a bush fire plan, the campaign aimed to increase the number of those plans which have included two or more elements from the Guide to Making a Bush Fire Survival Plan. Elements from the Guide to Making A Bush Fire Survival Plan include actions such as deciding what to take with you if you leave, ensuring you have the right equipment for defending your home and allocating responsibilities to members of a household. The post-campaign evaluation showed that the campaign did not achieve an increase against this objective for people who planned to stay and defend their property rather than leave.

Exhibit 8: Campaign objectives and results

Campaign objectives	Does the post-campaign evaluation show increases against the objective?
1. Continue to increase the number of people that have discussed and/or written a plan with regards to what they will do in the event of a fire.
2. Of those who indicate they have a plan, increase the number of people who have included two or more elements from the Guide to Making a Bush Fire Survival Plan:
for those who plan to leave
for those who plan to stay and defend.
3. Increase the frequency in completing preparation activities around a person’s property.
4. Increase the number of people who correctly assess it is their responsibility to complete preparation activities and enact their plan without direct intervention from emergency services.
5. Visits to MyFirePlan website.

Key

Yes

No

NSW Rural Fire Service achieved cost efficiencies by reusing creative content developed in the first year of the campaign

Total creative and production costs incurred in year one of the campaign were $1.08 million. Rather than commissioning new creative materials, NSW Rural Fire Service re-used the same creative content in year two of the campaign. NSW Rural Fire Service incurred $100,000 in creative and production costs in year two of the campaign and achieved cost-efficiencies by reusing the same creative developed in the prior year.

NSW Rural Fire Service allowed sufficient time for cost-efficient media placement and received free media placements

The Department of Customer Service advises agencies to work with media contacts to book media in advance to ensure a cost-efficient placement. Prior to 2019–20, the Department of Premier and Cabinet provided suggested timeframes for agencies to book media as part of the peer review process. For example, it advised agencies to book television six to 12 weeks in advance and book radio advertising two to eight weeks in advance. NSW Rural Fire Service allowed sufficient time for a cost-efficient media placement.

NSW Rural Fire Service received $4 million of free advertising time and space donated by media companies due to the extent and impact of the 2019–20 fire season.

The cost benefit analysis (CBA) did not assess the costs and benefits of alternatives to advertising

Under the Government Advertising Act 2011, agencies are required to prepare a CBA when the cost of the campaign is likely to exceed $1 million. As part of the CBA, the Government Advertising Guidelines require agencies to consider options other than advertising to achieve the desired objective including a comparison of costs and benefits.

The CBA for the Fireproof campaign (year two) notes that the proposed campaign is one component of a broader community engagement strategy which has been developed over time and is based on research and evaluation. The CBA considers two options to achieve the objectives of the campaign. The first option is community engagement activities without an advertising campaign and the second option is community engagement activities alongside an advertising campaign. The CBA does not identify and assess the costs and benefits of both of the options in order to assess the most cost-efficient option.

This is a repeat finding from two previous government advertising audits. The report ‘Government Advertising: 2015–16 and 2016–17’ found that both agencies subject to the audit did not meet the requirements in the guidelines to consider alternatives to advertising. The report made a recommendation to the Department of Premier and Cabinet to work with Treasury to ensure the requirements of the guidelines are fully reflected in the 'Cost-Benefit Analysis Framework for Government Advertising and Information Campaigns'. The report ‘Government advertising 2017–18’ found that one agency subject to the audit did not identify to what extent the benefits could be achieved without advertising, nor did it consider alternatives to advertising which could achieve the same impact as the advertising campaign.

Appendix one – Responses from agencies

Appendix two – About the campaigns

Appendix three – About the audit

Appendix four – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #342 - released 19 November 2020

The Auditor-General for New South Wales, Margaret Crawford, released a report today examining whether the Department of Planning, Industry and Environment has effectively supported the planning for, and funding of, town water infrastructure in regional NSW.

The audit found that the department has not effectively supported or overseen town water infrastructure planning since at least 2014. It does not have a clear regulatory approach and lacks internal procedures and data to guide its support for local water utilities that service around 1.85 million people in regional NSW.

The audit also found that the department has not had a strategy in place to target investments in town water infrastructure to the areas of greatest priority. A state-wide plan is now in development.

The Auditor-General made seven recommendations to the department, aimed at improving the administration and transparency of its oversight, support and funding for town water infrastructure, and at strengthening its sector engagement and interagency coordination on town water planning issues and investments.

According to the Auditor-General, ‘A continued focus on coordinating town water planning, investments and sector engagement is needed for the department to more effectively support, plan for and fund town water infrastructure, and to work with local water utilities to help avoid future shortages of safe water in regional towns and cities.’ 

This report is part of a multi-volume series on the theme of water. Refer to ‘Water conservation in Greater Sydney’ and ‘Water management and regulation – undertaking in 2020-21’.

Read full report (PDF)

Safe and reliable water and sewer services are essential for community health and wellbeing, environmental protection, and economic productivity. In 2019, during intense drought, around ten regional New South Wales (NSW) cities or towns were close to ‘zero’ water and others had six to 12 months of supply. In some towns, water quality was declared unsafe.

Ensuring the right water and sewer infrastructure in regional NSW to deliver these services (known as 'town water infrastructure') involves a strategic, integrated approach to water management. The NSW Government committed to ‘secure long-term potable water supplies for towns and cities’ in 2011. In 2019, it reiterated a commitment to invest in water security by funding town water infrastructure projects.

The New South Wales’ Water Management Act 2000 (WM Act) aims to promote the sustainable, integrated and best practice management of the State’s water resources, and establishes the priority of town water for meeting critical human needs.

The Department of Planning, Industry and Environment (the department) is the lead agency for water resource policy, regulation and planning in NSW. It is also responsible for ensuring water management is consistent with the shared commitments of the Australian, State and Territory Governments under the National Water Initiative. This includes the provision of healthy, safe and reliable water supplies, and reporting on the performance of water utilities.

Ninety-two Local Water Utilities (LWUs) plan for, price and deliver town water services in regional NSW. Eighty-nine are operated by local councils under the New South Wales’ Local Government Act 1993, and other LWUs exercise their functions under the WM Act. The Minister for Water, Property and Housing is the responsible minister for water supply functions under both acts.

The department is the primary regulator of LWUs. NSW Health, the NSW Environment Protection Authority (EPA) and the Natural Access Resource Regulator (NRAR) also regulate aspects of LWUs' operations. The department’s legislative powers with respect to LWUs cover approving infrastructure developments and intervening where there are town water risks, or in emergencies. In this context, the department administers the Best Practice Management of Water Supply and Sewerage Guidelines (BPM Guidelines) to support its regulation and to assist LWUs to strategically plan and price their services, including their planning for town water infrastructure.

Under the BPM Guidelines, the department supports LWU’s town water infrastructure planning with the Integrated Water Cycle Management (IWCM) Checklist. The Checklist outlines steps for LWUs to prepare an IWCM strategy: a long-term planning document that sets out town water priorities, including infrastructure and non-infrastructure investments, water conservation and drought measures. The department's objective is to review and approve (i.e. give ‘concurrence to’) an IWCM strategy before the LWU implements it. In turn, these documents should provide the department with evidence of town water risks, issues and infrastructure priorities.

The department also assesses and co-funds LWU's town water infrastructure projects. In 2017, the department launched the $1 billion Safe and Secure Water Program to ensure town water infrastructure in regional NSW is secure and meets current health and environmental standards. The program was initially established under the Restart NSW Fund.

This audit examined whether the department has effectively supported the planning for and funding of town water infrastructure in regional NSW. It focused on the department’s activities since 2014. This audit follows a previous Audit Office of NSW report which found that the department had helped to promote better management practices in the LWU sector, up to 2012–13.

Regional New South Wales (NSW) is home to about a third of the state's population. Infrastructure that provides safe and reliable water and sewer services (also known simply as 'town water infrastructure') is essential for community health and wellbeing, environmental protection, and economic productivity. Planning for and meeting these infrastructure needs, as well as identifying when non-infrastructure options may be a better solution, involves a strategic and integrated approach to water resource management in regional NSW.

We examined whether the department has effectively supported planning for town water infrastructure since 2014. This assessment was made in the context of its current approach to LWU sector regulation. The findings below focus on whether the department has an effective framework including governance arrangements for town water issues to inform state-wide strategic water planning, and whether (at the local level) the department has effectively overseen and facilitated town water infrastructure planning through its Integrated Water Cycle Management (IWCM) planning guidance to LWUs.

We examined whether the department has effectively targeted town water infrastructure funding to policy objectives, with a focus on the design and implementation of the Safe and Secure Water Program (SSWP) since its commencement in 2017. The program’s aim was to fund town water infrastructure projects that would deliver health, social and environmental benefits, and support economic growth and productivity. We also assessed the department’s capacity to demonstrate the outcomes of the SSWP funding and the contributions of its town water infrastructure investments more broadly. Finally, we identified risks to the effectiveness of the department’s work underway since 2018–19, which is intended to enhance its strategic water planning and approach to prioritising investments in reducing town water risks.

Appendix one – Response from agency

Appendix two – Key terms

Appendix three – About the audit

Appendix four – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #341 - released 24 September 2020

The Auditor-General for New South Wales, Margaret Crawford, released a report today examining credit card management in Local Government.

The audit was in response to a letter from the then Minister for Local Government in November 2018. The audit assessed the effectiveness of credit card management practices in six councils, including in the areas of policies, procedures, compliance and monitoring.

The audit found that all six councils had gaps in their credit card policies and procedures. The Auditor-General recommended that the Department of Planning, Industry and Environment publish guidelines on credit card management for the Local Government sector. The report also generated insights for the Local Government sector with respect to credit card management.

Read full report (PDF)

In 2018–19, all councils responding to an Audit Office survey (representing over 90 per cent of the sector) indicated they issued credit cards to staff members to make work-related purchases. As there are no sector-wide requirements or policies for credit card use and management in Local Government, councils have developed their credit card management frameworks to suit their own needs. The quality of credit card policies and procedures may therefore vary across the sector.

Credit cards are an efficient means of payment, especially for low-value purchases. Compared to the use of petty cash, credit card transactions provide better transparency and accountability for expenditure. By using credit cards, councils only need to make one payment each month, which can reduce the time spent on paying separate vendors, as in the case of purchase orders.

This audit assessed the effectiveness of credit card management practices in six councils: Dubbo Regional Council, Junee Shire Council, Lane Cove Council, Nambucca Valley Council, Penrith City Council and Shellharbour City Council. The councils selected represent a mix of rural, regional and metropolitan councils. They were also among the top ten users of credit cards within their geographical classification, in terms of the number of credit cards issued or the number of transactions per credit card.

This audit referenced the NSW Treasury's Policy and Guidelines Paper TPP17–09 'Use and Management of NSW Government Purchasing Cards', as its principles and recommendations for NSW Government agencies are relevant for councils.

The Audit Office of New South Wales Report on Local Government 2019 provided a high-level overview of credit card management across the sector. While over 90 per cent of councils reported that they had a credit card policy and a credit card acquittal process, the quality of these policies and procedures may vary across the sector as there is no standardised or recommended approach to credit card management for Local Government. This audit complements the Report on Local Government 2019 by providing a detailed discussion of the effectiveness of credit card management practices in councils.

Council staff provided with a credit card can purchase from a wide range of businesses, including online transactions with overseas vendors. However, councils may limit the types of purchases that staff can make through their policies and procedures or by setting controls that block certain transaction types such as cash advances. To examine credit card usage, the audit obtained credit card transaction data from 1 July 2016 to 30 June 2019 for the six councils in this review. The data included:

• transaction date
• amount
• merchant category code (MCC)
• merchant name.

The audit analysed the number and value of transactions by each council, and the types of purchases made using credit cards.

The existence of a documented approach to managing credit cards ensures transparency and consistency of use within the council. A credit card management framework that contains preventative and detective controls can also minimise risks of fraud, misuse and wastage.

There is no prescribed credit card management framework for Local Government, but typical components of a credit card management framework include:

• policies and procedures
• guidance for staff
• monitoring and reporting.

With no detailed guidance notes similar to those in TPP17–09 for NSW Government, councils have developed their own credit card management framework based on their size, structure, resources and intended credit card usage. For instance, the size of a council has implications for the number of credit cards issued, which in turn influences the arrangements for training and guidance provided to cardholders and approvers.

The intended level of credit card usage may determine whether a council adopts a manual or electronic credit card management system and councils should identify the system that best meets their needs. For instance, a council with few credit cards may not be able to justify investment in an electronic system. On the other hand, a manual system may only be viable for councils with a low number of credit cards and a low number of transactions.

Among the six councils audited, the three councils with fewer cards and a lower number of transactions had a manual credit card management system, while the three councils with more cards and a higher number of transactions used an electronic system.

Exhibit 10 summarises the six councils' policies on use of credit cards.

While it is important for councils to have an established credit card management framework, it is equally important that they ensure compliance in practice. This chapter examines councils' credit card management practices – how well staff members were complying with policies and procedures, and how effective their credit card controls were. The chapter is structured to cover:

• preventative controls (embedded in the issuance, use and cancellation of cards) that prevent fraud and misuse
• detective controls (embedded in reconciliation and record keeping) that assist in detecting fraud and misuse.

Where ineffective credit card management practices are identified, councils should reflect on whether they need to more closely monitor compliance, or whether there are fundamental deficiencies in their policies and procedures that need to be refined.

Appendix one – Responses from councils and the Department of Planning, Industry and Environment

Appendix two – About the audit

Appendix three – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #340 - released 3 September 2020

This report examines whether the Department of Planning, Industry and Environment, and Sydney Water have effectively progressed water conservation initiatives in Greater Sydney.

The report found that the department and Sydney Water have not effectively investigated, implemented or supported water conservation initiatives in Greater Sydney. The agencies have not met key requirements of the current Metropolitan Water Plan and Sydney Water has not met all its operating licence requirements for water conservation. There has been little policy or regulatory reform, little focus on identifying new options and investments, and limited planning and implementation of water conservation initiatives.

As a result, Greater Sydney's water supply may be less resilient to population growth and climate variability, including drought.

The Metropolitan Water Plan states that water conservation, including recycling water, makes the drinking water supply go further. The plan also states that increasing water conservation efforts may be cheaper than building new large-scale supply options and can delay the timing of investment in new supply infrastructure.

The Auditor-General recommends the department develop a clear policy and regulatory position on water conservation options, improve governance and funding for water conservation, and work with Sydney Water to assess the viability of water conservation initiatives. The report also recommends improvements to Sydney Water’s planning for and reporting on water conservation, including the transparency of this information.

This report is part of a multi-volume series on the theme of water. Refer to ‘Support for regional town water infrastructure’ and ‘Water management and regulation – undertaking in 2020-21’.

Read full report (PDF)

The current, 2017 Metropolitan Water Plan states that water conservation, including recycling water, makes the drinking water supply go further. The plan also states that increasing water conservation efforts may be cheaper than building new large-scale supply options and can delay the timing of investment in new supply infrastructure.

Water conservation refers to water recycling, leakage management and programs to enhance water efficiency. Water recycling refers to both harvesting stormwater for beneficial use and reusing wastewater.

This audit examined whether water conservation initiatives for the Greater Sydney Metropolitan area are effectively investigated, implemented and supported. We audited the Department of Planning, Industry and Environment (the Department) and the Sydney Water Corporation (Sydney Water), with a focus on activities since 2016.

The Department is responsible for the integrated and sustainable management of the state’s water resources under the Water Management Act 2000, which includes encouraging ‘best practice in the management and use of water’ as an objective. The Department is also responsible for strategic water policy and planning for Greater Sydney, including implementing the Metropolitan Water Plan.

Sydney Water is a state-owned corporation and the supplier of water, wastewater, recycled water and some stormwater services to more than five million people in Greater Sydney. It is regulated by an operating licence that is issued by the Governor on the recommendation of the Independent Pricing and Regulatory Tribunal (IPART). The Tribunal determines Sydney Water’s maximum prices, reviews its operating licence and monitors compliance. Sydney Water's operating licence and reporting manual set out requirements for its planning, implementing and reporting of water conservation.

From 2007 to 2012, the Climate Change Fund was a source of funds for water conservation activities to be undertaken by the Department and Sydney Water. The Climate Change Fund was established under the Energy and Utilities Administration Act 1987. Four of its six objectives relate to water savings. Water distributors such as Sydney Water can be issued with orders to contribute funds for water-related programs. The Fund is administered by the Department.

In 2016, Sydney Water developed a method for determining whether and how much to invest in water conservation. Known as the ‘Economic Level of Water Conservation’ (ELWC), the method identifies whether it costs less to implement a water conservation initiative than the value of the water saved, in which case the initiative should be implemented.

Appendix one – Responses from agencies

Appendix two – About the audit

Appendix three – Glossary

Appendix four – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #336 - released 23 June 2020

This report focuses on how the NSW Police Force managed a $100 million program to acquire new technology. The program invested in technologies intended to make police work safer and quicker. These included body-worn video (BWV) cameras, smart phone devices, mobile fingerprint scanners and hand-held drug testing devices.

The audit found that while the NSW Police Force mostly managed the ‘Policing for Tomorrow’ program effectively, investment decision making could be improved in the future. The NSW Police Force missed an opportunity to take a whole-of-organisation approach to identify capability gaps and target the acquired technologies to plug these.

The NSW Police Force has processes in place to monitor the benefits of some of the larger technology, but it does not do this consistently for all procured technology. It could not demonstrate that smaller projects are improving the efficiency or effectiveness of policing.

The audit also found that the NSW Police Force does not routinely engage with external stakeholders on the use or impacts of new technology that changes how officers interact with the public, noting that this will not always be possible for particularly sensitive procurements that involve covert technologies or methodologies.

The Auditor-General made three recommendations to guide improvement of NSW Police Force ICT procurement, benefits management and stakeholder engagement processes.

Read full report (PDF)

Ahead of the March 2015 election, the NSW Government announced a $100 million Policing for Tomorrow fund for the NSW Police Force to acquire technology intended to make police work safer and quicker. The announcement committed the NSW Police Force to several investment priorities, including body-worn video (BWV) cameras, smart phone devices (MobiPOL), mobile fingerprint scanners and hand-held drug testing devices. Otherwise, the NSW Police Force was allowed flexibility in identifying and resourcing suitable projects.

This audit assessed whether the Policing for Tomorrow fund was effectively managed to improve policing in New South Wales. We addressed the audit objective with the following audit questions:

• Did the NSW Police Force efficiently and effectively identify, acquire, implement and maintain technology resourced by the fund?
• Did the NSW Police Force establish effective governance arrangements for administering the fund, and for monitoring expected benefits and unintended consequences?
• Did technology implemented under the fund improve the efficiency and effectiveness of policing in New South Wales?

We examined how effectively the NSW Police Force governed the Policing for Tomorrow fund, to ensure that key accountability and decision-making arrangements were in place to direct the $100 million spend to appropriate technologies. We also assessed how the NSW Police Force acquired, implemented and maintained technology funded by Policing for Tomorrow to determine the effectiveness of the relevant asset management.

The Policing for Tomorrow election commitment aimed to invest in technology to ‘make police work safer and quicker – meaning more time on the street combatting crime’. We assessed whether the NSW Police Force ensured that funded technologies have improved policing efficiency and effectiveness. We did not seek to independently assure the benefits or outcomes resulting from the technologies.

Appendix one – Response from agency

Appendix two – Policing for Tomorrow projects and expenditure

Appendix three – About the audit

Appendix four – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #334 - released 2 June 2020