Appendix one - List of 2017 recommendations

Appendix two - Status of 2016 recommendations

Appendix three - Agencies selected for this volume

1. Financial reporting and controls

2. Service Delivery

This report provides Parliament and other users of Transport cluster agencies' financial statements with audit results, observations, conclusions and recommendations in the following areas:

• Financial reporting and controls
• Service delivery.

Confidence in public sector decision-making and transparency is enhanced when financial reporting is accurate and timely. Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies.

This chapter outlines our audit observations, conclusions or recommendations related to financial reporting and controls of Transport cluster agencies for 2016–17.

Achievement of government outcomes can be improved through effective delivery of the right mix of services, whether from the public, private or not‑for‑profit sectors. Service delivery reform will be most successful if there is clear accountability for service delivery outcomes, decisions are aligned to strategic direction and performance is monitored and evaluated.

This chapter outlines our audit observations, conclusions or recommendations related to service delivery in the Transport cluster agencies for 2016–17.

Appendix one - List of 2017 recommendations

Appendix two - Status of 2016 recommendations

Appendix three - Agencies selected for this volume

Appendix four - Financial audit reporting

Appendix five - Bus Contracts

Demand for ambulance services is increasing. Demographic factors including population growth and ageing have contributed to this and ongoing growth in demand is likely. It is important that NSW Ambulance finds ways to respond to this demand more efficiently, while maintaining patient safety standards and meeting community expectations.

Most triple zero calls to NSW Ambulance do not involve medical issues that require an emergency response. NSW Ambulance has introduced a range of initiatives to change the way it manages these less urgent requests for assistance. Its major demand management initiatives include using a telephone advice line, referring some patients to services other than hospital emergency departments and using specialist paramedics to respond to less urgent cases.

The role of NSW Ambulance has changed in recent years. It is aiming to become a ‘mobile health service’ that identifies the needs of patients and provides or refers them to the most appropriate type of care. This change involves a significant expansion of the clinical decision-making role of paramedics. Considerable strategic and organisational efforts are required to make this work. The successful implementation of demand management initiatives is important to NSW Ambulance's ability to continue to meet demand for its services.

This audit assessed NSW Ambulance's major demand management initiatives that aim to reduce unnecessary demand for ambulance responses and unnecessary transport to hospital emergency departments. It aimed to assess the extent to which these initiatives have improved the efficiency of its services.

Appendix one - Response from agency

Appendix two - About the audit

Appendix three - Performance auditing

• ageing ICT equipment and inadequate wireless networks
• variable student access to devices at school
• variable teacher access to centrally provided devices for use outside of the classroom.

Information and communication technologies (ICT) are pervasive in modern life. Australian research has identified that the workforce demand for digital literacy and advanced digital skills is growing across most areas of work. There is broad agreement internationally and in Australian school systems that digital literacy is a core skill for the workforce and students will need to be confident with ICT. Education systems around the world are using ICT in classrooms to support learning and employment goals.  

The New South Wales Department of Education’s (the Department’s) overall strategic directions for teaching and learning with ICT are set in the 'Strategic Information Technology Plan 2016–19'. The Department centrally provides a base level of resources to schools for ICT and schools supplement funding from their existing school budget and Parents and Citizens Associations. Each school decides how to allocate these funds to meet local needs. Schools also set expectations for how teachers and students will use technology to help deliver outcomes.

This audit assessed how well New South Wales public schools are using ICT to improve teaching and learning. It focussed on planning and teacher and student use of ICT. We examined whether:

• the Department identifies key strategic opportunities to enhance the use of ICT platforms and technologies in schools
• teachers are integrating ICT into classroom practice
• the Department monitors the impact of ICT on student learning.

Old equipment and wireless networks are not keeping pace with modern demands

The Department’s vision for ICT is to enable ‘any learning opportunity, anywhere, anytime’. This vision is at risk due to an ageing stock of devices and wireless networks. The average age of devices in New South Wales schools is over four years. Older devices are less reliable, require greater maintenance and support, and cannot run demanding applications. Further, many school wireless networks are beyond the end of their useful life. This limits the number of teachers and students who can access online content on wireless networks at the same time.

The central funding model for ICT in schools is not meeting current needs

Funding for the Technology for Learning program to deliver ICT in schools has not increased since 2004, despite an increase in the number of students and emphasis placed on ICT in teaching and learning during this time. Schools supplement funding for ICT from their existing school budget and Parents and Citizens Associations.  

The Department’s current funding model for ICT is not adequately addressing a growing gap in the provision of contemporary ICT in classrooms between schools able to access funding from other sources and those which cannot. The Department needs to review whether the Technology for Learning program is equitable in equipping all schools with the modern technology needed to achieve its vision.

Many teachers are not provided with devices for use outside of the classroom

School Principals we interviewed reported that technology is an essential part of a modern classroom and teacher access to devices outside of the classroom can impact how they use ICT. This is because, in practice, teacher working days extend outside classroom hours and teachers need access to devices for activities such as lesson preparation and student assessment. The Department provides teachers with access to a suite of software tools for these tasks.

The Commonwealth Government’s Digital Education Revolution program provided teachers of secondary school students with laptops from 2009 to 2013. The Department’s evaluation of the Digital Education Revolution program found that teachers reported greater confidence with, and use of, ICT throughout the program.  
Providing desktop computers, laptops or tablets for teachers is now a school level decision and arrangements vary across schools. Each school must trade-off between allocating devices for students and teachers. Most other States and Territories provide all teachers with a laptop for use in and outside of the classroom or offer subsidised access to one.  

There is limited teacher professional learning in the use of ICT

The Department’s research has identified that professional learning is an important factor in how effectively teachers use ICT to enhance teaching and learning. Despite this, the Department provides few courses on using ICT in the classroom directly, and most of these are offered in Sydney. This limits accessibility for teachers outside of the metropolitan area. Schools we visited reported that the costs of courses and providing relief teachers limits the number of external courses or events that teachers attend, especially for rural and regional schools. Increasing the use of online learning would improve access for teachers in these areas.  

The Department is not adequately monitoring trends in professional learning in ICT or evaluating the overall effectiveness of courses. A recent upgrade to the professional learning system may provide the Department with better quality data to do this.

Greater monitoring and reporting on technology use in schools is required

The Local Schools, Local Decisions policy gives schools greater authority to make strategic decisions on the use of ICT appropriate to their local contexts. To support this, the Department needs to better monitor current trends, and identify emerging needs to determine future direction and how best to support schools.  

For example, the Department does not currently know how many devices are allocated to teachers or how many schools have implemented a student Bring Your Own Device scheme. This affects how schools are using ICT, and places demand on the network and the type of support the Department must provide. An assessment of the ICT maturity of schools would help the Department target its resources to schools requiring greater assistance with planning.

The Department does not regularly monitor or report on student capabilities with ICT. A national assessment found that the ICT literacy of a sample of Year 6 and Year 10 New South Wales students fell between 2011 and 2014. The fall was greater in New South Wales than in other States and Territories. Without more regular assessment or reporting, the reasons behind this fall and the distribution of student capabilities between schools will remain unknown. 

By July 2018, the Department of Education should:

1. Review the Technology for Learning program and school ICT support resourcing to determine whether resourcing is adequate for modern school requirements.
    
2. Develop a program to improve wireless networks in all NSW schools, for instance by expanding the Connecting Country Schools Program to all NSW schools.  
    
3. Implement an assessment of school ‘ICT maturity’ and use this to target assistance to those schools requiring support with forward planning for ICT.
    
4. Improve the use of evidence to inform plans and strategies, including:
   • more detailed monitoring of teacher and student access to and use of ICT
   • evaluating the impact of teacher professional learning on student outcomes 
   • further examining the links between ICT and student outcomes.
      
5. Improve teacher access to devices for use outside of the classroom to improve how effectively they integrate ICT into teaching and learning.
    
6. Improve teacher professional learning by providing more:
   • online learning opportunities for teachers in regional and remote areas
   • courses focused on pedagogy to make best use of ICT.
      
7. Identify the ICT skills students need, and provide teaching resources to develop these skills and monitor their achievement.

Appendix One - Response from the Agency

Appendix Two - About the audit

Appendix Three - Performance auditing

RMS’ SMC contract management includes most elements of good practice, including governance and dispute resolution mechanisms. However, key elements are missing which reduces its effectiveness.

Roads and Maritime Services (RMS) is responsible for the Sydney region State roads network This includes over 2,800 kilometres of roads and associated road corridor infrastructure such as bridges, tunnels and drainage structures. RMS divides the network into three geographical areas: south, west and north zones.

In 1995, RMS first outsourced road corridor infrastructure maintenance for the north zone through a Performance Specified Maintenance Contract (PSMC). The current 10-year PSMC for the north zone will expire in October 2018. Prior to November 2013, RMS maintained roads in the south and west zones through its Road and Fleet Services unit. 

In November 2013, RMS outsourced road maintenance services for the south and west zones using Stewardship Maintenance Contracts (SMC). The contracts run for seven years with an option for a further three years at RMS’ discretion. RMS estimated that the annual cost of these contracts was around $240 million in total. In March 2018, the contract prices are due to be reset by negotiation to reflect the contractors’ experience with, and better information about, the road networks and routine maintenance requirements. 

The SMC model adopted stewardship principles to improve value for money. RMS defined stewardship principles as a broad set of values, attitudes and behaviours, required of the contractor to effectively manage the assets on behalf of RMS. The SMC also includes commercial principles, such as linking risk to reward, and a performance framework where outcomes drive performance.

This audit assessed whether RMS had effectively managed the outsourcing of road maintenance in the Sydney region south and west zones. In making this assessment, we answered the following questions:

1. Did RMS justify the decision to adopt the SMC model?
2. Do SMCs include key performance indicators (KPIs) and incentives which promote efficiency and effectiveness? 
3. Does RMS collect high quality information on contractor performance and take action to correct performance deficiencies?
4. Are the expected benefits being achieved?

The Stewardship Maintenance Contract

RMS justified adopting the SMC model and included KPIs to drive efficiency and effectiveness

The SMC model includes features that RMS had not previously used for road maintenance contracts. These included adopting stewardship principles and transferring price risk to the contractor over time as the contractor becomes familiar with the assets being maintained.

The SMC model meets RMS’ requirements for flexibility in pricing models, the need for collaboration in asset maintenance planning, promoting innovation and effective performance management.

RMS used many good practices to develop the SMC model, including:

• preparing a robust business case comparing the SMC model to RMS maintaining the road network itself, as well as assessing whether two other contracting models
  (traditional and alliance) would meet its requirements
• assessing experiences with similar arrangements in other jurisdictions and identifying elements that worked to get the best outcomes
• developing a robust performance framework, which included a mix of efficiency and effectiveness KPIs that reflected NSW Government policy and RMS priorities
• incorporating risk and reward incentives delivered through cost sharing arrangements which change as the contract matures
• using a contract duration that supports RMS priorities and provides an incentive for better quality outcomes.

RMS uses data provided by the contractor to measure performance and calculate payments to the contractor. The SMC includes a specific sanction if RMS finds that the contractor provided incorrect performance data, but no specific sanction if the contractor provides incorrect financial data. If RMS finds that the contactor provided incorrect performance or financial data, RMS can only recover over-payments which may have been made using the incorrect data.  

To provide a stronger incentive for the contractor to ensure data it provides is accurate, RMS should consider whether to incorporate stronger sanctions when negotiating the commercial reset due in mid-2018 for south and west zones. RMS should also consider this for the new contract for the north zone when the current PSMC contract expires in October 2018.

RMS' contract management approach and benefits realization

RMS can improve the effectiveness of its oversight and management of the SMC

RMS does not have SMC specific contract procedures to guide its contract managers. Consequently, RMS has not exercised several significant SMC requirements, such as having the contractors account for an efficiency dividend in their pricing at the start of each three-year works period. Effective contract management should be supported by contract specific procedures, with explanations of, and allocation of responsibility for, the various interventions that RMS may be required to exercise in the SMC.

Performance and financial reporting under the SMC is based on a mix of RMS and contractor provided data. While there are a range of audits of contractor provided performance and financial data that RMS can conduct each year under the SMC, it does not have a schedule of audits it will conduct and when.  
During the first year of the SMC, RMS commissioned some limited audits of financial data. In the first three years of the SMC, RMS did not conduct any audits of performance data. Had there been SMC specific procedures in place, this would have reduced the risk of RMS not implementing a systematic audit program to give it reasonable assurance on the quality of the data that the contractor has provided. This is important because the data is used to measure performance and calculate contractor payments.

RMS has been aware of data quality issues since 2015. While RMS advised that it commenced addressing some data quality issues in response to a series of reviews conducted in 2015, a recent internal audit report indicates that RMS has not resolved the data quality issues.  

RMS achieved benefits in the first year, but has not tracked benefits since

As part of the business case, RMS agreed to implement a benefits realisation strategy, including a benefits tracking tool. RMS commenced tracking benefits, but did not establish a comparative baseline pre-SMC on non-financial benefits, and has not tracked benefits past year one.

In 2015, a benchmarking study commissioned by RMS found that it had achieved 80 per cent of the expected recurrent cost savings and other benefits, such as improved workplace safety, in the first full year of the SMC. However, there was no clear baseline to measure
non-financial performance. The study was qualified due to gaps in available data. The study also did not reconcile the actual one-off transition costs to the business case estimate.

During the course of the audit, RMS advised that it intends to repeat this type of study to determine whether it has achieved all expected benefits (and their value), and that it would use the results to inform its negotiation with the SMC contractors as part of the commercial reset due in mid-2018.

Roads and Maritime Services is responsible for the State Roads network in the Sydney region

Roads and Maritime Services (RMS) is responsible for the Sydney region State roads network. This includes over 2,800 kilometres of roads and associated road corridor infrastructure such as bridges, tunnels and drainage structures. The network is divided into three geographical areas: south, west and north zones. Prior to November 2013, RMS maintained roads in the Sydney region south and west zones through its Road and Fleet Services unit.  

In 1995, RMS first outsourced road corridor infrastructure maintenance for the north zone through a Performance Specified Maintenance Contract (PSMC). The current 10-year PSMC for the north zone will expire in October 2018. This contract is worth around $35 million per annum.  

NSW Government priorities and road maintenance

Efficient and effective road maintenance contributes to the following NSW Government priorities:

• improving road travel reliability
• ensuring on-time running of public transport
• reducing road fatalities
• improving government services
• keeping our environment clean.

The NSW Commission of Audit recommended outsourcing the maintenance of State roads

The NSW Commission of Audit in its Final Report on Government Expenditure (May 2012) recommended contestability as an appropriate strategy to consider for improving road maintenance service delivery for State roads.  

The Commission benchmarked RMS’ road surface quality and cost per lane kilometre against those of Western Australia, Victoria, and Queensland. This showed that New South Wales lagged the other states on both these measures.  

The Commission noted that RMS had conducted two independent reviews to examine the potential for extending road maintenance contestability. The Commission found that there was inadequate and inconclusive benchmarking to establish the efficiency of RMS’ Road and Fleet Services unit when compared to outsourcing. It recommended that RMS bring forward a proposal to conduct a competitive tender for the road maintenance of the Sydney region south zone road network to inform the feasibility of a progressive rollout of road maintenance contestability across other areas of the State. In August 2012, the NSW Government adopted the Commission’s recommendation.

The NSW Government introduced road maintenance contestability through Stewardship Maintenance Contracts

In April 2013, the NSW Government announced that it would introduce road maintenance contestability across the Sydney region, using a Stewardship Maintenance Contract (SMC) model to improve value for money. In doing so, it excluded RMS’ Road and Fleet Services unit from tendering.  

The SMC model is based on the following key commercial and performance principles set by RMS:

• performance driven by outcomes
• flexible and adaptable
• transparent and measurable
• linking risk to reward
• continuous improvement
• criteria for selection of, and transition to, different payment models.

The following key stewardship principles underpin the SMC’s broad set of values, attitudes and behaviours, which are required of the contractor to effectively manage the assets on behalf of RMS:

• putting RMS’ customers (road users and the general public) first and being responsive to them
• being responsible and accountable for the outcomes resulting from the management of the assets
• managing the assets diligently, efficiently and effectively with limited direction from RMS
• working collaboratively with RMS to deliver services that are tailored to meet RMS’ evolving needs
• acting with integrity and transparency in performing the services
• performing the services in the best interests of RMS and asset users.

Other key features of the SMC include:

• service requirements which describe the scope of the services, and the standards the contractor must meet
• a commercial framework which defines how payments are structured, how performance assessment will impact on payments and outlines the key commercial principles. SMCs primarily divide payments into two main mechanisms, these being the priced component (or fixed price) and the target cost calculated as follows:
  • fixed price – the contractor is paid a pre-agreed amount for specific services being provided, regardless of the actual costs incurred
  • target cost – RMS and the contractor agree on a target cost for a project, and any cost overruns or underruns are shared between them
• a performance framework which provides mechanisms for assessing contractor performance. This includes a comprehensive listing of the key result areas (KRAs) and key performance indicators (KPIs) against which RMS measures the contractor’s performance. The framework also outlines the scoring methodology that RMS uses to determine whether the contractor’s bid margin (profit and overheads) is reduced due to less than satisfactory performance or whether a bonus is paid if a threshold performance score is exceeded.

Road maintenance under SMCs for Sydney region south and west zones commenced in November 2013

In November 2013, RMS awarded SMCs to the Leighton Boral Amey consortium, now named Ventia Boral Amey (VBA), for the south zone and the DownerMouchel (DM) consortium for the west zone. The contracts run for seven years with an option for a further three years at RMS’ discretion. In April 2014, full services commenced following a four-month transition period. RMS estimated that the annual cost of these contracts was around $240 million in total. In March 2018, the contract prices are due to be reset by negotiation to reflect the contractors’ experience with, and better information about, the road networks and routine maintenance requirements. 

1. Roads and Maritime Services should consider whether to incorporate stronger sanctions in the Stewardship Maintenance Contract if the contractor provides incorrect performance or financial data to RMS, when:
    
   1. negotiating the commercial reset for the next works period with the Sydney region south and west zone contractors due in July 2018.
   2. finalising a new SMC contract for the Sydney region north zone, due to commence in October 2018.

Roads and Maritime Services should, by September 2017:

2.  Review its contract management framework for SMCs to ensure that all authorities and accountabilities of
     contract managers are clearly defined, including:

a) accountability and procedures for exercising all operational clauses in the SMC where RMS may opt to, or be required to intervene, or make a decision

b) authority to approve or initiate the interventions RMS is required to, or may, exercise under the SMC

c) the audits that RMS will conduct to systematically validate the performance and financial data that the SMC contractors provide

d) the accountabilities of RMS contract managers to systematically review audits and quality reviews that the SMC contractors must conduct to demonstrate compliance with their service plans

e) the accountabilities of RMS contract managers to check that the monthly and annual reports provided by SMC contractors do not contain errors, omissions or inaccuracies.

3.  Improve its management of benefits realisation by:

a) initiating a further benefits realisation review and record the benefits delivered against those
    estimated following the tender process, including the one-off transition costs

b) identify any benefits, including savings, not yet attained and develop strategies to address any short-falls

c) establish a tool to track the ongoing realisation of benefits.

Appendix One - Response from Roads and Maritime Services

Appendix Two - Better practice contract management framework

Appendix Three - About the audit

The Department of Education (Department) must provide students with a place in a government school if parents desire it. Over the next 15 years, the student population in NSW Government and non-government schools is projected to grow by 21 per cent to nearly 1.5 million students. Over 80 per cent of this is expected to be in the Sydney metropolitan area.

Improving education outcomes of students is a NSW State Priority. Research shows that well designed and maintained facilities improve student learning outcomes. A strategic objective of the 2014 State Infrastructure Strategy Update is to ‘equip growing urban and regional populations with the modern schools and training infrastructure required to deliver educational service for a competitive, innovative economy’. 

This audit assessed whether the Department has a strategy and implementation model to ensure it has sufficient fit-for-purpose student learning spaces when and where needed.

Asset planning and investment for much of the last decade has been deficient

Over the last decade, there has been chronic under-investment in NSW Government school infrastructure. This has affected both new works and maintenance of existing assets. Until recently, the Department did not have a high-level, long-term school asset strategic plan. The Department had limited understanding of the funds needed over the long term to provide the necessary school infrastructure to meet educational needs of students economically. It had no robust method to determine whether priorities were correct and assess whether the funding split between building, upgrading and maintaining was appropriate.  

Permanent classrooms in 37 per cent of government schools are fully utilised, and 180 schools are operating beyond their permanent classroom capacity. The utilisation rates vary between regions and districts. Demountables are being used for extended periods to cater for permanent student population growth. A significant increase in the number of demountables at some schools decreased student access to amenities and open play spaces. 

The Department now has a Plan to meet future needs

The Department recently developed a Strategic Plan designed to ensure that there are sufficient fit-for-purpose places for students where and when required up to 2031. The Strategic Plan outlines the:

• predicted demand for future learning spaces
• condition of existing infrastructure and additional infrastructure and maintenance required
• proposed new initiatives to deliver the required infrastructure economically
• proposed new cluster planning model to determine priorities and initiatives to be implemented at the school level
• funding needed to provide appropriate learning spaces where and when needed.

The Strategic Plan has been developed with the benefit of expert advice and has been reviewed extensively within the Department, by other key government agencies and experts. The review process examined the Strategic Plan’s assumptions, data quality, proposals and cost estimation approach. This process has increased assurance and improved the Strategic Plan, but has delayed implementation by approximately a year so far.

Many more learning spaces will be needed

The Strategic Plan identifies that over the next 15 years the student population in government schools will increase by 21 per cent and that the Department will need:

• 7,200 additional classrooms and to upgrade many existing classrooms to meet future teaching and learning needs
• to undertake much more planned maintenance, otherwise 40 per cent of existing government school buildings will be in such poor condition that learning outcomes could be compromised.

The Department proposes a new approach designed to minimise costs

Given the need for substantial additional infrastructure and maintenance, and underfunding over the last decade, the Department has sought to minimise costs while maintaining quality.

Initiatives proposed include an increase in the maximum number of students in new and redeveloped schools; a stronger emphasis on redeveloping existing schools; smaller, more intensely developed school sites; strengthening partnerships with the private sector to improve school assets; and school consolidation and sale of surplus land to reinvest in better facilities. We did not identify any additional options that could be proposed to make further cost saving under current operational policy settings.

The proposed new cluster planning model will assess schools in a region or district to identify the best way to deliver school assets to a cluster as a whole rather than individual schools. It will identify the most effective and efficient asset solution within a cluster of five to 15 schools.

It represents an improvement over the previous model which addressed infrastructure needs on a school-by-school basis. The initial focus of school cluster planning will be on areas of highest student growth.

The proposed new cluster planning model has potential to create efficiencies and economies of scale if implemented well. Cluster planning will determine which of the various initiatives should be implemented in the schools in the cluster. It recognises that solving enrolment trends in one school requires consideration of surrounding schools and seeks the optimum asset solution for identified schools.

Implementation will be a major challenge

Effective implementation will require good collaboration with other government agencies, non-government schools, the private sector and the community. The Department has been improving its consultation with other government agencies and the non-government school sector, and has developed models for collaborating with the community and private sector. The Strategic Plan proposes open access to information, which will be important for effective collaboration and partnerships.  

There are many risks to effective implementation, which could drive up costs. These include opposition from school communities, a reduction in the proportion of students educated in non-government schools, unexpected increases in land and construction costs, failure to sufficiently streamline the planning approval system or a blow-out in renovation costs in older schools.  

To provide and maintain the infrastructure needed up until 2031, the Department estimates it will need significantly more money than it receives now even if it implements its initiatives and cluster planning effectively. It would require much more again if it was to retain its current approach to planning and delivering school infrastructure.  

The current school infrastructure funding arrangement does not support effective long-term planning. A four-year commitment to education infrastructure funding does not provide the flexibility needed for the Department to manage its allocations and respond to changes in priorities or emerging challenges. The Health and Transport clusters receive a ten-year funding commitment, known as a capital planning limit.

Changing operational policies could increase school utilisation

Further significant cost savings are only likely if the Department changes some operational policies. Class size is a key determinant of the number of classrooms needed. Choice in school enrolment and the existence of single-sex, selective, sports or creative and performing arts schools all can lead to underutilisation of schools and classrooms because they are not accessible to all students.  

The Department of Education should:

1. regularly revisit and evaluate the Strategic Plan to keep it contemporary, refine it based on learnings, update cost estimates to reflect actual results, and respond to available funding

2. work with NSW Treasury to develop a framework for partnering with the private sector

3. align Total Asset Management plans with cluster plans as they are developed

4. closely consult and collaborate with communities on implementation of the Strategic Plan

5. continue to collaborate with key government agencies, local government, the non-government school sector and the private sector on implementation of the Strategic Plan

6. publish detailed information on the status of assets, current and projected enrolments, and planned school projects to support effective consultation and collaboration

7. seek a ten-year capital planning limit from NSW Treasury

8. advise the government on options to change operational policies and practices to reduce infrastructure requirements.

Appendix One - Response from the agency

Appendix Two - About the audit

Appendix Three - NSW school regions and districts

Appendix Four - School utilisation rate by district/region

Appendix Five - Single-sex, selective and specialist high schools in Sydney Region

Based on forecast patronage increases, the rail agencies will find it hard to maintain punctuality after 2019 unless the capacity of the network to carry trains and people is increased significantly. If recent higher than forecast patronage growth continues, the network may struggle to maintain punctuality before 2019.

A NSW Government priority is to ‘maintain or improve reliability of public transport services over the next four years’. Punctuality is a key element of reliability, and the level of patronage is a critical factor in the ability to maintain punctuality. Increasing patronage places pressure on the length of time trains need to wait at stations to load and offload passengers which can lead to delays. The NSW Long Term Transport Master Plan forecasts that rail patronage could increase by 26 per cent between 2012 and 2031.  

Passenger rail services in NSW are provided under a purchaser-provider model. Transport for NSW enters contracts with:

• Sydney Trains for Sydney suburban passenger rail services
• NSW Trains for services that commence or terminate outside Sydney, including intercity services that operate between Central station and the South Coast, Southern Highlands, Blue Mountains and Central Coast and Newcastle.

Transport for NSW sets performance targets and standards for these services, develops the timetables, procures trains for the service providers, and is responsible for long term planning.

This audit assessed whether these rail agencies have plans and strategies to maintain or improve performance in getting the growing number of suburban and intercity rail passengers to their destinations on time.

Punctuality measurement is satisfactory, but agencies could publish more information

Passenger rail punctuality indicators adopted in NSW are good practice. The key train punctuality indicator is better than indicators used by many other rail operators. It is also better than the on-time-running indicator that it replaced. Unlike the on-time-running indicator, the punctuality indicator classifies trains that have been cancelled or skipped stations as late and results are not adjusted to take account of delays caused by factors such as extreme weather or police operations.

NSW also has a customer delay measure which represents good practice. Work has started on refining and embedding customer delay as a key performance measure for the planned new Rail Operations Centre.

As train frequency approaches a ‘turn up and go’ level of service, rather than running to a timetable, more emphasis will need to be placed on excess waiting time and customer delay when assessing performance.

Measurement of punctuality is reasonably precise. There are some measurement inaccuracies which should be addressed, such as the estimated arrival time of a train being incorrect at some destination stations, but these do not affect punctuality results materially.  

Train punctuality is reported publicly, but not to the detail of the indicators in the contracts between Transport for NSW and Sydney Trains and NSW Trains. There is very limited public reporting of customer delay.

Overall punctuality is good, but some services are relatively poor

System-wide train punctuality has usually exceeded target since 2005, but some services suffer from poor punctuality compared to the rest of the network.  

The part of the network around North Sydney is creating problems for the punctuality of afternoon peak services heading through it and out to Western Sydney and to Hornsby via Strathfield. Transport for NSW and Sydney Trains are well advanced with strategies to address this up to 2019.  

The East Hills express trains in the afternoon peak also performed well below target. The rail agencies recently analysed this issue and believe it relates to the train timetable and signalling which restricts how close trains can run behind each other into Campbelltown. It further advises that this will be corrected over the next three years.  

Intercity train punctuality is below that of suburban trains and there was an extended period of declining punctuality between 2011 and 2014. Transport for NSW suggested that the old age of trains is a factor, and the recently announced intercity fleet acquisition may help address this. Apart from ensuring that train crew and station staff are available and perform their duties adequately, NSW Trains can do little to impact the punctuality of its intercity services directly. Train maintenance, track and signal maintenance, and management of trains on the rail network are performed by Sydney Trains. NSW Trains’ ability to influence improvement is hampered by key indicators in some contracts being undefined. Transport for NSW, Sydney Trains and NSW Trains are now working collaboratively to make improvements to the contracts.

Initiatives are in place or are planned to deliver good punctuality until 2019

Patronage increases, which can lead to overcrowding and trains having to wait longer at stations, are likely to present a significant challenge to maintaining punctuality into the future.

Based on patronage projections, the rail agencies have strategies to maintain punctuality up to and including joining the Sydney Metro Northwest to the network at Chatswood in 2019. These include improving infrastructure at particular parts of the network, increasing staff training, reducing the number of speed restrictions, and a new Rail Operations Centre. The projects are being managed by experienced staff, with good governance arrangements, quality assurance processes and planning systems in place. New timetables should provide more services and cater for more passengers, including off peak. They should increase network efficiency through better utilisation of capacity, but some passengers may face longer journey times and more may need to change trains mid-journey.  

The planned Rail Operations Centre has the potential to make operational decision-making more customer-focussed, by placing more emphasis on minimising customer delay during disruptions. If implemented well, it will also generate information to help agencies better identify the root cause of incidents that delay trains and improve communication with passengers so they can make better real-time travel decisions.

Predicted passenger growth presents a risk to punctuality after 2019

The rail system will struggle to maintain punctuality much beyond 2019 based on current patronage forecasts and system limitations.

From 2024, the Sydney Metro City and Southwest will help by extending the metro network from Chatswood under Sydney Harbour, through the city and out to Bankstown. Announced fleet upgrades will also help. Transport for NSW advises that it is also working with the Greater Sydney Commission to ensure network capacity constraints are considered in future urban planning.

In addition to investment in new metro networks, sustained and substantial investment needs to be made into the existing heavy rail network to meet demand and ensure its ongoing reliability. Transport for NSW has been developing strategies for this purpose, including an Advanced Train Control system. Its aim is to put a costed plan to the government by the third quarter of this (2017) calendar year. Given the likely lead times involved with major infrastructure projects, there remains a significant risk of poor punctuality after 2019.

Punctuality could be at risk sooner if recent patronage growth continues

If patronage continues to increase at a faster rate than forecast, particularly during the morning peak, the network will struggle to cope before 2019. Transport for NSW forecast that between 2011 and 2026 morning peak rail patronage would increase each year by approximately 3.3 per cent. Between 2011 and 2016 the number of passengers travelling to the city during the morning peak grew by an average of 4.4 per cent each year, including annual growth of 6.6 per cent since May 2014.

A good understanding of patronage levels, trends and drivers is critical to effective planning. The audit identified some shortcomings in measurement of peak passenger loads. Transport for NSW advised that measurement approaches have been improved recently, and this will soon flow into improved data quality.  

Given the increasing flexibility in work practices available to many city workers, the relatively new field of behavioural insights may offer opportunities to ‘nudge’ some passengers away from travelling at the height of the peak with benefits for them and the network.

1. Transport for NSW should ensure that programs to address rail patronage growth over the next five to ten years are provided to the government for Cabinet consideration as soon as possible.
    
2. Sydney Trains and Transport for NSW should:
   a) maintain effective oversight and resourcing for all strategies designed to address rail patronage growth
   b) adjust strategies for any patronage growth above projection.
    
3. Sydney Trains, NSW Trains and Transport for NSW should publish Customer Delay results by June 2018.
    
4. Transport for NSW, Sydney Trains and NSW Trains should agree by December 2017:
   a) specific performance requirements for intercity train, track and signal availability and reliability
   b) guidelines for train priorities during disruptions and indicators of control centre performance in implementing these guidelines.
    
5. Sydney Trains, NSW Trains and Transport for NSW should by June 2018:
   a) improve the accuracy of patronage measurement and develop a better understanding of patronage growth trends
   b) address small errors in the adjustment factors used for determining a train’s punctuality status
   c) improve their understanding of the factors impacting on intercity punctuality.
    
6. Transport for NSW should, commencing June 2017, explore the potential to use behavioural insights to encourage more passengers to travel outside the height of the morning peak (8 am to 9 am).