Reports
Cyber security in local government
What this report is about
NSW local councils provide a wide range of essential services and infrastructure to their communities and are increasingly reliant on digital technologies.
Councils need to manage cyber security risks to ensure their information, data and systems are appropriately safeguarded. Councils also need to be prepared to detect, respond and recover when a cyber security incident occurs.
The audit assessed how effectively three selected councils identified and managed cyber security risks.
The audit also included the Department of Planning, Housing and Infrastructure (Office of Local Government) and Department of Customer Service (Cyber Security NSW), due to their roles in providing guidance and support to local councils.
Audit findings
The audit found that the selected councils are not effectively identifying and managing cyber security risks. Each of the councils undertook activities to improve their cyber security during the audit period, but this audit found significant gaps in their cyber security risk management and cyber security processes.
Such gaps result in unmitigated risks to the security of information and assets which, if compromised, could impact their local communities, service delivery and public infrastructure.
Cyber Security NSW and the Office of Local Government recommend that councils adopt requirements in the Cyber Security Guidelines for Local Government, but could do more to monitor whether the Guidelines are enabling better cyber security risk management in the sector.
Audit recommendations
In summary, the councils should:
- integrate assessment and monitoring of cyber security risks into corporate governance processes
- self-assess their performance against Cyber Security NSW's guidelines for local government
- develop and implement a risk-based cyber security improvement plan and program of activities
- develop, implement and test a cyber incident response plan.
Cyber Security NSW and the Office of Local Government should regularly consult on cyber security risks facing local government, and review the effectiveness of guidelines and related resources for the sector.
While this report focuses on the performance of the selected councils, the findings and recommendations should be considered by all councils to better understand their risks and challenges relevant to managing cyber security risks.
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Parliamentary reference - Report number #392- released 26 March 2024
Local Government 2023
What this report is about
Results of the local government sector financial statement audits for the year ended 30 June 2023.
Findings
Unqualified audit opinions were issued for 85 councils, eight county councils and 12 joint organisations.
Qualified audit opinions were issued for 36 councils due to non-recognition of rural firefighting equipment vested under section 119(2) of the Rural Fires Act 1997.
The audits of seven councils, one county council and one joint organisation remain in progress at the date of this report due to significant accounting issues.
Fifty councils, county councils and joint organisations missed the statutory deadline of submitting their financial statements to the Office of Local Government, within the Department of Planning, Housing and Infrastructure, by 31 October.
Audit management letters included 1,131 findings with 40% being repeat findings and 91 findings being high-risk. Governance, asset management and information technology continue to represent 65% of the key areas for improvement.
Fifty councils do not have basic governance and internal controls to manage cyber security.
Recommendations
To improve quality and timeliness of financial reporting, councils should:
- adopt early financial reporting procedures, including asset valuations
- ensure integrity and completeness of asset source records
- perform procedures to confirm completeness, accuracy and condition of vested rural firefighting equipment.
To improve internal controls, councils should:
- track progress of implementing audit recommendations, and prioritise high-risk repeat issues
- continue to focus on cyber security governance and controls.
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Regulation insights
What this report is about
In this report, we present findings and recommendations relevant to regulation from selected reports between 2018 and 2024.
This analysis includes performance audits, compliance audits and the outcomes of financial audits.
Effective regulation is necessary to ensure compliance with the law as well as to promote positive social and economic outcomes and minimise risks with certain activities.
The report is a resource for public sector leaders. It provides insights into the challenges and opportunities for more effective regulation.
Audit findings
The analysis of findings and recommendations is structured around four key themes related to effective regulation:
- governance and accountability
- processes and procedures
- data and information management
- support and guidance.
The report draws from this analysis to present insights for agencies to promote effective regulation. It also includes relevant examples from recent audit reports.
In this report, we also draw out insights for agencies that provide a public sector stewardship role.
The report highlights the need for agencies to communicate a clear regulatory approach. It also emphasises the need to have a consistent regulatory approach, supported by robust information about risks and accompanied with timely and proportionate responses.
The report highlights the need to provide relevant support to regulated parties to facilitate compliance and the importance of transparency through reporting of meaningful regulatory information.
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Effectiveness of SafeWork NSW in exercising its compliance functions
What this report is about
This report assesses how effectively SafeWork NSW, a part of the Department of Customer Service (DCS), has performed its regulatory compliance functions for work health and safety in New South Wales.
The report includes a case study examining SafeWork NSW's management of a project to develop a realtime monitoring device for airborne silica in workplaces.
Findings
There is limited transparency about SafeWork NSW's effectiveness as a regulator. The limited performance information that is available is either subsumed within DCS reporting (or other sources) and is focused on activity, not outcomes.
As a work health and safety (WHS) regulator, SafeWork NSW lacks an effective strategic and data-driven approach to respond to emerging WHS risks.
It was slow to respond to the risk of respirable crystalline silica in manufactured stone.
SafeWork NSW is constrained by an information management system that is over 20 years old and has passed its effective useful life.
While it has invested effort into ensuring consistent regulatory decisions, SafeWork NSW needs to maintain a focus on this objective, including by ensuring that there is a comprehensive approach to quality assurance.
SafeWork NSW's engagement of a commercial partner to develop a real-time silica monitoring device did not comply with key procurement obligations.
There was ineffective governance and process to address important concerns about the accuracy of the real-time silica monitoring device.
As such, SafeWork NSW did not adequately manage potential WHS risks.
Recommendations
The report recommended that DCS should:
- ensure there is an independent investigation into the procurement of the research partner for the real-time silica detector
- embed a formal process to review and set its annual regulatory priorities
- publish a consolidated performance report
- set long-term priorities, including for workforce planning and technology uplift
- improve its use of data, and start work to replace its existing complaints handling system
- review its risk culture and its risk management framework
- review the quality assurance measures that support consistent regulatory decisions
Read the PDF report.
Parliamentary reference - Report number #390 - released 27 February 2024
Driver vehicle system
What this report is about
Transport for NSW (TfNSW) uses the Driver vehicle System (DRIVES) to support its regulatory functions. The system covers over 6.2 million driver licences and over seven million vehicle registrations.
DRIVES first went live in 1991 and has been significantly extended and updated since, though is still based around the same core system. The system is at end of life but has become an important service for Service NSW and the NSW Police Force.
DRIVES now includes some services to other parts of government and non-government entities which have little or no connection to transport. There are 141 users of DRIVES in total, including commercial insurers, national regulators, and individual citizens.
This audit assessed whether TfNSW is effectively managing DRIVES and planning to transition it to a modernised system.
Audit findings
TfNSW has not effectively planned the replacement of DRIVES.
It is now working on its third business case for a replacement system but has failed to learn lessons from its past attempts.
In the meantime, TfNSW has not taken a strategic approach to managing DRIVES’ growth.
TfNSW has been slow to reduce the risk of misuse of personal information held in DRIVES. With its delivery partner Service NSW, TfNSW has also been slow to develop and implement automatic monitoring of access.
TfNSW uses recognised processes for managing most aspects of DRIVES, but has not kept the system consistently available for users. TfNSW has lacked accurate service availability information since June 2022, when it changed its technology support provider.
TfNSW needs to significantly prioritise cyber security improvements to DRIVES. TfNSW is seeking to lift DRIVES’ cyber defences, but it will not achieve its stated target safeguard level until December 2025.
Even then, one of the target safeguards will not be achieved in full until DRIVES is modernised.
Audit recommendations
TfNSW should:
- implement a service management framework including insight into the views of DRIVES users, and ensuring users can influence the service
- ensure it can accurately and cost effectively calculate when DRIVES is unavailable due to unplanned downtime
- ensure implementation of a capability to automatically detect anomalous patterns of access to DRIVES
- ensure that DRIVES has appropriate cyber security and resilience safeguards in place as a matter of priority
- develop a clear statement of the future role in whole of government service delivery for the system
- resolve key issues currently faced by the DRIVES replacement program including by:
- clearly setting out a strategy and design for the replacement
- preparing a specific business case for replacement.
Read the PDF report
Parliamentary reference - Report number #388 - released 20 February 2024
Health 2023
What this report is about
Results of the Health portfolio of agencies' financial statement audits for the year ended 30 June 2023.
The audit found
Unmodified audit opinions were issued for all Health portfolio agencies' financial statements.
The number of monetary misstatements increased in 2022–23, driven by key accounting issues, including the first-time recognition of paid parental leave and plant and equipment fair value adjustments.
The key audit issues were
NSW Health identified errors regarding the recognition and calculation of long service leave entitlements for employees with ten or more years of service that had periods of part time service in the first ten years, resulting in prior period restatements.
Comprehensive revaluation of buildings at the Graythwaite Charitable Trust found errors in the previous year's valuation, resulting in prior period restatements.
New parental leave legislation increased employee liabilities for portfolio agencies. The Ministry of Health corrected the consolidated financial statements to record parental leave liabilities for all agencies within the Health portfolio.
A repeat high-risk issue relates to processing time records by administrators that have not been reviewed prior to running the pay cycle.
Thirty per cent of reported issues were repeat issues.
The audit recommended
Portfolio agencies should ensure any changes to employee entitlements are assessed for their potential financial statements impact under the relevant Australian Accounting Standards.
Portfolio agencies should address deficiencies that resulted in qualified reports on:
- the design and operation of shared service controls
- prudential non-compliance at residential aged care facilities.
This report provides Parliament and other users of the Health portfolio of agencies’ financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
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.
This chapter outlines our audit observations related to the financial reporting of agencies in the Health portfolio of agencies (the portfolio) for 2023.
Section highlights
- Unqualified audit opinions were issued for all portfolio agencies required to prepare general purpose financial statements.
- The total number of errors (including corrected and uncorrected) in the financial statements increased compared to the prior year.
- The Ministry of Health retrospectively corrected an $18.9 million adjustment in its financial statements relating to long service leave entitlements for certain employees.
- Graythwaite Charitable Trust retrospectively corrected a $4.2 million adjustment in its financial statements related to prior period valuations.
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 observations and insights from our financial statement audits of agencies in the Health portfolio.
Section highlights
- The 2022–23 audits identified one high-risk and 57 moderate risk issues across the portfolio.
- The high-risk matter related to the forced-finalisation of time records.
- The total number of findings increased from 67 to 111 in 2022–23.
- Thirty per cent of the issues were repeat issues. Most repeat issues related to internal control deficiencies or non-compliance with key legislation and/or central agency policies.
- Forced-finalisation of time records, accounting for the new paid parental leave provision and user access review deficiencies were the most commonly reported issues.
- Qualified Assurance Practitioner's reports were issued on:
- the design and operation of controls as documented by HealthShare NSW
- the Ministry's Annual Prudential Compliance Statements in relation to residential aged care facilities.
Appendix one – Misstatements in financial statements submitted for audit
Appendix two – Early close procedures
Appendix three – Timeliness of financial reporting
Appendix four – Financial data
© 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.
Transport 2023
What this report is about
Result of the Transport portfolio of agencies' financial statement audits for the year ended 30 June 2023.
The audit found
Unqualified audit opinions were issued for all Transport portfolio agencies.
An 'emphasis of matter' paragraph was included in the Transport Asset Holding Entity of New South Wales' (TAHE) independent auditor's report, which draws attention to management's disclosure regarding proposed changes to TAHE's operating model.
Government's decision to convert TAHE into a non-commercial Public Non-Financial Corporation may impact the future valuation and the control of TAHE's assets.
Transport for NSW's valuation of roads and bridges resulted in a net increase to its asset value by $15.7 billion.
Transport for NSW and Sydney Metro have capitalised over $300 million of tender bid costs paid to unsuccessful tender bidders relating to significant infrastructure projects. Whilst NSW Treasury policy provides clarity on the reimbursement of unsuccessful bidders' costs, clearer guidance on how to account for these costs in agency's financial statements is required.
The key audit issues were
The number of issues reported to management decreased from 53 in 2021–22 to 49 in 2022–23.
High-risk findings include:
- gaps in how Sydney Metro manages its contractors and how conflicts of interest are recorded and managed
- future financial reporting implications to account for government's proposed changes to TAHE's future operating model, including asset valuations and control assessments of assets and operations
- Parramatta Park Trust's tree assets' valuation methodology needs to be addressed.
Recommendations were made to address the identified deficiencies.
This report provides Parliament and other users of the Transport portfolio of agencies’ financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
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.
This chapter outlines our audit observations related to the financial reporting of agencies in the Transport portfolio of agencies (the portfolio) for 2023.
Section highlights
- Unqualified audit opinions were issued on all the portfolio agencies’ 30 June 2023 financial statements.
- An 'Emphasis of Matter' paragraph was included in the Transport Asset Holding Entity of New South Wales’ (TAHE) Independent Auditor's Report to draw attention to management's disclosure regarding the proposed changes to TAHE's future operating model.
- The total number of errors (including corrected and uncorrected) in the financial statements increased by 59% compared to the prior year.
- The recent government's decision to convert TAHE into a non-commercial Public Non-Financial Corporation may impact the future valuation and the control of TAHE’s assets.
- Transport for NSW needs to further improve its quality assurance processes over comprehensive valuations, in particular, ensuring key inputs used in the valuations are properly supported and verified.
- Transport for NSW and Sydney Metro capitalised over $300 million of bid costs paid to unsuccessful bidders. NSW Treasury’s Bid Cost Contributions Policy does not contemplate how these costs should be recognised in agency’s financial statements. Transport agencies should work with NSW Treasury to develop an accounting policy for the bid cost contributions to ensure consistent application across the sector.
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 Transport portfolio.
Section highlights
- The 2022–23 audits identified four high risks and 28 moderate risk issues across the portfolio. Thirty-nine per cent of issues were repeat findings.
- Four high risk findings include:
- TAHE’s asset valuations (new)
- TAHE’s control of assets and operations (new)
- Sydney Metro’s management of contractors and conflicts of interest (new)
- Parramatta Park Trust’s valuation of trees (repeat).
- The total number of findings decreased from 53 in 2021–22 to 49 in 2022–23. Many repeat findings related to control weaknesses over the asset valuation, payroll processes, conflicts of interest and information technology user access administration.
Appendix one – Misstatements in financial statements submitted for audit
Appendix two – Early close procedures
Appendix three – Timeliness of financial reporting
Appendix four – Financial data
© 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.
Procurement of services for the Park'nPay app
What this report is about
The report assesses whether the Department of Customer Service (the department) complied with legislation and NSW government policy when it directly negotiated with Duncan Solutions to procure backend services relating to the Park'nPay app.
The Park'nPay app, developed by the department, enables users to locate and pay for parking remotely using their smart mobile device.
The audit found
The department failed to establish the grounds for entering a direct negotiation procurement strategy, without any competitive tendering, for services for the Park'nPay app. It rushed a decision to trial the app in The Rocks, without considering how this might affect its procurement obligations.
There is no evidence that the procurement achieved value for money. Despite being required by legislation, as well as mandatory NSW government policy, the department did not consider how it would ensure value for money, nor did it demonstrate an adequate understanding of what is meant by value for money on this occasion.
The department failed to implement key probity requirements. There was no effective management of conflicts of interest. Key decisions were not documented. There was a lack of clarity, transparency, and oversight of the relationship between the Minister's office and staff in the department.
The audit made recommendations about
- making and retaining complete and accurate records, particularly on decisions to commit or expend public money
- ensuring department staff understand how to exercise their financial delegations and procurement processes
- ensuring that only staff with appropriate delegations are committing or approving the spending of public money
- consistency with the contract extension provisions of the NSW Government Procurement Policy Framework, particularly regarding ensuring value for money
- protocols to guide the interactions between department staff and Minister and Minister's staff
- the need for proper management and oversight of contingent workers, such as contractors.
On 27 February 2019 the then Minister for Finance, Services and Property announced the commencement of a Park’nPay app trial in The Rocks precinct of Sydney.
The app was intended to enable users to locate and pay for parking remotely, using their smart mobile device such as a phone or tablet, rather than needing to physically be at a parking meter.
In July 2019, following a direct negotiation procurement conducted by the then Department of Finance, Services and Innovation, a contract was executed with Duncan Solutions for an estimated value of $1,260,600 over three-years, with three single-year options to extend. The contract required Duncan Solutions to provide development services to link the Park'nPay app to its Parking Enterprise Management System platform and to provide ongoing software support services.
This audit assessed whether the department complied with the procurement obligations that applied at the time it procured these services from Duncan Solutions.
This audit focussed on the department's processes and decision-making relating to:
- the direct negotiation with Duncan Solutions at the exclusion of any other potential supplier
- the negotiation, execution and management of the contract with Duncan Solutions.
As this audit focusses on the department's procurement and contract management processes, it does not comment on the activities of Duncan Solutions. The detailed audit objective, criteria and audit approach are in Appendix three.
The auditee is the Department of Customer Service. As a result of machinery of government changes, the Department of Finance, Services, and Innovation became the Department of Customer Service from 1 July 2019. To avoid confusion, this report simply uses ‘the department’ to refer to either. Where the report refers to the Minister, it relates to the former Minister in office at the time.
Conclusion
The department failed to establish the grounds for entering a direct negotiation procurement strategy for services for the Park'nPay app. It rushed a decision to trial the app in The Rocks, without considering how this might affect its procurement requirements.
As part of a direct negotiation process, the department was required to, but did not:
- undertake a comprehensive analysis of the market and all relevant factors to demonstrate that a competitive process does not need to be conducted
- conduct a risk assessment for the procurement approach
- follow the internal delegation process, including obtaining approval of the department's delegate and endorsement of the Chief Procurement Officer.
There is no evidence that the procurement to support Park'nPay represented value for money. Despite it being required by legislation, as well as mandatory NSW Government policy, the department did not consider how to ensure value for money, nor demonstrate an adequate understanding of what is meant by value for money in this case.
The department issued no tender or expression of interest documents against which any proposal could be assessed, and it had no tender evaluation plan, committee, or criteria. Without any objective standards against which the supplier's proposal could be assessed, it was not possible for the department to determine if value for money was achieved, and no value for money has been demonstrated.
The department failed to implement key probity requirements. There was no effective management of conflicts of interest. Key decisions were not documented. There was a lack of clarity, transparency, and oversight of the relationship between the Minister's office and staff in the department.
No conflict of interest declarations were made by staff until almost one year after the direct negotiations commenced and even then they were not made by all members of the negotiation team and key decision-makers.
The department did not document the reasons for its decisions or minute key meetings, such as when, why and by whom the decision was made to transform the procurement from a 'trial' to a contract of up to six years duration. The department had no policies guiding the interactions between the Minister, the Minister's office and staff in the department (including contractors) in relation to this initiative, resulting in blurred and uncertain roles, responsibilities, and accountabilities.
The department initially sought to withhold information from the Audit Office pertaining to Park'nPay. When questions were raised through external scrutiny, there was little evidence of genuine inquiry or review into its practices to ensure improvement and compliance.
The department deliberately sought to withhold information from the Audit Office of NSW when initial inquiries were lawfully made about the Park'nPay project in the context of the audit of the department's financial statements in May 2021.
There is also limited evidence to demonstrate the department has reviewed the decisions and practices around the Park'nPay project, despite receiving internal legal advice at the time that questioned the characterisation of the procurement as a 'pilot', and external scrutiny via the NSW Parliament's Budget Estimates Committee hearings. This indicates a risk that opportunities to review and improve the department's procurement practices based on learnings from this process have been missed.
Appendix one – Response from auditee
Appendix two – Key requirements of the department's procurement manual
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 #387 - released 14 December 2023
Education 2023
What this report is about
Results of the Education portfolio of agencies’ financial statements audits for the year ended 30 June 2023.
What we found
Unqualified audit opinions were issued for all Education portfolio agencies.
An ‘other matter’ paragraph was included in the TAFE Commission’s independent auditor’s report as it did not have a delegation or sub-delegation from the Minister for Education and Early Learning to incur expenditure on grants from other portfolio agencies.
What the key issues were
Comprehensive valuations of buildings at the Department of Education (the department) and at the TAFE Commission found that certain assumptions applied in previous years needed to be updated, resulting in prior period restatements.
The department prepaid a building contractor for early works on a project and some of the prepayment is in legal dispute.
The department duplicated a claim for project funding from Restart NSW in 2021.
New parental leave legislation increased employee liabilities for portfolio agencies. The department and the NSW Education Standards Authority (the Authority) updated their financial statements to record parental leave liabilities.
A high risk matter was raised for the Authority to improve the quality and timeliness of information to support their financial statement close process.
What we recommended
Portfolio agencies should ensure any changes to employee entitlements are assessed for their potential financial statements impact under the relevant Australian Accounting Standards.
The department should:
- improve processes to ensure project claims are not duplicated
- assess the risks associated with providing prepayments to contractors.
This report provides Parliament and other users of the Education portfolio of agencies’ financial statements with the results of our audits, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
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.
This chapter outlines our audit observations related to the financial reporting of agencies in the Education portfolio (the portfolio) for 2023.
Section highlights
- Unqualified audit opinions were issued on all the portfolio agencies 2022–23 financial statements.
- An ‘other matter’ paragraph was included in the independent auditor’s report for the Technical and Further Education Commission (the TAFE Commission) as it did not have a delegation or sub-delegation from the Minister for Education and Early Learning to incur expenditure on grants from other portfolio agencies.
- Comprehensive valuations of buildings in the current year identified that certain assumptions applied in previous years were incorrect. The effects of these corrections are disclosed as prior period errors in the financial statements of the Department of Education (the department) and the TAFE Commission.
- The department made corrections to its financial statements to reflect increases to NSW teachers’ wages announced post balance date. This impacted amounts recorded as liabilities for a range of employee benefits and entitlements totalling $225.4 million, of which $147.9 million is accepted by the Crown and $77.5 million is borne by the department.
- A change to the NSW paid parental leave scheme, effective October 2022, created a new legal obligation that needed to be recognised by impacted government agencies. Of the three affected portfolio agencies, only the department and the NSW Education Standards Authority recognised a liability to account for this change. The aggregated unrecorded liabilities of other agencies in the portfolio totalled $2.4 million. The errors within the individual agencies’ financial statements were not material.
- The total number of errors (including corrected and uncorrected) in the financial statements increased compared to the prior year.
- The NSW Childcare and Economic Opportunity Fund should prepare financial statements unless NSW Treasury releases a Treasurer’s Direction under section 7.8 of the GSF Act that will exempt the SDA from financial reporting requirements.
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 portfolio.
Section highlights
- The 2022–23 audits identified one high risk and 20 moderate risk issues across the portfolio. Of these, one was a high risk repeat issue and four were moderate risk repeat issues.
- The total number of findings increased from 29 to 36, which mainly related to deficiencies in financial reporting, information technology, payroll and purchasing controls.
- The high risk matter relates to the lack of quality and timely information to support the financial statement close process at the NSW Education Standards Authority.
Appendix one – Early close procedures
© 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.
State heritage assets
What the report is about
This audit assessed how effectively the Department of Planning and Environment (Heritage NSW) is overseeing and administering heritage assets of state significance.
Heritage that is rare, exceptional or outstanding to New South Wales may be listed on the State Heritage Register under the Heritage Act 1977. This provides assets with legal recognition and protection. Places, buildings, works, relics, objects and precincts can be listed, whether in public or private ownership.
Heritage NSW has administrative functions and regulatory powers, including under delegation from the Heritage Council of NSW, relevant to the listing, conservation and adaptive re-use of heritage assets of state significance.
In summary, the audit assessed whether Heritage NSW:
- is effectively administering relevant advice and decisions
- is effectively supporting and overseeing assets
- has established clear strategic priorities and can demonstrate preparedness to implement these.
What we found
Heritage NSW does not have adequate oversight of state significant heritage assets, presenting risks to its ability to promote the objects of the Heritage Act.
Information gaps and weaknesses in quality assurance processes limit its capacity to effectively regulate activities affecting assets listed on the State Heritage Register.
Heritage NSW has adopted a focus on customer service and recently improved its timeliness in providing advice and making decisions about activities affecting listed assets. But Heritage NSW has not demonstrated how its customer-focused priorities will address known risks to its core regulatory responsibilities.
Listed assets owned by government entities are often of high heritage value. Heritage NSW could do more to promote effective heritage management among these entities.
What we recommended
The report made eight recommendations to Heritage NSW, focusing on:
- improving quality assurance over advice and decisions
- improving staff guidance and training
- defining and maintaining data in the State Heritage Register
- clarifying its regulatory intent and approach
- sector engagement and interagency capability to support heritage outcomes.
The Heritage Act 1977 (the Heritage Act) and accompanying regulation provide the legal framework for the identification, conservation and adaptive re-use of heritage assets in New South Wales.
The Department of Planning and Environment (Heritage NSW) has responsibility for policy, legislative and program functions for state heritage matters, including supporting the Minister for Heritage to administer the Heritage Act.
Heritage assets that are rare, exceptional or outstanding beyond a local area or region may be listed on the State Heritage Register under the Heritage Act. These assets include places, buildings, works, relics, moveable objects and precincts, and assets that have significance to Aboriginal communities in New South Wales. Assets nominated for and listed on the State Heritage Register ('listed assets') may be owned privately or publicly, including by local councils and state government entities.
The Heritage Act establishes the Heritage Council of NSW (the Heritage Council) to undertake a range of functions in line with its objectives. Heritage NSW provides administrative support to the Heritage Council, for example providing advice on assets that have been nominated for listing on the State Heritage Register. Many of Heritage NSW’s core activities also relate to exercising functions and powers under delegation from the Heritage Council. These include making administrative decisions about works affecting listed assets, and exercising powers to regulate asset owners’ compliance with requirements under the Heritage Act.
Heritage NSW states that heritage:
| …gives us a sense of our history and provides meaningful insights into how earlier generations lived and developed. It also enriches our lives and helps us to understand who we are. |
According to Heritage NSW, an effective heritage system will facilitate the community in harnessing the cultural and economic value of heritage.
The objective of this audit was to assess how effectively the Department of Planning and Environment (Heritage NSW) is overseeing and administering heritage assets of state significance.
For this audit, ‘heritage assets of state significance’ refers to items (including a place, building, work, relic, moveable object or precinct) listed on the State Heritage Register ('listed assets'), and those which have been nominated for listing.
ConclusionThe Department of Planning and Environment (Heritage NSW) does not have adequate oversight of state significant heritage assets. Information gaps and weaknesses in certain assurance processes limit its capacity to effectively regulate activities affecting assets listed on the State Heritage Register. These factors also constrain its ability to effectively support voluntary compliance and promote the objects of the Heritage Act, which include encouraging conservation and adaptive re-use.Heritage NSW has adopted a focus on customer service and recently improved the timeliness of its advice and decisions on activities affecting listed assets. But Heritage NSW has not demonstrated how its customer service priorities will address known risks to its regulatory responsibilities. It could also do more to enable and promote effective heritage management among state government entities that own listed assets.The information that Heritage NSW maintains about assets listed on the State Heritage Register ('listed assets') is insufficient for its regulatory and owner engagement purposes. Data quality and completeness issues have arisen since the register was established in 1999. But Heritage NSW's progress to address important gaps in the register, and its other information systems, has been limited in recent years. These gaps limit Heritage NSW’s capacity to detect compliance breaches early and implement risk-based regulatory responses, and to strategically target its owner engagement activities to promote conservation and re-use. Heritage NSW makes decisions on applications for works on listed assets, requiring technical skills and professional judgement. But Heritage NSW does not provide its staff with adequate guidance to ensure that consistent approaches are used, and it lacks sufficient quality assurance processes. There are similar weaknesses in Heritage NSW's oversight of decisions on applications that are delegated to other government entities. Heritage NSW has prioritised the implementation of customer service-focused activities, policies, and programs to reduce regulatory burdens on asset owners since 2017. For example, Heritage NSW has refreshed its website, introduced new information management systems, and implemented new regulation for the self-assessment of exemptions for minor works. However, Heritage NSW has not taken steps to mitigate oversight and quality risks introduced with the reduced regulatory burdens. Heritage NSW has made some, but to date insufficient, progress on a key project to update its publications. These documents (over 150 publications) are intended to play an important role in promoting voluntary compliance and supporting heritage outcomes. Heritage NSW started a new project to update relevant publications in April 2023. Heritage NSW has recently implemented processes to improve its efficiency, such as screening new nominations for listing on the State Heritage Register. Heritage NSW has also reported improvements in the time it takes to decide on applications for works affecting listed assets. In the third quarter of 2022–23, 87% of decisions were made within the statutory timeframes. This compares to 48% in 2021–22. Heritage NSW has similarly improved how quickly it provides heritage advice on major projects, with 90% of advice reported as delivered on time in the third quarter of 2022–23, compared to 44% in 2020–21. Assets owned by state government entities comprise a large proportion of State Heritage Register listings. These assets are often of high heritage value or situated within large and complex precincts or portfolios. But Heritage NSW does not implement targeted capability building activities to support good practice heritage management among state government entities and to promote compliance with their obligations under the Heritage Act. The expected interaction between Heritage NSW's strategic plans and activities, and the priorities of the Heritage Council of NSW, is unclear. Actions to clarify the relevant governance arrangements have also been slow following a review in 2020 but this work re-commenced in late 2022. Heritage NSW has been progressing work to draft reforms to the Heritage Act. This follows recommendations made in a 2021 Upper House Inquiry into the Heritage Act. To build preparedness for future reforms, Heritage NSW will need to do more to address the risks and opportunities identified in this audit report. In particular, it will need to ensure it has sufficient information and capacity to implement a risk-based regulatory approach; clear and effective governance arrangements with the Heritage Council of NSW; and enhanced engagement with government entities to promote the conservation and adaptive re-use of listed assets in public ownership. |
This chapter assesses the effectiveness of Heritage NSW's oversight of state heritage assets, including its visibility of listed assets, and its oversight of regulatory decision-making. It also assesses Heritage NSW's activities to engage with owners to meet their obligations under the Heritage Act and to support heritage outcomes.
This chapter assesses the timeliness of Heritage NSW’s provision of advice, recommendations, and decisions on heritage issues to support heritage management outcomes with respect to listed assets.
This chapter assesses whether the Department of Planning and Environment (Heritage NSW) has established clear strategic priorities to effectively oversee and administer activities related to listed assets, and its preparedness to implement reforms. It also assesses the adequacy of planning activities and governance arrangements to support the achievement of strategic directions.
Appendix one – Response from agency
Appendix two – About the audit
Appendix three – Performance auditing
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Parliamentary reference - Report number #384 - released 27 June 2023
