Reports
Transport 2020
1. Financial Reporting |
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| Audit opinion | Unmodified audit opinions issued for the financial statements of all Transport cluster entities. |
| Quality and timeliness of financial reporting | All cluster agencies met the statutory deadlines for completing the early close and submitting the financial statements. Transport cluster agencies continued to experience some challenges with accounting for land and infrastructure assets. The former Roads and Maritime Services and Sydney Metro recorded prior period corrections to property, plant and equipment balances. |
| Impact of COVID-19 on passenger revenue and patronage | Total patronage and revenue for public transport decreased by approximately 18 per cent in 2019–20 due to COVID-19. The Transport cluster received additional funding from NSW Treasury during the year to support the reduced revenue and additional costs incurred such as cleaning on all modes of public transport and additional staff to manage physical distancing. |
| Completion of the CBD and South East Light Rail | The CBD and South East Light Rail project was completed and commenced operations in this financial year. At 30 June 2020, the total cost of the project related to the CBD and South East Light Rail was $3.3 billion. Of this total cost, $2.6 billion was recorded as assets, whilst $700 million was expensed. |
2. Audit Observations |
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| Internal control | While internal controls issues raised in management letters in the Transport cluster have decreased compared to the prior year, control weaknesses continue to exist in access security for financial systems. We identified 56 management letter findings across the cluster and 43 per cent of all issues were repeat issues. The majority of the repeat issues relate to information technology controls around user access management. There were three high risk issues identified - two related to financial reporting of assets and one for implementation of TAHE (see below). |
| Agency responses to emergency events | Transport for NSW established the COVID-19 Taskforce in March 2020 to take responsibility for the overall response of planning and coordination for the Transport cluster. It also implemented the COVIDSafe Transport Plan which incorporates guidance on physical distancing, increasing services to support social distancing and cleaning. |
| RailCorp transition to TAHE | On 1 July 2020, RailCorp was renamed Transport Asset Holding Entity of New South Wales (TAHE) and converted to a for-profit statutory State-Owned Corporation. TAHE is a commercial for-profit Public Trading Entity with the intent to provide a commercial return to its shareholders. A plan was established by NSW Treasury to transition RailCorp to TAHE which covered the period 1 July 2015 to 1 July 2019. A large portion of the planned arrangements were not implemented by 1 July 2020. As at the time of this report, the TAHE operating model, Statement of Corporate Intent (SCI) and other key plans and commercial agreements are not finalised. The State Owned Corporations Act 1989 generally requires finalisation of an SCI three months after the commencement of each financial year. However, under the Transport Administration Act 1988, TAHE received an extension from the voting shareholders, the Treasurer and Minister for Finance and Small Business, to submit its first SCI by 31 December 2020. In accordance with the original plan, interim commercial access arrangements were supposed to be in place with RailCorp prior to commencement of TAHE. Under the transitional arrangements, TAHE is continuing to operate in accordance with the asset and safety management plans of RailCorp. The final operating model is expected to include considerations of safety, operational, financial and fiscal risks. This should include a consideration of the potential conflicting objectives of a commercial return, and maintenance and safety measures. This matter has been included as a high risk finding in our management letter due to the significance of the financial reporting impacts and business risks for TAHE. Recommendation: TAHE management should:
Resolution of the above matters are critical as they may significantly impact the financial reporting arrangements for TAHE for 2020–21, in particular, accounting policies adopted as well as measurement principles of its significant infrastructure asset base. |
| Completeness and accuracy of contracts registers | Across the Transport cluster, contracts and agreements are maintained by the transport agencies using disparate registers. Recommendation (repeat): Transport agencies should continue to implement a process to centrally capture all contracts and agreements entered. This will ensure:
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This report provides parliament and other users of the Transport 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 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.
This chapter outlines our audit observations related to the financial reporting of agencies in the Transport cluster for 2020, including any financial implications from the recent emergency events.
Section highlights
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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 cluster
- assessment of how well cluster agencies adapted their systems, policies and procedures, and governance arrangements in response to recent emergencies.
Section highlights
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Appendix one – List of 2020 recommendations
Appendix two – Status of 2019, 2018 and 2017 recommendations
Appendix three – Management letter findings
Appendix four – 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.
Their Futures Matter
The Auditor-General for New South Wales, Margaret Crawford, released a report today examining whether the Department of Communities and Justice had effective governance and partnership arrangements in place to deliver ‘Their Futures Matter’.
Their Futures Matter was intended to place vulnerable children and families at the heart of services, and direct investment to where funding and programs deliver the greatest social and economic benefits. It was a four-year whole-of-government reform in response to the 2015 Tune Review of out-of-home care.
The Auditor-General found that while important foundations were put in place, and new programs trialled, the key objective to establish an evidence-based whole-of-government early intervention approach for vulnerable children and families in NSW was not achieved.
Governance and cross-agency partnership arrangements to deliver Their Futures Matter were found to be ineffective. 'Their Futures Matter lacked mechanisms to secure cross portfolio buy‑in and did not have authority to drive reprioritisation of government investment', the Auditor-General said.
At the reform’s close, the majority of around $380 million in investment funding remains tied to existing agency programs, with limited evidence of their comparative effectiveness or alignment with Their Futures Matter policy objectives. The reform concluded on 30 June 2020 without a strategy or plan in place to achieve its intent.
The Auditor-General made four recommendations to the Department of Communities and Justice, aimed at improving implementation of outstanding objectives, revising governance arrangements, and utilising the new human services data set to address the intent of the reform. However, these recommendations respond only in part to the findings of the audit.
According to the Auditor-General, ‘Cross-portfolio leadership and action is required to ensure a whole-of-government response to delivering the objectives of Their Futures Matter to improve outcomes for vulnerable children, young people and their families in New South Wales.’
In 2016, the NSW Government launched 'Their Futures Matter' (TFM) - a whole-of-government reform aimed at delivering improved outcomes for vulnerable children, young people and their families. TFM was the government's key response to the 2015 Independent Review of Out of Home Care in New South Wales (known as 'the Tune Review').
The Tune Review found that, despite previous child protection reforms, the out of home care system was ineffective and unsustainable. It highlighted that the system was not client-centred and was failing to improve the long-term outcomes for vulnerable children and families. The review found that the greatest proportion of relevant expenditure was made in out of home care service delivery rather than in evidence-based early intervention strategies to support children and families when vulnerabilities first become evident to government services (such as missed school days or presentations to health services).
The then Department of Family and Community Services (FACS) designed the TFM reform initiatives, in consultation with central and human services agencies. A cross-agency board, senior officers group, and a new unit in the FACS cluster were established to drive the implementation of TFM. In the 2016–17 Budget, the government allocated $190 million over four years (2016–17 to 2019–20) to the reform. This resourced the design and commissioning of evidence-based pilots, data analytics work, staffing for the implementation unit and secretariat support for the board and cross-agency collaboration.
As part of the TFM reform, the Department of Premier and Cabinet, NSW Treasury and partnering agencies (NSW Health, Department of Education and Department of Justice) identified various existing programs that targeted vulnerable children and families (such as the preceding whole-of-government ‘Keep Them Safe’ reform coming to an end in June 2020). Funding for these programs, totalling $381 million in 2019–20, was combined to form a nominal ‘investment pool’. The government intended that the TFM Implementation Board would use this pool to direct and prioritise resource allocation to evidence-based interventions for vulnerable children and families in NSW.
This audit assessed whether TFM had effective governance and partnership arrangements in place to enable an evidence-based early intervention investment approach for vulnerable children and families in NSW. We addressed the audit objective with the following audit questions:
- Was the TFM reform driven by effective governance arrangements?
- Was the TFM reform supported by effective cross-agency collaboration?
- Has the TFM reform generated an evidence base to inform a cross-agency investment approach in the future?
The audit did not seek to assess the outcomes for children, young people and families achieved by TFM programs and projects.
ConclusionThe governance and cross-agency partnership arrangements used to deliver the Their Futures Matter reform were ineffective. Important foundations were put in place, and new programs trialled over the reform's four years. However, an evidence-based whole-of-government early intervention approach for vulnerable children and families in NSW − the key objective of the reform − was not established. The reform concluded in June 2020 without a strategy or plan in place to achieve its intent. The governance arrangements established for the Their Futures Matter (TFM) reform did not provide sufficient independence, authority and cross-agency clout to deliver on the reform’s intent. This hindered delivery of the reform's key elements, particularly the redirection of funding to evidence-based earlier intervention supports, and limited the impact that TFM could have on driving system change. TFM increased focus on the contribution that other agencies outside of the former Family and Community Services portfolio could make in responding to the needs of vulnerable children and families, and in reducing the demand costs of related government service delivery. Despite being a whole-of-government reform, TFM lacked mechanisms to secure cross-portfolio buy-in and lacked the powers to drive reprioritisation of government investment in evidence-based and earlier intervention supports across agencies. At the reform’s close, the majority of the reform's investment pool funding remained tied to existing agency programs, with limited evidence of their comparative effectiveness or alignment with Their Futures Matter policy objectives. TFM began building an evidence base about ‘what works’, including piloting programs and creating a new dataset to identify risk factors for vulnerability and future costs to government. However, this evidence base does not yet comprehensively map how existing services meet needs, identify system duplications or gaps, nor demonstrate which government funded supports and interventions are most effective to make a difference to life outcomes for vulnerable children and families in NSW. |
Their Futures Matter (TFM) is a whole-of-government reform to deliver improved outcomes for vulnerable children, young people and their families.
Supported by a cross-agency TFM Board, and the TFM Unit in the then Department of Family and Community Services (FACS), the reform aimed to develop whole-of-government evidence-based early intervention investment approaches for vulnerable children and families in NSW.
Governance refers to the structures, systems and practices that an organisation has in place to:
- assign decision-making authorities and establish the organisation's strategic direction
- oversee the delivery of its services, the implementation of its policies, and the monitoring and mitigation of its key risks
- report on its performance in achieving intended results, and drive ongoing improvements.
We examined whether the TFM reform was driven by effective governance arrangements and cross-agency collaboration.
The reform agenda and timeframe set down for Their Futures Matter (TFM) were ambitious. This chapter assesses whether the TFM Board and TFM Unit had the capability, capacity and clout within government to deliver the reform agenda.
Creating a robust evidence base was important for Their Futures Matter, in order to:
- identify effective intervention strategies to improve supports and outcomes for vulnerable children and families
- make efficient use of taxpayer money to assist the maximum number of vulnerable children and families
- inform the investment-based approach for future funding allocation.
This chapter assesses whether the TFM reform has developed an evidence base to inform cross-agency investment decisions.
Appendix one – Response from agency
Appendix two – TFM governance entities
Appendix three – TFM Human Services Data Set
Appendix four – TFM pilot programs
Appendix five – About the audit
Appendix six – 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 #337 - released 24 July 2020
CBD South East Sydney Light Rail: follow-up performance audit
This is a follow-up to the Auditor-General's November 2016 report on the CBD South East Sydney Light Rail project. This follow-up report assessed whether Transport for NSW has updated and consolidated information about project costs and benefits.
The audit found that Transport for NSW has not consistently and accurately updated project costs, limiting the transparency of reporting to the public.
The Auditor-General reports that the total cost of the project will exceed $3.1 billion, which is above the revised cost of $2.9 billion published in November 2019. $153.84 million of additional costs are due to omitted costs for early enabling works, the small business assistance package and financing costs attributable to project delays.
The report makes four recommendations to Transport for NSW to publicly report on the final project cost, the updated expected project benefits, the benefits achieved in the first year of operations and the average weekly journey times.
The CBD and South East Light Rail is a 12 km light rail network for Sydney. It extends from Circular Quay along George Street to Central Station, through Surry Hills to Moore Park, then to Kensington and Kingsford via Anzac Parade and Randwick via Alison Road and High Street.
Transport for NSW (TfNSW) is responsible for planning, procuring and delivering the Central Business District and South East Light Rail (CSELR) project. In December 2014, TfNSW entered into a public private partnership with ALTRAC Light Rail as the operating company (OpCo) responsible for delivering, operating and maintaining the CSELR. OpCo engaged Alstom and Acciona, who together form its Design and Construct Contractor (D&C).
On 14 December 2019, passenger services started on the line between Circular Quay and Randwick. Passenger services on the line between Circular Quay and Kingsford commenced on 3 April 2020.
In November 2016, the Auditor-General published a performance audit report on the CSELR project. The audit found that TfNSW would deliver the CSELR at a higher cost with lower benefits than in the approved business case, and recommended that TfNSW update and consolidate information about project costs and benefits and ensure the information is readily accessible to the public.
In November 2018, the Public Accounts Committee (PAC) examined TfNSW's actions taken in response to our 2016 performance audit report on the CSELR project. The PAC recommended that the Auditor-General consider undertaking a follow-up audit on the CSELR project. The purpose of this follow-up performance audit is to assess whether TfNSW has effectively updated and consolidated information about project costs and benefits for the CSELR project.
Conclusion
Transport for NSW has not consistently and accurately updated CSLER project costs, limiting the transparency of reporting to the public. In line with the NSW Government Benefits Realisation Management Framework, TfNSW intends to measure benefits after the project is completed and has not updated the expected project benefits since April 2015.Between February 2015 and December 2019, Transport for NSW (TfNSW) regularly updated capital expenditure costs for the CSELR in internal monthly financial performance and risk reports. These reports did not include all the costs incurred by TfNSW to manage and commission the CSELR project.
Omitted costs of $153.84 million for early enabling works, the small business assistance package and financing costs attributable to project delays will bring the current estimated total cost of the CSELR project to $3.147 billion.
From February 2015, TfNSW did not regularly provide the financial performance and risk reports to key CSELR project governance bodies. TfNSW publishes information on project costs and benefits on the Sydney Light Rail website. However, the information on project costs has not always been accurate or current.
TfNSW is working with OpCo partners to deliver the expected journey time benefits. A key benefit defined in the business plan was that bus services would be reduced owing to transfer of demand to the light rail - entailing a saving. However, TfNSW reports that the full expected benefit of changes to bus services will not be realised due to bus patronage increasing above forecasted levels.
Appendix one – Response from agency
Appendix two – Governance and reporting arrangements for the CSELR
Appendix three – 2018 CSELR governance changes
Appendix four – About the audit
Appendix five – 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 #335 - released 11 June 2020
Funding enhancements for police technology
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.
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?
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Conclusion The NSW Police Force's management of the Policing for Tomorrow fund was mostly effective. There are measures in place to assess the impact of the technologies on the efficiency and effectiveness of policing in NSW. However, these measures are not in place for all technologies funded by Policing for Tomorrow. A strategic whole-of-organisation approach to identifying and filling technology capability gaps may have assisted in better targeting funds and managing expected benefits. The NSW Police Force identified, acquired, implemented and maintained a range of technologies resourced by the fund in an efficient and effective way. The election announcement committed the NSW Police Force to four specific projects which made up over three quarters of the fund value. Investment decisions for remaining funds were driven by the availability of funding and individual technology requirements rather than targeting improved policing outcomes and the capability necessary to achieve these. The NSW Police Force missed an opportunity to take a whole-of-organisation approach to selecting technology projects for the remainder of the funds where it had discretion. This may have included considering less obvious back office technology or making different investment decisions driven by gaps in the agency's technology capabilities. The NSW Police Force used effective governance arrangements for administering the Policing for Tomorrow fund, including using its existing ICT Executive Board. The NSW Police Force has adequate processes in place to drive benefits and monitor the impact of technology on the efficiency and effectiveness of policing for the larger projects funded by Policing for Tomorrow. Further work is required to ensure this for smaller projects. The NSW Police Force tends to consider only impacts on the organisation in managing benefits and identifying unintended consequences. It does not routinely engage proactively with stakeholders, including partner criminal justice agencies and members of the community, on new technology that changes how police interact with the public. |
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
Volume Eight 2013 focusing on Transport and Ports
Unqualified audit opinions were issued on the above corporations’ 30 June 2013 financial statements. During the year, Treasury issued TC 13/01 ‘Mandatory early close procedures for 2013’. This Circular aimed to improve the quality and timeliness of agencies’ annual financial statements. In 2012-13, application of the circular was made mandatory for State owned corporations. As a result, the port corporations were required to perform the early close procedures. All the port corporations were successful in performing the procedures, which helped them submit financial statements by an earlier due date. The early close procedures also resulted in general improvements to the quality of most financial statements.
The report recommends all transport entities should do more to reduce excessive annual leave balances to ensure they will comply with new targets set by the Premier, RailCorp, Sydney Trains and NSW Trains should minimise the amount of overtime bonuses paid to train drivers and that Transport for NSW should set targets to measure the overall satisfaction of train users.
Volume Nine 2011 focus on Education and Communities
The report includes comments on financial audits of government agencies in the Education and Communities sectors. The audits of the above entities’ financial statements for the year ended 30 June 2011 resulted in unmodified audit opinions within the Independent Auditor’s Reports. A key finding was that Treasury should consider issuing further guidance to arts and cultural bodies on collection valuation methodologies due to the significance of these assets to the State’s asset base.
Volume Eight 2011 Focus on Transport and Ports
The report includes comments on financial audits of government agencies in the Transport and Ports sectors. The audit of corporations’ financial statements for the year ended 30 June 2011 resulted in unmodified audit opinions within the Independent Auditor’s Reports. A key recommendation from the report is that Sydney Ports Corporation should continue working with other government authorities and industry stakeholders to improve the effectiveness of program initiatives for increasing container freight movements by rail. The Corporation should review the underlying causes hindering growth in the rail mode and develop and implement strategies to address the unfavourable trend.
Improving road safety: Young drivers
The audit concluded that the RTA’s licence testing and regulation has been generally effective in ensuring the safety of young drivers. There has been a significant reduction in crash and fatality rates involving young drivers over the last decade, more so than for drivers 26 years and older. This has coincided with the introduction by the RTA of an enhanced GLS. International and national research has demonstrated graduated licensing systems to be effective in reducing crashes and saving lives. Despite these improvements, young drivers are more likely to be involved in fatal crashes than other drivers.
Parliamentary reference - Report number #217 - released 19 October 2011
Improving Road Safety: Speed Cameras
We found that fixed speed cameras were generally located in areas with high road safety risk. Likewise, safety cameras that enforced speed limits were initially placed at high risk sites. However as all safety cameras will now enforce speed, RTA no longer uses evidence of a speeding problem to select these sites. Overall, total crashes and injuries each fell 26 per cent, and fatalities fell by more than two-thirds, in the three years after the installation of fixed speed camera. Long term trends show that these reductions have been maintained, the average number of speeding fines per fixed and safety cameras declines over time and fixed and safety speed cameras were located in areas with high road safety risk.
Parliamentary reference - Report number #215 - released 27 July 2011
Government expenditure and transport planning in relation to implementing Barangaroo
Barangaroo is an ambitious and significant development on Government-owned Sydney Harbour foreshore. Construction on the 22 hectare CBD site is expected to take 12 years to 2023. Developer contributions to Government of $1 billion are to provide for public domain and other Government development costs, including a six hectare Headland Park. When completed the precinct is to service an anticipated 26,000 workers and residents and up to 33,000 visitors a day. The Auditor-General concluded that while there was extensive transport planning and extensive documentation supporting Government financial forecasts, considerable risks remain for the implementation of the Barangaroo project.
Parliamentary reference - Report number #214 - released 15 June 2011
