Periodically we review the extent to which agencies have changed their practices as a result of our audits. This gives Parliament and the public an update on the extent of progress made.

In this follow-up audit, we examine changes following our September 2002 report, to assess whether NSW Health has improved its buying of hospital supplies using electronic systems.

NSW Health spends over $1.3 billion on hospital supplies. It is the largest expenditure area after employee costs. Reform of this area has the potential to make significant savings that could be redirected to frontline services.

As part of our series of audits in the area of e-government, our previous audit looked closely at the extent to which technology was being used to deliver potentially major savings in purchasing hospital supplies. This is a key area of so-called “process re-engineering” in the “e” field, and NSW Health provided an ideal case study.

Whilst implementing large-scale e-procurement has many technical aspects, it is not chiefly a technical issue. The key requirements for success reside in effective change management, in particular being clear as to who has the authority to make change decisions and be held accountable.

This audit looks at NSW Health’s successes to date, and its frustrations and challenges in making further progress in this field. Many of the issues raised in this report may provide lessons for any agency that is seeking to drive a significant change program.

Parliamentary reference - Report number #145 - released 23 November 2005

Hospitals, schools, public housing, roads, bridges, buses and trains are just some of the assets used by government in providing services to citizens.

The NSW Government’s asset base is impressive in size - with a value of around $167 billion and with government plans to spend around $8 billion acquiring or replacing assets in the current year. Another $2 billion is spent each year on maintenance.

Good asset management is very important to government; even a small efficiency gain in this area can provide significant returns. Good practice by those responsible for managing assets can improve reliability, extend asset life, save on maintenance costs and aid in identifying and disposing of unnecessary or non-performing assets.

Improving the NSW public sector’s approach to asset management has been on the reform agenda for at least a decade. Changes in practice have been accelerated more recently by integrating asset management policy with the budget process.

In this audit we examined NSW Treasury’s efforts to improve asset management practices in the public sector and the progress made by 3 agencies - the Department of Corrective Services, NSW Fire Brigades and the Powerhouse Museum - towards better managing their asset portfolios.

This report informs Parliament and the community on progress to date and what more needs to be done to ensure that agencies manage assets effectively and achieve best value.

Parliamentary reference - Report number #143 - released 12 October 2005

The annual Budget is one of the most important and visible statements about a government’s financial intentions.

Once a Budget is released, it is important to monitor variations from the projections it contains. This is done for two reasons -

• first, to ensure that individual agencies are properly managing their budget allocations and that any genuine emerging need for additional funding is met.
• second, to ensure that any changes to the State’s overall financial position are understood and corrective action is undertaken.

This audit dealt primarily with the second of these objectives.

Budget monitoring involves both agencies and Treasury working together to quickly identify factors that might impact the budget, to clearly understand the implications for their budget position and to take any remedial action needed.

Poor monitoring may reduce the confidence that stakeholders have in the government’s financial management. It may mean that government decisions made in- year or for the following budget (for example on tax measures or spending increases/savings) are based on an incorrect understanding of the State’s true financial position.

I hope that this Report provides some useful insights that will assist in better monitoring.

Parliamentary reference - Report number #141 - released 28 July 2005

The Audit Office has undertaken an audit on Government Office Accommodation. The audit examined the cost effectiveness of long-term leasing versus ownership and the housing of agencies involved with the delivery of core government activities.  Core activities are those intrinsically linked to basic and ongoing functions of Government and Parliament.

It recommends that:

• the Government consider owning office accommodation, as opposed to leasing, for its long-term core needs, subject to a case by case analysis of the relevant financial and nonfinancial factors

• the Government undertake an analysis of the costs/savings from proposed asset sales of office accommodation in light of the demonstrated need for long-term office accommodation (for core needs) New, Expired and Expiring Leases

• given the findings of the own versus lease case studies presented in this report, it is recommended that the Government require agencies to undertake, in collaboration with the Department of Public Works and Services (DPWS) a cost/benefit analysis of available accommodation options prior to committing to any proposed major new leases

• the Government direct the DPWS, in collaboration with all agencies, to negotiate the renewal of all major expired/expiring leases (where continued occupancy is warranted) in order to reduce the financial risk of above-market rent increases and the risk of cancellation of leases (Major leases are defined, for the purposes of these recommendations, to be those over $500,000 rental per annum or a net lettable area over 1,000 square metres) Management of Property Information

•  in order to improve the integrity of the Government Office Accommodation Database, agencies be required to respond to the annual data request from DPWS by a predetermined date

• a senior officer within each agency be required to certify to the accuracy of information provided by an agency as input to the database maintained by DPWS

• DPWS verify, on a sample basis, information provided by agencies as input to the Government Office Accommodation Database Premier’s Memorandum No 97-2

• the compliance by agencies with Premier’s Memorandum No 97-2 Government Office Accommodation and Property Disposal be established by DPWS.

Parliamentary reference - Report number #45 - released 11 December 1997