What the report is about

This audit assessed the effectiveness of NSW Government agencies’ coordination of the response to COVID-19, with a focus on the Delta variant outbreak in the Dubbo and Fairfield Local Government Areas (LGA) between June and November 2021. We audited five agencies - the Department of Premier and Cabinet, NSW Health, the NSW Police Force, Resilience NSW and the Department of Customer Service.

The audit also considered relevant planning and preparation activities that occurred prior to June 2021 to examine how emergency management and public health responses learned from previous events.

What we found

Prior to Delta, agencies developed capability to respond to COVID-19 related challenges.

However, lessons learned from prior reviews of emergency management arrangements, and from other jurisdictions, had not been implemented when Delta emerged in June 2021. As a result, agencies were not as fully prepared as they could have been to respond to the additional challenges presented by Delta.

Gaps in emergency management plans affected agencies' ability to support individuals, families and businesses impacted by restrictions to movement and gathering such as stay-at-home orders. In LGAs of concern, modest delays of a few days had a significant impact on people, especially those most vulnerable.

On 23 July 2021, the NSW Government established a cross-government coordinating approach, the Delta Microstrategy, which complemented existing emergency management arrangements, improved coordination between NSW Government agencies and led to more effective local responses.

Where possible, advice provided to government was supported by cross-government consultation, up-to-date evidence and insights. Public Health Orders were updated as the response to Delta intensified or to address unintended consequences of previous orders. The frequency of changes hampered agencies' ability to effectively communicate changes to frontline staff and the community in a rapidly evolving situation.

The NSW Government could provide greater transparency and accountability over decisions to apply Public Health Orders during a pandemic.

What we recommended

The audit made seven recommendations intended to improve transparency, accountability and preparedness for future emergency events.

This audit assessed the effectiveness of NSW Government agencies’ coordination (focused on the Department of Premier and Cabinet, NSW Health, the NSW Police Force, Resilience NSW and the Department of Customer Service) of the COVID-19 response in selected Local Government Areas (Fairfield City Council and Dubbo Regional Council) between June and November 2021.

As noted in this report, Resilience NSW was responsible for the coordination of welfare services as part of the emergency management arrangements. On 16 December 2022, the NSW Government abolished Resilience NSW.

During the audited period, Resilience NSW was tasked with supporting the needs of communities subject to stay-at-home orders or stricter restrictions and it provided secretariat support to the State Emergency Management Committee (SEMC). The SEMC was, and remains, responsible for the coordination and oversight of emergency management policy and preparedness.

Our work for this performance audit was completed on 15 November 2022, when we issued the final report to the five audited agencies. While the audit report does not make specific recommendations to Resilience NSW, it does include five recommendations to the State Emergency Management Committee. On 8 December 2022, the then Commissioner of Resilience NSW provided a response to the final report, which we include as it is the formal response from the audited entity at the time the audit was conducted.

The community of New South Wales has experienced significant emergency events during the past three years. COVID-19 first emerged in New South Wales after bushfire and flooding emergencies in 2019–20. The pandemic is now into its third year, and there have been further extreme weather and flooding events during 2021 and 2022.

Lessons taken from the experience of these events are important to informing future responses and reducing future risks to the community from emergencies.

This audit focuses on the NSW Government's response to the COVID-19 pandemic, and in particular, the Delta variant (Delta) that occurred between June and November 2021. The response to the Delta represents six months of heightened challenges for the NSW Government.

Government responses to emergencies are guided by legislation. The State Emergency and Rescue Management Act 1989 (SERM Act) establishes emergency management arrangements in New South Wales and covers:

• coordination at state, regional and local levels through emergency management committees
• emergency management plans, supporting plans and functional areas including the State Emergency Management Plan (EMPLAN)
• operations centres and controllers at state, regional and local levels.

This audit focuses on the activities of five agencies during the audit period:

• The NSW Police Force led the emergency management response and was responsible for coordinating agencies across government in providing the tactical and operational elements that supported and enhanced the health response to the pandemic. The NSW Police Force also led the compliance response which enforced Public Health Orders and included household checks on those required to isolate at home after testing positive to COVID-19. In some parts of NSW, they were supported by the Australian Defence Force in this role.
• NSW Health was responsible for leading the health response which coordinated all parts of the health system, initially to prevent, and then to manage, the pandemic.
• Resilience NSW coordinated welfare services as part of the emergency management arrangements and provided secretariat support to the State Emergency Management Committee (SEMC). The SEMC is responsible for the coordination and oversight of emergency management policy and preparedness. Resilience NSW was also tasked with supporting the needs of communities subject to stay-at-home orders or stricter restrictions.
• The Department of Customer Service (DCS) was responsible for the statewide strategic communications response.
• The Department of Premier and Cabinet (DPC) held a key role in providing policy and legal services, as well as supporting the coordination of activity across a range of functional areas and decision-making by our State’s leaders.

This audit assessed the effectiveness of NSW Government agencies’ coordination (focused on the Department of Premier and Cabinet, NSW Health, the NSW Police Force, Resilience NSW and the Department of Customer Service) of the COVID-19 response in selected Local Government Areas (LGA) (Fairfield City Council and Dubbo Regional Council) after June 2021.

The audit investigated whether:

• government decisions to apply LGA-specific Public Health Orders were supported by effective crisis management governance and planning frameworks
• agencies effectively coordinated in the communication (and enforcement) of Public Health Orders.

While focusing on the coordination of NSW Government agencies’ response to the Delta variant in June through to November 2021, the audit also considered relevant planning and preparation activities that occurred prior to June 2021 to examine how emergency management and public health responses learned from previous events.

This audit does not assess the effectiveness of other specific COVID-19 responses such as business support. It refers to the preparedness, planning and delivery of these activities in the context of supporting communities in selected LGAs. NSW Health's contribution to the Australian COVID-19 vaccine rollout was also subject to a separate audit titled 'New South Wales COVID-19 vaccine rollout' tabled in NSW Parliament on 7 December 2022. 

This audit is part of a series of audits which have been completed, or are in progress, regarding the New South Wales COVID-19 emergency response. The Audit Office of New South Wales '2022–2025 Annual Work Program' details the ongoing focus our audits will have on providing assurance on the effectiveness of emergency responses.

In this document Aboriginal refers to the First Nations peoples of the land and waters now called Australia, and includes Aboriginal and Torres Strait Islander peoples.

The COVID-19 pandemic arrived in Australia in late January 2020 as the bushfire and localised flooding emergencies were in their final stages. Between 2020 and mid-2021, agencies responded to the initial variants of COVID-19, managed a border closure with Victoria that lasted nearly four months and dealt with localised ‘flare-ups’ that required postcode-based restrictions on mobility in northern parts of Sydney and regional New South Wales. During this period, New South Wales had the opportunity to learn from events in Victoria which imposed strict restrictions on mobility across the State and the growing emergence of the Delta variant (Delta) across the Asia Pacific.

This section of the report assesses how emergency management and public health responses adapted to these lessons and determined preparedness for, and responses to, widespread community transmission of Delta in New South Wales.

The previous chapter discusses how agencies had refined the existing emergency management arrangements to suit the needs of a pandemic and describes some gaps that were not addressed. This chapter explores the first month of Delta (mid-June to mid-July 2021). It explores the areas where agencies were prepared and responses in place for the outbreak. It also discusses the impact of the gaps that were not addressed in the period prior to Delta and other issues that emerged.

NSW Health provided advice on the removal of restrictions based on up-to-date advice

The NSW Government discussed the gradual process for removing restrictions using the Doherty Institute modelling provided to National Cabinet on 10 August 2021. NSW Health highlighted the importance of maintaining a level of public health and safety measure bundles to further suppress case numbers. This was based on additional modelling from the Doherty Institute.

The Department of Regional NSW led discussion and planning around reopening with a range of proposal through August and September 2021. The Department of Premier and Cabinet and NSW Health jointly developed a paper to provide options on the restrictions when the State reached a level of 70% double dose vaccinations.

The roadmap to reopening was originally published on 9 September 2021. However, by 11 October 2021, the restrictions were relaxed when the 70% double dose threshold was reached to allow:

• up to ten fully vaccinated visitors to a home (increased from five)
• up to 30 fully vaccinated people attending outdoor gatherings (increased from 20)
• weddings and funerals limits increased to 100 people (from 50)
• the reopening of indoor pools for training, exercise and learning purposes only.

On the same day, the NSW Government announced further relaxation of restrictions once the 80% double dose threshold was reached. These restrictions were further relaxed on 8 November 2021. This included the removal of capacity restrictions to the number of visitors to a private residence, indoor pools to reopen for all purposes and density limits of one person for every two square metres, dancing allowed in nightclubs and 100% capacity in major stadia.

The NSW Government allowed workers in regional areas who received one vaccination dose to return to their workplace from 11 October 2021.

The Premier extended the date of easing of restrictions for unvaccinated people aged over 16 from 1 December to 15 December 2021.

Many agencies have undertaken reviews of their response to the Delta outbreak but a whole-of-government review has yet to be conducted

Various agencies and entities associated with the response to the Delta outbreak conducted after-action review processes. These processes assessed the achievements delivered, lessons learned and opportunities for improvement. However, a whole-of-government level review has not been conducted. This limits the New South Wales public service's ability to improve how it coordinates responses in future emergencies.

The agencies/entities that conducted reviews included:

• South West Metropolitan region, Western NSW region, Fairfield Local Emergency Management Committee (LEMC), Dubbo Local Emergency Operations Controller (LEOCON), which were collated centrally by the State Emergency Operations Centre (SEOC)
• Aboriginal Affairs NSW assessed representation and relevance of the emergency management arrangements for Aboriginal communities following the 2019 bushfires
• Resilience NSW developed case studies to capture improved practice with regard to food security and supply chains
• a community support and empowerment-focused after-action review undertaken by the Pillar 5 workstream of the Microstrategy.

Key lessons collated from the after-action reviews include:

• the impact of variation in capability across agencies on the management of key aspects of the response including welfare support and logistics
• issues with boundary differences between NSW Police Force regions, local government areas (LGA and local health districts (LHD) caused issues in delivering and coordinating services in an emergency situation 
• the need to improve relationships between state and local Government outside of acute emergency responses to improve service delivery 
• issues arising from impediments to information sharing between agencies and jurisdictions, such as:
  • timeliness and accuracy of data used to direct compliance activities
  • the impact of insufficient advance notice on changes to Public Health Orders
  • timely access to data across public sector agencies and other jurisdictions to inform decision-making, analysis and communications
  • gaps in data around ethnicity, geolocation of recent positive cases and infection/vaccination rates in Aboriginal communities.
• the lack of Aboriginal community representation on many LEMCs
• compared with the response to COVID-19 in 2020, improved coordination of communications with Culturally and Linguistically Diverse (CALD) populations with a reduction in overlapping messages and over-communication
• improved attendance from agency representatives in LEMCs, and regional emergency operations centres (REOC) to improve interagency communications, planning, capability development and community engagement issues
• deficiencies in succession planning and fatigue management practices
• the potential for REOC Welfare/Well-being subgroups to be included as part of the wider efforts to community needs during emergencies.

NSW Health commenced a whole of system review of its COVID-19 response in May 2022. At the time of writing, the completion due date for the debrief is 7 November 2022. This debrief is expected to explore:

• governance
• engagement 
• innovation and technology 
• community impact 
• workforce impact
• system impact and performance.

NSW Health is also undertaking a parallel Intra-Action Review that is focused on the public health aspects of the response with finalisation estimated for the end of November 2022. At the time of completing this performance audit report, NSW Health had not finalised these reviews and, as a result, we cannot validate their findings against our own observations.

Recent inquiries are likely to impact the governance of emergency management in New South Wales

In March 2022, the NSW Government established an independent inquiry to examine and report on the causes of, preparedness for, response to and recovery from the 2022 floods. The Flood Inquiry report made 28 recommendations, which the NSW Government supported in full or in principle. Some of the recommendations relate directly to the governance and leadership of emergency management arrangements in New South Wales. 

The State Emergency Management Committee (SEMC) will likely be involved in, and impacted by, the recommendations arising from the Flood Inquiry with potential changes to its membership and reshaping of functional areas and agencies. At the same time, the SEMC may have a role in overseeing the changes that emerge from the SEOC consolidated after-action reviews. This can also extend to ensuring local and regional bodies have incorporated the required actions. There is a risk that the recommendations from the pandemic-based after-action reviews may not be considered due to the priority of action resulting from the Flood Inquiry.

Furthermore, there is potential for the SEMC to work with NSW Health during its system-wide review. Such an approach is likely to improve preparedness for future events.

Appendix one – Response from agencies

Appendix two – Chronology 2020–2021

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 #371 - released 20 December 2022

What the report is about

Local councils in New South Wales are responsible for assessing local and regional development applications.

Most development applications are assessed and determined by council staff under delegated authority. However, some development applications must be referred to independent local planning panels or Sydney and regional planning panels for determination.

Councils provide support to local planning panels. The Department of Planning and Environment provides support to Sydney and regional planning panels.

This audit assessed whether Byron Shire Council, Northern Beaches Council and The Hills Shire Council had effectively assessed and determined development applications in compliance with legislative and other requirements.

It also assessed whether The Hills Shire Council, Northern Beaches Council and the Department of Planning and Environment had provided effective support to relevant independent planning panels.

What we found

All councils had established clear roles, responsibilities and delegations for assessment and determination of development applications and had also established processes to ensure quality of assessment reports.

Northern Beaches Council and The Hills Shire Council have established comprehensive approaches to considering and managing risks related to development assessment.

Northern Beaches Council's approach to publishing its assessment reports promotes transparency.

Across a sample of development applications assessed and determined between 2020–22:

• Northern Beaches Council and The Hills Shire Council had assessed and determined applications in compliance with legislative and other requirements. However, The Hills Shire Council could do more to transparently document any conflicts of interest within assessment reports.
• Byron Shire Council had assessed most applications in compliance with legislative and other requirements. However, we found opportunities for the Council to:
  • ensure determinations were made in line with delegations
  • strengthen its approach to transparent management of conflicts of interest and quality review of assessments.

The Hills Shire Council and Northern Beaches Council had effectively supported their respective local planning panels.

The Department of Planning and Environment had processes that meet requirements for supporting regional planning panels but could do more to promote consistency in approach, share information across panels and measure the effectiveness of its support.

What we recommended

We made recommendations to Byron Shire Council, The Hills Shire Council and the Department of Planning and Environment to address the gaps identified and improve the transparency of processes.

Local councils in New South Wales are responsible for assessing local and regional development applications under the Environmental Planning and Assessment Act 1979 (EP&A Act).

In assessing development applications, councils consider:

• whether the proposed development application is compliant with legislation and environmental planning instruments
• whether the proposed development meets local planning controls and objectives
• any environmental, social and economic impacts
• any submissions from impacted properties, neighbours and interested parties
• the public interest.

Once assessed, a development application will be determined by council staff under delegated authority, the elected council, or an independent planning panel.¹ 

The involvement of a particular independent planning panel is established under legislative and policy instruments, and depends on the type and value of the proposed development. Most development applications are assessed and determined by council staff under delegated authority.

In determining development applications, independent planning panels must manage any potential, real or perceived conflicts of interest of panel members for a given development application, meet and vote on development applications, and publish their decisions and reasons.

Under the EP&A Act, and as required by statutory instruments and procedures, councils and the Department of Planning and Environment (DPE) must provide secretariat and other support functions to independent planning panels.

Previous reviews and inquiries have identified several significant risks that are present within the processes involved in the assessment and determination of development applications. These risks include possible non-compliance with complex legal and policy requirements, potential improper influence from developers and other stakeholders, and a perceived lack of transparency within the planning system and planning outcomes.

There are several planning pathways for development in New South Wales. This audit focuses on local and regional development that requires assessment and determination by a local council and/or an independent local planning panel or Sydney or regional planning panel in three Local Government Areas (LGAs): Byron Shire Council, Northern Beaches Council, The Hills Shire Council.

Audited councils were selected from a range of criteria, including:

• the number, value and types of development applications determined in 2018–19
• average determination timeframes
• appeals against determinations and Land and Environment Court outcomes
• LGA demographics.

The audit also avoided councils that had previously been subject to a performance audit.

The objective of this audit was to assess whether:

• selected councils have effectively assessed and determined development applications in compliance with relevant legislation, regulations and government guidance
• selected councils and DPE effectively support independent planning panels to determine development applications in compliance with relevant legislation, regulations and government guidance.

This audit continues a series of audits examining the development assessment process in NSW local councils and is focused on the assessment and determination stages.

The Audit Office of New South Wales previously considered local government development assessments in our 2019 performance audit: 'Development assessment: pre-lodgement and lodgement in Camden Council and Randwick City Council'.

Appendix one – Response from agencies

Appendix two – Council profile: Byron Shire Council

Appendix three – Council profile: Northern Beaches Council

Appendix four – Council profile: The Hills Shire Council

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 #370 - released 12 December 2022

What the report is about

The Australian Government led and implemented the Australian COVID-19 vaccine rollout, with the support of state and territory governments. As part of the Australian Government's vaccine rollout, NSW Health launched its vaccination program on 22 February 2021, with responsibility for distributing and administering COVID-19 vaccine stock provided by the Australian Government.

This audit examined the period 1 January 2021 to 31 December 2021 and focused on NSW Health's contribution to the Australian Government led vaccine roll out in four Local Health Districts (LHDs), in particular the administration of two doses of vaccine to people aged 16 and over.

What we found

On 16 October 2021, NSW Health, in partnership with the Australian Government's vaccination program, achieved its first objective to fully vaccinate 80% of people in NSW aged 16 and over. Demand for the vaccine reduced in December 2021, and NSW Health did not reach its target of 95% fully vaccinated for people aged 16 and over until June 2022.

Despite challenges such as uncertain supply and changes to clinical advice affecting vaccine eligibility, NSW Health's overall delivery of vaccination services was effective and efficient.

During the audit period, NSW Health implemented effective strategies to allocate vaccines and reduce wastage to optimise the number of vaccines available.

NSW Health implemented its own booking system after it identified that the Australian Government's system would not manage bookings. There were problems with NSW Health's interim vaccine booking system, and NSW Health fully resolved these issues by September 2021.

As at 19 October 2022, vaccination rates for Aboriginal peoples and culturally and linguistically diverse people remained below the 95% target.

What we recommended

By June 2023, NSW Health should conduct a comprehensive review of the COVID-19 vaccine rollout and incorporate lessons learned into pandemic response plans.

The first three cases of COVID-19 in New South Wales were diagnosed in January 2020. By 30 June 2021, 128 people were being treated in hospital and one person was in intensive care. By the end of December 2021, 187,504 total cases and 663 deaths were reported in New South Wales. As at 27 October 2022, NSW Health reported more than three million total cases and 5,430 deaths.

The COVID-19 pandemic continues to have a significant impact on the people and the health sector of New South Wales. The Australian, state, territory, and local governments have directed significant resources towards health responses and economic recovery.

On 13 November 2020, National Cabinet (comprised of the Australian, state, and territory governments) endorsed the Australian COVID-19 Vaccination Policy. Australia's vaccination program was launched on 21 February 2021 with the goal of providing safe and effective vaccines to the people who most needed them as quickly as possible, to support the physical, mental and economic wellbeing of the nation.

The Australian Government led and implemented the Australian vaccine rollout, with the support of state and territory governments. As part of the Australian Government's vaccine rollout, NSW Health launched its vaccination program on 22 February 2021, with responsibility for distributing and administering COVID-19 vaccine stock provided by the Australian Government.

The overall objective of this audit was to assess the effectiveness and efficiency of NSW Health’s contribution to the Australian COVID-19 vaccine rollout. It is important to note that in New South Wales, primary care providers (GPs and pharmacies) and aged care providers administered the majority of vaccines. Primary care providers and aged care providers are the responsibility of the Australian Government.

The audit had a particular focus on whether NSW Health:

• set clear vaccination targets underpinned and/or guided by evidence
• managed the rollout of the vaccination program effectively and efficiently
• managed demand of vaccines effectively and efficiently.

The audit examined the period 1 January 2021 to 31 December 2021 and focused on NSW Health's contribution to the Australian Government led vaccine rollout in four Local Health Districts (LHDs), in particular the administration of two doses of vaccine to people aged 16 and over. We did not audit the subsequent rollout for ages five to 15, or the booster rollout (third and fourth doses) as these activities mostly occurred outside the date of our review.

This audit also did not assess the Australian Government’s allocation of vaccine supplies to New South Wales because we do not audit the Australian Government's activities. On 17 August 2022, the Australian National Audit Office completed a performance audit which assessed the Australian Department of Health and Aged Care's effectiveness in the planning and implementation of Australia's COVID-19 vaccine rollout.

This audit is one of a series of audits that have been completed or are in progress regarding the New South Wales COVID-19 emergency response. This includes the planned performance audit ‘Coordination of the response to COVID-19 (June to November 2021)’, and financial audit assurance activities focusing on Local Health District processes and controls to manage the receipt, distribution and inventory management of vaccine stock. The Audit Office New South Wales '2022–25 Annual Work Program' details the ongoing focus our audits will have on providing assurance on the effectiveness of emergency responses.

Appendix one – Response from agency

Appendix two – Australian audits on the vaccine rollouts

Appendix three – Committee members 

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 #369 - released 7 December 2022

What the report is about

This audit examined whether the Department of Planning and Environment (DPE) and the Biodiversity Conservation Trust (BCT) have effectively designed and implemented the Biodiversity Offsets Scheme (‘the Scheme’) to compensate for the loss of biodiversity due to development.

Under the Biodiversity Conservation Act 2016, the Scheme enables landholders to establish in-perpetuity Biodiversity Stewardship Agreements on sites to generate credits for the unique biodiversity on that land. These credits can be sold to offset the negative impact of development on biodiversity.

What we found

DPE has not effectively designed core elements of the Scheme. DPE did not establish a clear strategic plan to guide the implementation of the Scheme.

The BCT has various roles in the Scheme but lacked safeguards against potential conflicts, creating risks to credit supply.

The effectiveness of its implementation has also been limited. Key concerns around the Scheme’s transparency, sustainability and integrity are yet to be fully resolved.

A market-based approach to biodiversity offsetting is central to the Scheme's operation but credit supply is lacking and poorly matched to growing demand. DPE has not established a clear, resourced plan to manage the shortage in credit supply. Data about the market, published by the DPE and the BCT, does not provide an adequate picture of credit supply, demand and price to readily support market participation.

These factors create a risk that biodiversity gains made through the Scheme will not be sufficient to offset losses resulting from development, and that the DPE will not be able to assess the Scheme’s overall effectiveness.

DPE is leading work with the BCT to improve the Scheme, but this is not yet guided by a long-term strategy with clear goals.

What we recommended

The audit made 11 recommendations to DPE and the BCT, focusing on:

• a long-term strategic plan for the Scheme
• improvements to the operation and transparency of the market and credit supply
• frameworks to ensure the financial and ecological sustainability of biodiversity stewardship sites
• enhanced public reporting and data management
• resolving issues in conflicting governance and oversight.

The NSW Government's Biodiversity Outlook Report 2020 estimates that, without effective management, only 50% of species and 59% of ecological communities that are listed as threatened in New South Wales will still exist in 100 years. The NSW State of the Environment 2021 report identifies habitat destruction and native vegetation clearing as presenting the single greatest threat to biodiversity in the State.

According to the Organisation for Economic Co-operation and Development (OECD), biodiversity offsets are 'measurable conservation outcomes that result from actions designed to compensate for significant, residual biodiversity loss from development projects'. The OECD states that a feature of such schemes is that biodiversity offsets are intended to be implemented as the 'final step of a mitigation hierarchy' whereby reasonable first steps are taken to avoid and minimise the negative impacts.

The NSW Biodiversity Offsets Scheme was established in 2017 under the Biodiversity Conservation Act 2016 (the Act). The purpose of the Act is to 'maintain a healthy, productive and resilient environment for the greatest well-being of the community, now and into the future, consistent with the principles of ecologically sustainable development'.

The Department of Planning and Environment (DPE) designed and manages this Scheme. Under the Act, a feature of the Scheme is a 'market-based conservation mechanism through which the impacts to biodiversity can be offset.' The Scheme enables landholders to establish in-perpetuity Biodiversity Stewardship Agreements (BSAs) on sites to generate biodiversity credits, which can be sold to offset the negative impact of development on biodiversity. BSA sites are intended to be managed over the long term to generate the biodiversity gains required to offset the impact.

The Biodiversity Conservation Trust (BCT) monitors and supports landholders to manage BSA sites under the Scheme. This includes making payments to landholders from funds held in the Biodiversity Stewardship Payments Fund for undertaking the required biodiversity management actions.

This Scheme was preceded by several other offsetting schemes in New South Wales, including the BioBanking scheme that started in 2008. DPE has arrangements to transition sites, credits, and offset obligations from this and other previous schemes.

The current biodiversity credit market in New South Wales consists of 1394 different types of ecosystem credits, which are approved to be traded in 364 different offset trading groups, and 867 different species credits. Trading rules, set out in the Biodiversity Conservation Regulation 2017 (the Regulation), prioritise offsetting the obligations of a development with like-for-like ecosystem or species credits.

The Scheme is implemented through the planning system in New South Wales. Proposed development that involves the clearing of native vegetation, and meets certain thresholds, is required to undertake a Biodiversity Development Assessment Report. These reports determine an offset obligation, in biodiversity credits, to compensate for the biodiversity loss proposed. These reports are considered by consent authorities (such as a council, for local development, or by the Minister for Planning for major projects). An offset obligation is then included in the conditions of development approval.

In addition to establishing a market for trading between developers, with offset obligations, and landholders, who sell credits from their BSA sites, the Scheme allows developers to pay into the Biodiversity Conservation Fund and transfer their obligations to the BCT. This allows the developer to proceed with their project. The BCT must then meet these acquired obligations by buying the required credits, or by undertaking other approved activities set out in the Regulation. The BCT has more options than developers on how and when it acquits its obligations.

This audit examined whether DPE and the BCT have effectively designed and implemented the Biodiversity Offsets Scheme to compensate for the loss of biodiversity due to development.

This section presents an overview of the status of the biodiversity credit market in New South Wales. It describes development of the market under the Scheme in the context of transitional arrangements from previous schemes, and the extent of market participation and transactions to date. It also presents information about emerging trends in credit demand and supply.

This section assesses the clarity and alignment of the goals of the Scheme to key features of its design and operations. It also examines structural elements of the Scheme that aim to maintain integrity within administering agencies, and the status of actions to address risks or issues.

This section assesses how effectively components of the Scheme have been designed and are being implemented to provide assurance that the impacts of development are being avoided and minimised such that only ‘unavoidable’ impacts remain to be offset. The section also assesses whether the Scheme and its market embeds the necessary controls to ensure that obligations are offset as required.

This section assesses how effectively the supply of biodiversity credits has been supported by encouraging and enabling landholders to participate in the Scheme. It also assesses whether sufficient action is underway to address issues and risks to the establishment of BSA sites, especially in the context of known credit supply issues (section 2).

This section assesses how effectively BSA sites, which need to be managed by landholders to generate the biodiversity gains represented by credits, are regulated and supported by the Biodiversity Conservation Trust. It also assesses whether actions have been taken to address identified risks to the suitability of funds required to ensure long-term BSA site management.

Appendix one – Response from agencies 

Appendix two – Like-for-like, variation and ancillary rules

Appendix three – Detail on progress of the IIAP

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 #367 - released 30 August 2022

What the report is about

The ePlanning program is an initiative of the Department of Planning and Environment (the department) to deliver a digital planning service for New South Wales through the NSW planning portal (the portal).

Using the portal, relevant planning activities can be carried out online, including all stages of development applications.

The portal has been developed under three separate business cases in 2013, 2014 and 2020.

In late 2019, the government mandated the use of the portal for all development applications. This decision took effect across 2020–21.

This audit assessed the effectiveness of the department's implementation, governance and stakeholder engagement in delivering the NSW planning portal. 

What we found

Since implementation commenced in 2013, the NSW planning portal has progressively achieved its objectives to provide citizens with access to consolidated planning information, and allow them to prepare and submit development applications online.

Shortcomings in the department's initial planning and management of the program led to a significant time overrun. It has taken the department longer and cost significantly more to implement the portal than first anticipated. 

In recent years the department has improved the planning, implementation and governance of the ePlanning program, resulting in improved delivery of the portal’s core functions.

The department now has a clear view of the scope necessary to finalise the program, but has not yet published the services it plans to implement in 2022 and 2023.

Mandating the use of the portal for all development applications changed the program's strategic risk environment and required the department to work more closely with a cohort of stakeholders, many of whom did not want to adopt the portal.

Despite this change, the department kept its overall delivery approach the same.

While implementation of the portal has delivered financial benefits, the department has overestimated their value.

The Department has only reported benefits since 2019 and has not independently assured the calculation of benefits.

What we recommended

By December 2022, the department should:

• publish a roadmap of the services it expects to release on the portal across 2022 and 2023
• update its ePlanning program assumptions, benefits targets and change management approach to reflect the government's decision to mandate the use of the portal for all stages of a development application
• independently assure and report publicly the correct calculation of ePlanning program benefits.

The ePlanning program is an initiative of the Department of Planning and Environment (the department) to deliver a digital planning service for New South Wales through the NSW planning portal (the portal, or the planning portal). The department defines the portal as an online environment where community, industry and government can work together to better understand and meet their obligations under the Environmental Planning and Assessment Act 1979 (NSW). Using the portal, relevant planning activities can be carried out online throughout New South Wales. This includes, but is not limited to:

• applying for and gaining planning approval
• applying for and gaining approval for building works, sub-dividing land and similar activities
• issuing occupancy and other certificates.

The portal has been developed under three separate business cases. The first business case in 2013 led to the creation of a central portal, which made planning information available to view by planning applicants and allowed some planning applications to be lodged and tracked online.

Under a second business case prepared in 2014, the department set out to improve and widen the functions available via the portal. The department prepared a third business case in 2020 to fund further improvements to the portal over the period July 2020 to June 2023. The third business case also extended the portal's functions to support the building and occupation stages of the planning cycle.

In late 2019, the government mandated the use of the portal for all stages of development applications. This decision took effect across 2020–21 and applied to all councils as well as certifiers and others involved in the planning process.

The objective of this performance audit was to assess the effectiveness of the department's implementation, governance and stakeholder engagement in delivering the NSW planning portal. We investigated whether:

• delivery of the NSW planning portal was planned effectively
• sound governance arrangements are in place to ensure effective implementation of the program
• users of the NSW planning portal are supported effectively to adopt and use the system.

This part of the report sets out how:

• the ePlanning program has been planned and delivered
• users of the portal have been supported
• the program has been governed.

This part of the report sets out the ePlanning program's:

• expected and reported financial benefits
• calculation of financial benefits.

In 2019, the department increased its expectations for net financial benefits

The department's three ePlanning business cases each forecast substantial financial benefits from the implementation of the planning portal. The department expected that most financial benefits would flow to planning applicants due to a quicker and more consistent planning process. It also expected that government agencies and councils would benefit from the portal.

In 2019 the department commissioned a review to explore opportunities to better identify, monitor and realise the benefits of the ePlanning program. Using this work, the department updated the expected benefits for business cases 1 and 2 to take account of:

• errors and miscalculations in the original benefits calculations
• slower delivery of the portal and changes to the take-up of portal services by councils
• changes to the services supported by the portal.

Reported benefits significantly exceed the current targets

In September 2021, the department reported that the program had achieved $334 million of benefits over the three financial years up to June 2021 plus the first two months of 2021–22. These reported benefits were significantly higher than expected. 

The department attributes the higher-than-expected financial benefits to the following:

• benefit targets have not been updated to reflect the impact of the 2019 decision to mandate the use of the portal for all development applications. This decision brought forward the expected benefits as well as potential costs of the program. However, the department did not update its third business case which was draft at the time. The business case was subsequently approved in July 2020
• one-off cost savings for agencies not having to develop their own systems
• public exhibitions of planning proposals continuing to be available online during 2020 when some newspapers stopping printing due to COVID-19.

The calculation of benefits is overstated

The department reported $334 million of benefits in September 2021 due to the ePlanning program. This calculation is overstated because:

• a proportion of reported benefits is likely to be due to other planning reforms
• the calculation of the largest single benefit is incorrect
• the reported benefits may not fully account for dis-benefits reported by some stakeholders.

The program’s benefits are calculated primarily from changes in planning performance data, such as the time it takes to determine a planning development application. The department currently attributes the benefits from shorter planning cycles entirely to the effect of the ePlanning program. However, planning cycles are impacted by many other factors such as the complexity of planning regulations and the availability of planning professionals. Planning cycles may also be impacted by other departmental initiatives which are designed to improve the time that it takes for a planning application to be evaluated. The Introduction describes some of these initiatives.

The largest contribution to the department’s September 2021 benefit report was an estimated saving of $151 million for developers due to lower costs associated with holding their investment for a shorter time. However, the department’s calculation of this benefit assumes a high baseline for the time to determine a development application. It also assumes that all development applications except for additions or alterations to existing properties will incur financing costs. However, a small but material number of these applications will be self-financed. The calculation also includes several data errors in spreadsheets.

The calculation of some benefits relies upon an extrapolation of the benefits experienced by a small number of early-adopter councils, including lower printing and scanning costs, fewer forms and quicker processing times. However, some councils report that their costs have increased following the introduction of the portal, primarily because aspects of the portal duplicate work that they carry out in their own systems. The portal has also required some councils to re-engineer aspects of their own systems, such as the integration of their planning systems with other council systems such as finance or property and rating systems. It has also required councils to create new ways of integrating council information systems with the planning portal.

The department has published information to help councils and certifiers to automatically integrate their systems with the planning portal. This approach uses application programming interfaces (or APIs) which are an industry-standard way for systems to share information. In April and May 2021, the government granted $4.8 million to 96 regional councils to assist with the cost of developing, implementing and maintaining APIs. The maximum amount of funding for each council was $50,000. The department is closely monitoring the implementation of APIs by councils and other portal users. Once they are fully implemented the department expects APIs to reduce costs incurred by stakeholders.

The department has not yet measured stakeholder costs. It was beyond the scope of this audit to validate these costs.

The department has not independently assured the calculation of reported benefits

In 2020 the department appointed an external provider to calculate the benefits achieved by the ePlanning program. The department advised that it chose to outsource the calculation of benefits because the provider had the required expertise and because it wanted an independent calculation of the benefits. The process involves:

• extraction and verification of planning performance data by the department
• population of data input sheets by the department
• calculation of benefits by the external provider using the data input
• confirmation by the department that the calculation includes all expected benefit sources.

The department does not have access to the benefits calculation model which is owned and operated by the external provider. The department trusts that the provider correctly calculates the benefits and does not verify the reported benefit numbers. However, as the benefits model involves many linked spreadsheets and approximately 300 individual data points, there is a risk that the calculation model contains errors beyond those discussed in this audit.

The reported benefits have only been calculated since 2019

The department originally intended to track benefits from October 2014. However, it only started to track benefits in 2019 when it appointed an external provider to calculate the benefits achieved by the portal. Any benefits or dis-benefits between the introduction of the portal and 2019 are unknown and not included in the department’s calculation of benefits.

Appendix one – Response from agency

Appendix two – About the audit

Appendix three – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #366 - released 21 June 2022

The Auditor-General for New South Wales, Margaret Crawford, released a report today examining NSW Health’s management of health and safety risks to nurses and junior doctors in high demand hospital wards over the past five years, including during the first six months of the 2020 COVID-19 health emergency.

The Auditor-General found that while NSW Health effectively managed most incidents and risks to the physical health and safety of hospital staff during ‘business as usual’ activities, systems and resources are not fully effective to manage staff psychological and wellbeing risks, particularly for nurses.

The Auditor-General found that NSW Health was effective in managing most COVID-19 health and safety risks to hospital staff. Overall effectiveness could have been improved had pandemic preparedness training been delivered across all Local Health Districts. Additionally, state-wide communication systems could have been improved to provide hospital clinicians with access to a ‘single source of truth’ with the latest advice from NSW Health authorities.

NSW Health’s planning and preparation for the supply of Personal Protective Equipment (PPE) was partially effective. At various times, some PPE items could not be sourced from established suppliers. Face masks, goggles and protective gowns were substituted with products that differed in shape, size and fitting from usual items, and in some hospitals, substituted masks were used without being locally fit tested by hospital staff.

The Auditor-General made seven recommendations aimed at enhancing hospital health and safety risk reporting practices, along with a recommendation that NSW Health conduct a post pandemic 'lessons learned' review and make policy and operational recommendations for future pandemic responses.

Over the past decade, there have been increases in the numbers of health and safety incidents affecting nurses and junior doctors in NSW hospitals. These increases have been associated with higher numbers of patients with acute mental health conditions, age-related cognitive impairments, and patients presenting in emergency departments under the influence of drugs and alcohol.  

This audit commenced in August 2019, with a focus on the health, safety and wellbeing of nurses and junior doctors in high demand hospital wards. Our audit focused on emergency departments, mental health wards and aged care wards during 'business as usual’ periods of hospital operations. 

In the early months of 2020, the novel coronavirus (COVID-19) brought new health and safety risks to hospital staff. These risks included the potential for infection amongst health workers, increased staff workloads, and impacts on staff wellbeing.  

In May 2020, we expanded the focus of the audit to assess the effectiveness of NSW Health’s management of the health and safety risks to staff during the COVID-19 health emergency. We assessed the impacts on emergency departments and intensive care units, as these were the wards where staff were most likely to come into contact with COVID-19.  

The Audit Office acknowledges the ongoing health and safety challenges that the pandemic has brought to NSW Health staff – in particular to hospital clinicians and the managers who support them.  

This audit assessed the effectiveness of NSW Health’s:

• systems, forums and workplace cultures to support reporting and generate data about risk
• initiatives to support safe workplaces and effectively respond to health and safety incidents
• actions to continuously improve staff health, safety and wellbeing in hospital environments.

The first three chapters of this report describe the effectiveness of NSW Health’s ‘business as usual’ health and safety risk management. The fourth and fifth chapters describe the effectiveness of NSW Health’s health and safety risk management during the COVID-19 pandemic.  

1. Audit recommendations

By December 2021, NSW Health should:

1. Evaluate the effectiveness of the new incident management system to enable full reporting of health and safety incidents and risks in all hospital wards, including those where incidents and risks are common, and monitor for consistency of reporting over time
2. Expand the categories of hospital incident data reported to Ministry executives in the Work Health and Safety Dashboard reports, including by linking injury data to incident types by hospital ward category, and monitor in conjunction with Local Health Districts for emerging trends and improvement over time
3. Ensure that nurses and junior doctors have regular opportunities to report on risks to their psychological health and wellbeing, and that system managers have access to aggregate data to guide responses to mitigate these risks
4. Develop and implement an evidence-based guiding framework and strategy to support hospital staff in the aftermath of traumatic or unexpected workplace incidents, and monitor implementation
5. At regular intervals, publicly report aggregate Root Cause Analysis data detailing the hospital system factors that contribute to clinical incidents
6. Develop and implement a systemwide platform for sharing research and information about hospital health and safety initiatives across the health system
7. Conduct a post-pandemic 'lessons learned' review focusing on the effectiveness of key strategies deployed in the management of the COVID-19 pandemic and make policy and operational recommendations for future pandemic responses. In particular, ensure:
   • regular scenario-based pandemic training for hospital staff
   • updated policies and protocols for hospital infection controls
   • capability to upscale authoritative communication with frontline health workers at the earliest notification of a health emergency and for the duration of the emergency
   • systems and safeguards to ensure the supply and availability of clinically appropriate personal protective equipment (PPE) during all phases of a pandemic.

Local Health Districts were effective in leading health and safety infection control activity

According the NSW Health Influenza Pandemic Plan (Pandemic Plan), the Chief Executives of Local Health Districts have ultimate responsibility for public health unit preparations during health emergencies. If necessary, they can ‘draw on the support of the State Pandemic Management Team and local emergency management resources’.

During the preparations and early response phases to the COVID-19 pandemic, Local Health Districts were at the forefront of most NSW hospital activity. They took the lead role in developing hospital infection control protocols and guidance about the appropriate uses of Personal Protective Equipment (PPE). Each Local Health District established its own responses to the health emergency, based on the best clinical advice available to them. The localised approach meant that there were some minor differences in infection control practices across the NSW health system.

Throughout February and March 2020, there was limited centralised policy or guidance from the Ministry and its Pillar Health agencies about COVID-19 infection control practices. It was not possible to mandate practices at a time when information about the virus was evolving. Clinical responses were changing as more became known about COVID-19, especially about its patterns of transmission and its impacts on people with the disease.

During February and March 2020, Local Health District executives communicated with hospital staff via a range of methods. Some sent daily e-memos with the latest updates. Some scheduled more regular meetings with hospital clinicians. Some Districts set up extensive staff training sessions and information briefings to keep all personnel updated with the latest advice. Physical distancing made it difficult to bring staff together in large groups, so a range of communications measures were implemented.

Clinical staff also utilised their clinical training and expertise to prepare their wards and train frontline staff in infection control procedures. Some sourced information from national and international colleagues to add to localised knowledge of the virus.

When the first evidence of COVID-19 community transmission was identified in the Northern Sydney Local Health District, hospital staff followed infection control protocols that were based on local guidance and information. With the support from the District executive team and infectious diseases experts, hospital clinicians set up their own infection control protocols and PPE protections. Within a week the District had produced a matrix to guide staff in the uses of PPE during COVID-19 procedures, and had circulated the guidance to all hospital clinicians.

At the end of March 2020, a version of the Northern Sydney PPE matrix was published on the Clinical Excellence Commission’s website and it has now become NSW Health’s standard guideline for PPE during COVID-19 procedures. Once this guideline was published centrally, infection control practices were standardised across NSW hospitals.

This form of District-led policy making is not ‘business as usual’ practice for NSW Health. Policy making processes were somewhat reversed during the early response phases to COVID-19. This flexible policy approach supports the governance arrangements described in the Pandemic Plan, which assigns responsibility for ‘supporting and maintaining quality care across health services and implementing infection control measures as appropriate’ to Local Health Districts.

In non-health emergency situations, clinical policy and protocols are usually initiated and developed by the Ministry and the Clinical Excellence Commission and are subsequently shared across the health system after a quality control process. The localised approach adopted in the months from February to March 2020, allowed for rapid and flexible responses to changing information – to protect the health and safety of the hospital workforce and the wider community.

Hospital staff across NSW would have been better prepared for COVID-19 if pandemic training had been delivered across all Local Health Districts in the past decade

Local Health Districts are responsible for training hospital staff in preparation for public health emergencies. NSW’s policy describing Public Health Emergency Response Preparedness Minimum Standards requires that clinical staff participate in at least one annual emergency training exercise if they hold a position where they are likely to be called upon in an emergency. Staff must participate in an actual response exercise or a relevant training session. The training must also include re-familiarisation with PPE.

Available evidence about emergency response training in NSW indicates that at least two Local Health Districts have delivered pandemic focussed training in the past decade. Our interviews with managers of emergency departments and intensive care units indicates that most other Districts have focused their emergency training on mass patient trauma incidents such as plane crashes, train crashes and terrorist attacks. While the potential for these types of mass trauma events is real, and warrants training and preparation, significant global outbreaks of diseases have also had potential to threaten NSW communities. In previous decades, global health communities have been at risk of diseases such as the Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory Syndrome (MERS).

In the two Districts where pandemic training was provided in NSW, staff participated in community influenza vaccination exercises. These were focused on upskilling staff to follow emergency command structures, manage high volume patient flows, and organise sanitisation logistics during a hospital-based training exercise.

Our interviews with nurse managers in emergency departments and intensive care units indicate that in the majority of other Local Health Districts, key personnel were unaware of the NSW Pandemic Plan. Interviewed staff also reported insufficient scenario-based training in pandemic responses over the last ten years.

The Ministry, the Clinical Excellence Commission and the Health Education and Training Institute (HETI) are responsible for online training and 'state-wide strategies and resources to maintain high levels of compliance with infection control and patient safety recommendations'. The HETI website contains online training modules in infection control and PPE donning and doffing procedures. Other infection control information and research is available on the websites of the Clinical Excellence Commission and the Agency for Clinical Innovation.

Online training modules are effective for upskilling staff in a range of skills, but are not a substitute for real-time, rapid incident response training. Face-to-face training provides opportunities for first responders to test procedures in hospital environments. Incident response training provides opportunities for staff to assess their levels of compliance with protocols and their competence with equipment in scenario situations. It is the responsibility of Local Health Districts to provide this form of training to the health staff in their District.

Two NSW Health policies that govern clinical arrangements during pandemics are outdated

The Ministry had not updated two policies that had the potential to assist emergency departments and intensive care units in aspects of their ward preparation for the COVID-19 pandemic. Both policies were on the NSW Health website, but neither were shared with hospital staff in the planning phases for the pandemic. Both policies are out of date and have not been revised within required timeframes.

The 2010 Influenza Pandemic - Providing Critical Care policy was due for review in May 2015 and was not updated at the time of the COVID-19 health emergency. Similarly, the 2007 policy Hospital Response to Pandemic Influenza Part 1: Emergency Department Response was due for review in June 2012 and has not been updated.

These policies were designed to assist clinical staff to make necessary ward arrangements for infection control. They set out the steps for rapid identification of contingent workforces, isolation procedures, and management of patient flows to separate those with suspected infection from other patient cohorts. They were a potential addendum to the NSW Pandemic Plan which describes the command and control responsibilities of health agencies in health emergencies.

Our interviews with nurse managers from emergency departments and intensive care units indicate that in the absence of pandemic policy, they sought clinical guidance from external sources and Local Health District experts. Interviewees told us that a lack of policy guidance about ward arrangements and infection control practices in a pandemic increased their workloads and hours of overtime in the early response phases to COVID-19. With the support of Local Health Districts, clinical staff made rapid adjustments in order to respond to changing testing requirements and ward arrangements.

The Ministry was slow to establish a centralised communication channel to communicate with frontline staff

NSW Health’s governance and communication arrangements during a pandemic are set out in the Pandemic Plan. The Plan requires that government agencies ‘commence enhanced arrangements, establish communications measures’ and confirm ‘governance arrangements’ when there is evidence of person to person transmission during an influenza outbreak. NSW Health received the first notifications of the novel coronavirus risks in January 2020.

During the preparation and early response phases to COVID-19, the Ministry and its central agencies were slow in establishing a single, authoritative channel through which to communicate consistent messages to frontline staff. Clinical staff required up-to-date information about COVID-19 testing criteria as requirements were changing rapidly, sometimes daily. While there was no expectation for fixed policy at this time, hospital staff required the latest instructions about treatment requirements, and updates on the numbers of COVID-19 infections in their region.

As information about COVID-19 was evolving, information was communicated across the health system via ‘multiple channels and sources’. While the Ministry and its central agencies communicated extensively with Local Health Districts during March 2020, hospital staff reported to us that they weren’t always sure where they could find the latest advice about testing protocols or infection controls.

Frontline staff told audit office staff that they were checking multiple sources and time-stamping advice to ensure they had the most up to date information on a daily basis. While some Local Health Districts managed clear communication links with frontline staff, nurse managers told us that communication was ‘chaotic’ during the early phases of pandemic preparation. Key personnel were not always available outside business hours and nurse managers advise that they spent hours at the end of shifts, seeking and printing the latest advice for weekend and night shift personnel. By the end of March 2020, the Ministry and the Clinical Excellence Commission websites became better organised to communicate with frontline clinicians.

A recommendation to the Ministry of Health after H1N1 swine flu could be equally applied in the COVID-19 context. The NSW Government’s report: Key Recommendations on Pandemic (H1N1) 2009 Influenza recommended the establishment of ‘clear pathways of communication … so that all employees have confidence in where their information will come from and who they should approach if they need additional information.’

NSW Health acknowledges the challenges and the lessons from the early phases of the COVID-19 pandemic. For example, a strategy released in August 2020, sets out NSW Health’s own recommendation for the future management of PPE including: ‘Aligning a single source of truth for PPE education and evidence-based guidance to ensure clarity of information on appropriate use, supported by an influential network of Infection Prevention and Control (IPC) practitioners at the forefront.

Ministry executives advise that communication with health staff has improved since the early phases of the pandemic. The Ministry now sends weekly COVID-19 updates to over 130,000 health staff via email. In addition, NSW Health now has two COVID-19 tabs on its website with current information, including COVID-19 testing advice. According to Ministry executives, these communication channels could be used or replicated if needed for future health emergencies. The Ministry also provides health information and updates via a phone application called Med App. This App is preferred by doctors and is less likely to be used by nurses. As at October 2020, there are 13,000 users of Med App. Push notifications can be made on Med App through SMS alerts.

Personal protective equipment (PPE) was not always available in required sizes and some hospital masks and gowns were substituted with products that differed from the usual items

Since the emergence of COVID-19 in Australia, all clinicians in NSW hospitals have had access to some form of PPE for their clinical requirements. If staff did not have appropriate equipment for each COVID-19 related procedure, they were guided by the formal advice issued to the NSW Health workforce on 11 March 2020 stating that: ‘The safety of NSW Health staff is a priority at all times, especially during COVID-19. Where safe working practices confirm specific PPE (e.g. face shields/masks or other equipment) are required for the protection of staff due to COVID-19, in all circumstances:

• staff are to wear prescribed PPE as instructed
• staff are not to undertake or be required to undertake tasks requiring PPE if the PPE is not available for use. Any such tasks are not to proceed until required PPE is available
• any staff member who is concerned about their safety must raise their concerns immediately to their manager.’

At periods during March and April 2020, some PPE items were not available in the required sizes or the regular brands to which staff were accustomed. HealthShare NSW was not able to source PPE from usual suppliers. HealthShare NSW sourced PPE including N95 masks from non-traditional suppliers. Some PPE items differed in shape and size from the usual hospital equipment. While senior executives from HealthShare NSW advise that all products were approved by the Therapeutic Goods Administration (TGA), in some hospitals, nurse managers advise that staff were not able to ‘fit test’ substituted masks. Fit testing determines the type and the size of the respirator mask that achieves an adequate seal on an individual’s face.

In March and April 2020, ‘duck bill’ (N95) masks were not available in some hospitals. According to stock managers and clinical managers in Local Health Districts, duck bills are the preferred mask for staff with smaller faces, particularly female staff members. The duck bill mask is a standard PPE product, and as such, is fit tested during mandatory PPE training. During the early response phases to COVID-19, most Local Health Districts were provided with substitute N95 masks. Fit testing of the substituted N95 masks was not able to be conducted in all NSW hospitals during the early phases of COVID-19. During the first wave of COVID-19 in March and April 2020, hospital staff told audit staff that there was no time and a lack of equipment to appropriately fit test substituted N95 masks.

Nurse managers in emergency departments advise that in some instances, staff made adaptations to PPE to improve protections, such as doubling masks, adding elastics or bringing their own equipment. These adaptations were not consistent with guidelines. Nurse managers advise that in some cases, adaptations to PPE or ill-fitting masks created pressure sores and contact dermatitis. Just over half of the stock managers of Local Health Districts advised that PPE stock was procured from outside the HealthShare NSW system. Stock managers in some Districts advise that facial shields and goggles sourced from non-traditional suppliers by HealthShare NSW were of a lesser quality than standard equipment. Stock managers and nurse managers reported that the changes in PPE products caused confusion and stress amongst staff.

Local Health Districts were proactive in assisting hospital staff to mitigate risks of COVID-19 infections. Some Local Health Districts assigned ‘tiger teams’ to assist staff with their PPE practices. Tiger teams provide clinical expertise and advice to staff, answer questions about infection control and provide training on PPE practice in hospital ward environments. They assist and support PPE donning and doffing practices to ensure the appropriate sequencing of applying and removing PPE for effective infection control. They provide mask fit checking guidance to assist staff in correct PPE practices.

Districts ran extensive refresher PPE training sessions for clinical staff. Some hospitals ran regular PPE demonstrations so that staff could observe correct PPE procedures at set times during the day. These activities assisted staff to implement appropriate infection control in the period before the Clinical Excellence Commission’s web-based materials and videos became available in late March and early April 2020. These online resources now provide comprehensive guidance to hospital staff in PPE practices.

HealthShare NSW placed limits or caps on some high-demand PPE items that were too low to meet requirements in some Local Health Districts and had to be adjusted to meet actual demand

The NSW Pandemic Plan describes the responsibilities of the Ministry and its central agencies to manage and maintain the State Medical Stockpile of essential PPE supplies and antiviral medications. During a pandemic, HealthShare NSW has responsibility for warehousing, monitoring and distributing health supplies to the health workforce.

Due to a reported global shortage of PPE and limits to the NSW stockpile, HealthShare NSW placed limits on the provision of approximately 100 high-demand items to NSW hospitals. HealthShare NSW advise that the PPE order capping ceilings were implemented ‘to ensure local stockpiling does not occur’. A centralised ordering process was established with Local Health Districts so that PPE product ordering occurred through single hospital locations (214 across the State), rather than at the ward level. Escalation processes were established to allow Districts to request one-off increases to supply, and a process was set up to permanently increase the order cap limit for any PPE item by facility.

According to HealthShare NSW, ‘as incoming central supply has improved, order caps have subsequently increased in line with strong engagement and governance with the Local Health Districts to ensure the appropriate levels of supply are provided’. The original capped levels were determined by assessing PPE usage in wards during the flu season of 2019. As the flu season case numbers of 2019 were relatively low, some Local Health District managers advised that the levels of PPE during 2019 were not comparable to the level of PPE required for the COVID-19 pandemic.

After advocacy from hospital stock managers and clinicians, HealthShare NSW increased capped PPE levels in many Local Health Districts.

Executive members of the State Health Emergency Operations Centre (SHEOC) advise that its PPE supply strategy needs to be carefully developed as there are vast differences in PPE usage rates during 'business as usual' periods and pandemic periods. If NSW Health kept the level of PPE required in planning for a worst-case scenario, this would equate to an extensive surplus of PPE that could not be utilised during business as usual periods. The SHEOC Executive advise that it is not feasible or economical to store this level of PPE. They advise that given the costs of PPE, and the fact that the products have a shelf life, a diversified supply line is a more reliable method for ensuring PPE during surge and non-surge periods.

Early data modelling showed ICU patient numbers at levels not manageable with levels of ventilators and equipment

Early projections of patient numbers requiring acute care for COVID-19, were at levels that would not have been manageable with the equipment and resources of NSW hospitals. Throughout March through to May 2020, government data modelling indicated significant surges of community infections and surges in intensive care patients.

Early estimates were based on overseas trends, and if actual cases had matched projections, NSW hospitals would not have had sufficient ventilators to meet demand. The knowledge of this shortfall caused high levels of anxiety among nursing and medical staff.

While the data was based on the best available information, it had negative implications for the health and safety of the nurse and junior doctor workforce. Managers of intensive care wards and emergency departments reported stress amongst the workforce. Staff concerns were primarily about being faced with ‘the unmanageable’, along with heightened fears about contracting the virus with the knowledge that there was insufficient equipment to treat acute patients.

As it transpired, overall numbers of COVID-19 infections were lower than projected during the early months of the pandemic. The lower infection rates in the general population have meant fewer instances of patients requiring intensive care in NSW hospitals. In addition, HealthShare NSW has been able to increase the numbers of ventilators in NSW hospitals to prepare for future surges in patients requiring acute respiratory care.

SHEOC Executive advise that NSW Health undertook an accelerated procurement strategy in early 2020 to increase its stock of ventilators, and that ventilator capacity has always far-exceeded actual requirements.

NSW Health has developed a strategy to improve the management of PPE for the NSW health workforce

In August 2020, NSW Health released a strategy that sets out its future management and planning approaches to the provision of PPE for the NSW Health workforce. NSW Health’s Personal Protective Equipment (PPE) Strategy describes the learnings and challenges during the COVID-19 pandemic in sourcing and distributing PPE. It sets out the systems and methods for distributing PPE to staff and patients and focuses on how staff are kept informed on the appropriate use of PPE at all times. A supporting communications strategy has been developed to support its implementation.

The strategy contains enhanced transparency measures to regularly inform staff about PPE stock levels and to provide data about PPE usage rates by item types in wards in NSW hospitals. The NSW Health PPE strategy describes a changed approach to ordering, storing and allocating PPE. This includes diversifying the supply lines for PPE products to increase supply options in circumstances where supply lines become disrupted. It includes a centralised system for coordinating the supply of hospital PPE through Local Heath District coordination points and centralised distribution points in large hospitals.

Our interviews with hospital PPE stock managers and nurse managers indicate that staff find the new ordering system to be an improvement upon the previous stock ordering method.

According to the Personal Protective Equipment (PPE) Strategy, NSW health is upgrading its models for monitoring and benchmarking PPE usage across the health system. Systems are being improved for forecasting demand volumes during business as usual periods and during health emergency surges.

Appendix one – Response from agency

Appendix two – Audit methodology

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 #344 - released 9 December 2020

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

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

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

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

Read full report (PDF)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Key

Image

Yes

Image

Not Fully

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

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

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

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

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

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

Key

Yes

Not Fully

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Service NSW allowed sufficient time for cost-efficient media placement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Exhibit 8: Campaign objectives and results

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

Key

Yes

No

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

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

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

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

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

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

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

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

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

Appendix one – Responses from agencies

Appendix two – About the campaigns

Appendix three – About the audit

Appendix four – Performance auditing

Copyright notice

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

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

The Auditor-General for New South Wales, Margaret Crawford, released a report today on how well four councils managed their local infrastructure contributions during the 2017-18 and 2018-19 financial years. 

Local infrastructure contributions, also known as developer contributions, are collected from developers to pay for local infrastructure such as drainage, local roads, open space and community facilities. Controls over local infrastructure contributions help to ensure that all contributions owed are collected, funds are spent as intended, and any contributions paid in the form of works-in-kind or dedicated land are correctly valued.

The audit found that Blacktown City Council and City of Sydney Council provided effective governance over their local infrastructure contributions whereas Central Coast and Liverpool City Councils’ governance arrangements require improvement.

The audit found that three councils had spent local infrastructure contributions in accordance with approved contributions plans. Central Coast Council and the former Gosford City Council had spent $13.2 million on administration costs in breach of the Environmental Planning and Assessment Act 1979. These funds were repaid into the council’s local infrastructure fund during the course of the audit.

The Auditor-General made a number of recommendations for each council relating to improving controls over contributions and increasing transparency. 

Read full report (PDF)
 

This audit examined the effectiveness of governance and internal controls over local infrastructure contributions, also known as developer contributions, held by four councils during the 2017–18 and 2018–19 financial years.

This performance audit was conducted with reference to the legislative and regulatory planning framework that was in place during that period.

Our work for this performance audit was completed at the end of March 2020 when we issued the final report to the four audited councils and the Department of Planning, Industry and Environment. We received their respective formal responses to the report’s recommendations during April and May 2020.

Concurrently to this audit, we sought Crown Solicitor’s advice (the ‘Advice’) regarding the use of local infrastructure contributions collected by local councils under the Environmental Planning and Assessment Act 1979 (‘the EPA Act’) for our financial audit work. The Advice clarified the applicable legislative requirements with reference to the application, investment and pooling of local infrastructure contributions. The Advice is included in Appendix 2 of this report. The Advice has not impacted on the findings and recommendations of this report.

Councils collect Local Infrastructure Contributions (LICs) from developers under the Environmental Planning and Assessment Act (1979), the Local Government Act (1993) and the City of Sydney Act (2000) (EP&A Act, LG Act and City of Sydney Act) to fund infrastructure required to service and support new development. At 30 June 2018, councils across NSW collectively held more than $3.0 billion in LICs collected from developers. Just over $1.37 billion in total was held by ten councils. Councils collecting LICs must prepare a contributions plan, which outlines how LICs will be calculated and apportioned across different types of infrastructure. Councils that deliver water and sewer services prepare a development servicing plan (DSP) which allows them to collect contributions for water and sewer infrastructure.

Development timeframes are such that there is often several years between when LICs are collected and the infrastructure is required. Good governance and internal controls are needed over these funds to ensure they are available when needed and spent appropriately.

This audit assessed the effectiveness of governance and internal controls over LICs collected by four councils during the 2017–18 and 2018–19 financial years: Blacktown City Council, Central Coast Council, City of Sydney Council and Liverpool City Council. As at June 2018 these councils held the four highest LIC balances, each in excess of $140 million.

A strong governance framework is important at each council to ensure that the funds are managed well, available when needed and spent as intended. The audit examined the following features of each council's governance framework as they apply to LICs:

• decision-making by councillors and council officers relating to LICs
• monitoring delivery of contributions plans and DSPs including:
  • reviewing assumptions underlying the plans
  • monitoring projected status of plans.

Internal controls over LICs are important to promote accountability, prevent fraud and deliver infrastructure to the required standard at the best possible price. If financial controls are weak or are not implemented well, there is a risk that LICs are misspent or that councils pay too much for infrastructure.

Not all councils' internal controls adequately addressed risks associated with the administration of LICs

The audit examined a number of internal controls that manage risks related to LICs. These included:

• financial controls over receipt and expenditure of LIC funds
• management of conflicts-of-interest when dealing with developers
• independent valuations of works-in-kind and dedicated land
• ensuring delivery and quality of works-in-kind, and obtaining security from developers in the event of non-delivery or poor quality work
• management of variations to VPAs and works-in-kind agreements.

We reviewed controls included in policies and procedures and then checked samples of work to ensure that controls were implemented. We found variation in the controls that councils implemented, and some weaknesses in controls. It is a matter for each council to assess their financial risk and develop internal controls that support the collection, management, and expenditure of LICs. However, councils must be able to assure their communities and developers that they are doing everything possible to collect all LICs owing and that work conducted by developers in lieu of cash payments is properly valued and carried out to the required standard.

Further information about audit findings in relation to internal controls for each council are included in chapters five to eight. The exhibit below demonstrates variation in several controls implemented in the audited councils.

In a 2018 report, the Independent Commission Against Corruption noted that 'the appetite for transparency is expanding in both the public and private sectors'.

The Practice Note and S64 Guidance refer to transparency, including the importance of transparency over:

• calculation and apportionment of LICs
• funding of infrastructure, including where and when infrastructure is delivered
• arrangements made with developers through VPAs.

The LIC system is largely transparent for community members who know where to look

Contributions plans and DSPs are public documents, exhibited to the public before being adopted by council. Councils included in the audit publish their contributions plans and DSPs on their websites and meet statutory requirements with regard to reporting and accessibility of information.

However, other public information relating to the LIC system is fragmented across different websites and reports and varies in detail across councils.

The Practice Note states that councils are accountable for providing the infrastructure for which contributions are collected. Demonstrating that infrastructure has been provided is difficult with fragmented information. As an example of transparent reporting, Blacktown City Council's 2018–19 annual report includes information about infrastructure that has been delivered for every contributions plan, providing transparency over how LICs have been spent.

Use of LICs collected under VPAs is not always transparent

Contributions collected under VPAs are not required to demonstrate the same relationship to a development as LICs collected under section 7.11 of the EP&A Act. VPAs are often negotiated because a developer requests a change to a planning instrument, and it is important that these arrangements, and their outcomes, are transparent to the community.

The EP&A Regulation includes mechanisms to ensure that VPAs are partially transparent. VPAs are exhibited to the public and approved by the elected council. Councils must maintain a VPA Register and make the VPA Deeds of Agreement available on request. However, there is no obligation on council to report on the outcomes or delivery of developers' obligations under VPAs. The four audited councils vary in transparency and accessibility of information available about VPAs.

The Practice Note suggests that councils incorporate the intended use of LICs collected under VPAs in the Deed of Agreement, but there is no guidance relating to transparency over where and when funds have actually been spent. There is merit in councils providing greater transparency over public benefits delivered through VPAs to give communities confidence in VPAs as a planning tool.

Credit arrangements with developers are not always well documented or monitored

When levying LICs, section 7.11(6) of the EP&A Act requires councils to take into account land, money, or works-in-kind that the developer has contributed on other development sites over and above their LIC obligations. This section of the EP&A Act allows a developer to offset a LIC owed on one site against land or works contributed on another. This leads to some developers carrying 'credits' for work delivered to councils, to be paid back by reduced LICs on a future development. Blacktown City Council and Central Coast Council allow developers to carry credits. Liverpool City Council and City of Sydney Council do not permit credits and instead pay the developers for any additional work undertaken.

Councils should formally document credit arrangements and have a robust process to validate and keep track of credit balances and report on them. Central Coast Council does not keep good track of credit arrangements and neither Blacktown City Council or Central Coast Council aggregate or report on outstanding credit balances.

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

Appendix two – Advice from the Crown Solicitor

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 #339 - released 17 August 2020

This report examines whether NSW Health effectively planned and delivered major capital works to meet the demand for health services in New South Wales.

The report found that NSW Health has substantially expanded health infrastructure across New South Wales since 2015. However, the program was driven by Local Health District priorities without assessment of the State’s broader and future‑focussed health requirements.

The report found that unclear decision making roles and responsibilities between Health Infrastructure and the Ministry of Health limited the ability of NSW Health to effectively test and analyse investment options.

Project delays and budget overruns on some major projects indicate that Health Infrastructure's project governance, risk assessment and management systems could be improved.

The Auditor‑General recommends that NSW Health ensure its capital projects offer the greatest value to New South Wales by establishing effective policy guidance and enhancing project governance and management systems.

Read full report (PDF)

Since 2011–12, NSW Health has aimed to improve its facilities and build 'future focused' infrastructure. The NSW Government’s 2015–16 election commitments established a four-year $5.0 billion capital program for NSW Health to build and upgrade more than 60 hospitals and health services. The 2019–20 State Budget committed a further $10.1 billion over four years for another 29 projects. This is the largest investment to date on health capital works in New South Wales.

Recent reviews of infrastructure have recognised that population and demographic growth will require a change in the delivery and composition of health infrastructure, including considering greater use of non-traditional, non-capital health service options and assets.

To ensure that expenditure on capital works represents the best value for money, NSW Health's business cases need to be robust and supported by evidence that demonstrates they are worthy investments. The NSW Process of Facility Planning has been the main framework guiding the detailed planning and development of NSW Health's capital works proposals. This framework was developed by the then NSW Department of Health in 2010. Its aim is to ensure investment proposals are supported by rigorous planning processes that address health service needs and provide value for money.

Infrastructure projects of the complexity and scale being delivered by NSW Health carry inherent risks. For example, unplanned cost escalations can potentially impact on the State’s finances. Unforeseen delays can also reduce the intended benefits. The growth in the State’s health capital spend and project profile, means its exposure to such risks has increased over time.

The objective of this audit was to assess the effectiveness of planning and delivery of major capital works to meet demand for health services in New South Wales. To address this objective, the audit examined whether:

• the Ministry of Health has effective procedures for planning and prioritising investments in major health capital works
• Health Infrastructure develops robust business cases for initiated major capital works that reliably inform government decision making
• Health Infrastructure has effective project governance and management systems that support delivering projects on-time, within budget and achievement of intended benefits.

The audit focused on the Ministry of Health and Health Infrastructure – being the lead agencies within NSW Health responsible for prioritising, planning and delivering major health capital works across the State. The audit examined 13 business cases for eight discrete projects over a ten-year period.

Over the period of review, NSW Government policies for business case development and submission have emphasised that effective governance arrangements are critical to a proposal's successful implementation.

NSW Health's Process of Facility Planning similarly highlights the importance of effective governance and project management for achieving good outcomes. It prescribes a general governance structure managed by Health Infrastructure that can be tailored to the planning and delivery of health infrastructure projects greater than $10.0 million.

The three major hospital redevelopments examined in metropolitan, regional and rural areas had a combined Estimated Total Cost of more than $1.2 billion and comprised eight discrete projects and 13 separate business cases.

Almost all these projects experienced delivery challenges which impacted achievement of their original objectives and intended benefits. This is expected in complex and large-scale health infrastructure programs. However, in some projects the impacts were significant and resulted in substantial delays, unforeseen costs, and diversion of resources from other priority areas.

Our review of the selected case studies highlighted opportunities for enhancing governance and project management. Specifically, it indicates a need for improving transparency in the management of contingencies, risk management and assessments particularly relating to adverse site conditions and the selection of contractors. There is also a need to strengthen forward planning for options to address unfunded priorities within business cases that risk complicating the delivery of future project stages resulting in unforeseen costs and potentially avoidable budget overruns.

In February 2017, the Ministry's Capital Strategy Group approved the use of surplus funds of $13.76 million from Stage 1 of the Hornsby Ku-ring-gai Hospital Redevelopment for new works deemed needed to support Stage 2. Following this decision, Health Infrastructure finalised and submitted a business case addendum for Stage 1 to the Ministry in March 2017, addressing the new works comprising a two-storey building for medical imaging and paediatric floors. The business case addendum also addressed options to fit out and procure major medical imaging equipment. The Ministry approved the Stage 1 business case in July 2017, noting the Ministry's Capital Strategy Group had already approved the use of remaining Stage 1 funds to deliver the new works.

Stage 1 was completed in 2015, almost two years before the Stage 1 business case addendum was prepared in February 2017.

The Ministry's decision to approve the new works using $13.76 million of surplus Stage 1 funds did not comply with the NSW Treasury Circular TC 12/20. This policy establishes the Treasurer's approval must be sought and received before a new capital project with an Estimated Total Cost of $5.0 million or more can be approved by NSW Health. The Ministry therefore exceeded its delegated authority in making this decision, as it was not evident it had sought and received the Treasurer's approval prior to doing so.

Consequently, the surplus Stage 1 funds should not have been used by the Ministry to deliver new works in the circumstances. Instead, they should have been released from the Stage 1 project in accordance with established NSW Health procedures, and the Stage 1 Estimated Total Cost revised down accordingly. This did not occur, and NSW Health ultimately directed $11.0 million in surplus Stage 1 funds to the new works.

These circumstances indicate a need to strengthen transparency and accountability within NSW Health for the approval of new projects, and how contingency funds are used in the management of major health capital works. They also demonstrate the impact of weaknesses with options appraisal as the initial Stage 1 business case did not consider alternative options for addressing the initially unfunded works later covered by the Stage 1 business case addendum and ultimately funded from the Stage 1 contingency provision.

In addition to proposing the above-noted new works, the 2017 Stage 1 Business Case Addendum for the Hornsby-Ku-ring-gai development sought to retrospectively address the estimated funding gap of around $14.0 million for the internal fit out, supply of major medical imaging equipment, and cost to operate the medical imaging service at Hornsby Ku-ring-gai Hospital also not addressed in the originally Stage 1 business case.

The Stage 1 business case addendum considered various procurement options to purchase and run the medical imaging services ranging from State operation purchase options to private operation purchase options.

It recommended outsourcing the operation and provision of equipment to the private sector based on estimated savings to the public sector initially of around $650,000 per annum reducing over time to $270,000. The Ministry endorsed this option in June 2017, but it did not ultimately proceed.

A July 2018 report to the Executive Steering Committee on the project shows NSW Health later decided to deliver operation of the medical imaging unit 'traditionally' with an updated estimate of the cost at approximately $16.4 million. The report also shows the Ministry supported the costs now being met by the Northern Sydney Local Health District.

This means the funding gap previously identified in the Stage 1 business case addendum for fitting out the medical imaging building and supply of major medical equipment would need to be met fully by the State, representing a $16.4 million cost overrun for the project.

Examined reports to the Executive Steering Committee show this was largely funded by the Northern Sydney Local Health District via the disposal of land realising approximately $15.0 million in proceeds.

This initially unforeseen cost, along with the additional $11.0 million for the new works approved under the Stage 1 business case addendum, were ultimately merged with the Stage 2 project initially approved in 2017–18 with an Estimated Total Cost of $200 million.

The 2019–20 State Budget provided an additional $65.0 million for a further Stage 2A to deliver additional built capacity to support outpatient services, enhanced allied health services, re-housed community health services and the delivery of prioritised clinical services unfunded as part of Stage 2. The funds were approved based on an Investment Decision Template (IDT) that examined two options in addition to the base case representing scoping alternatives to the preferred master planned capital solution.

However, we found the IDT showed around 23 per cent of the $65.0 million sought (i.e. $15.0 million) was to be allocated to fund the deficit in Stage 2, which had arisen as a result of project delays due to adverse site conditions. This was not discussed in the IDT.

The February 2020 report to the Executive Steering Committee shows a combined Stage 2 and 2A final forecast cost of $292.6 million against a potential budget of $290.7 million representing an overall deficit for the project of around 0.6 per cent.

However, this favourable final budget position does not transparently show the funding challenges experienced over the project's implementation to-date. The three major budget issues include:

• inappropriate use of around $11.0 million in Stage 1 contingency for originally unfunded works contrary to Treasury policy
• the additional $16.4 million cost unforeseen in the Stage 1 business case for delivering medical imaging services mostly funded through the sale of land
• an additional $15.0 million from Stage 2A to cover the budget overrun in Stage 2 due to adverse site conditions.

The cumulative impact of these events is that Stages 1 and 2 of the Hornsby project cost approximately $42.4 million than it should have in the circumstances around 14 per cent more than what the revised combined Estimated Total Cost for both stages should have been after releasing the $11.0 million in surplus Stage 1 funds, with Stage 2 delayed by around 14 months.

Major construction projects often experience adverse site conditions which can be difficult to fully detect in advance. However, we found this was a common occurrence in the projects we examined sometimes with significant time and/or budget impacts indicating scope to enhance related risk and cost assessments. Specifically:

• Hornsby Ku-ring-gai Hospital Redevelopment Stage 2: adverse site conditions during demolition works resulted in an 11-month delay for delivering the medical imaging unit and 14-month delay completing Stage 2 main works including need for additional $15.0 million in funds to cover the resultant budget deficit for the project.
• Blacktown Mt Druitt Hospital Redevelopment Stage 2: adverse site conditions combined with project complexity delayed completion of the early works by approximately five months. This contributed to the delay in completing the main construction works which occurred around nine months later than planned in the business case.
• Dubbo Health Service Redevelopment Stages 3 and 4: Health Infrastructure advised adverse site conditions including asbestos containing materials and ground conditions delayed works for the main building with completion forecast for March 2021, around 21 months later than planned in the final business case. This resulted in the need for additional $13.5 million to cover increased construction costs and risks, increasing the Stage 3 and 4 forecast final cost from $150 million to $163.5 million as at February 2020.

These examples indicate a risk the cumulative impact of adverse site conditions may be substantial when measured across both time and Health Infrastructure's full delivery program. They also point to potential for Health Infrastructure to achieve efficiencies and improved outcomes from strengthening its approach to assessing and mitigating the risks from adverse site conditions.

Main construction works on Stage 1 of the Dubbo Health Service Redevelopment were completed in October 2015, approximately 13 months later than planned in the final business case. Delays were mainly due to insolvency of the early works contractor resulting in their departure from the project. The ensuing 11-month delay in completing the early works significantly impacted the overall schedule and delivery of main construction works.

The insolvency event was significant as it affected nine separate Health Infrastructure projects – three of which had yet to reach practical completion. It also affected state-funded projects in other sectors. It resulted in the need for additional funding of $11.5 million that was provided in the 2014–15 State Budget increasing the total Stage 1 and 2 budget from $79.8 million to $91.3 million.

Health Infrastructure’s analysis of lessons learned shows it worked actively to mitigate the impacts of the insolvency event across all affected projects. However, it also indicates a risk the lessons were mainly focused on mitigating the impacts after an insolvency event occurred rather than on prevention.

Although Health Infrastructure initially commissioned a financial assessment of the now insolvent early works contractor before engagement, it did not detect any risks of the impending insolvency and instead concluded the contractor was in a strong financial position. However, the contractor became insolvent shortly after commencement approximately seven months later. This indicates a risk of weaknesses in the assessment performed that was not explicitly addressed by the lessons learned.

Delivery of the main construction works were further impacted by disputes with the main works contractor over the scope of works for the renal unit resulting in Health Infrastructure terminating the contract in November 2016 following lengthy negotiations over several months.

The scope of works relating to the renal unit were ultimately transferred to Stages 3 and 4 and were delivered in December 2019, around five years later than originally planned in the business case.

Health Infrastructure advised the delay was ultimately beneficial to the project because the refurbishment works for the renal unit, initially scheduled for Stages 1 and 2, would have been demolished to accommodate the new Western Cancer Centre proposed after Stages 1 and 2 and currently being delivered in parallel with Stages 3 and 4.

Health Infrastructure advised the actual cost of Stages 1 and 2 was $84.7 million against the budget of $91.3 million. The residual $6.6 million relates to the renal works not delivered during Stage 1 and 2 and transferred to Stage 3 and 4.

Health Infrastructure advised the contractual provisions for mitigating insolvency events 'in-flight' are limited highlighting the importance of proactive and effective due diligence prior to engaging contractors for significant construction projects.

Health Infrastructure's 2017-20 Corporate Plan identifies the development of a quality framework to support delivery of future-focused outcomes as a key organisational priority. Related initiatives within the Corporate Plan describe a framework underpinned by a Quality Committee providing advice on:

• records management, to meet the requirements of the State Records Act 1998
• project assurance, to ensure future focused outcomes and enhance Health Infrastructure's Standards, Policies, Procedures and Guidelines, Templates and Design Guidance Notes
• knowledge management and library services, to promote and leverage from project learnings.

Although Health Infrastructure has some elements of a quality framework it is not yet fully in place. Health Infrastructure advised it had yet to establish the quality framework and related committee described in its Corporate Plan due in part to its focus on responding to the growth of its capital program.

Health Infrastructure's Development and Innovation team has been active in supporting continuous improvement in knowledge and project management including development of business cases. Although useful, these initiatives have relied heavily on leveraging and disseminating insights from Gateway reviews and have not formed part of a systematic quality and continuous improvement framework.

The limited focus on the quality of business cases is reflected in internal performance monitoring and reporting which focuses mainly on tracking the delivery of projects against internal benchmarks, often revised from the baselines in the business case, and expenditure against cashflow targets. There is no evident internal monitoring and/or reporting to the Chief Executive and Board on defined quality metrics linked to business case development and staff capability.

Performance reporting on balanced scorecard metrics has similarly focused mainly on process rather than quality and has been inconsistent in recent years.

Appendix one – Response from agency

Appendix two – About the audit

Appendix three – Performance auditing

Appendix four – Ministry of Health planning tools and guidelines

Appendix five – Streamlined investment decision process for Health Capital Projects

Appendix six – Timeline of business cases and relevant policy guidelines

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 #338 - released 12 August 2020

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.’

Read full report (PDF)

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.

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