The report includes comments on financial audits of government agencies in the Transport and Ports sectors. The audit of corporations’ financial statements for the year ended 30 June 2011 resulted in unmodified audit opinions within the Independent Auditor’s Reports. A key recommendation from the report is that Sydney Ports Corporation should continue working with other government authorities and industry stakeholders to improve the effectiveness of program initiatives for increasing container freight movements by rail. The Corporation should review the underlying causes hindering growth in the rail mode and develop and implement strategies to address the unfavourable trend.

The Environment Protection Authority’s expenditure for the financial year 2010/11 was $92 million - $76 million of this was for environment protection and regulation. The Office of Environment and Heritage and the Environment Protection Authority commenced 145 prosecutions for environmental offences and 106 were completed in the financial year 2010/11, down from the 134 prosecutions completed in 2009/10. Financial penalties for 2010/11 totalled $969,000 down from $1,403,000 in 2009/10. The average fine decreased from $10,468 in 2009/10 to $9,141 in 2010/11.

The sale of the State’s electricity retail and trading rights raised $5.3 billion. The electricity retail businesses sold for a $3.08 billion profit with the electricity generation output sold for a $1.85 billion loss, delivering a overall profit of $1.23 billion. One recommendation is that  The Treasurer should consider releasing the Energy Reform Strategy relating to the development and ownership of the Cobbora Coal Project for public scrutiny to ensure transparency of the energy reform process. There should be a clearly articulated business plan to demonstrate to the people of New South Wales the benefits from the project.

The level of non compliance with the requirements of this Premier’s Memorandum is concerning, particularly considering the NSW Procurement Reforms were effective since 2006. The implementation strategy for procurement reform was announced as early as 2001. We recommend the governing bodies of agencies and management review, not only the processes their agencies have in place to comply with procurement reforms and requirements, but also more broadly how agencies identify and comply with laws, regulations, Treasury policy pronouncements, Premier’s memoranda and other obligations. 

The report includes comments on his financial audits of NSW Government transport, planning and industry agencies for 2009-10. A key recommendation from the report is that the New South Wales Government identify lessons learnt from the metro experience and ensure that future decision processes are developed to ensure the State never again expends such a large amount of scarce transport funding dollars and valuable time on a project that does not proceed.

The report includes comments on his financial audits of NSW Government environment, climate change and water agencies. The audits of these agencies’ financial reports for the year ended 30 June 2010 resulted in one qualified Independent Auditor’s Report. Sydney Water has not recognised assets and liabilities of the Build-Own-Operate schemes in their statement of financial position. The combined profit after tax of the four largest water utilities increased substantially from $300 million in 2008-09 to $584 million in 2009-10. Distributions to the Government were $379 million up 17 per cent or $55 million from last year.

The report includes comments on NSW Treasury and agencies in the finance and superannuation sectors. The New South Wales public sector superannuation funds’ investments were $42.2 billion at 30 June 2010, up from $38.5 billion in 2009. Investment returns reached 14.5 per cent in 2009-10. This is a significant improvement on the investment returns of up to negative 18.4 per cent at the peak of the global financial crisis in 2008.
 

The report includes comments on financial audits of government agencies in the electricity sector. The audits of the seven NSW electricity corporations’ financial reports for the year ended 30 June 2010 each resulted in an unqualified Independent Auditor’s Report. We did note significant uncertainty that may affect the value of power station assets due to the unknown impacts of any future carbon pollution reduction scheme and the Government’s proposed electricity industry reforms.

The audit identified that overall the agencies had carried out the redundancy process satisfactorily and the process, with some exceptions, complied with Government and internal policies. Government policy states that performance problems should be dealt with by managing the performance of the employee rather than restructuring/redundancy processes. In a limited number of instances certain employees, whose performance had been questioned, had been offered and accepted voluntary redundancy.

The audit also indicates that the process of redundancies has resulted in lower salary costs, in real dollar terms, without undue increase in either overtime or consultancy costs nor any detrimental effect on service quality. However, it is noted that the decrease in staffing levels occurred exclusively in the non-budget sector. Budget sector staffing levels increased by 1.4 per cent during 1989-95. There are also signs that the need for and the benefits arising out of redundancies are not well planned or measured. The need for redundancies often arises from a desire to reduce staff related costs while there is no comparison of the costs of redundancy compared to benefits.

Parliamentary reference - Report number #37 - released 17 April 1997

Following a request from the NSW Legislative Council in September 1996, a performance audit into various matters affecting the operation of the New South Wales Department of Agriculture was undertaken by The Audit Office.

Among the recommendations from this report, the Audit Office found that:

• An economic appraisal should be undertaken before all major developments, including rationalisation plans, are implemented. It should include details of anticipated benefits from the changes planned, so that their achievement can be evaluated after implementation.

• Government policies should be made explicit or else established by directives in writing. Planning Infrastructure and human resources should be planned to maximise efficiency and effectiveness. If Government chooses alternatives that have higher costs or lower benefits for the Department, then these should be explicitly funded.

• The Department should strengthen its system of internal control by strengthening the role of the Board of Management as a means of management control, directing an overhaul of the Charter of the Internal Audit Committee and using it to drive the Department’s internal audit function and ensuring implementation of an effective financial management information system.

Parliamentary reference - Report number #36 - released 27 March 1997