Reports
Supporting the District Criminal Court
The Auditor-General for New South Wales, Margaret Crawford, released a report today on whether the Department of Communities and Justice (the department) effectively supports the efficient operation of the District Criminal Court system.
The audit found that in the provision of data and technology services, the department is not effectively supporting the efficient operation of the District Criminal Court system. The department has insufficient controls in place to ensure that data in the system is always accurate.
The department is also using outdated technology and could improve its delivery of technical support to courts.
The audit also assessed the implementation of the Early Appropriate Guilty Pleas reform. This reform aims to improve court efficiency by having more cases resolved earlier with a guilty plea in the Local Court. The audit found that the department effectively governed the implementation of the reform but is not measuring achievement of expected benefits, placing the objectives of the reform at risk.
The Auditor-General made seven recommendations to the department, aimed at improving the controls around courts data, reporting on key performance indicators, improving regional technical support and measuring the success of the Early Appropriate Guilty Pleas reform.
The District Court is the intermediate court in the New South Wales court system. It hears most serious criminal matters, except murder, treason and piracy. The Department of Communities and Justice (the Department) provides support to the District Court in a variety of ways. For example, it provides security services, library services and front-desk services. This audit examined three forms of support that the Department provides to the District Court:
- data collection, reporting and analysis - the Department collects data from cases in its case management system, JusticeLink, based on the orders Judges make in court and court papers
- technology - the Department provides technology to courts across New South Wales, as well as technical support for this technology
- policy - the Department is responsible for proposing and implementing policy reforms.
Recent years have seen a worsening of District Court efficiency, as measured in the Productivity Commission's Report on Government Services (RoGS). Efficiency in the court system is typically measured through timeliness of case completion. There is evidence that timeliness has worsened. For example, the median time from arrest to finalisation of a case in the District Court increased from 420 days in 2012–13 to 541 days in 2017–18.
As a result, the government has announced a range of measures to improve court performance, particularly in the District Court. These measures included the Early Appropriate Guilty Pleas (EAGP) reform. One of the objectives of EAGP is to improve court efficiency, which would be achieved by having more cases resolve with a guilty plea in the Local Court.
This audit assessed whether the Department of Communities and Justice effectively supports the efficient operation of the District Criminal Court system. We assessed this with the following lines of inquiry:
- Does the Department effectively collect, analyse and report performance information relevant to court efficiency?
- Does the Department effectively provide technology to support the efficient working of the courts?
- Does the Department have effective plans, governance and monitoring for the Early Appropriate Guilty Pleas reform?
The audit did not consider other support functions provided by the Department. Further information on the audit, including detailed audit criteria, may be found in Appendix two.
The Department is responsible for providing technology to the courts, which can improve the efficiency of court operations by making them faster and cheaper. The Department is also responsible for providing technical support to courtrooms and registries. It is important that technical support is provided in a timely manner because some technical incidents can delay court sittings and thus impact on court efficiency. A 2013 Organisation for Economic Co‑operation and Development report emphasised the importance of technology and digitisation for reducing trial length.
While the Department may provide technology to the courts, they are not responsible for deciding when, how or if the technology is used in the courtroom.
The Department is using a significant amount of outdated technology, risking court delays
As of April 2019, the whole court system had 2,389 laptops or desktop computers out of warranty, 56.0 per cent of the court system's fleet. The court system also had 786 printing devices out of their normal warranty period, 75.1 per cent of all printers in use. The Department also advised that many of its court audio transcription machines are out of date. These machines must be running for the court to sit and thus it is critical that they are maintained to a high degree. The then Department of Justice estimated the cost of aligning its hardware across the whole Department with desired levels at $14.0 million per year for three years. Figures for the court system were not calculated but they are likely to be a significant portion of this figure.
Using outdated technology poses a risk to the court system as older equipment may be more likely to break down, potentially delaying courts or slowing down court services. In the court system throughout 2018, hardware made up 30.8 per cent of all critical incidents reported to technical support and 41.9 per cent of all high priority incidents. In addition, 16.2 per cent of all reported issues related to printing devices or printing.
From 2017 to 2018, technical support incidents from courts or court services increased. There were 4,379 technical support incidents in 2017, which increased significantly to 9,186 in 2018. The Department advised that some outside factors may have contributed to this increase. The Department was rolling out its new incident recording system throughout 2017, meaning that there would be an under‑reporting of incidents in that year. The Department also advised that throughout 2018 there was a greater focus on ensuring that every issue was logged, which had not previously been the case. Despite these factors, the use of outdated technology has likely increased the risk of technology breakages and may have contributed to the increase in requests for technical support.
Refreshing technology on a regular basis would reduce the risk of hardware failures and ensure that equipment is covered by warranty.
The Department did not meet all court technical support targets in 2017 and 2018
The Digital and Technology Services branch (DTS) was responsible for providing technical support to the courts and the Courts and Tribunal Services branch prior to July 2019. DTS provided technical support in line with a Service Level Agreement (SLA) with the Department. In 2017, DTS did not provide this support in a timely manner. Performance improved in 2018, though DTS fell short of its targets for critical and moderate priority incidents. Exhibit 7 outlines DTS' targets under the SLA.
| Priority | Target resolution time | Target percentage in time (%) |
| 1. Critical | 4 hours | 80 |
| 2. High | 1 day | 80 |
| 3. Moderate | 3 days | 85 |
| 4. Low | 5 days | 85 |
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Source: Department of Communities and Justice, 2019.
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Critical incidents are particularly important for the Department to deal with in a timely manner because these include incidents which may delay a court sitting until resolved or incidents which impact on large numbers of staff. Some of the critical incidents raised with DTS specifically stated that they were delaying a court sitting, often due to transcription machines not working. High priority incidents include those where there is some impact on the functions of the business, which may in turn affect the efficiency of the court system. High priority incidents also include those directly impacting on members of the Judiciary.
This audit examined DTS' performance against its SLA in the 2017 and 2018 calendar years across the whole court system, not just the District Court. The total number of incidents, as well as critical and high priority incidents, can be seen in Exhibit 8.
| Priority | 2017 | 2018 |
| All | 4,379 | 9,186 |
| 1. Critical | 48 | 91 |
| 2. High | 128 | 315 |
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Source: Audit Office of NSW analysis of Department of Communities and Justice data, 2019.
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The Department's results against its SLA in 2017 and 2018 are shown in Exhibit 9.
The Early Appropriate Guilty Pleas (EAGP) reform consists of five main elements:
- early disclosure of evidence from NSW Police Force to the prosecution and defence
- early certification of what the accused is going to be charged with to minimise changes
- mandatory criminal case conferencing between the prosecutor and accused's representation
- changes to Local Court case management
- more structured sentence discounts.
More detailed descriptions of each of these changes can be found in the Introduction. These reform elements are anticipated to have three key effects:
- accelerate the timing of guilty pleas
- increase the overall proportion of guilty pleas
- decrease the average length of contested trials.
Improving District Court efficiency is one of the stated aims of EAGP, which would be achieved by having more cases resolve in the Local Court and having fewer defendants plead guilty on the day of their trial in the District Court. The reform commenced in April 2018 and it is too early to state the impact of this reform on District Court efficiency.
The Department is responsible for delivering EAGP in conjunction with other justice sector agencies. They participated in the Steering Committee and the Working Groups, as well as providing the Project Management Office (PMO).
The Department is not measuring the economic benefits stated in the EAGP business case
The business case for EAGP listed nine quantifiable benefits which were expected to be derived from the achievement of the three key effects listed above. The Department is not measuring one of these benefits and is not measuring the economic benefits for five more, as shown in Exhibit 12.
| Benefit | Economic benefit (over ten years) | Being measured? |
| Accelerated timing of guilty pleas | $54.6m |  |
| Increased guilty plea rate | $90.7m | |
| Decreased average trial length | $27.5m | |
| A reduction in the delay of indictable matters proceeding to trial | N/A |  |
| Increase the number of finalised matters per annum | N/A | |
| Reduction of the current backlog of criminal trials in the District Court | N/A | |
| Reduction in bed pressure on the correction system due to reduced average time in custody |
$13.7m |  |
| Productivity improvements due to reduction in wasted effort | $53.3m | |
| Bankable cost savings due to jury empanelment avoided | $2.5m | |
| Key | |
Measuring | |
Not measuring economic benefit | |
Not measuring |
While it is too early to comment on the overall impact of EAGP, better practice in benefits realisation involves an ongoing effort to monitor benefits to ensure that the reform is on target and determine whether any corrective action is needed.
The Department is measuring the number of finalised matters per annum and while the Department is not measuring the reduction in the backlog as part of this program, this measure is reported as part of the Department's internal reporting framework. The Department is not monitoring the reduction in delay of indictable matters proceeding to trial directly as part of this reform, but this does form part of the monthly Operational Performance Report which the Department sends to the EAGP Steering Committee.
The Department is not monitoring any of the economic benefits stated in the business case. These economic benefits are a mixture of bankable savings and productivity improvements. This amounts to a total of $242.3 million over ten years which was listed in the business case as potential economic benefits from the implementation of this reform against the total cost of $206.9 million over ten years. The Department is collecting proxy indicators which would assist in these calculations for several indicators, but it is not actively monitoring these savings. For example, the Department is monitoring average trial length, but is not using this information to calculate economic benefits derived from changes in trial length.
The Department is also not collecting information related to the average length of custody as part of this program. This means that it is unable to determine if EAGP is putting less pressure on the correctives system and it is not possible for the Department to calculate the savings from this particular benefit.
While stakeholders are optimistic about the impact of EAGP, not measuring the expected benefits stated in the business case means that the Department does not know if the reform is achieving what it was designed to achieve. Further, the Department does not know if it must take corrective action to ensure that the program achieves the stated benefits. These two things put the overall program benefits at risk.
The Department has not assigned responsibility for the realisation of each benefit stated in the business case. The Department holds the Steering Committee responsible for the realisation of all benefits. Benefits realisation is the process which ensures that the agency reaches benefits as stated in the business case. Assigning responsibility for benefits realisation to the Steering Committee rather than individuals is not in line with good practice.
Good practice benefits realisation involves assigning responsibility for the realisation of each benefit to an individual at the business unit level. This ensures there is a single point of accountability for each part of the program with knowledge of the benefit and the ability to take corrective action if it looks like that benefit will not be realised. This responsibility should sit at the operational level where detailed action can most easily be undertaken. The role of a Steering Committee in benefits realisation is to ensure that responsible parties are monitoring their benefits and taking appropriate corrective action.
The Department advised that it believes the Steering Committee should have responsibility for the realisation of benefits due to the difficulty of attributing the achievement of each benefit to one part of the reform alone. Given the Steering Committee meets only quarterly, it is not well placed to take action in response to variances in performance.
BOCSAR are planning to undertake an overall evaluation of EAGP which is planned for release in 2021. Undertaking this evaluation will require high quality data to gain an understanding of the drivers of the reform. However, data captured throughout the first year of EAGP has proven unreliable, which may reduce the usefulness of BOCSAR's evaluation. These data issues were discussed in Exhibit 5 in Chapter 2, above. Access to accurate data is vital for conducting any program evaluation and inaccurate data raises the risk that the BOCSAR evaluation will not be able to provide an accurate evaluation of the impact of EAGP.
In addition to the BOCSAR evaluation, the Department had plans for a series of 'snapshot' evaluations for some of the key elements of the reform to ensure that they were operating effectively. These were initially delayed due to an efficiency dividend which affected EAGP. In August 2019, the Department commissioned a review of the implementation of several key success factors for EAGP.
The implementation stage of EAGP had clear governance, lines of authority and communication. The Steering Committee, each Working Group and each agency had clear roles and responsibilities, and these were organised through a Project Management Office (PMO) provided by the former Department of Justice. The governance structure throughout the implementation phase can be seen at Exhibit 13.
The Steering Committee was established in December 2016 and met regularly from March 2017. It comprised senior members of key government agencies, as well as the Chief Judge and the Chief Magistrate for most of the duration of the implementation period. The Steering Committee met at least monthly throughout the life of the program. The Steering Committee was responsible for overseeing the delivery of EAGP and making key decisions relating to implementation, including spending decisions. The Chief Judge and the Chief Magistrate abstained from financial decisions. The Steering Committee updated the governance and membership of the Steering Committee as appropriate throughout the life of the reform.
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 #329 - released 18 December 2019
Planning, Industry and Environment 2019
This report outlines the results of audits of the financial statements of agencies now grouped in the NSW Planning, Industry and Environment cluster.
Unqualified audit opinions were issued for 56 of the 66 cluster agencies’ 30 June 2019 financial statements. Ten audits remain incomplete. The cluster agencies need to improve the timeliness of financial reporting.
The Audit Office continued to identify issues regarding unprocessed Aboriginal land claims and the recognition of Crown land. ‘Auditor-General’s reports to parliament have recommended action to reduce the level of unprocessed land claims since 2007. However, the number of unprocessed claims continued to increase’, Margaret Crawford said.
One in five internal control findings were repeat issues. Key themes included information technology, asset management and improvements required to expense and payroll controls.
The report makes several recommendations including:
- Property NSW should urgently address the deficiencies in the lease data used to calculate the impact of the new leasing standard effective from 1 July 2019
- the Department of Planning, Industry and Environment should prioritise action to reduce unprocessed Aboriginal land claims
- the Department of Planning, Industry and Environment should ensure the Crown land database is complete and accurate so state agencies and local government councils are better informed about the Crown land they control.
This report analyses the results of our audits of financial statements of the Planning, Industry and Environment cluster agencies for the year ended 30 June 2019. The table below summarises our key observations.
1. Machinery of Government changes
| Creation of the Planning, Industry and Environment cluster |
The Machinery of Government (MoG) changes abolished the former Planning and Environment cluster and former Industry cluster, and created the Planning, Industry and Environment cluster on 1 July 2019. The Department of Planning and Environment (DPE), the Department of Industry (DOI), the Office of Environment and Heritage, and the Office of Local Government were abolished and the majority of their functions were transferred to the new Department of Planning, Industry and Environment (DPIE). |
| The Department of Planning, Industry and Environment is still in the process of implementing changes |
The MoG changes bring risks and challenges to the cluster. A MoG Steering Committee, with the support of various project control groups and working groups, identified and developed responses to key risks arising from the changes. However, the DPIE will take some time to fully integrate the policies, systems and processes of the abolished Departments and agencies. |
2. Financial reporting
| Audit opinions | Unqualified audit opinions were issued for 56 of the 66 cluster agencies' 30 June 2019 financial statements audits. Ten financial statements audits are still ongoing. |
| Timeliness of financial reporting |
Fifty-five of the 57 agencies subject to statutory deadlines submitted their financial statements on time. Due to issues identified during the audit, 13 financial statements audits were not completed and audit opinions issued by the statutory deadline. Agencies prepared and submitted their early close procedures in accordance with the mandatory timeframe set by NSW Treasury. However, 17 of the 49 agencies where we reviewed early close procedures were assessed as either partially addressing or not addressing one or more of the mandatory requirements. The cluster agencies could benefit from an increased focus on early close procedures. |
| Introduction of AASB 16 'Leases' |
We noted errors in the lease data used in Property NSW's AASB 16 impact calculations, which affect both Property NSW and other government agencies. These errors were significant enough to present a risk of material misstatements to the financial statements of Property NSW and other government agencies in future reporting periods. We had similar findings in our recent performance audit on 'Property Asset Utilisation', which highlighted issues with the quality of Property NSW's records. Recommendation: Property NSW should urgently address the deficiencies in the lease data used to calculate the impact of the new leasing standard effective from 1 July 2019. |
| Unprocessed Aboriginal land claims have continued to increase |
Despite an increase in the number of claims resolved, the number of unprocessed Aboriginal land claims increased by 7.2 per cent from the prior year to 35,855 at 30 June 2019. Claims can be made over Crown land assets of the DPIE or other government agencies. Until claims are resolved, there is an uncertainty over who is entitled to the land and the uses and activities that can be carried out on the land. We first recommended action to address unprocessed claims in 2007. Recommendation (repeat issue): The DPIE should prioritise action to reduce unprocessed Aboriginal land claims. |
3. Audit observations
| Internal controls |
One in five internal control issues identified and reported to management in 2018–19 were repeat issues. The lack of user access review was the most common IT general control issue in the cluster. |
| Drought relief |
The NSW Government announced an emergency drought relief package of $500 million in 2018, in addition to other financial assistance measures already in place. Limited documentation and written agreements between relevant delivery agencies resulted in a $31.0 million misstatement relating to grant revenue. |
| Recognition of Crown land |
Crown land is an important asset of the state. Management and recognition of Crown land assets is weakened when there is confusion over who is responsible for a particular Crown land parcel. Last year we recommended the DOI should ensure the database of Crown land is complete and accurate. While the DOI has commenced actions to improve the database, this continued to be an issue in 2018–19. Recommendation (repeat issue): The DPIE should ensure the Crown land database is complete and accurate so state agencies and local government councils are better informed about the Crown land they control. |
| Developer contributions | The former DPE continued to accumulate more developer contributions revenues than it spent on infrastructure projects. Total unspent funds increased to $274 million at 30 June 2019. |
This report provides parliament and other users of the Planning, Industry and Environment cluster agencies financial statements with the results of our audits, our observations, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
This cluster was created by the Machinery of Government changes on 1 July 2019. This report is focused on agencies in the Planning, Industry and Environment cluster from 1 July 2019. However, these agencies were all in other clusters during 2018–19. Please refer to the section on Machinery of Government changes for more details.
Machinery of Government (MoG) refers to how the government organises the structures and functions of the public service. MoG changes are where the government reorganises these structures and functions that are given effect by Administrative orders.
The MoG changes, announced following the NSW State election on 23 March 2019, created the Planning, Industry and Environment (PIE) cluster. The Administrative Changes Orders issued on 2 April 2019, 1 May 2019 and 28 June 2019 gave effect to these changes. These orders became effective on 1 July 2019.
Section highlights
The 2019 MoG changes significantly impacted the former Planning and Environment, and Industry clusters and agencies.
- The PIE cluster combines most of the functions and agencies of the former Planning and Environment and Industry clusters from 1 July 2019.
- The Department of Planning, Industry and Environment is the principal agency in the PIE cluster.
- The MoG changes bring risks and challenges to the PIE cluster.
- A MoG Steering Committee was established to oversee the transitional processes.
- The full integration of the systems and processes will not be completed in the near future.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Planning, Industry and Environment (PIE) cluster for 2019. In this chapter, the Department of Planning, Industry and Environment is referred to as DPIE, the former Department of Planning and Environment as DPE, and the former Department of Industry as DOI.
Section highlights
- Unqualified audit opinions were issued for all completed 30 June 2019 financial statements audits. However, some cluster agencies can further enhance the quality of financial reporting.
- Timeliness of financial reporting remains an issue for 13 agencies.
- Deficiencies were identified in the data used to calculate the impact of AASB 16 ‘Leases’ effective from 1 July 2019. Property NSW should urgently address these deficiencies.
- Unprocessed Aboriginal land claims continue to increase. DPIE should prioritise action to reduce unprocessed Aboriginal land claims.
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision making.
This chapter outlines our audit observations and insights from our financial statement audits of agencies in the Planning, Industry and Environment (PIE) cluster for 2019. In this chapter, the Department of Planning, Industry and Environment is referred to as DPIE, the former Department of Planning and Environment as DPE, and the former Department of Industry as DOI.
Section highlights
- One in five issues identified and reported to management in 2018–19 were repeat issues.
- The lack of user access review was the most common IT general control issue in the PIE cluster.
- The PIE cluster provided significant financial assistance for drought relief.
- There continues to be significant deficiencies in Crown land records. The DPIE should ensure the Crown land database is complete and accurate.
- Unspent developer contributions funds continued to build up in 2018–19.
Appendix one – List of 2019 recommendations
Appendix two – Status of 2018 recommendations
Appendix three – Cluster agencies
Appendix four – Financial data
Appendix five – Management letter findings
Appendix six – Timeliness of financial reporting
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.
Stronger Communities 2019
A report has been released on the NSW Stronger Communities cluster.
From 1 July 2019, the functions of the former Department of Justice, the former Department of Family and Community Services and many of the cluster agencies moved to the new Stronger Communities cluster. The Department of Communities and Justice is the principal agency in the new Stronger Communities cluster.
The report focuses on key observations and findings from the most recent financial audits of agencies in the Stronger Communities cluster.
Unqualified audit opinions were issued on the financial statements for all agencies in the cluster.
There were 157 audit findings on internal controls. Two of these were high risk and 59 were repeat findings from previous financial audits. ‘Cluster agencies should prioritise actions to address internal control weaknesses promptly with particular focus given to issues that are assessed as high risk’, the Auditor-General said.
The report notes that the NSW Government’s new workers' compensation legislation, which gave eligible firefighters presumptive rights to workers' compensation, cost emergency services agencies $180 million in 2018–19, mostly in increased premiums.
This report analyses the results of our audits of financial statements of the agencies comprising the Stronger Communities cluster for the year ended 30 June 2019. The table below summarises our key observations.
This report provides parliament and other users of the financial statements of agencies in the Stronger Communities cluster with the results of our audits, our observations, analyses, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
This cluster was significantly impacted by the Machinery of Government (MoG) changes on 1 July 2019. This report focuses on the agencies that from 1 July 2019, comprised the Stronger Communities cluster. The MoG changes moved some agencies from the clusters to which they belonged in 2018–19 to the Stronger Communities cluster. Conversely, the MoG also moved some agencies formerly in the Family and Community Services cluster and Justice cluster elsewhere. Please refer to the section on Machinery of Government changes for more details.
The Department of Communities and Justice is the principal agency of the cluster. The newly created department combines functions of the former Department of Justice and the Department of Family and Community Services.
Machinery of Government (MoG) refers to how the government organises the structures and functions of the public service. MoG changes occur when the government reorganises these structures and functions and those changes are given effect by Administrative Orders.
The MoG changes announced following the NSW State election on 23 March 2019 significantly impacted the Stronger Communities cluster through Administrative Changes Orders issued on 2 April 2019 and 1 May 2019. These orders took effect on 1 July 2019.
Section highlights
The 2019 MoG changes significantly impacted the former Justice and Family and Community Services (FACS) departments and clusters.
- The Stronger Communities cluster combines most of the functions and agencies of the former Justice and FACS clusters from 1 July 2019.
- The Department of Communities and Justice is now the principal agency in the new cluster.
- The MoG changes bring new responsibilities, risks and challenges to the cluster.
- A temporary office has been established by the Department of Communities and Justice to support the cluster in the planning, delivery and reporting associated with implementing the changes.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations relating to the financial reporting of agencies in the Stronger Communities cluster for 2019.
Section highlights
- Unqualified audit opinions were issued for all agencies' 30 June 2019 financial statements. However, further actions can be taken by some cluster agencies to enhance the quality of their financial reporting.
- In November 2018, the Department of Justice implemented a new Victims Support Services system called VS Connect. Significant data quality issues arising from the VS Connect system implementation impacted the Department's ability to reliably estimate its Victims Support Scheme claims liabilities at 30 June 2019.
We recommend the Department of Communities and Justice resolves the data quality issues in the new VS Connect System before 30 June 2020 and capture and apply lessons learned from recent project implementations, including LifeLink, Justice SAP and VS Connect, in any relevant future implementations. - Our audits found some cluster agencies needed to do more work on their impact assessments and preparedness to implement the new accounting standards, to minimise the risk of errors in their 2019–20 financial statements.
- Cluster agencies with annual leave balances exceeding the State's target should further review their approach to managing leave balances.
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision making.
This chapter outlines our observations and insights from our financial statement audits of agencies in the Stronger Communities cluster.
Section highlights
- Cluster agencies should action recommendations to address internal control weaknesses promptly. Particular focus should be given to prioritising high risk issues. The 2018–19 financial audits of cluster agencies identified 157 internal control issues. Of these, two were high risk and 37.6 per cent were repeat findings from previous audits.
- Data from the Department of Justice shows the inmate population reached a maximum of 13,798, compared to an operational capacity of 14,626 beds on 31 August 2019. This equates to an operational vacancy rate of 5.7 per cent, which is more than the recommended 5.0 per cent buffer. This is the first time the vacancy rate has exceeded the target over the last five years. Growth in the NSW prison population is being managed through the NSW Government's $3.8 billion Prison Bed Capacity Program.
- In September 2018, the NSW Government introduced new workers' compensation legislation, which gives eligible firefighters presumptive rights to workers' compensation when diagnosed with one of 12 prescribed cancers. The new legislation cost emergency services agencies $180 million in 2018–19, mainly through additional workers' compensation premiums.
Appendix one – Timeliness of financial reporting by agency
Appendix two – Management letter findings by agency
Appendix three – List of 2019 recommendations
Appendix four – Status of 2018 recommendations
Appendix five – Cluster agencies
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.
Internal Controls and Governance 2019
This report covers the findings and recommendations from the 2018–19 financial audits that relate to internal controls and governance at 40 of the largest agencies in the NSW public sector. The 40 agencies selected for this report constitute around 84 per cent of total expenditure for all NSW public sector agencies.
The report provides insights into the effectiveness of controls and governance processes across the NSW public sector. It evaluates how agencies identify, mitigate and manage risks related to:
- financial controls
- information technology controls
- gifts and benefits
- internal audit
- contingent labour
- sensitive data.
The Auditor-General recommended that agencies do more to prioritise and address vulnerabilities in their internal controls and governance. The Auditor-General also recommended agencies increase the transparency of their management of gifts and benefits by publishing their registers on their websites.
This report analyses the internal controls and governance of 40 of the largest agencies in the NSW public sector for the year ended 30 June 2019.
1. Internal control trends
| New, repeat and high risk findings |
There was an increase in internal control deficiencies of 12 per cent compared to last year. The increase is predominately due to a 100 per cent increase in repeat financial and IT control deficiencies. Some agencies attributed the delay in actioning repeat findings to the diversion of staff from their regular activities to implement and operationalise the recent Machinery of Government changes. As a result, actions to address audit recommendations have been deferred or re prioritised, as the changes are implemented. Agencies need to ensure they are actively managing the risks associated with having these vulnerabilities in internal control systems unaddressed for extended periods of time. |
| Common findings |
A number of findings were common to multiple agencies. These findings often related to areas that are fundamental to good internal control environments and effective organisational governance, such as:
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2. Information technology controls
| IT general controls |
We examined information security controls over key financial systems that support the preparation of agency financial statements. We found:
We also found 20 per cent of agencies had deficient IT program change controls, mainly related to segregation of duties in approval and authorisation processes, and user acceptance testing of program changes prior to deployment into production environments. User acceptance testing helps identify potential issues with software incompatibility, operational workflows, absent controls and software issues, as well as areas where training or user support may be required. |
3. Gifts and benefits
| Gifts and benefits registers |
All agencies had a gifts and benefits policy and 90 per cent of agencies maintain a gifts and benefits register. However, 51 per cent of the gifts and benefits registers we examined contained incomplete declarations, such as missing details for the approving officer, value of the gift and/or benefit offered and reasons supporting the decision. In some cases, gaps in recorded information meant the basis for decisions around gifts and benefits was not always clear, making it difficult to determine whether decisions in those instances were appropriate, compliant with policy and were not direct or indirect inducements to the recipients to favour suppliers or service providers. Agencies should ensure their gifts and benefits register includes all key fields specified in the Public Service Commission's minimum standards for gifts and benefits. Agencies should also perform regular reviews of the register to ensure completeness and ensure any gift or benefit accepted by a staff member meets the public's expectations for ethical behaviour. |
| Managing gifts and benefits |
We found opportunities to improve gifts and benefits processes and enhance transparency. For example, only three per cent of agencies publish their gifts and benefits registers on their websites. Agencies can improve management of gifts and benefits by:
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| Reporting and monitoring |
Only 35 per cent of agencies reported trends in the number and nature of gifts and benefits recorded in their registers to the agency's senior executive management and/or a governance committee. Agencies should regularly report to the agency executive or other governance committee on trends in the offer and acceptance of gifts and benefits. |
4. Internal audit
| Obtaining value from the internal audit function |
Agencies have established and maintained internal audit functions to provide assurance on the effectiveness of agency controls and governance systems. However, we identified areas where agencies' internal audit functions could improve their processes to add greater value. For example, only 73 per cent of CAEs regularly attend meetings of the agency board or executive management committee. Internal audit functions can add greater value by involving the CAE more extensively in executive forums as an observer. Internal audit functions should also consider producing an annual report on internal audit. An annual report allows the internal audit function to report on their performance and add value by drawing to the attention of audit and risk committees and senior management strategic issues, thematic trends and emerging risks. |
| Role of the Chief Audit Executive |
Forty-five per cent of agencies assigned responsibilities to the Chief Audit Executive (CAE) that were broader than internal audit, but 17 per cent of these had not documented safeguards to protect the independence of the CAE. The reporting lines and status of the CAE at some agencies also needs review. At two agencies, the CAE reported to the CFO. Agencies should ensure:
|
| Quality assurance and improvement program |
Thirty-five per cent of agencies did not have a documented quality assurance and improvement program for its internal audit function. The policy and the International Standards for the Professional Practice of Internal Auditing require agencies to have a documented quality assurance and improvement program. The results of this program should be reported annually. Agencies should ensure there is a documented and operational Quality Assurance and Improvement Program for the internal audit function that covers both internal and external assessments. |
5. Managing contingent labour
| Obtaining value for money from contingent labour |
According to NSW Procurement data, spend on contingent labour has increased by 75 per cent over the last five years, to $1.5 billion in 2018–19. Improvements in internal processes and a renewed focus on agency monitoring and oversight of contingent labour can help ensure agencies get the best value for money from their contingent workforces. Agencies can improve their management of contingent labour by:
We also found 57 per cent of the 23 agencies we examined with contingent labour spend of more than $5 million in 2018–19 have implemented the government's vendor management system and service provider 'Contractor Central'. |
6. Managing sensitive data
| Identifying and assessing sensitive data |
Sixty-eight per cent of agencies maintain an inventory of their sensitive data and where it resides. However, these inventories are not always complete and risks may be overlooked. Agencies can improve processes to manage sensitive data by:
|
| Managing data breaches |
Eighty-eight per cent of agencies have established policies to respond to potential data breaches when they are identified and 70 per cent of agencies maintain a register to record key information in relation to identified data breach incidents. Agencies should maintain a data breach register to effectively manage the actions undertaken to contain, evaluate and remediate each data breach. |
This report covers the findings and recommendations from our 2018–19 financial audits that relate to internal controls and governance at 40 of the largest agencies (refer to Appendix three) in the NSW public sector. The 40 agencies selected for this volume constitute around 84 per cent of total expenditure for all NSW public sector agencies.
Although the report includes several agencies that have changed as a result of the Machinery of Government changes that were effective from 1 July 2019, its focus on sector wide issues and insights means that its findings remain relevant to NSW public sector agencies, including newly formed agencies that have assumed the functions of abolished agencies.
This report offers insights into internal controls and governance in the NSW public sector
This is the third report dedicated to internal controls and governance at NSW State Government agencies. The report provides insights into the effectiveness of controls and governance processes in the NSW public sector by:
- highlighting the potential risks posed by weaknesses in controls and governance processes
- helping agencies benchmark the adequacy of their processes against their peers
- focusing on new and emerging risks, and the internal controls and governance processes that might address those risks.
Without strong governance systems and internal controls, agencies increase the risks associated with effectively managing their finances and delivering services to citizens. For example, if they do not have strong information technology controls, sensitive information may be at risk of unauthorised access and misuse.
Areas of specific focus of the report have changed since last year
Last year's report topics included transparency and performance reporting, management of purchasing cards and taxi use, and fraud and corruption control. We are reporting on new topics this year and re-visiting agency management of gifts and benefits, which we first covered in our 2017 report. Re-visiting topics from prior years provides a baseline to show the NSW public sectors’ progress implementing appropriate internal controls and governance processes to mitigate existing, new and emerging risks in the public sector.
Our audits do not review all aspects of internal controls and governance every year. We select a range of measures and report on those that present heightened risks for agencies to mitigate. This year the report focusses on:
- internal control trends
- information technology controls, including access to agency systems
- protecting sensitive information held within agencies
- managing large and diverse workforces (controls around employing and managing contingent workers)
- maintaining an ethical culture (management of gifts and benefits)
- effectiveness of internal audit function and its oversight by Audit and Risk Committees.
The findings in this report should not be used to draw conclusions on the effectiveness of individual agency control environments and governance arrangements. Specific financial reporting, internal controls and audit observations are included in the individual 2019 cluster financial audit reports, which will be tabled in parliament from November to December 2019.
Internal controls are processes, policies and procedures that help agencies to:
- operate effectively and efficiently
- produce reliable financial reports
- comply with laws and regulations
- support ethical government.
This chapter outlines the overall trends for agency controls and governance issues, including the number of audit findings, the degree of risk those deficiencies pose to the agency, and a summary of the most common deficiencies we found across agencies. The rest of this report presents this year’s controls and governance findings in more detail.
Key conclusions and sector wide learnings
- out of date policies or an absence of policies to guide appropriate decisions
- poor record keeping and document retention
- incomplete or inaccurate centralised registers or gaps in these registers.
Policies, procedures and internal controls should be properly designed, be appropriate for the current organisational structure and its business activities, and work effectively.
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency controls to manage key financial systems.
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency controls to manage gifts and benefits.
Key conclusions and sector wide learnings
We found most agencies have implemented the Public Service Commission's minimum standards for gifts and benefits. All agencies had a gifts and benefits policy and 90 per cent of agencies maintained a gifts and benefits register and provided some form of training to employees on the treatment of gifts and benefits.
Based on our analysis of agency registers, we found some areas where opportunities existed to make processes more effective. In some cases, gaps in recorded information meant the basis for decisions around gifts and benefits was not always clear, making it difficult to determine whether decisions in those instances were appropriate and compliant with policy. Fifty-one per cent of the gifts and benefits registers reviewed contained declarations where not all fields of information had been completed. Seventy-seven per cent of agencies that maintained a gifts and benefits register did not include all key fields suggested by the minimum standards.
Areas where agencies can improve their management of gifts and benefits include:
- ensuring agency policies comprehensively cover the elements necessary to make it effective in an operational environment, such as identifying risks specific to the agency and actions that will be taken in the event of a policy breach
- establishing and publishing a statement of business ethics on the agency's website to clearly communicate expected behaviours to clients, customers,suppliers and contractors
- updating gifts and benefits registers to include all key fields suggested by the minimum standards, as well as performing regular reviews of the register to ensure completeness
- providing on-going training, awareness activities and support to employees, not just at induction
- regularly reporting gifts and benefits to executive management and/or a governance committee such as the audit and risk committee, focussing on trends in the number and types of gifts and benefits offered to and accepted by agency staff
- publishing their gifts and benefits registers on their websites to demonstrate a commitment to a transparently ethical environment.
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency internal audit functions.
Key conclusions and sector wide learnings
We found agencies have established and maintained internal audit functions to provide assurance on the effectiveness of agency controls and governance systems as required by TPP15-03 'Internal Audit and Risk Management Policy for the NSW Public Sector'. However, we identified areas where agencies' internal audit functions could improve their processes to add greater value, including:
- documenting and implementing safeguards to address conflicting roles performed by the Chief Audit Executive (CAE)
- ensuring the reporting lines for the CAE comply with the NSW Treasury policy, and the CAE reports neither functionally or administratively to the finance function or other significant recipients of internal audit services
- involving the CAE more extensively in executive forums as an observer
- documenting a Quality Assurance and Improvement Program for the internal audit function and performing both internal and external performance assessments to identify opportunities for continuous improvement
- reporting against key performance indicators or a balanced scorecard and producing an annual report on internal audit to bring to the attention of the audit and risk committee and senior management strategic issues, thematic trends and emerging risks that may require further attention or resources.
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of agency controls to on-board, manage and off-board contingent labour.
Key conclusions and sector wide learnings
Agencies have implemented controls to manage contingent labour and most agencies have some level of reporting and oversight of contingent labour at an executive level. However, the increasing trend in spend on contingent labour warrants a renewed focus on agency monitoring and oversight of their use of contingent labour. Over the last five years spend on contingent labour has increased by 75 per cent, to $1.5 billion in 2018–19.
There are also some key gaps that limit the ability of agencies to effectively manage contingent labour. Key areas where agencies can improve their management of contingent labour include:
- preparing workforce plans to inform their resourcing strategy, and confirm prior to engaging contingent labour, that this solution aligns with the strategy and best meets business needs
- involving agency human resources units in decisions about engaging contingent labour
- regularly reporting on contingent labour use to agency executive teams, particularly in terms of trends in agency spend, tenure and compliance with policies and procedures
- strengthening on-boarding and off-boarding processes, including establishing checklists to on-board and off-board contingent labour, making provisions for knowledge transfer, and assessing, documenting and capturing performance information.
This chapter outlines our audit observations, conclusions and recommendations, arising from our review of governance and processes in relation to the management of sensitive data.
Key conclusions and sector wide learnings
Information technology risks are rapidly increasing. More interfaces between agencies and greater connectivity means the amounts of data agencies generate, access, store and share continue to increase. Some of this information is sensitive information, which is protected by the Privacy Act 1988.
It is important that agencies understand what sensitive data they hold, the risks associated with the inadvertent release of this information and how they are mitigating those risks. We found that agencies need to continue to identify and record their sensitive data, as well as expand the methods they use to identify sensitive data. This includes data held in unstructured repositories, such as network shared drives and by agency service providers.
Eighty-eight per cent of agencies have established policies to respond to potential data breaches when they are identified and 70 per cent of agencies maintain a register to record key information in relation to identified data breach incidents.
Key areas where agencies can improve their management of sensitive data include:
- identifying sensitive data, based on a comprehensive and structured process and maintaining an inventory of the data
- assessing the criticality and sensitivity of the data so that the protection of high risk data can be prioritised
- developing comprehensive data breach management policies to ensure data breaches are appropriately managed
- maintaining a data breach incident register to record key information in relation to identified data breaches incidents, including the estimated cost of the breach
- providing on-going training and awareness activities to employees in relation to sensitive data and managing data breaches.
Appendix one – List of 2019 recommendations
Appendix two – Status of 2018 recommendations
Appendix three – In-scope agencies
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Universities 2018 audits
The Acting Auditor General of New South Wales, Ian Goodwin, released a report today on the results of financial audits of NSW universities for the year ended 31 December 2018.
All ten NSW universities received unqualified audit opinions.
This report analyses the results of our audits of financial statements of the ten NSW universities for the year ended 31 December 2018. The table below summarises our key observations.
This report provides Parliament with the results of our financial audits of New South Wales universities and their controlled entities in 2018, including our analysis, observations and recommendations in the following areas:
- financial reporting
- internal controls and governance
- teaching and research.
Financial reporting is an important element of governance. Confidence and transparency in university sector decision making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations on the financial reporting of NSW universities for 2018.
Appropriate and robust internal controls help reduce risks associated with managing finances, compliance and administration of NSW universities.
This chapter outlines the internal controls related observations and insights across NSW universities for 2018, including overall trends in findings, level of risk and implications.
Our audits do not review all aspects of internal controls and governance every year. The more significant issues and risks are included in this chapter. These along with the less significant ones are reported to universities for them to address.
Universities' primary objectives are teaching and research. They invest most of their resources to achieve quality outcomes in academia and student experience. Universities have committed to achieving certain government targets and compete to advance their reputation and international and Australian rankings.
This chapter outlines teaching and research outcomes for NSW universities for 2018.
Engagement of probity advisers and probity auditors
Three key agencies are not fully complying with the NSW Procurement Board’s Direction for engaging probity practitioners, according to a report released today by the Acting Auditor-General for New South Wales, Ian Goodwin. They also do not have effective processes to achieve compliance or assure that probity engagements achieved value for money.
Probity is defined as the quality of having strong moral principles, honesty and decency. Probity is important for NSW Government agencies as it helps ensure decisions are made with integrity, fairness and accountability, while attaining value for money.
Probity advisers provide guidance on issues concerning integrity, fairness and accountability that may arise throughout asset procurement and disposal processes. Probity auditors verify that agencies' processes are consistent with government laws and legislation, guidelines and best practice principles.
According to the NSW State Infrastructure Strategy 2018-2038, New South Wales has more infrastructure projects underway than any state or territory in Australia. The scale of the spend on procuring and constructing new public transport networks, roads, schools and hospitals, the complexity of these projects and public scrutiny of aspects of their delivery has increased the focus on probity in the public sector.
A Procurement Board Direction, 'PBD-2013-05 Engagement of probity advisers and probity auditors' (the Direction), sets out the requirements for NSW Government agencies' use and engagement of probity practitioners. It confirms agencies should routinely take into account probity considerations in their procurement. The Direction also specifies that NSW Government agencies can use probity advisers and probity auditors (probity practitioners) when making decisions on procuring and disposing of assets, but that agencies:
- should use external probity practitioners as the exception rather than the rule
- should not use external probity practitioners as an 'insurance policy'
- must be accountable for decisions made
- cannot substitute the use of probity practitioners for good management practices
- not engage the same probity practitioner on an ongoing basis, and ensure the relationship remains robustly independent.
The scale of probity spend may be small in the context of the NSW Government's spend on projects. However, government agencies remain responsible for probity considerations whether they engage external probity practitioners or not.
The audit assessed whether Transport for NSW, the Department of Education and the Ministry of Health:
- complied with the requirements of ‘PBD-2013-05 Engagement of Probity Advisers and Probity Auditors’
- effectively ensured they achieved value for money when they used probity practitioners.
These entities are referred to as 'participating agencies' in this report.
We also surveyed 40 NSW Government agencies with the largest total expenditures (top 40 agencies) to get a cross sector view of their use of probity practitioners. These agencies are listed in Appendix two.
Conclusion
We found instances where each of the three participating agencies had not fully complied with the requirements of the NSW Procurement Board Direction ‘PBD-2013-05 Engagement of Probity Advisers and Probity Auditors’ when they engaged probity practitioners. We also found they did not have effective processes to achieve compliance or assure the engagements achieved value for money.
In the sample of engagements we selected, we found instances where the participating agencies did not always:
- document detailed terms of reference
- ensure the practitioner was sufficiently independent
- manage probity practitioners' independence and conflict of interest issues transparently
- provide practitioners with full access to records, people and meetings
- establish independent reporting lines reporting was limited to project managers
- evaluate whether value for money was achieved.
We also found:
- agencies tend to rely on only a limited number of probity service providers, sometimes using them on a continuous basis, which may threaten the actual or perceived independence of probity practitioners
- the NSW Procurement Board does not effectively monitor agencies' compliance with the Direction's requirements. Our enquiries revealed that the Board has not asked any agency to report on its use of probity practitioners since the Direction's inception in 2013.
There are no professional standards and capability requirements for probity practitioners
NSW Government agencies use probity practitioners to independently verify that their procurement and asset disposal processes are transparent, fair and accountable in the pursuit of value for money.
Probity practitioners are not subject to regulations that require them to have professional qualifications, experience and capability. Government agencies in New South Wales have difficulty finding probity standards, regulations or best practice guides to reference, which may diminish the degree of reliance stakeholders can place on practitioners’ work.
The NSW Procurement Board provides direction for the use of probity practitioners
The NSW Procurement Board Direction 'PBD-2013-15 for engagement of probity advisers and probity auditors' outlines the requirements for agencies' use of probity practitioners in the New South Wales public sector. All NSW Government agencies, except local government, state owned corporations and universities, must comply with the Direction when engaging probity practitioners. This is illustrated in Exhibit 1 below.
Managing growth in the NSW prison population
The Department of Justice has relied heavily on temporary responses to accommodate growing prisoner numbers according to a report released today by the Acting Auditor-General for New South Wales, Ian Goodwin.
At the time of this audit, the NSW Department of Justice (DOJ) was responsible for delivering custodial corrections services in New South Wales through its Corrective Services NSW division (Corrective Services NSW). From 1 July 2019, the Department of Family and Community Services and Justice will be responsible for these functions.
Within DOJ, Corrective Services NSW is responsible for administering sentences and legal orders through custodial and community-based management of adult offenders. Its key priorities are:
- providing safe, secure and humane management of prisoners
- reducing reoffending
- improving community safety and confidence in the justice system.
The prison population in New South Wales grew by around 40 per cent between 2012 to 2018, from 9,602 to 13,630 inmates. This rate of growth was higher than experienced prior to 2012. DOJ forecasts growth to continue over the short and longer-term.
DOJ has responded to inmate population growth by doubling-up and tripling-up the number of prison beds in cells, reactivating previously closed prisons, and a $3.8 billion program of new prison capacity. DOJ has also developed a long-term prison infrastructure strategy that projects long-term needs and recommended investments to meet these needs.
This audit assessed how efficiently and effectively DOJ is responding to growth in the NSW prison population. In this report, we have not analysed the sources of demand or recommended ways that custody may be avoided. These are largely government policy issues.
The Productivity Commission’s Report on Government Services outlines the performance indicator framework for corrective services in Australia (Appendix three). We have used measures from this framework to assess the efficiency and effectiveness of DOJ’s responses to prison bed capacity needs.
In this section, we analyse system-wide indicators as DOJ has not consistently published or reported data for individual correctional centres over the period of review.
Appendix one - Response from agency
Appendix two - Managing women in custody
Appendix three - Corrective services performance indicator framework
Appendix four - About the audit
Appendix five – Performance auditing
Parliamentary Reference: Report number #319 - released 24 May 2019
Workforce reform in three amalgamated councils
The Inner West Council and the Snowy Monaro and Queanbeyan-Palerang Regional Councils have all made progress towards efficient organisational structures following the amalgamation of their former council areas in 2016, according to a report released today by the Auditor-General of New South Wales.
All three councils are now operating with a single workforce and have largely achieved the milestones they planned for the first stage of their amalgamations. None have finished reviewing and aligning services across their former council areas nor integrated their ICT systems. They need to do this to be in a position to implement an optimal structure.
On 12 May 2016, the NSW Government announced the amalgamation of 42 councils into 19 new councils. This followed a period of 18 months during which the NSW Independent Pricing and Regulatory Tribunal (IPART) had assessed councils' ‘fitness for the future’, and communities were consulted about proposed mergers. A further amalgamated council was created on 9 September 2016.
Upon amalgamation, existing elected councils were abolished, interim General Managers appointed, and Administrators engaged to undertake the role of the previously elected councils until Local Government elections were held 18 months later. During the period of administration, councils were asked to report on the progress of their amalgamations to the Department of Premier and Cabinet (DPC).
Council amalgamations not only require a re-drawing of boundaries, but re-establishment of local representation, decisions about alignment of services across the former council areas, and establishment of an amalgamated workforce.
The objective of this audit was to assess whether three councils, Inner West Council, Queanbeyan-Palerang Regional Council and Snowy Monaro Regional Council, are effectively reforming their organisation structures to realise efficiency benefits from amalgamation and managing the impact on staff.
Following amalgamation, all three councils developed detailed plans to bring their former workforces together, review positions and salaries, amalgamate salary structures and align human resources policies. All three councils have largely achieved the milestones included in these plans.
Benefits realisation plans show that councils did not expect to achieve material savings or efficiencies from workforce reform within the first three years of amalgamation.
Administrators at all three councils endorsed lower savings targets than the NSW Government’s early analysis suggested may be possible. All three councils have plans or strategies to progress and achieve benefits from the amalgamation. However, Inner West Council and Snowy Monaro Regional Council could more clearly link their reform initiatives with expected benefits and include this in public reporting.
Amalgamations represent a substantial period of change for affected communities and amalgamated councils should be routinely reporting to their communities about the costs and benefits of amalgamation.
Councils have not yet determined their future service offerings and service levels nor completed integration of ICT systems. These decisions need to be made before an optimal organisation structure can be implemented.
Before amalgamated councils can implement an optimal organisation structure, they need to review and confirm their customer service offerings and service levels in consultation with their communities. This work is underway but is not yet complete in any of the councils.
Progress towards an efficient structure has been slowed by staff protections in the Local Government Act 1993 (the Act) and a range of logistical and administrative issues associated with amalgamation. These include multiple IT systems and databases that need to be integrated and different working conditions, policies and practices in the former councils that are not yet fully
harmonised.
The councils implemented legislated staff protections and focused on the people side of change but cannot reliably measure the impact of their change management efforts.
The Act provides protections that reduce the impact of amalgamations on staff. Beyond implementing these protections, the councils have communicated with staff, sought to prepare them for change, and involved staff in key decisions. All councils have conducted staff surveys over time. However, at this stage these staff surveys have not provided an effective or reliable measure of the impact of change management efforts.
Appendix one - Response from councils and Office of Local Government
Appendix two - Compliance with staff protections in the Local Government Act 1993
Appendix three - About the audit
Appendix four - Performance auditing
Parliamentary Reference: Report number #317 - released 1 May 2019
Transport Access Program
The following report is available in an Easy English version that is intended to meet the needs of some people with lower literacy skills, some people with an intellectual disability and some people from different cultural backgrounds.
View the Easy English version of the Transport Access Program report
Transport for NSW’s process for selecting and prioritising projects for the third stage of its Transport Access Program balanced compliance with national disability standards with broader customer outcomes. Demographics, deliverability and value for money were also considered. However, Transport for NSW does not know the complete scope of work required for full compliance, limiting its ability to demonstrate that its approach is effective, according to a report released today by the Auditor-General for New South Wales, Margaret Crawford.
Access to transport is critical to ensuring that people can engage in all aspects of community life, including education, employment and recreation. People with disability can encounter barriers when accessing public transport services. In 2015, there were 1.37 million people living with disability in New South Wales.
Accessible public transport is about more than physical accessibility. It also means barrier-free access for people who have vision, hearing or cognitive impairments. All users, not just people with disability, benefit from improvements to the accessibility and inclusiveness of transport services.
Transport for NSW has an obligation under Australian Government legislation to provide accessible services to people with disabilities in a manner which is not discriminatory. Under the Disability Standards for Accessible Public Transport 2002 (the DSAPT - an instrument of the Disability Discrimination Act 1992 (the Act) (Commonwealth)), there is a requirement to modify and develop new infrastructure, means of transport and services to provide access for people with disabilities. All public transport operators are required to ensure that at least 90 per cent of their networks met DSAPT by December 2017 and the networks will need to be 100 per cent compliant with all parts of the standards by 31 December 2022. Trains are not required to be fully compliant with DSAPT until December 2032.
The Transport Access Program (TAP) is Transport for NSW's largest program with a specific focus on improving access to public transport for people with disability. The TAP is a series of projects to upgrade existing public transport infrastructure across four networks: Sydney Trains, Intercity Trains, Regional Trains and Sydney Ferries. Transport for NSW established the TAP as a rolling program and, to date, it has delivered the first tranche of TAP (TAP 1) and is completing the final projects for the second tranche (TAP 2). NSW budget papers estimate that by 30 June 2018, Transport for NSW had spent $1.2 billion in the TAP since its commencement in 2011-12.
After the completion of TAP 1 and TAP 2 (as well as through other transport infrastructure programs), Transport for NSW estimates that 58.5 per cent of the Sydney Trains, Regional Trains and Intercity Trains networks, and 66 per cent of the Sydney Ferries network, will be accessible. To close the significant gap in compliance with the DSAPT target, the objective for TAP 3 is ‘to contribute to Disability Discrimination Act 1992 related targets through DSAPT compliance upgrades’.
The audit assessed whether Transport for NSW has an effective process to select and prioritise projects as part of the TAP, with a specific focus on the third tranche of TAP funding.
In August 2018, at the commencement of this audit, Transport for NSW intended to complete the selection of projects for the TAP 3 final business case in December 2018. Transport for NSW advise that it now intends to complete the development stage and final business case in the first quarter of 2019, prior to the final investment decision of the TAP program. This report is based on the TAP 3 strategic business case and information provided by Transport for NSW up to December 2018.
Transport for NSW’s process for selecting and prioritising projects for TAP 3 balanced DSAPT compliance goals with broader customer outcomes. It also considered demographics, deliverability and value for money. However, Transport for NSW does not know the complete scope of work required for full DSAPT compliance, and this limits its ability to demonstrate that its approach is effective.
In 2015, there were 1.37 million people living with disability in New South Wales. Access to transport is critical to ensuring that people can engage in all aspects of community life, including education, employment and recreation. People with disability can encounter barriers when accessing public transport services.
The social model of disability, outlined in the United Nations Convention on the Rights of Persons with Disabilities, views people with disability as not disabled by their impairment but by the barriers in the community and environment that restrict their full and effective participation in society on an equal basis with others.
Accessible public transport is more than the provision of physical access to premises and conveyances, it provides barrier-free access for people who have vision, hearing or cognitive impairments. All users, not just people with disability, benefit from improvements to the accessibility and inclusiveness of transport services.
According to the Australian Bureau of Statistics, the main types of difficulties experienced by people with disability when using public transport relate to steps (39.9 per cent), difficulty getting to stops and stations (25 per cent), fear and anxiety (23.3 per cent) and lack of seating or difficulty standing (20.7 per cent).
Transport for NSW has a Disability Inclusion Action Plan (the Action Plan) 2018-2022 that sets an overall framework for planning, delivering and reporting on initiatives to increase accessibility of the transport network. It covers all elements of the journey experienced when using public transport, including journey planning, staff training, customer services and interaction between the physical environment and modes of transport. Appendix five outlines the guiding principles of the Action Plan.
Transport for NSW's Transport Social Policy branch developed the Action Plan in consultation with internal and external stakeholders. The director of the Transport Social Policy branch is a member of the TAP executive steering committee, which supports alignment between the Action Plan and TAP.
Transport for NSW's Disability Inclusion Action Plan describes a customer focussed approach to accessibility
One of the guiding principles of the Action Plan is ‘intelligent compliance’. Transport for NSW describes this as compliance that prioritises customer-focused outcomes over a narrow focus on legal compliance with accessibility standards. As well as being compliant, infrastructure should be practical, usable, fit for purpose and convenient.
The TAP prioritisation and selection methodology reflects Transport for NSW’s focus on intelligent compliance. We consider this a reasonable approach as had Transport for NSW focussed exclusively on achieving compliance with the DSAPT targets by upgrading the most affordable infrastructure, some locations, that are used by more customers, would remain inaccessible to people with disability. However, this approach should not be seen as an alternative to Transport for NSW meeting its DSAPT compliance obligations.
TAP program staff consult with the Accessible Transport Advisory Committee
The Accessible Transport Advisory Committee (ATAC) has representatives from disability and ageing organisations, who provide expert guidance to Transport for NSW on access and inclusion. The ATAC provide guidance and feedback on projects and project solutions, including user testing where appropriate. TAP program staff provide regular updates at ATAC meetings, which include briefings on progress. The ATAC also provides feedback and suggestions to TAP program staff, which is considered and sometimes included in current and future projects.For example, in March 2017 the TAP program team briefed the ATAC on the challenges with respect to a number of ferry wharves and sought support for DSAPT exemptions proposed in the TAP 3 strategic business case.
| In June 2018, the Program team sought feedback on a variety of lift button options to improve accessibility on future TAP projects. In September 2018, during the ATAC meeting attended by the Audit Office, the program team sought feedback on the standard designs for TAP 3. Some ATAC members noted that the standard design included Braille lettering on the lift buttons, and that this was not good practice because people can accidently press the button while reading it. As a result, Transport for NSW are incorporating this feedback into design requirements for the lifts for TAP 3, which will consider larger buttons, clearer Braille and Braille signage adjacent to the button. |
Transport for NSW has not briefed the Advisory Committee on the outcome of the prioritisation and selection process
TAP program staff briefed the Advisory Committee about the prioritisation and selection methodology, after the Minister approved it in 2016. However, Transport for NSW have not briefed or consulted the Advisory Committee on the outcome of the prioritisation process. Infrastructure NSW noted this issue during its review of the strategic business case.
Transport for NSW advised us that it established the ATAC as an advisory group, and that Transport for NSW does not disclose sensitive information to it. Transport for NSW intends to share the outcome of the prioritisation process following the completion of the TAP 3 development stage and final investment decision.
The TAP communication plan does not fully meet the requirements of the Disability Inclusion Action Plan
The Disability Inclusion Action Plan includes an action item to ‘provide a listing of stations and wharves to be upgraded with estimated time of construction as each new tranche of the Transport Access Program is announced’ The TAP Communication Plan that we reviewed does not include this provision instead focussing on communication on a per project basis. Given the long timeframes associated with improving transport infrastructure, this information is important as it allows people to make informed decisions about where they live, work or study.
Appendix one - Response from agency
Appendix two - Compliance requirements of Disability Standards for Accessible Public Transport
Appendix three - TAP 1 and TAP 2 sub-programs
Appendix four - Prioritisation Assessment for the TAP 3 Strategic Business Case
Appendix five - The guiding principles of Transport for NSW's Disability Inclusion Action Plan
Appendix six - Transport projects and programs that contribute to DSAPT compliance
Appendix seven - About the audit
Appendix eight - Performance auditing
Parliamentary Reference - Report number #314 - released 19 February 2019.
Newcastle Urban Transformation and Transport Program
The urban renewal projects on former railway land in the Newcastle city centre are well targeted to support the objectives of the Newcastle Urban Transformation and Transport Program (the Program), according to a report released today by the Auditor-General for New South Wales, Margaret Crawford. The planned uses of the former railway land achieve a balance between the economic and social objectives of the Program at a reasonable cost to the government. However, the evidence that the cost of the light rail will be justified by its contribution to the Program is not convincing.
The Newcastle Urban Transformation and Transport Program (the Program) is an urban renewal and transport program in the Newcastle city centre. The Hunter and Central Coast Development Corporation (HCCDC) has led the Program since 2017. UrbanGrowth NSW led the Program from 2014 until 2017. Transport for NSW has been responsible for delivering the transport parts of the Program since the Program commenced. All references to HCCDC in this report relate to both HCCDC and its predecessor, the Hunter Development Corporation. All references to UrbanGrowth NSW in this report relate only to its Newcastle office from 2014 to 2017.
This audit had two objectives:
- To assess the economy of the approach chosen to achieve the objectives of the Program.
- To assess the effectiveness of the consultation and oversight of the Program.
We addressed the audit objectives by answering the following questions:
a) Was the decision to build light rail an economical option for achieving Program objectives?
b) Has the best value been obtained for the use of the former railway land?
c) Was good practice used in consultation on key Program decisions?
d) Did governance arrangements support delivery of the program?
1. The urban renewal projects on the former railway land are well targeted to support the objectives of the Program. However, there is insufficient evidence that the cost of the light rail will be justified by its contribution to Program objectives.
The planned uses of the former railway land achieve a balance between the economic and social objectives of the Program at a reasonable cost to the Government. HCCDC, and previously UrbanGrowth NSW, identified and considered options for land use that would best meet Program objectives. Required probity processes were followed for developments that involved financial transactions. Our audit did not assess the achievement of these objectives because none of the projects have been completed yet.
Analysis presented in the Program business case and other planning documents showed that the light rail would have small transport benefits and was expected to make a modest contribution to broader Program objectives. Analysis in the Program business case argued that despite this, the light rail was justified because it would attract investment and promote economic development around the route. The Program business case referred to several international examples to support this argument, but did not make a convincing case that these examples were comparable to the proposed light rail in Newcastle.
The audited agencies argue that the contribution of light rail cannot be assessed separately because it is a part of a broader Program. The cost of the light rail makes up around 53 per cent of the total Program funding. Given the cost of the light rail, agencies need to be able to demonstrate that this investment provides value for money by making a measurable contribution to the Program objectives.
2. Consultation and oversight were mostly effective during the implementation stages of the Program. There were weaknesses in both areas in the planning stages.
Consultations about the urban renewal activities from around 2015 onward followed good practice standards. These consultations were based on an internationally accepted framework and met their stated objectives. Community consultations on the decision to close the train line were held in 2006 and 2009. However, the final decision in 2012 was made without a specific community consultation. There was no community consultation on the decision to build a light rail.
The governance arrangements that were in place during the planning stages of the Program did not provide effective oversight. This meant there was not a single agreed set of Program objectives until 2016 and roles and responsibilities for the Program were not clear. Leadership and oversight improved during the implementation phase of the Program. Roles and responsibilities were clarified and a multi-agency steering committee was established to resolve issues that needed multi-agency coordination.
Recommendations
For future infrastructure programs, NSW Government agencies should support economical decision-making on infrastructure projects by:
- providing balanced advice to decision makers on the benefits and risks of large infrastructure investments at all stages of the decision-making process
- providing scope and cost estimates that are as accurate and complete as possible when initial funding decisions are being made
- making business cases available to the public.
The planned uses of the former railway land align with the objectives of encouraging people to visit and live in the city centre, creating attractive public spaces, and supporting growth in employment in the city. The transport benefits of the activities are less clear, because the light rail is the major transport project and this will not make significant improvements to transport in Newcastle.
The processes used for selling and leasing parts of the former railway land followed industry standards. Options for the former railway land were identified and assessed systematically. Competitive processes were used for most transactions and the required assessment and approval processes were followed. The sale of land to the University of Newcastle did not use a competitive process, but required processes for direct negotiations were followed.
Recommendation
By March 2019, the Hunter and Central Coast Development Corporation should:
- work with relevant stakeholders to explore options for increasing the focus on the heritage objective of the Program in projects on the former railway land. This could include projects that recognise the cultural and industrial heritage of Newcastle.
Consultations focusing on urban renewal options for the Program included a range of stakeholders and provided opportunities for input into decisions about the use of the former railway land. These consultations received mostly positive feedback from participants. Changes and additions were made to the objectives of the Program and specific projects in response to feedback received.
There had been several decades of debate about the potential closure of the train line, including community consultations in 2006 and 2009. However, the final decision to close the train line was made and announced in 2012 without a specific community consultation. HCCDC states that consultation with industry and business representatives constitutes community consultation because industry representatives are also members of the community. This does not meet good practice standards because it is not a representative sample of the community.
There was no community consultation on the decision to build a light rail. There were subsequent opportunities for members of the community to comment on the implementation options, but the decision to build it had already been made. A community and industry consultation was held on which route the light rail should use, but the results of this were not made public.
Recommendation
For future infrastructure programs, NSW Government agencies should consult with a wide range of stakeholders before major decisions are made and announced, and report publicly on the results and outcomes of consultations.
The governance arrangements that were in place during the planning stages of the Program did not provide effective oversight. Project leadership and oversight improved during the implementation phase of the Program.
Multi-agency coordination and oversight were ineffective during the planning stages of the Program. Examples include: multiple versions of Program objectives being in circulation; unclear reporting lines for project management groups; and poor role definition for the initial advisory board. Program ownership was clarified in mid-2016 with the appointment of a new Program Director with clear accountability for the delivery of the Program. This was supported by the creation of a multi-agency steering committee that was more effective than previous oversight bodies.
The limitations that existed in multi-agency coordination and oversight had some negative consequences in important aspects of project management for the Program. This included whole-of-government benefits management and the coordination of work to mitigate impacts of the Program on small businesses.
Recommendations
For future infrastructure programs, NSW Government agencies should:
- develop and implement a benefits management approach from the beginning of a program to ensure responsibility for defining benefits and measuring their achievement is clear
- establish whole-of-government oversight early in the program to guide major decisions. This should include:
- agreeing on objectives and ensuring all agencies understand these
- clearly defining roles and responsibilities for all agencies
- establishing whole-of-government coordination for the assessment and mitigation of the impact of major construction projects on businesses and the community.
By March 2019, the Hunter and Central Coast Development Corporation should update and implement the Program Benefits Realisation Plan. This should include:
- setting measurable targets for the desired benefits
- clearly allocating ownership for achieving the desired benefits
- monitoring progress toward achieving the desired benefits and reporting publicly on the results.
Appendix one - Response from agencies
Appendix two - About the audit
Appendix three - Performance auditing
Parliamentary reference - Report number #310 - released 12 December 2018
