Reports
Planning and Environment 2018
The Auditor-General for New South Wales, Margaret Crawford, released her report today on the NSW Planning and Environment cluster. The report focuses on key observations and findings from the most recent financial audits of these agencies. Unqualified audit opinions were issued for all agencies' financial statements. However, some cultural institutions had challenges valuing collection assets in 2017–18. These issues were resolved before the financial statements were finalised.
This report analyses the results of our audits of financial statements of the Planning and Environment cluster for the year ended 30 June 2018. The table below summarises our key observations.
This report provides parliament and other users of the Planning 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
- service delivery.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision making is enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Planning and Environment cluster for 2018.
| Observation | Conclusions and recommendations |
| 2.1 Quality of financial reporting | |
| Unqualified audit opinions were issued for all agencies' financial statements. | The quality of financial reporting remains high across the cluster. |
| 2.2 Key accounting issues | |
| There were errors in some cultural institutions' collection asset valuations. | Recommendation: Collection asset valuations could be improved by:
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| 2.3 Timeliness of financial reporting | |
| Except for two agencies, the audits of cluster agencies’ financial statements were completed within the statutory timeframe. | Issues with asset revaluations delayed the finalisation of two environment and heritage agencies' financial statement audits. |
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 Planning and Environment cluster for 2018
- the areas of focus identified in the Audit Office work program.
The Audit Office annual work program provides a summary of all audits to be conducted within the proposed time period as well as detailed information on the areas of focus for each of the NSW Government clusters.
| Observation | Conclusions and recommendations |
| 3.1 Internal controls | |
| One in five internal control weaknesses reported in 2017–18 were repeat issues. | Delays in implementing audit recommendations can prolong the risk of fraud and error. Recommendation (repeat issue): Management letter recommendations to address internal control weaknesses should be actioned promptly, with a focus on addressing repeat issues. |
| One extreme risk was identified relating to the National Art School. The School does not have an occupancy agreement for the Darlinghurst campus. | Lack of formal agreement creates uncertainty over the School's continued occupancy of the Darlinghurst site. The School should continue to liaise with stakeholders to formalise the occupancy arrangement. |
| 3.2 Information technology controls | |
| The controls and governance arrangements when migrating payroll data from the Aurion system to SAP HR system were effective. | Data migration from the Aurion system to SAP HR system had no significant issues. |
| The Department can improve controls over user access to SAP system. | The Department needs to ensure the SAP user access controls are appropriate, including investigation of excess access rights and resolving segregation of duties issues. |
| 3.3 Annual work program | |
| Agencies used different benchmarks to monitor their maintenance expenditure. | The cluster agencies under review operate in different industries. As a result, they do not use the same benchmarks to assess the adequacy of their maintenance spend. |
This chapter outlines certain service delivery outcomes for 2017–18. The data on activity levels and performance is provided by cluster agencies. The Audit Office does not have a specific mandate to audit performance information. Accordingly, the information in this chapter is unaudited.
We report this information on service delivery to provide additional context to understand the operations of the Planning and Environment cluster, and to collate and present service information for different segments of the cluster in one report.
In our recent performance audit, ‘Progress and measurement of Premier's Priorities’, we identified 12 limitations of performance measurement and performance data. We recommended the Department of Premier and Cabinet ensure that processes to check and verify data are in place for all relevant agency data sources.
Transport 2018
The Auditor-General for New South Wales, Margaret Crawford released her report today on key observations and findings from the 30 June 2018 financial statement audits of agencies in the Transport cluster. Unqualified audit opinions were issued for all agencies' financial statements. However, assessing the fair value of the broad range of transport related assets creates challenges.
This report analyses the results of our audits of financial statements of the Transport cluster for the year ended 30 June 2018. The table below summarises our key observations.
This report provides Parliament and other users of the Transport cluster’s financial statements with the results of our audits, our observations, analysis, conclusions and recommendations in the following areas:
- financial reporting
- audit observations.
Financial reporting is an important element of good governance. Confidence and transparency in public sector decision making are enhanced when financial reporting is accurate and timely.
This chapter outlines our audit observations related to the financial reporting of agencies in the Transport cluster for 2018.
| Observation | Conclusions and recommendations |
| 2.1 Quality of financial reporting | |
| Unqualified audit opinions were issued for all agencies' financial statements | Sufficient audit evidence was obtained to conclude the financial statements were free of material misstatement. |
| 2.2 Key accounting issues | |
| Valuation of assets continues to create challenges. Although agencies complied with the requirements of the accounting standards and Treasury policies on valuations, we identified some opportunities for improvements at RMS. |
RMS incorporated data from its asset condition assessments for the first time in the valuation methodology which improved the valuation outcome. Overall, we were satisfied with the valuation methodology and key assumptions, but we noted some deficiencies in the asset data in relation to asset component unit rates and old condition data for some components of assets. Also, a bypass and tunnel were incorrectly excluded from RMS records and valuation process since 2013. This resulted in an increase for these assets’ value by $133 million. The valuation inputs for Wetlands and Moorings were revised this year to better reflect the assets' characteristics resulting in a $98.0 million increase. |
| 2.3 Timeliness of financial reporting | |
| Residual Transport Corporation did not submit its financial statements by the statutory reporting deadline. | Residual Transport Corporation remained a dormant entity with no transactions for the year ended 30 June 2018. |
| With the exception of Residual Transport Corporation, all agencies completed early close procedures and submitted financial statements within statutory timeframes. | Early close procedures allow financial reporting issues and risks to be addressed early in the reporting and audit process. |
| 2.4 Financial sustainability | |
| NSW Trains and the Chief Investigator of the Office of Transport Safety Investigations reported negative net assets of $75.7 million and $89,000 respectively at 30 June 2018. | NSW Trains and the Chief Investigator of the Office of Transport Safety Investigations continue to require letters of financial support to confirm their ability to pay liabilities as they fall due. |
| 2.5 Passenger revenue and patronage | |
| Transport agencies revenue growth increased at a higher rate than patronage. | Public transport passenger revenue increased by $114 million (8.3 per cent) in 2017–18, and patronage increased by 37.1 million (5.1 per cent) across all modes of transport based on data provided by TfNSW. |
| Negative balance Opal Cards resulted in $3.8 million in revenue not collected in 2017–18 and $7.8 million since the introduction of Opal. A total of 1.1 million Opal cards issued since its introduction have negative balances. | Transport for NSW advised it is liaising with the ticketing vendor to implement system changes and are investigating other ways to reduce the occurrences. |
| 2.6 Cost recovery from public transport users | |
| Overall cost recovery from users has decreased. | Overall cost recovery from public transport users (on rail and bus services by STA) decreased from 23.2 per cent to 22.4 per cent between 2016–17 and 2017–18. The main reason for the decrease is due to expenditure increasing at a faster rate than revenue in 2017–18. |
Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are essential for quality and timely decision making.
This chapter outlines our observations and insights from:
- our financial statement audits of agencies in the Transport cluster for 2018
- the areas of focus identified in the Audit Office annual work program.
The Audit Office Annual Work Program provides a summary of all audits to be conducted within the proposed time period as well as detailed information on the areas of focus for each of the NSW Government clusters.
| Observation | Conclusions and recommendations |
| 3.1 Internal controls | |
| There was an increase in findings on internal controls across the Transport cluster. | Key themes related to information technology, employee leave entitlements and asset management. Eighteen per cent of all issues were repeat issues. |
| 3.2 Audit Office Annual work program | |
| The Transport cluster wrote-off over $200 million of assets which were replaced by new assets or technology. |
Majority of this write-off was recognised by RMS, with $199 million relating to the write-off of existing assets which have been replaced during the year. |
| RailCorp is expected to convert to TAHE from 1 July 2019. | Several working groups are considering different aspects of the TAHE transition including its status as a for-profit Public Trading Enterprise and which assets to transfer to TAHE. We will continue to monitor developments on TAHE for any impact to the financial statements. |
| RMS' estimated maintenance backlog at 30 June 2018 of $3.4 billion is lower than last year. Sydney Trains' estimated maintenance backlog at 30 June 2018 increased by 20.6 per cent to $434 million. TfNSW does not quantify its backlog maintenance. | TfNSW advised it is liaising with Infrastructure NSW to develop a consistent definition of maintenance backlog across all transport service providers. |
| Not all agencies monitor unplanned maintenance across the Transport cluster. | Unplanned maintenance can be more expensive than planned maintenance. TfNSW should develop a consistent approach to define, monitor and track unplanned maintenance across the cluster. |
This chapter outlines certain service delivery outcomes for 2017–18. The data on activity levels and performance is provided by Cluster agencies. The Audit Office does not have a specific mandate to audit performance information. Accordingly, the information in this chapter is unaudited.
We report this information on service delivery to provide additional context to understand the operations of the Transport cluster and to collate and present service information for different modes of transport in one report.
In our recent performance audit, Progress and measurement of Premier's Priorities, we identified 12 limitations of performance measurement and performance data. We recommended that the Department of Premier and Cabinet ensure that processes to check and verify data are in place for all agency data sources.
Mobile speed cameras
The primary goal of speed cameras is to reduce speeding and make the roads safer. Our 2011 performance audit on speed cameras found that, in general, speed cameras change driver behaviour and have a positive impact on road safety.
Transport for NSW published the NSW Speed Camera Strategy in June 2012 in response to our audit. According to the Strategy, the main purpose of mobile speed cameras is to reduce speeding across the road network by providing a general deterrence through anywhere, anytime enforcement and by creating a perceived risk of detection across the road network. Fixed and red-light speed cameras aim to reduce speeding at specific locations.
Roads and Maritime Services and Transport for NSW deploy mobile speed cameras (MSCs) in consultation with NSW Police. The cameras are operated by contractors authorised by Roads and Maritime Services. MSC locations are stretches of road that can be more than 20 kilometres long. MSC sites are specific places within these locations that meet the requirements for a MSC vehicle to be able to operate there.
This audit assessed whether the mobile speed camera program is effectively managed to maximise road safety benefits across the NSW road network.
The mobile speed camera program requires improvements to key aspects of its management to maximise road safety benefits. While camera locations have been selected based on crash history, the limited number of locations restricts network coverage. It also makes enforcement more predictable, reducing the ability to provide a general deterrence. Implementation of the program has been consistent with government decisions to limit its hours of operation and use multiple warning signs. These factors limit the ability of the mobile speed camera program to effectively deliver a broad general network deterrence from speeding.
Many locations are needed to enable network-wide coverage and ensure MSC sessions are randomised and not predictable. However, there are insufficient locations available to operate MSCs that meet strict criteria for crash history, operator safety, signage and technical requirements. MSC performance would be improved if there were more locations.
A scheduling system is meant to randomise MSC location visits to ensure they are not predictable. However, a relatively small number of locations have been visited many times making their deployment more predictable in these places. The allocation of MSCs across the time of day, day of week and across regions is prioritised based on crash history but the frequency of location visits does not correspond with the crash risk for each location.
There is evidence of a reduction in fatal and serious crashes at the 30 best-performing MSC locations. However, there is limited evidence that the current MSC program in NSW has led to a behavioural change in drivers by creating a general network deterrence. While the overall reduction in serious injuries on roads has continued, fatalities have started to climb again. Compliance with speed limits has improved at the sites and locations that MSCs operate, but the results of overall network speed surveys vary, with recent improvements in some speed zones but not others.
There is no supporting justification for the number of hours of operation for the program. The rate of MSC enforcement (hours per capita) in NSW is less than Queensland and Victoria. The government decision to use multiple warning signs has made it harder to identify and maintain suitable MSC locations, and impeded their use for enforcement in both traffic directions and in school zones.
Appendix one - Response from agency
Appendix two - About the audit
Appendix three - Performance auditing
Parliamentary reference - Report number #308 - released 18 October 2018
Regulation of water pollution in drinking water catchments and illegal disposal of solid waste
There are important gaps in how the Environmental Protection Authority (EPA) implements its regulatory framework for water pollution in drinking water catchments and illegal solid waste disposal. This limits the effectiveness of its regulatory responses, according to a report released today by the Auditor-General for New South Wales, Margaret Crawford.
| By 31 December 2018, to improve governance and oversight, the EPA should: | |
| 1. | implement a more effective performance framework with regular reports to the Chief Executive Officer and to the EPA Board on outcomes-based key result areas that assess its environmental and regulatory performance and trends over time |
| By 30 June 2019, to improve consistency in its practices, the EPA should: | |
| 2. | progressively update and make accessible its policies and procedures for regulatory operations, and mandate procedures where necessary to ensure consistent application |
| 3. | implement internal controls to monitor the consistency and quality of its regulatory operations. |
| By 30 June 2019, to address worsening water quality in Lake Burragorang, the EPA should: | |
| 4. | (a) review the impact of its licensed activities on water quality in Lake Burragorang, and |
| (b) develop strategies relating to its licensed activities (in consultation with other relevant NSW Government agencies) to improve and maintain the lake's water quality. | |
| To improve compliance monitoring, the EPA should implement procedures to: | |
| 5. | by 30 June 2019, validate self-reported information, eliminate hardcopy submissions and require licensees to report on their breaches of the Act and associated regulations in their annual returns |
| 6. | by 31 December 2018, conduct mandatory site inspections under the risk-based licensing scheme to assess compliance with all regulatory requirements and licence conditions. |
| By 31 December 2018 to improve enforcement, the EPA should: | |
| 7. | Implement procedures to systematically assess non-compliances with licence conditions and breaches of the Act and to implement appropriate and consistent regulatory actions. |
Appendix one – Response from agency
Appendix two – List of enforcement tools
Appendix three – The EPA's organisational structure
Appendix four – The EPA's regions and branches
Appendix five – About the audit
Appendix six – Performance auditing
Parliamentary reference - Report number #304 - released 28 June 2018
Fraud controls in local councils
Many local councils need to improve their fraud control systems, according to a report released today by the Auditor-General for New South Wales, Margaret Crawford. The report highlights that councils often have fraud control procedures and systems in place, but are not ensuring people understand them and how they work. There is also significant variation between councils in the quality of their fraud controls.
Fraud can directly influence councils’ ability to deliver services, and undermine community confidence and trust. ICAC investigations, such as the recent Operation Ricco into the former City of Botany Bay Council, show the financial and reputational damage that major fraud can cause. Good fraud control practices are critical for councils and the community.
The Audit Office of New South Wales 2015 Fraud Control Improvement Kit (the Kit) aligns with the Fraud and Corruption Control Standard AS8001-2008 and identifies ten attributes of an effective fraud control system. This audit used the Kit to assess how councils manage the risk of fraud. It identifies areas where fraud control can improve.
Fraud can disrupt the delivery and quality of services and threaten the financial stability of councils.
Recent reviews of local government in Queensland and Victoria identify that councils are at risk of fraud because they purchase large quantities of goods and services using devolved decision making arrangements. The Queensland Audit Office in its 2014–15 report 'Fraud Management in Local Government' found that ‘Councils are exposed to high-risks of fraud and corruption because of the high volume of goods and services they procure, often from local suppliers; and because of the high degree of decision making vested in councils'. They also highlight some common problems faced by councils including the absence of fraud control plans and failure to conduct regular reviews of their internal controls. Also, in 2008 and 2012 the Victorian Auditor-General identified the importance of up-to-date fraud control planning, clearly documented related policies, training staff to identify fraud risks and the importance of controls such as third party management.
Investigations into councils by the NSW Independent Commission Against Corruption (ICAC), such as the recent Operation Ricco, show the impact that fraud can have on councils. These impacts include significant financial loss, and negative public perceptions about how well councils manage fraud. The findings of these investigations also show the importance of good fraud controls for councils.
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Operation Ricco In its report on Operation Ricco, the ICAC found that the Chief Financial Officer (CFO) of the City of Botany Bay Council and others dishonestly exercised official functions to obtain financial benefits for themselves and others by causing fraudulent payments from the Council for their benefit. It also identified the CFO received inducements for favourable treatment of contractors. The report noted that there were overwhelming failures in the council’s procedures and governance framework that created significant opportunities for corruption, of which the CFO and others took advantage. It found weaknesses across a wide variety of governance processes and functions, including those involving the general manager, the internal audit function, external audit, and the operation of the audit committee. |
The strength of fraud control systems varies significantly across New South Wales local councils, and many councils we surveyed need to improve significantly.
Most surveyed councils do not have fraud control plans that direct resources to mitigating the specific fraud risks they face. Few councils reported that they conduct regular risk assessments or health checks to ensure they respond effectively to the risks they identify.
There are sector wide weaknesses that impact on the strength of councils' fraud control practice. Less than one-third of councils that responded to the survey:
- communicate their expectations about ethical conduct and responsibility for fraud control to staff
- regularly train staff to identify and respond to suspected fraud
- inform staff or the wider community how to report suspected fraud and how reports made will be investigated.
The audit also identified a pattern of councils developing policies, procedures or systems without ensuring people understand them, or assessing that they work. This reduces the likelihood that staff will actually use them.
In general, metropolitan and regional councils surveyed have stronger fraud control systems than rural councils.
Newly amalgamated councils are operating with systems inherited from two or more pre-amalgamated councils. These councils are developing new systems for their changed circumstances.
Five councils surveyed reported that they did not comply with the Public Interest Disclosure Act 1994.
Observations for the sector:
Councils should improve their fraud controls by:
- tailoring fraud control plans to their circumstances and specific risks
- systematically and regularly reviewing their fraud risks and fraud control systems to keep their plans up to-date
- effectively communicating fraud risks, and how staff and the community can report suspected fraud
- ensuring that they comply with the Public Interest Disclosure Act 1994.
Recommendation:
That the Office of Local Government:
- work with councils to ensure they comply with the Public Interest Disclosure Act 1994.
That the Office of Local Government:
- work with state entities and councils to develop a common approach to how fraud complaints and incidences are defined and categorised so that they can:
- better use data to provide a clearer picture of the level of fraud within councils
- measure the effectiveness of, and drive improvement in councils' fraud controls systems
Appendix one – Response from agency
Appendix three – About the audit
Appendix four – Performance auditing
Parliamentary reference - Report number #303 - released 22 June 2018
Managing risks in the NSW public sector: risk culture and capability
The Ministry of Health, NSW Fair Trading, NSW Police Force, and NSW Treasury Corporation are taking steps to strengthen their risk culture, according to a report released today by the Auditor-General, Margaret Crawford. 'Senior management communicates the importance of managing risk to their staff, and there are many examples of risk management being integrated into daily activities', the Auditor-General said.
We did find that three of the agencies we examined could strengthen their culture so that all employees feel comfortable speaking openly about risks. To support innovation, senior management could also do better at communicating to their staff the levels of risk they are willing to accept.
Effective risk management is essential to good governance, and supports staff at all levels to make informed judgements and decisions. At a time when government is encouraging innovation and exploring new service delivery models, effective risk management is about seizing opportunities as well as managing threats.
Over the past decade, governments and regulators around the world have increasingly turned their attention to risk culture. It is now widely accepted that organisational culture is a key element of risk management because it influences how people recognise and engage with risk. Neglecting this ‘soft’ side of risk management can prevent institutions from managing risks that threaten their success and lead to missed opportunities for change, improvement or innovation.
This audit assessed how effectively NSW Government agencies are building risk management capabilities and embedding a sound risk culture throughout their organisations. To do this we examined whether:
- agencies can demonstrate that senior management is committed to risk management
- information about risk is communicated effectively throughout agencies
- agencies are building risk management capabilities.
The audit examined four agencies: the Ministry of Health, the NSW Fair Trading function within the Department of Finance, Services and Innovation, NSW Police Force and NSW Treasury Corporation (TCorp). NSW Treasury was also included as the agency responsible for the NSW Government's risk management framework.
In assessing an agency’s risk culture, we focused on four key areas:
Executive sponsorship (tone at the top)
In the four agencies we reviewed, senior management is communicating the importance of managing risk. They have endorsed risk management frameworks and funded central functions tasked with overseeing risk management within their agencies.
That said, we found that three case study agencies do not measure their existing risk culture. Without clear measures of how employees identify and engage with risk, it is difficult for agencies to tell whether employee's behaviours are aligned with the 'tone' set by the executive and management.
For example, in some agencies we examined we found a disconnect between risk tolerances espoused by senior management and how these concepts were understood by staff.
Employee perceptions of risk management
Our survey of staff indicated that while senior leaders have communicated the importance of managing risk, more could be done to strengthen a culture of open communication so that all employees feel comfortable speaking openly about risks. We found that senior management could better communicate to their staff the levels of risk they should be willing to accept.
Integration of risk management into daily activities and links to decision-making
We found examples of risk management being integrated into daily activities. On the other hand, we also identified areas where risk management deviated from good practice. For example, we found that corporate risk registers are not consistently used as a tool to support decision-making.
Support and guidance to help staff manage risks
Most case study agencies are monitoring risk-related skills and knowledge of their workforce, but only one agency has addressed the gaps it identified. While agencies are providing risk management training, surveyed staff in three case study agencies reported that risk management training is not adequate.
NSW Treasury provides agencies with direction and guidance on risk management through policy and guidelines. In line with better practice, NSW Treasury's principles-based policy acknowledges that individual agencies are in a better position to understand their own risks and design risk management frameworks that address those risks. Nevertheless, there is scope for NSW Treasury to refine its guidance material to support a better risk culture in the NSW public sector.
Recommendation
By May 2019, NSW Treasury should:
- Review the scope of its risk management guidance, and identify additional guidance, training or activities to improve risk culture across the NSW public sector. This should focus on encouraging agency heads to form a view on the current risk culture in their agencies, identify desirable changes to that risk culture, and take steps to address those changes.
Appendix one - Response from agencies
Appendix three - About the audit
Appendix four - Performance auditing
Parliamentary reference - Report number #298 - released 23 April 2018
Council reporting on service delivery
New South Wales local government councils’ could do more to demonstrate how well they are delivering services in their reports to the public, according to a report released today by the Auditor-General for New South Wales, Margaret Crawford. Many councils report activity, but do not report on outcomes in a way that would help their communities assess how well they are performing. Most councils also did not report on the cost of services, making it difficult for communities to see how efficiently they are being delivered. And councils are not consistently publishing targets to demonstrate what they are striving for.
I am pleased to present my first local government performance audit pursuant to section 421D of the Local Government Act 1993.
My new mandate supports the Parliament’s objectives to:
- strengthen governance and financial oversight in the local government sector
- improve financial management, fiscal responsibility and public accountability for how councils use citizens’ funds.
Performance audits aim to help councils improve their efficiency and effectiveness. They will also provide communities with independent information on the performance of their councils.
For this inaugural audit in the local government sector, I have chosen to examine how well councils report to their constituents about the services they provide.
In this way, the report will enable benchmarking and provide improvement guidance to all councils across New South Wales.
Specific recommendations to drive improved reporting are directed to the Office of Local Government, which is the regulator of councils in New South Wales.
Councils provide a range of services which have a direct impact on the amenity, safety and health of their communities. These services need to meet the needs and expectations of their communities, as well as relevant regulatory requirements set by state and federal governments. Councils have a high level of autonomy in decisions about how and to whom they provide services, so it is important that local communities have access to information about how well they are being delivered and meeting community needs. Ultimately councils should aim to ensure that reporting performance is subject to quality controls designed to provide independent assurance.
Councils report extensively on the things they have done, but minimally on the outcomes from that effort, efficiency and performance over time.
Councils could improve reporting on service delivery by more clearly relating the resources needed with the outputs produced, and by reporting against clear targets. This would enable communities to understand how efficiently services are being delivered and how well councils are tracking against their goals and priorities.
Across the sector, a greater focus is also needed on reporting performance over time so that communities can track changes in performance and councils can demonstrate whether they are on target to meet any agreed timeframes for service improvements.
The degree to which councils demonstrate good practice in reporting on service delivery varies greatly between councils. Metropolitan and regional town and city councils generally produce better quality reporting than rural councils. This variation indicates that, at least in the near-term, OLG's efforts in building capability in reporting would be best directed toward rural councils.
Recommendation
By mid-2018, OLG should:
- assist rural councils to develop their reporting capability.
The Framework which councils are required to use to report on service delivery, is intended to drive good practice in reporting. Despite this, the Framework is silent on a number of aspects of reporting that should be considered fundamental to transparent reporting on service delivery. It does not provide guidance on reporting efficiency or cost effectiveness in service delivery and provides limited guidance on how annual reports link with other plans produced as part of the Framework. OLG's review of the Framework, currently underway, needs to address these issues.
Recommendation
By mid-2018, OLG should:
- issue additional guidance on good practice in council reporting, with specific information on:
- reporting on performance against targets
- reporting on performance against outcome
- assessing and reporting on efficiency and cost effectiveness
- reporting performance over time
- clearer integration of all reports and plans that are required by the Framework, particularly the role of End of Term Reporting
- defining reporting terms to encourage consistency.
The Framework is silent on inclusion of efficiency or cost effectiveness indicators in reports
The guidelines produced by OLG in 2013 to assist councils to implement their Framework requirements advise that performance measures should be included in all plans. However, the Framework does not specifically state that efficiency or cost effectiveness indicators should be included as part of this process. This has been identified as a weakness in the 2012 performance audit report and the Local Government Reform Panel review of reporting by councils on service delivery.
The Framework and supporting documents provide limited guidance on reporting
Councils' annual reports provide a consolidated summary of their efforts and achievements in service delivery and financial management. However, OLG provides limited guidance on:
- good practice in reporting to the community
- how the annual report links with other plans and reports required by the Framework.
Further, the Framework includes both Annual and End of Term Reports. However, End of Term reports are published prior to council elections and are mainly a consolidation of annual reports produced during a council’s term. The relationship between Annual reports and End of Term reports is not clear.
OLG is reviewing the Framework and guidance
OLG commenced work on reviewing of the Framework in 2013 but this was deferred with work re‑starting in 2017. The revised guidelines and manual were expected to be released late in 2017.
OLG should build on the Framework to improve guidance on reporting on service delivery, including in annual reports
The Framework provides limited guidance on how best to report on service delivery, including in annual reports. It is silent on inclusion of efficiency or cost effectiveness indicators in reporting, which are fundamental aspects of performance reporting. Councils we consulted would welcome more guidance from OLG on these aspects of reporting.
Our consultation with councils highlighted that many council staff would welcome a set of reporting principles that provide guidance to councils, without being prescriptive. This would allow councils to tailor their approach to the individual characteristics, needs and priorities of their local communities.
Consolidating what councils are required to report to state agencies would reduce the reporting burden and enable councils to better report on performance. Comparative performance indicators are also needed to provide councils and the public with a clear understanding of councils' performance relative to each other.
Recommendations
By mid-2018, OLG should:
- commence work to consolidate the information reported by individual councils to NSW Government agencies as part of their compliance requirements.
- progress work on the development of a Performance Measurement Framework, and associated performance indicators, that can be used by councils and the NSW Government in sector-wide performance reporting.
Streamlining the reporting burden would help councils improve reporting
The NSW Government does not have a central view of all local government reporting, planning and compliance obligations. A 2016 draft IPART ‘Review of reporting and compliance burdens on Local Government’ noted that councils provide a wide range of services under 67 different Acts, administered by 27 different NSW Government agencies. Consolidating and coordinating reporting requirements would assist with better reporting over time and comparative reporting. It would also provide an opportunity for NSW Government agencies to reduce the reporting burden on councils by identifying and removing duplication.
Enabling rural councils to perform tailored surveys of their communities may be more beneficial than a state-wide survey in defining outcome indicators
Some councils use community satisfaction survey data to develop outcome indicators for reporting. The results from these are used by councils to set service delivery targets and report on outcomes. This helps to drive service delivery in line with community expectations. While some regional councils do conduct satisfaction surveys, surveys are mainly used by metropolitan councils which generally have the resources needed to run them.
OLG and the Department of Premier and Cabinet have explored the potential to conduct state-wide resident satisfaction surveys with a view to establishing measures to improve service delivery. This work has drawn from a similar approach adopted in Victoria. Our consultation with stakeholders in Victoria indicated that the state level survey is not sufficiently detailed or specific enough to be used as a tool in setting targets that respond to local circumstances, expectations and priorities. Our analysis of reports and consultation with stakeholders suggest that better use of resident survey data in rural and regional areas may support improvements in performance reporting in these areas. Rural councils may benefit more from tailored surveys of groups of councils with similar challenges, priorities and circumstances than from a standard state-wide survey. These could potentially be achieved through regional cooperation between groups of similar councils or regional groups.
Comparative reporting indicators are needed to enable councils to respond to service delivery priorities of their communities
The Local Government Reform Panel in 2012 identified the need for ‘more consistent data collection and benchmarking to enable councils and the public to gain a clear understanding of how a council is performing relative to their peers’.
OLG commenced work in 2012 to build a new performance measurement Framework for councils which aimed to move away from compliance reporting. This work was also strongly influenced by the approach used in Victoria that requires councils to report on a set of 79 indicators which are reported on the Victorian 'Know your council' website. OLG’s work did not fully progress at the time and several other local government representative bodies have since commenced work to establish performance measurement frameworks. OLG advised us it has recently recommenced its work on this project.
Our consultation identified some desire amongst councils to be able to compare their performance to support improvement in the delivery of services. We also identified a level of frustration that more progress has not been made toward establishment of a set of indicators that councils can use to measure performance and drive improvement in service delivery.
Several councils we spoke with were concerned that the current approaches to comparative reporting did not adequately acknowledge that councils need to tailor their service types, level and mix to the needs of their community. Comparative reporting approaches tend to focus on output measures such as number of applications processed, library loans annually and opening hours for sporting facilities, rather than outcome measures. These approaches risk unjustified and adverse interpretations of performance where councils have made a decision based on community consultation, local priorities and available resources. To mitigate this, it is important to
- adopt a partnership approach to the development of indicators
- ensure indicators measure performance, not just level of activity
- compare performance between councils that are similar in terms of size and location.
It may be more feasible, at least in the short term, for OLG to support small groups of like councils to develop indicators suited to their situation.
Based on our consultations, key lessons from implementing a sector-wide performance indicator framework in Victoria included the benefits of:
- consolidation of the various compliance data currently being reported by councils to provide an initial platform for comparative performance reporting
- adopting a partnership approach to development of common indicators with groups of like councils.
Appendix one - Response from agency
Appendix two - Service delivery categorisation
Appendix three - Reporting targets and performance over time
Appendix four - Performance auditing
Appendix five - About the audit
Parliamentary reference - Report number #296 - released 1 February 2018
Liverpool to Parramatta Bus Transitway
Several of my recent audits have identified a need to improve our public transport system – both for the benefit of travellers and to assist in achieving better air quality.
Bus Transitways can provide a good public transport solution for lower density population areas, potentially at a relatively low capital cost. This audit examines the transitway running between Liverpool and Parramatta, the first of several planned for Sydney. This audit should contribute to a better understanding of the lessons learnt from this first project, and so to future transitways providing better value for money.
But this audit also raises broader issues.
It highlights the importance of accurately projecting the total cost of major infrastructure projects before governments lock in their decisions. It also highlights the need for sound decision-making processes when government agencies compete with the private sector. The principles and recommendations flowing from these issues are ones I would draw to the attention of all agencies, and to the Government.
Parliamentary reference - Report number #146 - released 5 December 2005
Managing and Measuring Success: Department of Juvenile Justice
Criminal or anti-social juvenile behaviour affects us all. Some of us may be victims of juvenile crime, some may be apprehensive about their personal safety, while others may know of young people who have been in trouble with the law. And, as taxpayers, all of us contribute to the costs of juvenile justice.
Currently about one in every 200 young people in NSW is convicted of a crime each year. The Department of Juvenile Justice works with these young offenders to help them fit back into society and lead a life free of crime.
This is not an easy task. Young offenders are often difficult to help. Many come from disadvantaged backgrounds and may have had poor parental supervision. They may have achieved little at school, have poor work prospects and psychological problems, and be part of an anti-social peer group.
While the Department of Juvenile Justice has prime responsibility, agencies in the justice and welfare systems need to work closely together to tackle these complex and diverse issues. They ultimately desire the same result for young offenders – progression to a well-adjusted, crime-free adulthood.
The report highlights the challenges facing all those who work with young offenders - youth workers, police officers, magistrates, health workers and teachers. Achieving the best possible outcome for these young people will help bring about safer and more harmonious communities for us all.
This is the first of two audits in our current performance audit program that deals with young offenders. We examined how the Department of Juvenile Justice measures performance, and whether staff have adequate information to make sound planning decisions and recommend appropriate interventions for young offenders.
Our next audit, starting later in 2005, will review whether relevant government agencies effectively coordinate the management of young offenders.
Parliamentary reference - Report number #142 - released 14 September 2005
Coordination of Rescue Services
Nearly 11,000 rescues are carried out each year in New South Wales, the majority involving motor vehicle accidents.
In metropolitan areas we have three emergency services providing general land rescue - NSW Police, the Ambulance Service and the NSW Fire Brigades. The two volunteer services, the State Emergency Service and the Volunteer Rescue Association, generally cover the remainder of the State.
Rescue arrangements in NSW are different to all other mainland states. Elsewhere, the trend in metropolitan areas has been towards consolidation with only one provider of rescue services.
The State Rescue Board of NSW was set up in 1989. Its primary role is to ensure efficient and effective rescue services are maintained throughout the State.
In this audit we examined how well placed the Board was to provide assurance to Parliament and the community that the organisation of rescue services in NSW best serves those in need of rescuing.
NSW deserves a clear and unequivocal answer on such an important issue. However, the issues are complex, often strongly argued, and generally there is insufficient relevant information upon which to make judgements about performance and value. This report outlines a way forward.
Parliamentary reference - Report number #140 - released 20 July 2005
