What this report is about

In this report, we present findings and recommendations relevant to regulation from selected reports between 2018 and 2024.

This analysis includes performance audits, compliance audits and the outcomes of financial audits.

Effective regulation is necessary to ensure compliance with the law as well as to promote positive social and economic outcomes and minimise risks with certain activities.

The report is a resource for public sector leaders. It provides insights into the challenges and opportunities for more effective regulation.

Audit findings

The analysis of findings and recommendations is structured around four key themes related to effective regulation:

• governance and accountability
• processes and procedures
• data and information management
• support and guidance.

The report draws from this analysis to present insights for agencies to promote effective regulation. It also includes relevant examples from recent audit reports.

In this report, we also draw out insights for agencies that provide a public sector stewardship role.

The report highlights the need for agencies to communicate a clear regulatory approach. It also emphasises the need to have a consistent regulatory approach, supported by robust information about risks and accompanied with timely and proportionate responses.

The report highlights the need to provide relevant support to regulated parties to facilitate compliance and the importance of transparency through reporting of meaningful regulatory information.

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I am pleased to present this report, Regulation insights. This report highlights themes and generates insights about effective regulation from the last six years of audit.

Effective regulation is necessary to ensure compliance with the law. Effective regulation also promotes social, economic, and environmental outcomes, and minimises risks or negative impacts associated with certain activities. But regulation can be challenging and costly for governments to implement. It can also involve costs and impact on the regulated parties, including other public sector and private entities, and individuals. As such, effective regulation needs to be administered efficiently, and with integrity.

Having a clearly articulated and communicated regulatory approach is essential to achieving this outcome, particularly when this promotes voluntary compliance and sets performance standards that are informed by community expectations. A consistent approach to exercising regulatory powers is important: it should be supported by robust information about regulatory risks and issues, and accompanied with timely, proportionate responses. Providing relevant support to the regulated parties and coordinating activities to facilitate compliance and performance can generate efficiencies.

Finally, transparency matters. It matters so that government has oversight of and can be held accountable for its leadership of public sector compliance, and in regulating the activities of third parties. Transparency also matters because it can provide insights into the effective exercise of government power. To achieve this, meaningful regulatory information needs to be reported.

While these issues are most pertinent for government agencies that exercise traditional regulatory functions, they are also relevant to lead government agencies that provide a stewardship role in promoting compliance and performance by other government agencies in relation to particular areas of risk.

Over the past six years, our audit work has found many common and repeat performance gaps, creating risks, inefficiencies, and limiting outcomes of regulatory activities. In considering these gaps, this report provides public sector leaders with insights into the challenges and opportunities they may encounter when aiming for more effective regulation, including the good governance of regulatory activities. This includes insights for lead agencies that provide a public sector stewardship role. Through applying these insights and maximising regulatory effectiveness, unintended impacts on the people and sectors government serves and protects can be avoided or at the very least minimised.

Margaret Crawford PSM
Auditor-General for NSW

This report brings together key findings and recommendations relevant to regulation from selected performance and compliance audits between 2018 and early 2024 (19 in total), and from two reports that summarise results of financial audits during the same period. It aims to provide insights into the challenges and opportunities the public sector may encounter when aiming to enhance regulatory effectiveness.

The report is structured in two sections, each setting out insights from relevant audits and providing summaries as illustrative examples.

Section 3 is focused on insights from audits of agencies that administer regulatory powers and functions over other entities or activities (typically known as 'regulators'). The powers and functions of regulators are defined in law, and often relate to issuing approvals (e.g., licensing) for certain activities, and/or monitoring allowable activities within certain limits. Regulators often have compliance and enforcement powers that can be exercised in particular circumstances, such as when a regulated entity has not complied with relevant requirements.

Agencies may be primarily established as regulators or perform regulatory activities alongside other functions. Depending on the context, the regulated activity may relate to other state agencies, local government entities, non-government entities or individuals.

Section 4 summarises insights from a selection of audits of agencies that provide a stewardship role in promoting compliance by and performance of other state agencies and local government entities in relation to specific regulations or policies. These policies may or may not be mandatory and, unlike a more traditional regulator, the coordinating agency may not have enforcement powers to ensure compliance.

These policies, and accompanying guidelines and frameworks, are typically issued by ‘central agencies’ such as the Premier's Department that have a public sector stewardship role. They can also be issued by agencies with a leadership role in particular policy areas ('lead agencies'). While individual agencies and local government entities implementing these policies are responsible for their own compliance and performance, lead and central agencies have an oversight role including by promoting accountability and coordinating activities towards achieving compliance and performance outcomes across the public sector.

Readers are encouraged to view the full reports for further information. Links to versions published on our website are provided throughout this document, and a full list is in Appendix one. An overview of the rationale for selecting these audits and the approach to developing this report is in Appendix two.

The status of agencies' responses to audit recommendations

Findings from the audits referred to in this report were current at the time each respective report was published. In many cases, agencies accepted audit recommendations, as reflected in the letters from agency heads that are included in the appendix of each audit report.

The Public Accounts Committee of the NSW Parliament has a role in reporting on and ensuring that agencies respond appropriately to audit recommendations. Readers are encouraged to review the Public Accounts Committee's inquiries on agencies' implementation of audit recommendations, which can be found on the Committee's website.

Appendix one – Included reports 2018–2024 Regulation insights

Appendix two – About this report- Regulation insights

What this report is about

The report assesses whether the Department of Customer Service (the department) complied with legislation and NSW government policy when it directly negotiated with Duncan Solutions to procure backend services relating to the Park'nPay app.

The Park'nPay app, developed by the department, enables users to locate and pay for parking remotely using their smart mobile device.

The audit found

The department failed to establish the grounds for entering a direct negotiation procurement strategy, without any competitive tendering, for services for the Park'nPay app. It rushed a decision to trial the app in The Rocks, without considering how this might affect its procurement obligations.

There is no evidence that the procurement achieved value for money. Despite being required by legislation, as well as mandatory NSW government policy, the department did not consider how it would ensure value for money, nor did it demonstrate an adequate understanding of what is meant by value for money on this occasion.

The department failed to implement key probity requirements. There was no effective management of conflicts of interest. Key decisions were not documented. There was a lack of clarity, transparency, and oversight of the relationship between the Minister's office and staff in the department.

The audit made recommendations about

1. making and retaining complete and accurate records, particularly on decisions to commit or expend public money
2. ensuring department staff understand how to exercise their financial delegations and procurement processes
3. ensuring that only staff with appropriate delegations are committing or approving the spending of public money
4. consistency with the contract extension provisions of the NSW Government Procurement Policy Framework, particularly regarding ensuring value for money
5. protocols to guide the interactions between department staff and Minister and Minister's staff
6. the need for proper management and oversight of contingent workers, such as contractors.

On 27 February 2019 the then Minister for Finance, Services and Property announced the commencement of a Park’nPay app trial in The Rocks precinct of Sydney.

The app was intended to enable users to locate and pay for parking remotely, using their smart mobile device such as a phone or tablet, rather than needing to physically be at a parking meter.

In July 2019, following a direct negotiation procurement conducted by the then Department of Finance, Services and Innovation, a contract was executed with Duncan Solutions for an estimated value of $1,260,600 over three-years, with three single-year options to extend. The contract required Duncan Solutions to provide development services to link the Park'nPay app to its Parking Enterprise Management System platform and to provide ongoing software support services.

This audit assessed whether the department complied with the procurement obligations that applied at the time it procured these services from Duncan Solutions.

This audit focussed on the department's processes and decision-making relating to:

• the direct negotiation with Duncan Solutions at the exclusion of any other potential supplier
• the negotiation, execution and management of the contract with Duncan Solutions.

As this audit focusses on the department's procurement and contract management processes, it does not comment on the activities of Duncan Solutions. The detailed audit objective, criteria and audit approach are in Appendix three.

The auditee is the Department of Customer Service. As a result of machinery of government changes, the Department of Finance, Services, and Innovation became the Department of Customer Service from 1 July 2019. To avoid confusion, this report simply uses ‘the department’ to refer to either. Where the report refers to the Minister, it relates to the former Minister in office at the time.

Appendix one – Response from auditee

Appendix two – Key requirements of the department's procurement manual 

Appendix three – About the audit 

Appendix four– Performance auditing

Copyright notice

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

Parliamentary reference - Report number #387 - released 14 December 2023

What the report is about

This audit assessed how effectively the Department of Planning and Environment (Heritage NSW) is overseeing and administering heritage assets of state significance.

Heritage that is rare, exceptional or outstanding to New South Wales may be listed on the State Heritage Register under the Heritage Act 1977. This provides assets with legal recognition and protection. Places, buildings, works, relics, objects and precincts can be listed, whether in public or private ownership.

Heritage NSW has administrative functions and regulatory powers, including under delegation from the Heritage Council of NSW, relevant to the listing, conservation and adaptive re-use of heritage assets of state significance.

In summary, the audit assessed whether Heritage NSW:

• is effectively administering relevant advice and decisions
• is effectively supporting and overseeing assets
• has established clear strategic priorities and can demonstrate preparedness to implement these.

What we found

Heritage NSW does not have adequate oversight of state significant heritage assets, presenting risks to its ability to promote the objects of the Heritage Act.

Information gaps and weaknesses in quality assurance processes limit its capacity to effectively regulate activities affecting assets listed on the State Heritage Register.

Heritage NSW has adopted a focus on customer service and recently improved its timeliness in providing advice and making decisions about activities affecting listed assets. But Heritage NSW has not demonstrated how its customer-focused priorities will address known risks to its core regulatory responsibilities.

Listed assets owned by government entities are often of high heritage value. Heritage NSW could do more to promote effective heritage management among these entities.

What we recommended

The report made eight recommendations to Heritage NSW, focusing on:

• improving quality assurance over advice and decisions
• improving staff guidance and training
• defining and maintaining data in the State Heritage Register
• clarifying its regulatory intent and approach
• sector engagement and interagency capability to support heritage outcomes.

The Heritage Act 1977 (the Heritage Act) and accompanying regulation provide the legal framework for the identification, conservation and adaptive re-use of heritage assets in New South Wales.

The Department of Planning and Environment (Heritage NSW) has responsibility for policy, legislative and program functions for state heritage matters, including supporting the Minister for Heritage to administer the Heritage Act.

Heritage assets that are rare, exceptional or outstanding beyond a local area or region may be listed on the State Heritage Register under the Heritage Act. These assets include places, buildings, works, relics, moveable objects and precincts, and assets that have significance to Aboriginal communities in New South Wales. Assets nominated for and listed on the State Heritage Register ('listed assets') may be owned privately or publicly, including by local councils and state government entities.

The Heritage Act establishes the Heritage Council of NSW (the Heritage Council) to undertake a range of functions in line with its objectives. Heritage NSW provides administrative support to the Heritage Council, for example providing advice on assets that have been nominated for listing on the State Heritage Register. Many of Heritage NSW’s core activities also relate to exercising functions and powers under delegation from the Heritage Council. These include making administrative decisions about works affecting listed assets, and exercising powers to regulate asset owners’ compliance with requirements under the Heritage Act.

Heritage NSW states that heritage:

According to Heritage NSW, an effective heritage system will facilitate the community in harnessing the cultural and economic value of heritage.

The objective of this audit was to assess how effectively the Department of Planning and Environment (Heritage NSW) is overseeing and administering heritage assets of state significance.

For this audit, ‘heritage assets of state significance’ refers to items (including a place, building, work, relic, moveable object or precinct) listed on the State Heritage Register ('listed assets'), and those which have been nominated for listing.

This chapter assesses the effectiveness of Heritage NSW's oversight of state heritage assets, including its visibility of listed assets, and its oversight of regulatory decision-making. It also assesses Heritage NSW's activities to engage with owners to meet their obligations under the Heritage Act and to support heritage outcomes.

This chapter assesses the timeliness of Heritage NSW’s provision of advice, recommendations, and decisions on heritage issues to support heritage management outcomes with respect to listed assets.

This chapter assesses whether the Department of Planning and Environment (Heritage NSW) has established clear strategic priorities to effectively oversee and administer activities related to listed assets, and its preparedness to implement reforms. It also assesses the adequacy of planning activities and governance arrangements to support the achievement of strategic directions.

Appendix one – Response from agency

Appendix two – About the audit

Appendix three – Performance auditing

© 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 #384 - released 27 June 2023

What this report is about

This report draws together the financial impact of natural disasters on agencies integral to the response and impact of natural disasters during 2021–22.

What we found

Over the 2021–22 financial year $1.4 billion from a budget of $1.9 billion was spent by the NSW Government in response to natural disasters.

Total expenses were less than the budget due to underspend in the following areas:

• clean-up assistance, including council grants
• anticipated temporary accommodation support
• payments relating to the Northern Rivers Business Support scheme for small businesses.

Natural disaster events damaged council assets such as roads, bridges, waste collection centres and other facilities used to provide essential services. Additional staff, contractors and experts were engaged to restore and repair damaged assets and minimise disruption to service delivery.

At 30 June 2022, the estimated damage to council infrastructure assets totalled $349 million.

Over the first half of the 2022–23 financial year, councils experienced further damage to infrastructure assets due to natural disasters. NSW Government spending on natural disasters continued with a further $1.1 billion spent over this period.

Thirty-six councils did not identify climate change or natural disaster as a strategic risk despite 22 of these having at least one natural disaster during 2021–22.

What the report is about

The Office of Local Government (OLG) in the Department of Planning and Environment is responsible for strengthening the local government sector, including through its regulatory functions.

This audit assessed whether the OLG is effectively monitoring and regulating the sector under the Local Government Act 1993. The audit covered:

• the effectiveness of departmental arrangements for the OLG to undertake its regulatory functions
• whether the OLG has effective mechanisms to monitor and respond to risks and issues relating to council compliance and performance.

What we found

The OLG does not conduct effective, proactive monitoring to enable timely risk-based responses to council performance and compliance issues.

The OLG has not clearly defined and communicated its regulatory role to ensure that its priorities are well understood.

The OLG does not routinely review the results of its regulatory activities to improve its approaches.

The department lacks an adequate framework to define, measure and report on the OLG's performance, limiting transparency and its accountability.

The OLG's new strategic plan presents an opportunity for the OLG to better define, communicate, and deliver on its regulatory objectives.

What we recommended

The OLG should:

• publish a tool to support councils to self-assess risks and report on their performance and compliance
• ensure its council engagement strategy is consistent with its regulatory approach
• report each year on its regulatory activities and performance
• publish a calendar of its key sector support and monitoring activities
• enhance processes for internally tracking operational activities
• develop and maintain a data management framework
• review and update frameworks and procedures for regulatory responses.

The Local Government Act 1993 (the LG Act) provides the legal framework for the system of local government in New South Wales. The LG Act describes the functions of councils, county councils and joint organisations which should be exercised consistent with the guiding principles and requirements of the LG Act. Councils also have functions and responsibilities under other Acts.

There are 128 local councils, nine county councils and 13 joint organisations of councils in the New South Wales local government sector. Each council is unique in size and location, owns and manages assets, and delivers services for their communities. According to 2021–22 data provided by the Department of Planning and Environment (the department), local councils managed $175.2 billion in infrastructure, property plant and equipment, held $16.8 billion of cash and investments, collected $7.8 billion in rates and charges and entered into $3.7 billion of borrowings. Councils' decision-making responsibilities directly impact the communities they serve, including responsibilities relevant to financial management, economic development, environmental sustainability and community wellbeing.

Under the LG Act, each elected council is accountable to the community they serve. In addition to Auditor-General reports, issues relating to council performance and compliance have been identified in public inquiries commissioned by the Minister for Local Government and investigations by the Independent Commission Against Corruption, NSW Ombudsman and Office of Local Government (OLG). Challenges and opportunities related to the operations and sustainability of the local government sector have also been reported by the sector and identified in reports by NSW government agencies such as the Independent Pricing and Regulatory Tribunal.

The department is the primary state government agency with responsibility for policy, legislative, regulatory and program functions for local government matters. The Office of Local Government (OLG) is a business unit within the department that advises the Minister for Local Government and exercises delegated functions of the Secretary of the Department of Planning and Environment under the LG Act.

Key departmental planning documents state that the OLG is responsible for strengthening the sustainability, performance, integrity, transparency and accountability of the local government sector. As the state regulator of the local government sector, the OLG aims to promote voluntary compliance, build councils' capacity for high performance, and intervene only when 'warranted and appropriate'. Relevant regulatory activities include issuing guidelines, investigating councils and councillors, and supporting the Minister for Local Government's discretionary intervention powers. The OLG's other functions include developing policy, administering grants and programs, supporting local government election processes, and issuing certain approvals.

The objective of this audit was to assess whether the OLG is effectively monitoring and regulating the local government sector under the LG Act. The assessment included:

• the effectiveness of departmental arrangements for the OLG to undertake its regulatory functions
• whether the OLG has effective mechanisms to monitor and respond to risks and issues relating to council compliance and performance.

This report focuses on the OLG’s activities relevant to powers under Chapter 13 of the LG Act, and related regulatory activities, such as monitoring risks, issuing guidance and engaging with councils. It also examines strategic and operational planning for these activities in the context of the OLG's other activities, and departmental arrangements to oversee and enable the OLG's regulatory effectiveness.

Other OLG activities were not in scope of the audit but are commented on in this report where contextually relevant. This includes the OLG's responsibilities under the LG Act with respect to councillor misconduct, and the 2022 review of the councillor misconduct framework commissioned by the former Minister for Local Government.

This chapter considers the effectiveness of departmental arrangements for the OLG to undertake its regulatory functions.

This chapter assesses whether the OLG has effective mechanisms to monitor and respond to risks and issues relating to council compliance and performance.

The OLG’s 2017 Improvement and Intervention Framework is intended to guide appropriate responses to council compliance or performance risks and issues. The publicly available framework states that generally, the OLG will encourage councils to meet their obligations before a more formal intervention will be considered. It also states that any intervention or improvement response will be proportionate to the circumstances.

Appendix one – Response from agency

Appendix two – Statutory powers relevant to council accountability under the Local Government Act

Appendix three – About the audit

Appendix four – Performance auditing

Copyright notice

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

Parliamentary reference - Report number #380 - released 23 May 2023

What the report is about

This audit assessed the effectiveness of the NSW Rural Fire Service (RFS) and local councils in planning and managing equipment for bushfire prevention, mitigation, and suppression.

What we found

The RFS has focused its fleet development activity on modernising and improving the safety of its firefighting fleet, and on the purchase of new firefighting aircraft.

There is limited evidence that the RFS has undertaken strategic fleet planning or assessment of the capability of the firefighting fleet to respond to current bushfire events or emerging fire risks.

The RFS does not have an overarching strategy to guide its planning, procurement, or distribution of the firefighting fleet.

The RFS does not have effective oversight of fleet maintenance activity across the State, and is not ensuring the accuracy of District Service Agreements with local councils, where maintenance responsibilities are described.

What we recommended

1. Develop a fleet enhancement framework and strategy that is informed by an assessment of current fleet capability, and research into appropriate technologies to respond to emerging fire risks.
2. Develop performance measures to assess the performance and capabilities of the fleet in each RFS District by recording and publicly reporting on fire response times, fire response outcomes, and completions of fire hazard reduction works.
3. Report annually on fleet allocations to RFS Districts, and identify the ways in which fleet resources align with district-level fire risks.
4. Develop a strategy to ensure that local brigade volunteers are adequate in numbers and appropriately trained to operate fleet appliances in RFS Districts where they are required.
5. Establish a fleet maintenance framework to ensure regular update of District Service Agreements with local councils.
6. Review and improve processes for timely recording of fleet asset movements, locations, and maintenance status.

This audit assessed how effectively the NSW Rural Fire Service (the RFS) plans and manages the firefighting equipment needed to prevent, mitigate, and suppress bushfires. This audit also examined the role of local councils in managing bushfire equipment fleet assets. Local councils have vested legal ownership of the majority of the land-based firefighting fleet, including a range of legislated responsibilities to carry out fleet maintenance and repairs. The RFS has responsibilities to plan and purchase firefighting fleet assets, and ensure they are ready for use in response to fires and other emergencies.

This report describes the challenges in planning and managing the firefighting fleet, including a confusion of roles and responsibilities between the RFS and local councils in relation to managing certain land-based rural firefighting fleet – a point that has been made in our Local Government financial audits over several years. This role confusion is further demonstrated in the responses of the RFS and local councils to this audit report – included at Appendix one.

The lack of cohesion in roles and responsibilities for managing rural firefighting vehicles increases the risk that these firefighting assets are not properly maintained and managed, and introduces a risk that this could affect their readiness to be mobilised when needed.

While the audit findings and recommendations address some of the operational and organisational inefficiencies in relation to rural firefighting equipment management, they do not question the legislative arrangements that govern them. This is a matter for the NSW Government to consider in ensuring the fleet arrangements are fit for purpose, and are clearly understood by the relevant agencies.

The NSW Rural Fire Service (hereafter the RFS) is the lead combat agency for bushfires in New South Wales, and has the power to take charge of bushfire prevention and response operations anywhere in the State. The RFS has responsibilities to prevent, mitigate and suppress bushfires across 95% of the State, predominantly in the non-metropolitan areas of New South Wales. Fire and Rescue NSW is responsible for fire response activity in the cities and large townships that make up the remaining five per cent of the State.

The RFS bushfire fleet is an integral part of the agency's overall bushfire risk management. The RFS also uses this fleet to respond to other emergencies such as floods and storms, motor vehicle accidents, and structural fires. Fleet planning and management is one of a number of activities that is necessary for fire mitigation and suppression.

The Rural Fires Act 1997 (Rural Fires Act) imposes obligations on all landowners and land managers to prevent the occurrence of bushfires and reduce the risk of bushfires from spreading. Local councils have fire prevention responsibilities within their local government areas, principally to reduce fire hazards near council owned or managed assets, and minor roads.

The RFS is led by a Commissioner and is comprised of both paid employees and volunteer rural firefighters. Its functions are prescribed in the Rural Fires Act and related legislation such as the State Emergency Rescue Management Act 1989. The RFS functions are also described in Bush Fire Risk Management Plans, the State Emergency Management Plan, District Service Agreements, and RFS procedural documents. Some of the core responsibilities of the RFS include:

• preventing, mitigating, and suppressing fires across New South Wales
• recruiting and managing volunteer firefighters in rural fire brigades
• purchasing and allocating firefighting fleet assets to local councils
• establishing District Service Agreements with local councils to give the RFS permissions to use the fleet assets that are vested with local councils
• carrying out fleet maintenance and repairs when authorised to do so by local councils
• inspecting the firefighting fleet
• supporting land managers and private property owners with fire prevention activity.

In order to carry out its legislated firefighting functions, the RFS relies on land-based vehicles, marine craft, and aircraft. These different firefighting appliance types are referred to in this report as the firefighting fleet or fleet assets.

RFS records show that in 2021 there were 6,345 firefighting fleet assets across NSW. Most of the land-based appliances commonly associated with firefighting, such as water pumpers and water tankers, are purchased by the RFS and vested with local councils under the Rural Fires Act. The vesting of firefighting assets with local councils means that the assets are legally owned by the council for which the asset has been purchased. The RFS is able to use the firefighting assets through District Service Agreements with local councils or groups of councils.

In addition to the land-based firefighting fleet, the RFS owns a fleet of aircraft with capabilities for fire mitigation, suppression, and reconnaissance during fire events. The RFS hires a fleet of different appliances to assist with fire prevention and hazard reduction works. These include aircraft for firefighting and fire reconnaissance, and heavy plant equipment such as graders and bulldozers for hazard reduction. Hazard reduction works include the clearance of bush and grasslands around major roads and protected assets, and the creation and maintenance of fire trails and fire corridors to assist with fire response activity.

The RFS is organised into 44 RFS Districts and seven Area Commands. The RFS relies on volunteer firefighters to assist in carrying out most of its firefighting functions. These functions may include the operation of the fleet during fire response activities and training exercises, and the routine inspection of the fleet to ensure it is maintained according to fleet service standards. Volunteer fleet inspections are supervised by the RFS Fire Control Officer.

In 2021 there were approximately 73,000 volunteers located in 1,993 rural fire brigades across the State, making the RFS the largest volunteer fire emergency service in Australia. In addition to brigade volunteers, the RFS has approximately 1,100 salaried staff who occupy leadership and administrative roles at RFS headquarters and in the 44 RFS Districts.

Local councils have legislative responsibilities relating to bushfire planning and management. Some of the core responsibilities of local councils include:

• establishing and equipping rural fire brigades
• contributing to the Rural Fire Fighting Fund
• vested ownership of land-based rural firefighting equipment
• carrying out firefighting fleet maintenance and repairs
• conducting bushfire prevention and hazard reduction activity.

The objective of this audit was to assess the effectiveness of the RFS and local councils in planning and managing equipment for bushfire prevention, mitigation, and suppression. From the period of 2017 to 2022 inclusive, we addressed the audit objective by examining whether the NSW RFS and local councils effectively:

• plan for current and future bushfire fleet requirements
• manage and maintain the fleet required to prevent, mitigate, and suppress bushfires in NSW.

This audit did not assess:

• the operational effectiveness of the RFS bushfire response
• the effectiveness of personal protective equipment and clothing
• the process of vesting of rural firefighting equipment with local councils
• activities of any other statutory authorities responsible for managing bushfires in NSW.

As the lead combat agency for the bushfire response in NSW, the RFS has primary responsibility for bushfire prevention, mitigation, and suppression.

Three local councils were selected as case studies for this audit, Hawkesbury City Council, Wagga Wagga City Council and Uralla Shire Council. These case studies highlight the ways in which the RFS and local councils collaborate and communicate in rural fire districts.

The RFS has not made significant changes to the size or composition of the firefighting fleet in the past five years and does not have an overarching strategy to drive fleet development

Since 2017, the RFS has made minimal changes to its firefighting fleet volumes or vehicle types. The RFS is taking a fleet renewal approach to fleet planning, with a focus on refurbishing and replacing ageing firefighting assets with newer appliances and vehicles of the same classification and type. While the RFS has adopted a fleet renewal approach, driven by its Appliance Replacement Program Guide, it does not have a strategy or framework to guide its future-focused fleet development. There is no document that identifies and analyses bushfire events and risks in NSW, and matches fleet resources and fleet technologies to meet those risks. The RFS does not have fleet performance measures or targets to assess whether the size and composition of the fleet is meeting current or emerging bushfire climate hazards, or fuel load risks across its 44 NSW Fire Districts.

The RFS fleet currently comprises approximately 4,000 frontline, operational firefighting assets such as tankers, pumpers, and air and marine craft, and approximately 2,300 logistical vehicles, such as personnel transport vehicles and specialist support vehicles. Of the land-based firefighting vehicles, the RFS has maintained a steady number of approximately 3,800 tankers and 65 pumpers, year on year, for the past five years. This appliance type is an essential component of the RFS land-based, firefighting fleet with capabilities to suppress and extinguish fires.

Since 2017, most RFS fleet enhancement activity has been directed to upgrades and the modernisation of older fleet assets with new safety features. There is limited evidence of research into new fleet technologies for modern firefighting. The RFS fleet volumes and fleet types have remained relatively static since 2017, with the exception of the aerial firefighting fleet. Since 2017, the RFS has planned for, and purchased, six additional aircraft to add to the existing three aircraft in its permanent fleet.

While the RFS has made minimal changes to its fleet since 2017, in 2016 it reduced the overall number of smaller transport vehicles, by purchasing larger vehicles with increased capacity for personnel transport. The consolidation of logistical and transport vehicles accounts for an attrition in fleet numbers from 7,058 in 2016, to 6,315 in 2017 as shown in Exhibit 2.

The firefighting fleet management system is not always updated in a timely manner due to insufficient RFS personnel with permissions to make changes in the system

The RFS uses a fleet management system known as SAP EAM to record the location and status of firefighting fleet assets. The system holds information about the condition of the firefighting fleet, the home location of each fleet asset, and the maintenance, servicing, and inspection records of all assets. The RFS uses the system for almost all functions related to the firefighting fleet, including the location of vehicles so that they can be dispatched during operational exercises or fire responses.

Staff at RFS Headquarters are responsible for creating and maintaining asset records in the fleet management system. RFS District staff have limited permissions in relation to SAP EAM. They are able to raise work orders for repairs and maintenance, upload evidence to show that work has been done, and close actions in the system.

RFS District staff are not able to enter or update some fleet information in the system, such as the location of vehicles. When an RFS District receives a fleet appliance, it cannot be allocated to a brigade until the location of the asset is accurately recorded in the system. The location of the asset must be updated in the SAP EAM system by staff at RFS Headquarters. District staff can request system support from staff at RFS Headquarters to enter this information. At the time of writing, the position responsible for updating the fleet management system at RFS Headquarters was vacant, and RFS District personnel reported significant wait times in response to their service requests.

The RFS conducts annual audits of SAP EAM system information to ensure data is accurate and complete. RFS staff are currently doing data cleansing work to ensure that fleet allocations are recorded correctly in the system.

Communication between brigades, local councils and the RFS needs improvement to ensure that fleet information is promptly updated in the fleet management system

RFS brigade volunteers do not have access to the fleet management system. When fleet assets are used or moved, volunteers report information about the location and condition of the fleet to RFS District staff using a paper-based form, or by email or phone. Information such as vehicle mileage, engine hours, and defects are all captured by volunteers in a logbook which is scanned and sent to RFS District staff. RFS District staff then enter the relevant information into the fleet management system, or raise a service ticket with RFS Headquarters to enter the information.

Brigade volunteers move fleet assets for a range of reasons, including for fire practice exercises. If volunteers are unable to report the movement of assets to RFS District staff in a timely manner, this can lead to system inaccuracies. Lapses and backlogs in record keeping can occur when RFS staff at district offices or at Headquarters are not available to update records at the times that volunteers report information. A lack of accurate record keeping can potentially impact on RFS operational activities, including fire response activity.

Brigade volunteers notify RFS District staff when fleet appliances are defective, or if they have not been repaired properly. District staff then enter the information into the fleet management system. The inability of volunteers to enter information into the system means they have no visibility over their requests, including whether they have been approved, actioned, or rejected.

Local councils are responsible for servicing and maintaining the firefighting fleet according to the Rural Fires Act, but this responsibility can be transferred to the RFS through arrangements described in local service agreements. Council staff record all fleet servicing and maintenance information in their local systems. The types of fleet information that is captured in local council records can vary between councils. RFS staff described the level of council reporting, and the effectiveness of this process, as 'mixed'.

Councils use different databases and systems to record fleet assets, and some councils are better resourced for this activity than others

Firefighting fleet information is recorded in different asset management systems across NSW. Each council uses its own asset management system to record details about the vested fleet assets. All three councils that were interviewed for this audit had different systems to record information about the fleet. In addition, the type of information captured by the three councils was varied.

Local councils have varying levels of resources and capabilities to manage the administrative tasks associated with the firefighting fleet. Some of the factors that impact on the ability of councils to manage administrative tasks include: the size of the council; the capabilities of the information management systems, the size of the staff team, and the levels of staff training in asset management.

Uralla Shire Council is a small rural council in northern NSW. This council uses financial software to record information about the firefighting fleet. While staff record information about the condition of the asset, its replacement value, and its depreciation, staff do not record the age of the asset, or its location. Staff manually enter fleet maintenance information into their systems. Uralla Shire Council would like to purchase asset maintenance software that generates work orders for fleet repairs and maintenance. However, the council does not have trained staff in the use of asset management software, and the small size of the fleet may not make it financially worthwhile.

The Hawkesbury City Council uses a single system to capture financial and asset information associated with the firefighting fleet. Hawkesbury is a large metropolitan council located north-west of Sydney, with a relatively large staff team in comparison with Uralla Shire Council. The Hawkesbury City Council has given RFS District staff access to their fleet information system. RFS District staff can directly raise work orders for fleet repairs and maintenance through the council system, and receive automated notifications when the work is complete.

Two of the three audited councils report that they conduct annual reviews of fleet assets to assess whether the information they hold is accurate and up-to-date.

More than half of the fleet maintenance service agreements between the RFS and local councils have not been reviewed in ten years, and some do not reflect local practices

Local councils have a legislated responsibility to service, repair, and maintain the firefighting fleet to service standards set by the RFS. Councils may transfer this responsibility to the RFS through District Service Agreements. The RFS Districts are responsible for ensuring that the service agreements are current and effective.

The RFS does not have monitoring and quality control processes to ensure that service agreements with local councils are reviewed regularly. The RFS has 73 service agreements with local councils or groups of councils. Sixty-three per cent of service agreements had not been reviewed in the last ten years. Only four service agreements specify an end date and, of those, one agreement expired in 2010 and had not been reviewed at the time of this audit.

The RFS does not have a framework to ensure that service agreements with local councils reflect actual practices. Of the three councils selected for audit, one agreement does not describe the actual arrangements for fleet maintenance practices in RFS Districts. The service agreement with Hawkesbury City Council specifies that the RFS will maintain the firefighting fleet on behalf of council when, in fact, council maintains the firefighting fleet. The current agreement commenced in 2012, and at the time of writing had not been updated to reflect local maintenance practices.

When District Service Agreements are not reviewed periodically, there is a risk that neither local councils nor the RFS have clear oversight of the status of fleet servicing, maintenance, and repairs.

RFS District Service Agreements set out a requirement that RFS and local councils establish a liaison committee. Liaison committees typically include council staff, RFS District staff, and RFS brigade volunteers. While service agreements state that liaison committees must meet periodically to monitor and review the performance of the service agreement, committee members determine when and how often the committee meets.

RFS District staff and staff at the three audited councils are not meeting routinely to review or update their service agreements. At Wagga Wagga City Council, staff meet with RFS District staff each year to report on activity to fulfil service agreement requirements. Uralla Shire Council staff did not meet routinely with RFS District staff before 2021. When liaison committees do not meet regularly, there is a risk that the RFS and local councils have incorrect or outdated information about the location, status, or condition of the firefighting fleet. Given that councils lack systems to track and monitor fleet locations, regular communication between the RFS and local councils is essential.

The RFS has not established processes to ensure that local councils and RFS District personnel meet and exchange information about the fleet. Of the three councils selected for this audit, one council had not received information about the number, type, or status of the fleet for at least five years, and did not receive an updated list of appliances until there was a change in RFS District personnel. This has impacted on the accuracy of council record keeping. Councils do not always receive notification about new assets or information about the location of assets from the RFS, and therefore cannot reflect this information in their accounting and reporting.

RFS area commands audit system records to ensure fleet inspections occur as planned, but central systems are not always updated, creating operational risks

RFS District staff are required by the Rural Fires Act to ensure the firefighting fleet is inspected at least once a year. Regular inspections of the fleet are vital to ensure that vehicles are fit-for-purpose and safe for brigade volunteers. Inspections are also fundamental to the operational readiness and capability of RFS to respond to fire incidents.

RFS Area Command personnel conduct audits of fleet maintenance data to ensure that fleet inspections are occurring as planned. These inspections provide the RFS with assurance that the fleet is being maintained and serviced by local council workshops, or third-party maintenance contractors.

Some RFS Districts run their own fleet management systems outside of the central management system. They do this to manage their fleet inspection activity effectively. Annual fleet inspection dates are programmed by staff at RFS Headquarters. Most of the inspection dates generated by RFS Headquarters are clustered together and RFS Districts need to separate inspection times to manage workloads over the year. Spreading inspection dates is necessary to avoid exceeding the capacity of local council workshops or third party contractors, and to ensure that fleet are available during the bushfire season.

The fleet inspection records at RFS Headquarters are not always updated in a timely manner to reflect actual inspection and service dates of vehicles. District staff are not able to change fleet inspection and service dates in the central management system because they do not have the necessary permissions to access the system. The usual practice is for RFS District staff to notify staff at RFS Headquarters, and ask them to retrospectively update the system. As there is a lag in updating the central database, at a point in time, the actual inspection and service dates of vehicles can be different to the dates entered in the central fleet management system.

Fleet inspection and maintenance records must be accurately recorded in the central RFS management system for operational reasons. RFS Headquarters personnel need to know the location and maintenance status of fleet vehicles at all times in order to dispatch vehicles to incidents and fires. The RFS fleet management system is integrated with a new Computer Aided Dispatch System. The Computer Aided Dispatch System assigns the nearest and most appropriate vehicles to fire incidents. The system relies on accurate fleet locations and fleet condition information in order to dispatch these vehicles.

There is a risk that RFS Headquarters' systems do not contain accurate information about the location and status of vehicles. Some may be in workshops for servicing and repair, while the system may record them as available for dispatch. As there are many thousands of fleet vehicles, all requiring an annual service and inspection, a lack of accurate record keeping has wide implications for State fire operations.

RFS is currently exploring ways to improve the ways in which fleet inspections are programmed into the fleet management system.

RFS provides funds to councils to assist with maintaining the firefighting fleet, but does not receive fleet maintenance cost information from all local councils

Each year the RFS provides local councils with a lump sum to assist with the cost of repairing and maintaining the firefighting fleet. This lump sum funding is also used for meeting the costs of maintaining brigade stations, utilities, and other miscellaneous matters associated with RFS business.

In 2020–21, the RFS provided NSW local councils with approximately $23 million for maintenance and repairs of appliances, buildings, and utilities. Ninety councils were provided with lump sum funding in 2021, receiving on average $257,000. The amounts received by individual councils ranged from $56,200 to $1,029,884.

Some councils provide itemised repairs and maintenance reports to RFS District staff, showing the work completed and the cost of that work. However, not all councils collect this information or provide it to the RFS. Local councils collect fleet maintenance information in their local council systems. In some cases, the responsibility for fleet maintenance is shared across a group of councils, and not all councils have oversight of this process.

The RFS has not taken steps to require local councils to provide itemised maintenance costings for the firefighting fleet. Thus, the RFS does not have a clear understanding of how local councils are spending their annual fleet maintenance funding allocations. The RFS does not know if the funding allocations are keeping pace with the actual cost of repairing and maintaining the fleet.

RFS District staff report that funding shortfalls are impacting on the prioritisation of fleet servicing and maintenance works in some council areas. When fleet servicing and maintenance is not completed routinely or effectively, there is a risk that it can negatively impact the overall condition and lifespan of the vehicle. Poor processes in relation to fleet maintenance and repair risk impacting on the operational capabilities of the fleet during fire events.

The timeliness and effectiveness of fleet servicing and maintenance is affected by resource levels in RFS Districts and local councils

Local councils have a legislated responsibility to service and maintain the firefighting fleet to the service standards set by the RFS. Fleet maintenance is usually done by the entity with the appropriate workshops and resources, and the maintenance arrangements are described in District Service Agreements. RFS District staff conduct annual inspections to ensure that the firefighting fleet has been serviced and maintained appropriately, and is safe for use by brigade volunteers. If the fleet has not been maintained to RFS service standards or timelines, RFS District staff may work with local councils to support or remediate these works.

The effectiveness of this quality control activity is dependent on relationships and communication between the RFS Districts and local councils. While some RFS staff reported having positive relationships with local councils, others said they struggled to get fleet maintenance work done in a timely manner. Some councils reported that funding shortfalls for fleet maintenance activity was impacting on the prioritisation of RFS fleet maintenance works. When fleet maintenance work is not completed routinely or effectively, it can negatively impact on the overall condition and lifespan of the vehicle. It can also reduce the capacity of the RFS to respond to fire events.

Fleet quality control activities are carried out by RFS District staff. In some of the smaller RFS Districts, one person is responsible for liaising with local councils and brigade volunteers about fleet maintenance and repairs. In the regions where resources are limited, there is less ability to maintain ongoing communication. This is impacting on fleet service and maintenance timelines and the timeliness of fleet monitoring activity.

The RFS has mutual support arrangements with agencies in NSW and interstate, though shared fleet levels are yet to be quantified

The RFS has arrangements with state, federal, and international fire authorities to provide mutual support during fire incidents. In NSW, the RFS has agreements with the three statutory authorities – Fire and Rescue NSW, the Forestry Corporation of NSW, and the NSW National Parks and Wildlife Service. The agreement with Fire and Rescue NSW provides a framework for cooperation and joint operations between the agencies. The agreements with the Forestry Corporation of NSW and the NSW National Parks and Wildlife Service describe the control and coordination arrangements for bush and grass fires across NSW. These arrangements are set out in legislation and incorporated into local Bush Fire Risk Management Plans.

The RFS has agreements with fire authorities in three of the four Australian states and territories that share a border with NSW – the Australian Capital Territory, Queensland, and South Australia. Each agreement sets out the arrangements for mutual assistance and joint operations, including arrangements for sharing aircraft. The agreement between the RFS and Victoria had lapsed. The RFS told the NSW Bushfire Inquiry that the agreement with Victoria would be finalised by June 2020. In June 2022, the RFS reported that the agreement was in the process of being finalised.

The arrangements for mutual aid from Western Australia, Northern Territory and Tasmania, are managed by the National Resource Sharing Centre. These agreements set out the arrangements for interstate assistance between Australian fire services, emergency services, and land management agencies in those states and territories.

These mutual support arrangements may assist during state-based fire events. However, when there are competing demands for resources, such as during the bushfires of 2019–2020, there can be limits on fleet availability. During the 2019–2020 fires, resources were stretched in all jurisdictions as these fires affected NSW, Victoria, and Queensland.

There are opportunities for the RFS and other NSW agencies to quantify fleet resources across the State and identify assets that can be mobilised for different fire activities. This form of fleet planning may be used to enhance surge capabilities during times of high fire activity. There are also opportunities for the RFS and other agencies to match the levels of shared assets to projected bushfire risks.

Appendix one – Responses from agencies 

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 #376 - released 27 February 2023

What the report is about

Result of the Planning and Environment cluster agencies' financial statements audits for the year ended 30 June 2022.

What we found

Unmodified audit opinions were issued for all completed 30 June 2022 financial statements audits of cluster agencies. Seven audits are ongoing.

Disclaimed audit opinions were issued for the 2010–11 to 2015–16 financial statements of the Water Administration Ministerial Corporation (WAMC), as management was unable to certify that the financial statements exhibit a true and fair view of WAMC's financial position and financial performance.

Qualified audit opinions were issued for WAMC's 2016–17 and 2017–18 financial statements due to insufficient evidence to support the completeness and valuation of water meters infrastructure assets, the impairment of water meters, and the completeness of buildings at Nimmie Caira.

Unqualified audit opinions were issued for WAMC's 2018–19 and 2019–20 financial statements.

The Department of Planning and Environment (the department) assessed 45 Category 2 Statutory Land Managers (SLM) did not meet the reporting exemption criteria and therefore were required to prepare 2021–22 financial statements. None of these 45 Category 2 SLMs prepared and submitted their 30 June 2022 financial statements by the statutory reporting deadline.

All 119 Commons Trusts have never submitted their financial statements for audit as required by the Government Sector Finance Act 2018 (GSF Act).

NSW Treasury has confirmed that the Catholic Metropolitan Cemeteries Trust (CMCT) is a controlled entity of the State. To date, CMCT has not met its obligations to prepare financial statements under the GSF Act and it has not submitted financial statements to the Auditor-General for audit.

What the key issues were

Since 2017, the Audit Office has recommended the department address the different practices across the local government sector in accounting for rural firefighting equipment. Despite repeated recommendations, the department did little to resolve this issue. At the time of writing, 32 of 118 completed council audits received qualified audit opinions on their 30 June 2022 financial statements.

There continues to be significant deficiencies in Crown land records. The department uses the Crown Land Information Database (CLID) to record key information relating to Crown land in New South Wales that is managed and controlled by the department and land managers. The CLID system was not designed to facilitate financial reporting, and the department is required to conduct extensive adjustments and reconciliations to produce accurate information for the financial statements.

The department implemented the CrownTracker system as a replacement for CLID. The project was finalised in June 2022, but it has not achieved the intended outcomes.

Nine high-risk issues were identified across the cluster related to the findings outlined above and weaknesses in IT general controls, financial reporting, governance processes and internal controls.

Recommendations were made to address these deficiencies.

This report provides Parliament and other users of the Planning and Environment cluster’s financial statements with the results of our audits, 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 Planning and Environment cluster (the cluster) for 2022.

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.

Appendix one – Misstatements in financial statements submitted for audit

Appendix two – Early close procedures

Appendix three – Timeliness of financial reporting

Appendix four – Financial data

Appendix five – Councils received qualified audit opinions 

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.

What the report is about

In this report, we have analysed the key findings and recommendations from our audit reports over the past four years.

This analysis includes financial audits, performance audits, and compliance audits of state and local government entities that were tabled in NSW Parliament between July 2018 and February 2022.

The report is framed by recognition that the past four years have seen significant challenges and emergency events.

The scale of government responses to these events has been wide-ranging, involving emergency response coordination, service delivery, governance and policy.

The report is a resource to support public sector agencies and local government to improve future programs and activities.

What we found

Our analysis of findings and recommendations is structured around six key themes:

• Integrity and transparency
• Performance and monitoring
• Governance and oversight
• Cyber security and data
• System planning for disruption
• Resource management.

The report draws from this analysis to present recommendations for elements of good practice that government agencies should consider in relation to these themes. It also includes relevant examples from recent audit reports.

In this report we particularly call out threats to the integrity of government systems, processes and governance arrangements.

The report highlights the need for balanced advice to government on options and risks, for transparent documentation and reporting of directions and decisions, and for early and open sharing of information with integrity bodies and audit.

A number of the matters highlighted in this report are similar to those described in our previous Insights Report, (Performance Audit Insights: key findings from 2014–2018) specifically in relation to cyber and information security, to performance measurement, reporting and evaluation, and system and workforce planning and capability.

I am pleased to present the Audit Insights 2018–2022 report. This report describes key findings, trends and lessons learned from the last four years of audit. It seeks to inform the New South Wales Parliament of key risks identified and to provide insights and suggestions to the agencies we audit to improve performance across the public sector.

The report is framed by a very clear recognition that governments have been responding to significant events, in number, character and scale, over recent years. Further, it acknowledges that public servants at both state and council levels generally bring their best selves to work and diligently strive to deliver great outcomes for citizens and communities. The role of audit in this context is to provide necessary assurance over government spending, programs and services, and make suggestions for continuous improvement.

A number of the matters highlighted in this report are similar to those described in our previous Insights Report, (Performance Audit Insights: key findings from 2014–2018) specifically in relation to cyber and information security, to performance measurement, reporting and evaluation, and system and workforce planning and capability.

However, in this report we particularly call out threats to the integrity of government systems, processes and governance arrangements. We highlight the need for balanced advice to government on options and risks, for transparent documentation and reporting of directions and decisions, and for early and open sharing of information with integrity bodies and audit. Arguably, these considerations are never more important than in an increasingly complex environment and in the face of significant emergency events and they will be key areas of focus in our future audit program.

While we have acknowledged the challenges of the last few years have required rapid responses to address the short-term impacts of emergency events, there is much to be learned to improve future programs. I trust that the insights developed in this report provide a helpful resource to public sector agencies and local government across New South Wales. I would be pleased to receive any feedback you may wish to offer.

Margaret Crawford
Auditor-General for New South Wales

This report brings together a summary of key findings arising from NSW Audit Office reports tabled in the New South Wales Parliament between July 2018 and February 2022. This includes analysis of financial audits, performance audits, and compliance audits tabled over this period.

• Financial audits provide an independent opinion on the financial statements of NSW Government entities, universities and councils and identify whether they comply with accounting standards, relevant laws, regulations, and government directions.
• Performance audits determine whether government entities carry out their activities effectively, are doing so economically and efficiently, and in accordance with relevant laws. The activities examined by a performance audit may include a selected program or service, all or part of an entity, or more than one government entity. Performance audits can consider issues which affect the whole state and/or the local government sectors.
• Compliance audits and other assurance reviews are audits that assess whether specific legislation, directions, and regulations have been adhered to.

This report follows our earlier edition titled 'Performance Audit Insights: key findings from 2014–2018'. That report sought to highlight issues and themes emerging from performance audit findings, and to share lessons common across government. In this report, we have analysed the key findings and recommendations from our reports over the past four years. The full list of reports is included in Appendix 1. The analysis included findings and recommendations from 58 performance audits, as well as selected financial and compliance reports tabled between July 2018 and February 2022. The number of recommendations and key findings made across different areas of activity and the top issues are summarised at Exhibit 1.

The past four years have seen unprecedented challenges and several emergency events, and the scale of government responses to these events has been wide-ranging involving emergency response coordination, service delivery, governance and policy. While these emergencies are having a significant impact today, they are also likely to continue to have an impact into the future. There is much to learn from the response to those events that will help the government sector to prepare for and respond to future disruption. The following chapters bring together our recommendations for core elements of good practice across a number of areas of government activity, along with relevant examples from recent audit reports.

This 'Audit Insights 2018–2022' report does not make comparative analysis of trends in public sector performance since our 2018 Insights report, but instead highlights areas where government continues to face challenges, as well as new issues that our audits have identified since our 2018 report. We will continue to use the findings of our Insights analysis to shape our future audit priorities, in line with our purpose to help Parliament hold government accountable for its use of public resources in New South Wales.

Appendix one – Included reports, 2018–2022

Appendix two – About this report

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© 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.

What the report is about

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

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

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

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

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

What we found

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

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

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

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

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

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

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

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

What we recommended

By December 2022, the department should:

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

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

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

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

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

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

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

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

This part of the report sets out how:

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

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

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

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

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

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

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

Reported benefits significantly exceed the current targets

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

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

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

The calculation of benefits is overstated

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

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

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

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

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

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

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

The department has not independently assured the calculation of reported benefits

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

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

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

The reported benefits have only been calculated since 2019

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

Appendix one – Response from agency

Appendix two – About the audit

Appendix three – Performance auditing

Copyright notice

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

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

What the report is about

The Aboriginal Land Rights Act 1983 (NSW) (the Act) provides land rights over certain Crown land for Aboriginal Land Councils in NSW.

If a claim is made over Crown land (land owned and managed by government) and meets other criteria under the Act, ownership of that land is to be transferred to the Aboriginal Land Council.

This process is intended to provide compensation for the dispossession of land from Aboriginal people in NSW. It is a different process to the recognition of native title rights under Commonwealth law.

We examined whether relevant agencies are effectively facilitating and administering Aboriginal land claim processes. The relevant agencies are:

• Department of Premier and Cabinet (DPC)
• Department of Planning and Environment (DPE)
• NSW Aboriginal Land Council (NSWALC).

We consulted with Local Aboriginal Land Councils (LALCs) and other Aboriginal community representative groups to hear about their experiences.

What we found

Neither DPC nor DPE have established the resources required for the NSW Government to deliver Aboriginal land claim processes in a coordinated way, and which transparently commits to the requirements and intent of the Act.

Delays in determining land claims result in Aboriginal Land Councils being denied the opportunity to realise their statutory right to certain Crown land. Delays also create risks due to uncertainty around the ownership, use and development of Crown land.

DPC has not established governance arrangements to ensure accountability for outcomes under the Act, and effective risk management.

DPE lacks clear performance measures for the timely and transparent delivery of its claim assessment functions. DPE also lacks a well-defined framework for prioritising assessments.

LALCs have concerns about delays, and lack of transparency in the process.

Reviews since at least 2014 have recommended actions to address numerous issues and improve outcomes, but limited progress has been made.

The database used by DPC (Office of the Registrar) for the statutory register of land claims has not been upgraded or fully validated since the 1990s.

In 2020, DPE identified the transfer of claimable Crown land to LALCs to enable economic and cultural outcomes as a strategic priority. DPE has some activities underway to do this, and to improve how it engages with Aboriginal Land Councils – but DPE still lacks a clear, resourced strategy to process over 38,000 undetermined claims within a reasonable time.

What we recommended

In summary:

• DPC should lead strategic governance to oversee a resourced, coordinated program that is accountable for delivering Aboriginal land claim processes
• DPE should implement a resourced, ten-year plan that increases the rate of claim processing, and includes an initial focus on land grants
• DPE and DPC should jointly establish operational arrangements to deliver a coordinated interagency program for land claim processes
• DPC should plan an interagency, land claim spatial information system, and the Office of the Registrar should remediate and upgrade the statutory land claims register
• DPC and NSWALC should implement an education program (for state agencies and the local government sector) about the Act and its operations
• DPE should implement a five-year workforce development strategy for its land claim assessment function
• DPE should finalise updates to its land claim assessment procedures
• DPE should enhance information sharing with Aboriginal Land Councils to inform their claim making
• NSWALC should enhance information sharing and other supports to LALCs to inform their claim making and build capacity.

The return of land under the Aboriginal Land Rights Act 1983 (NSW) (the Act) is intended to provide compensation for the dispossession of land from Aboriginal people in New South Wales. A claim on Crown land¹ made by an Aboriginal Land Council that meets criteria under the Act is to be transferred to the claimant council as freehold title. The 2021 statutory review of the Act recognises the spiritual, social, cultural and economic importance of land to Aboriginal people.

The Minister for Aboriginal Affairs administers the Act, with support from Aboriginal Affairs NSW (AANSW) in the Department of Premier and Cabinet (DPC). AANSW also leads the delivery of Opportunity, Choice, Healing, Responsibility and Empowerment (OCHRE), the NSW Government's plan for Aboriginal affairs, and assists the Minister to implement the National Agreement on Closing the Gap – which includes a target for increasing the area of land covered by Aboriginal and Torres Strait Islander people's legal rights or interests.

The Act gives responsibility for registering land claims to an independent statutory officer, the Registrar of the Aboriginal Land Rights Act (the Registrar), whose functions are supported by the Office of the Registrar (ORALRA) which is resourced by AANSW.²

The Land and Environment Court of New South Wales has stated that there is an implied obligation for land claims to be determined within a reasonable time. The Minister administering the Crown Land Management Act 2016 (NSW) is responsible for determining land claims. This function is supported by the Department of Planning and Environment (DPE),³ whose staff assess and recommend claims for determination based on the criteria under section 36(1) of the Act. There is also a mechanism under the Act for land claims to be negotiated in good faith through an Aboriginal Land Agreement.

The NSW Aboriginal Land Council (NSWALC) is a statutory corporation constituted under the Act with a mandate to provide for the development of land rights for Aboriginal people in NSW, in conjunction with the network of 120 Local Aboriginal Land Councils (LALCs). LALCs are constituted over specific areas to represent Aboriginal communities across NSW. Both NSWALC and LALCs can make land claims.

DPC and DPE are responsible for governance and, in partnership with NSWALC, operational and information-sharing activities that are required to coordinate Aboriginal land claim processes. LALCs, statutory officers, government agencies, local councils, and other parties need to be engaged so that these processes are coordinated effectively and managed in a way that is consistent with the intent of the Act, and other legislative requirements.

The first land claim was lodged in 1983. The number of undetermined land claims has increased over time, and at 31 December 2021 DPE data shows 38,257 undetermined claims.

The issue of undetermined land claims has been publicly reported by the Audit Office since 2007. Recommendations to agencies to better facilitate processes and improve how functions are administered have been made in multiple reviews, including two Parliamentary inquiries in 2016.

The objective of this audit was to assess whether relevant agencies are effectively facilitating and administering Aboriginal land claim processes. In making this assessment, we considered whether:

• agencies (DPE, DPC (AANSW and ORALRA) and NSWALC) coordinate information and activities to effectively facilitate Aboriginal land claim processes
• agencies (DPE and DPC (ORALRA)) are effectively administering their roles in the Aboriginal land claim process.

We consulted with LALCs to hear about their experiences and priorities with respect to Aboriginal land claim processes and related outcomes. We have aimed to incorporate their insights into our understanding of their expectations of government with respect to delivering requirements, facilitating processes, and identifying opportunities for improved outcomes. 

Since 1983, 53,861 Aboriginal land claims have been lodged with the Registrar.²⁵

The Land and Environment Court of New South Wales has stated there is an implied obligation on the Crown Lands Minister to determine land claims within a reasonable time.²⁶

As at 31 December 2021, DPE has processed less than a third (31 per cent) of these land claims: 14,273 were determined by the Crown Lands Minister (that is, granted or refused, in whole or part) and 2,562 were withdrawn. This amounts to 16,835 claims processed, including the negotiated settlement of 15 claims through three Aboriginal Land Agreements. As a result, DPE reports that approximately 163,900 hectares of Crown land has been granted to Aboriginal Land Councils since 1983 up to 31 December 2021.

There are 38,257 land claims awaiting determination, which cover about 1.12 million hectares of Crown land.

The 2017 report on the statutory review of the Act noted that the land claims ‘backlog’ was one of the ‘Top 5’ priorities identified by LALCs during consultations. The importance of this issue is consistent with findings from our consultations with LALCs in 2021 (see Exhibit 7).

Delays in delivering on the statutory requirement to determine land claims, and limited use of other mechanisms to process claims in consultation or agreement with NSWALC and LALCs, undermines the beneficial and remedial intent of Aboriginal land rights under the Act. It also:

• impacts negatively on DPE’s ability to comply with the statutory requirement to determine land claims, because often the older a claim becomes the more difficult it can be to gather the evidence required to assess it
• creates uncertainty around the ownership, use and development of Crown land, which can have financial impacts on Aboriginal Land Councils, government agencies, local councils and developers.

Risks that arise in the context of undetermined claims are discussed further in section 3.3.

NSW Treasury describes public sector governance as providing strategic direction, ensuring objectives are achieved, and managing risks and the use of resources responsibly with accountability.

Consistent with the NSW Treasury’s Risk Management Toolkit (TPP-12-03b), governance arrangements for Aboriginal land claim processes should ensure their effective facilitation and administration. That is, arrangements are expected to contribute to and oversee the performance of administrative processes and service delivery towards outcomes, and ensure that legal and policy compliance obligations are met consistent with community expectations of accountability and transparency.

DPC and DPE are responsible for governance and, in partnership with NSWALC, operational and information-sharing activities required to coordinate Aboriginal land claim processes. LALCs, statutory officers, government agencies, local councils, and other parties (such as native title groups and those with an interest in development on Crown land) need to be engaged so that these processes are coordinated effectively with risks managed – consistent with the intent of the Act, and other legislative requirements.

Policy commitments to Aboriginal people and communities made by the NSW Government in the OCHRE Plan and Closing the Gap priority reforms establish an expectation for culturally informed governance.

The Crown Lands Minister, supported by DPE, is required to determine whether Aboriginal land claims meet the criteria to be ‘claimable Crown lands’ under section 36(1) of the Act. DPE staff within its Crown Lands division are responsible for assessing land claims and preparing recommendation briefs to the Crown Lands Minister, or their delegate, on determination outcomes. That is, on whether to grant or refuse the claim.³⁸ DPE staff also make decisions about which land claims within the large number of undetermined claims should be processed first.

Appendix one – Response from agencies

Appendix two – About the audit

Appendix three – Performance auditing

Banner image used with permission.
Title: Forces of Nature
Artist: Lee Hampton – Koori Kicks Art

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Parliamentary reference - Report number #365 - released 28 April 2022.