About this report

This audit assessed the compliance of the Local Small Commitments Allocation Program (LSCA Program) with the NSW Grants Administration Guide (the Guide) and the Government Sector Finance Act 2018 (the Act).

The LSCA Program Office (the Program Office) was established in the NSW Premier’s Department in July 2023 to administer the LSCA Program.

Findings

Since its formation in July 2023, the Program Office effectively administered the LSCA Program in compliance with the Guide and the Act. The audit identified two exceptions: 54 assessment panel members’ conflicts were not identified and managed from a total of 644 approved projects, and there were some other minor administrative errors.

NSW Labor oversaw initial aspects of the administration of the LSCA Program. Where aspects of the LSCA Program were not performed by an auditable entity, nor by a non-government entity that received state government funding or other resources to deliver a state purpose, these activities fall outside the scope of the Auditor-General’s mandate.

The Guide could be clearer about how the public sector is to administer grants involving election commitments.

The Program Office’s review of conflicts of interest at the candidate level, was limited to 17 candidates put forward by the Special Minister of State. The Program Office advises it received verbal confirmation that conflicts of interest processes had been implemented by NSW Labor for all electorates, but did not seek documentation supporting NSW Labor’s conflicts of interest assessments.

The summarised merit assessment criteria do not fully reflect the legislative purposes of the funding source for the LSCA Program. As a result, there is a risk that the Minister was not provided with sufficient guidance to reach the state of satisfaction required by legislation.

Recommendations

The report made the following recommendations:

• the NSW Government should consider updating the Grants Administration Guide to include additional guidance on how the public sector is to address financial accountability, probity, record keeping and administrative obligations when a grants administration process has been initiated as an election commitment
• the Department should ensure conflicts of interest processes are implemented as intended for all future grant programs.

This chapter focuses on our assessment of the Program Office’s compliance with the requirements of the NSW Grants Administration Guide (the Guide), presented in two sections. The first section sets out the findings from our compliance assessment, presented by the grant activity categories referred to in chapter 3 of the Guide. The second section considers the funding of the Local Small Commitments Allocation Program (LSCA Program).

Appendix 1 – Response from entity

Appendix 2 – Chronology of events

Appendix 3 – About the audit

© 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 #412 - released 26 June 2025

About this report

Social housing is affordable rental housing provided to households with low incomes. In NSW, there are around 156,000 social housing dwellings. Social housing includes public housing, community housing and Aboriginal housing.

On 1 February 2024, Homes NSW was established as a division of the Department of Communities and Justice (DCJ) with responsibility for managing housing and homelessness services.

This audit assessed whether social housing is effectively and efficiently prioritised to meet the needs of vulnerable households, and whether social housing tenants are effectively supported to establish and sustain their tenancies.

Conclusion

The audit concluded that the process to apply for a social housing property is inefficient and inequitable. The application process requests substantial amounts of evidence to determine whether an applicant is a priority. Some applicants are supported by external agencies to collect this evidence while others cannot access support.

The process to allocate available social housing properties is inefficient and inequitable. In June 2024, DCJ took an average of 33 days to fill a vacant property. Just under a third of offers of housing result from manually selecting an applicant, rather than using the priority ranked list of applicants. DCJ does not centrally monitor manual allocation decisions, which risks inequitable outcomes.

Social housing tenants do not consistently receive effective support to help them establish a successful tenancy or sustain that tenancy when issues arise. DCJ does not have a clearly articulated strategy for supporting tenancies, nor does it monitor or report on the support it coordinates for tenants.

Recommendations

The report made five recommendations:

1. Simplify the social housing application process.
2. Review and improve the allocation and offer process.
3. Regularly monitor and report on the use of manual allocations.
4. Clearly articulate the role of Homes NSW as a social housing landlord.
5. Align key data sets between DCJ and community housing providers.

This section assesses whether the process of applying for social housing is efficient, effective and equitable. It considers the collection of information on applicants and the process that applicants follow.

In June 2024 there were 56,332 households approved for social housing and waiting to be housed, including 9,428 households eligible for priority housing. The number of households changes daily as new households apply, some are allocated a property and some are removed from the Housing Register because they are no longer eligible for social housing.

Applicants for social housing are encouraged to apply online on the DCJ website or through the My Housing app. They can also call the Housing Response Centre for assistance or to apply by phone. Some applicants have specific needs such as a property that is close to employment, schools or public transport, or a dwelling that has been modified to accommodate disability.

When applying for social housing, applicants need to choose an area where they would like to be housed (referred to as an allocation zone). There are 246 allocation zones across NSW, which vary in size and also have different expected waiting times for housing. In cities an allocation zone can be a group of suburbs, while in regional areas the zones can be a single town or a group of towns. Applicants can only select one allocation zone when they apply for housing.

One third of calls to the Housing Response Centre are abandoned, meaning that many people face delays in receiving advice and assistance in applying for housing

In 2023–24 over one-third of calls for housing assistance were abandoned. The Housing Response Centre received around 133,000 calls for housing assistance, not including requests for temporary accommodation or private rental products. The average waiting time for answered calls was 19.5 minutes. Since 2021–22 only a small proportion of calls were answered within a target timeframe of three minutes (see Figure 8). Long wait times for a call to be answered discourages applicants from seeking advice about eligibility for housing or getting assistance with their application.

This section assesses whether applications for social housing are being effectively, efficiently and equitably prioritised to meet the needs of vulnerable households.

Both DCJ and community housing providers who process applications for housing use common policies and systems, known as Housing Pathways. Information about applications and applicants is stored in the Housing Operations Management and Extended Services (HOMES) system.

During 2023–24, 18,345 households were added to the NSW Housing Register. This was made up of 9,688 general applicants (53%) and 8,657 priority applicants (47%).

Systems and processes are shared between DCJ and community housing providers, supporting consistent decision-making on approving priority status

DCJ and community housing providers have clear guidance materials and written procedures for staff that promote equity in deciding priority status. DCJ has developed step-by-step process documents for assessing eligibility for social housing, requesting additional evidence and deciding the outcome of an application (Table 3). DCJ systems used for processing housing applications are effectively integrated with each other and with external organisations such as Centrelink.

Source: Adapted from DCJ policy and procedure documents.

Staff at the Housing Response Centre ask the most important questions first, to determine if a caller is at risk or currently experiencing homelessness. They then run through a series of questions to establish eligibility for housing and whether applicants have all the required documents. If additional information is needed following the initial phone call, staff send an email to request the missing evidence. The HOMES system automatically determines if priority assessment is needed, based on information entered into the system. This reduces the chance of errors during application processing.

The Housing Response Centre is a centralised call centre that provides phone support and processes standard applications for housing assistance. The call centre does not process applications for at-risk clients or for complex clients. These are passed to the relevant DCJ District office or community housing provider for processing, which may include providing support to vulnerable clients in completing the application. In August 2024 the Housing Response Centre processed 71.3% of the applications for housing and change of circumstances forms, while district offices processed 28.7%.

DCJ and the community housing providers we audited follow a similar process to decide whether an applicant is eligible for priority status. Client services officers recommend priority status, and applications are passed to a team leader for approval. This helps ensure consistency in making decisions about priority status.

The number of priority approved applicants has grown in recent years, increasing the evidence burden on applicants and time taken to process applications

In June 2024 there were 56,332 approved applicants on the NSW Housing Register waiting to be housed, including 9,428 households eligible for priority housing. Since June 2019 the number of priority households has more than doubled, from 4,484 households. Figure 10 shows that the increase is most noticeable in regional NSW, rising threefold from 1,265 households in 2019 to 4,235 households in 2024. Over the same time, priority applicants in Sydney increased by around 61%. This has added pressure to the workload of DCJ regional offices and community housing providers operating in regional areas.

This section assesses whether the process to allocate social housing properties is efficient, effective and equitable.

When a property becomes available, the system is designed to allocate it to the highest priority applicant, provided that the property meets their needs. Applicants for housing, including existing tenants requesting transfer to a different property, are categorised based on their level of need. There are over 30 categories of need, grouped into six rank levels. The highest ranked categories are ‘high priority at risk of homelessness’ and ‘high priority natural disaster’, while general households are ranked lowest.

These categories are the main determinant of the algorithm that selects the highest priority household when a property is available. The system then sorts the households in the highest ranked categories based on the number of days since they were added to the NSW Housing Register.

The proportion of properties allocated to households on the general Housing Register has fallen in recent years (see Figure 12).

This section assesses whether social housing tenants receive effective support to establish their tenancies. It considers the identification of support needs when starting a new tenancy.

In 2023–24, there were 8,257 households provided with a social housing dwelling. Of these, 6,278 (76%) were to priority applicants, more likely to have additional needs. Social housing tenants with complex needs are vulnerable to tenancy breakdown, which can have high costs for individuals and society. Working with tenants early to identify their needs, confirm any existing supports in place and check whether existing supports are meeting those needs can help set up tenants for success.

DCJ does not have a structured approach to assess the support needs of new tenants, which means approaches vary across locations

In 2023–24, there were 76% of newly housed applicants from a priority category. These are clients who had experienced homelessness, been affected by domestic and family violence, were elderly, or had medical or disability needs. There is no defined method to assess the background and support needs of new tenants. Approaches vary across locations, which, in turn, affects the referral to support services that may help tenants sustain a tenancy and avoid an exit into homelessness.

Vulnerability assessment tools are an example of a structured approach to objectively determine the support needs of vulnerable clients as they start a new tenancy (Table 7).

Source: Adapted from Community Housing Industry Association – Creating Sustainable Tenancies for Tenants with Complex Needs.

After a tenancy has been established, DCJ takes a reactive approach to identifying whether the tenancy is at risk. A recent evaluation noted that DCJ’s current approach is driven by observed breaches in the tenancy, which means that newer tenancies are classified as low risk because there has been less time to observe any breaches. The evaluation recommended that DCJ consider adding criteria known to be associated with tenancy risk (e.g. tenant history of rough sleeping). This would allow for those tenancies to be identified up front as potentially requiring additional supports, prior to risk escalating following an identified tenancy breach.

The Social and Affordable Housing Fund program provides funding for participating community housing providers to take a structured approach to identifying tenant support needs

The Social and Affordable Housing Fund includes contractual requirements for participating community housing providers to take a structured approach to identifying tenant vulnerability and support. There is a specific service stream with separate funding to undertake this function. The Fund covers a relatively small portion of properties managed by community housing providers (there were 3,341 residents in social housing properties under this fund at 31 December 2024).

For Social and Affordable Housing Fund properties, community housing providers are required to conduct a tenant needs assessment for each household member within six weeks of signing a residential tenancy agreement. The tenant needs assessment covers:

• need for support services
• whether existing access to support services meets current needs
• factors that may inform the level of support needed (e.g. employment status, highest level of education, history of homelessness)
• likelihood of transitioning out of social housing in the short-term and/or long-term.

The results of the tenant needs assessment inform the creation of a tenant support services plan. The DCJ contract with providers specifies that the support plan is to be developed in collaboration with the individual and tailored to the needs and goals of the tenant or household member.

An evaluation examining the Social and Affordable Housing Fund reported positive findings in relation to overall tenant satisfaction and satisfaction with the quality of tailored support coordination. The evaluation did note that a universal approach was being taken to the assessment of tenant needs, rather than a risk-based approach. Better targeting resources to higher-risk groups could allow for more intensive support services where there is greatest risk of a tenancy failure.

Beyond the subset of Social and Affordable Housing Fund properties, community housing providers have a range of approaches to assess the vulnerability and support needs of new tenants. For example, Homes North uses the Best Start Assessment as its structured approach (Table 8).

Source: Adapted from information provided by Homes North.

Initial visits early in a tenancy can identify issues and support needs but many visits are missed

In the year to June 2024, only 58% of DCJ managed tenancies that commenced within the last 12 months had a successful visit completed within 12 weeks (against a target of 95%). DCJ policy is to visit tenants within the first eight weeks of a new tenancy. Visiting tenants during the first few months of a new tenancy is an important way to check on tenant wellbeing and property care. The first visit can identify any issues that may place the tenancy at risk and trigger referrals to support services.

Staff we interviewed reported that new tenants who have previously been receiving a high degree of support in crisis accommodation may encounter difficulties once they commence a social housing tenancy and their previous high level of support falls away.

The low proportion of new tenants visited within the first 12 weeks means an opportunity is missed for DCJ to identify early warning signs of a tenant not coping well in the new property and to respond by making referrals to support services that may prevent the tenancy from failing. DCJ tenancy staff we spoke with told us that one of the reasons for not meeting visitation targets is that portfolios of tenants are large. Similarly, staff responding to a workload analysis conducted by DCJ in late 2023 reported significant increases in applications, high workloads in managing temporary accommodation and large portfolio sizes as factors contributing to the inability to work proactively with clients to address their needs.

The Community Housing Providers we audited had similar policies to visit new tenants within the first 6–10 weeks. They told us of the importance of these visits in establishing a successful tenancy and making referrals to support services. Two of the three community housing providers regularly include a second staff member for initial visits, who has a focus on identifying support needs and making referrals to relevant services.

As social housing has increasingly been targeted to those in greatest need, the level and complexity of social housing tenant needs has also risen. This has increased expectations on social housing providers to coordinate access to support, as well as increasing the costs of managing this function. If the support needs of tenants are unaddressed, the wellbeing of tenants and that of neighbouring residents may be affected, and ultimately result in tenancy breakdown.

A failed tenancy has significant costs if it results in a household experiencing homelessness. DCJ reported the total cost to the NSW Government of someone experiencing homelessness is seven times more than a person not experiencing homelessness ($23,100 compared to $3,300 each year). For those rough sleeping, the costs can be significantly higher (estimated at $142,800 per person per year). For individuals, experiences of homelessness contribute to premature and preventable death (for example, suicide, violence, substance abuse and chronic ill-health).

Tenants in community housing and Aboriginal Housing Office properties are eligible for Commonwealth Rent Assistance. The full amount of Commonwealth Rent Assistance is passed on to community housing providers and the Aboriginal Housing Office, resulting in extra funds that can be used for tenancy management. The proportion of housing managed by community housing providers varies across the state. For example, community housing providers manage:

• over 90% of social housing in the Mid-North Coast and Northern Sydney areas
• less than 25% of social housing in the Western Sydney, South-Western Sydney and South-Eastern Sydney areas.

DCJ does not have a clear or consistent approach to assisting tenants to access support

There are no references in legislation or statewide strategies that outline a requirement for DCJ to coordinate access to support services for tenants. DCJ’s previous social housing strategy (Future Directions for Social Housing) did not detail approaches to sustaining social housing tenancies. The strategy focused on helping clients avoid social housing or transition from social housing into the private rental market.

DCJ’s procedures encourage staff to refer vulnerable clients to appropriate organisations or agencies. Its guidelines identify best practice information specific to:

• alcohol and other drugs
• clients with severe mental illness
• children at risk of significant harm
• clients with disability
• hoarding and squalor
• clients experiencing domestic and family violence
• Aboriginal and/or Torres Strait Islander clients.

DCJ does not centrally record, monitor or report on referrals for support. This means that tenants’ access to support will vary depending on the capacity and capability of staff in their local office. DCJ districts we visited have local arrangements to track referrals to external services. Arrangements are focused on operational planning and are not aggregated in a way that allows for statewide analysis. DCJ advised that it is exploring options to introduce this functionality into the HOMES system.

DCJ operates one pilot program (Sustaining Tenancies in Social Housing) that takes an early intervention approach to supporting tenants through community outreach and case management by non-government partners. Participants receive up to 12 months wrap-around support, based on assessed need. Access is limited as the program operates in only three metropolitan and three regional locations. In 2023–24, this program delivered tenancy support to 687 tenants (of around 170,000 people living in DCJ managed housing).

The regulatory system sets clear expectations that community housing providers assist tenants to access support services to sustain their tenancy

Community housing providers have clearer expectations that they facilitate access to support for tenants. Different expectations on tenancy sustainment between DCJ and community housing providers may lead to inequitable levels of service and outcomes for tenants. Generally, tenants do not have a choice of housing provider as this is driven by location rather than tenant preference.

As a condition of registration, community housing providers are required to ‘facilitate access to support for social housing applicants and tenants with complex needs’. The NSW Registrar of Community Housing requires community housing providers to report annually on the number of supported tenancies (where a household member has a support plan or other specific assistance to help sustain the tenancy). Providers also submit partnership agreements with support agencies.

In addition to the registration requirements, the nine community housing providers who received properties under the Social Housing Management Transfer program are required to deliver ‘tenant support coordination services’. Participating community housing providers report back to DCJ on tenant support coordination services, but DCJ does not actively monitor the assessment of support needs, access to support or satisfaction with support services.

DCJ also requires the seven community housing providers participating in the Social and Affordable Housing Fund to record details of referrals to support services. DCJ provides specific funding for tenant support coordination services under this program. Community housing providers report on the number of support plans re-assessments and tenant satisfaction with support services. Surveying tenants about their satisfaction helps assess the quality of support.

High workloads in DCJ lead to reactive approaches to coordinating tenancy support that miss opportunities to proactively address emerging issues

Staff in DCJ districts we visited reported that high workloads affect the time they can spend visiting tenants and arranging referrals to support services. The main factor contributing to high workloads is the size of tenancy portfolios. In 2024, around 38% of DCJ tenancy officers had portfolios of more than 350 households, while 31% had portfolios of between 251 and 350 households. Managers have limited capacity to supervise and support their teams with complex cases, due to the high portfolio sizes.

Regular tenancy visits are important to identify emerging issues for tenants and make referrals where necessary. DCJ has a target of visiting 65% of tenants at least once per year. This means a substantial number of tenants are not visited at least annually. At June 2024:

• around 30% of tenants had not been visited in the past 12 months
• around 1.5% of tenants had not been visited in the past three years (1,421 households).

When DCJ tenancy officers do not have the capacity to regularly visit tenants, this leads staff to only contact tenants when there is an issue. For example, when a tenant is in arrears and/or there are complaints from neighbours about anti-social behaviour or property upkeep. DCJ has operational policies for staff to refer tenants to support services following a breach of their tenancy agreement. Reactive approaches to referrals to support services are less effective because of limited availability and long wait times to access support.

Community housing providers we audited reported prioritising regular visits to tenants (between one and four times per year depending on needs). This provides greater opportunity to identify issues with the tenancy and make timely referrals to support services.

Tenants have unequal access to the expertise of senior specialist staff, which depends on the location of tenants

The capabilities of staff required to manage a portfolio of tenants has increased as social housing has been progressively targeted to households with greatest needs. Senior specialist staff have more experience in managing and sustaining complex tenancies, including by working in partnership with the broader support service system. Tenant access to senior staff that specialise in assessing support needs and making referrals to support services depends on the location in which they are housed. There are no standard expectations of how this service should be provided and it is not monitored centrally.

DCJ completed a review of Senior Client Service Officer roles in February 2025. There are Aboriginal and non-Aboriginal Senior Client Service Officers roles that can support tenancy staff with referrals to external services. The review found variability in how the role is performed across locations. This stemmed from unclear role expectations, varying workloads, mixed skills and competencies, and inconsistent reporting. The review recommended actions to improve the effectiveness of these roles.

Community housing providers have similar roles and, like in DCJ, there is also variability in approaches between providers (Table 9 outlines one approach).

Source: Adapted from information provided by Link Wentworth.

Community housing providers have a range of programs that support tenancy sustainment

Alongside targeted referrals to support agencies, community housing providers offer a range of programs and initiatives aimed at delivering positive outcomes for tenants and helping them retain their tenancies. These are done in partnership with service providers, local councils and government agencies. As not-for-profit organisations, community housing providers can access a range of government and philanthropic assistance to fund certain programs. The opportunity for additional funding to address tenant needs is limited by high demand for services and limited availability.

Some examples of programs provided by community housing providers include:

• social programs to prevent isolation and help build connections with community
• service coordination programs that assist tenants to access and engage with service providers
• programs to assist tenants to manage their finances, including programs that help tenants access no-interest or low-cost loans, financial counselling, and budgeting support
• employment support programs to develop job-readiness skills
• education scholarships for students to help cover education and training expenses
• energy efficiency initiatives to support tenants with energy costs.

Home in Place has a Community Participation Unit to coordinate tenant support services across the organisation. The approach intends to balance activities that support tenants individually with more tenant engagement and community development-based activities (Table 10).

Source: Adapted from information provided by Home in Place.

DCJ also provides a small range of community development programs and additional programs such as education scholarships for social housing residents.

Around 7,000 tenants of DCJ are in arrears, which places their tenancy at risk

Rental arrears are a risk to tenancy failure and indicate that households may be experiencing underlying issues and need greater support. At June 2024, 7.3% of DCJ managed social housing tenancies were in arrears (around 6,990 households). Of these, around 2,370 households were two or more weeks in arrears. The total amount of arrears was around $3,384,000. This is an average of $35 per household across all households or $484 per household for households in arrears. There is significant variation in the proportion of households in arrears and the average arrears across locations (Figure 14). This could be due to a combination of household characteristics and different locational approaches to managing arrears.

Managing arrears accounts for a substantial amount of staff time. A workload analysis of DCJ housing operations staff conducted in late 2023 reported that managing arrears accounted for 18.1% of tenancy staff time. This was more time than undertaking routine client service visits (16.7% of tenancy staff time) or managing complex tenancy issues (14.2% of tenancy staff time). The estimated annual staff costs of managing arrears were around $11.7 million in 2023.

Appendix 1 – Response from entities

Appendix 2 – About the audit

Appendix 3 – 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 #410 - released 24 June 2025

About this report

This report examined whether the NSW Police Force has been efficient and effective in managing and supporting the psychological wellbeing of the police workforce.

Findings

In 2023, the NSW Police Force funded a range of additional wellbeing initiatives to support police. In 2024, a standalone command was established to deliver these initiatives and manage the health and wellbeing of the workforce.

Over the five years from July 2019 to June 2024, the NSW Police Force had increasing numbers of psychological injury claims, escalating compensation costs, and increasing psychological injury medical exits. Since October 2024, there has been a reduction in the number of psychological injury notifications.

The NSW Police Force monitors and reports on psychological injuries to the workforce, but does not monitor, analyse or report on the root causes of these injuries. As a result, the NSW Police Force is not efficiently or effectively preventing future psychological injuries to the police workforce. Work is currently in progress to improve psychological risk reporting.

NSW Police Force wellbeing initiatives provide counselling and support for police after traumatic incidents. The initiatives do not address other psychological risk factors such as fatigue, role overload, or burnout.

Some police commands have higher workload volumes than others, and the NSW Police Force does not have a staffing allocation model to distribute police to locations under the greatest workload pressure.

In the five years from 2020 to 2025, the NSW Police Force invested $34 million on proactive wellbeing services for police, and an additional $60 million on the administrative costs of running the Health Safety and Wellbeing Command.

The cost of compensation for police psychological injuries amounted to approximately $1.75 billion from July 2019 to June 2024.

Recommendations

The NSW Police Force should, by July 2026:

1. develop and implement a workforce allocation model that matches police numbers to command-level workload demands and changing workload levels
2. fully implement the health and safety incident notification system and regularly report on the causal factors that lead to psychological incidents and injury claims
3. investigate and report on the factors that contribute to police role overload and burnout, and adjust policy settings, practices and controls accordingly
4. implement a strategy, process, and evaluation framework, that links police wellbeing initiatives and resources to evidence-based psychological risk factors.

A significant proportion of police report poor wellbeing in the People Matter Employee Survey, but managers do not have detailed information about workforce-wide stressors and risks

In 2024, 44% of police respondents to the People Matter Employee Survey reported unfavourable levels of wellbeing. The self-reported poor wellbeing of police included a reduced ability to function well in the role, and a lack of resources to manage wellbeing in the course of work duties. Other results from the People Matter Employee Survey show that the majority of police respondents do not believe they have support from managers to assist with wellbeing. While 44% of police reported low wellbeing in 2024, this is an improvement on 2023 levels, when 58% of police reported unfavourable wellbeing via the People Matter Employee Survey.

The People Matter Employee Survey is the only workforce-wide, self-reported source of information about police wellbeing risks. While the People Matter Employee Survey provides some insight into police wellbeing, it does not describe the nature, prevalence, or causes of psychological risk to employees. The NSW Police Force does not have an alternative means by which employees can report their psychological stressors, such as a workforce-wide survey.

The People Matter Employee Survey asks generalised questions about whether stress is manageable for the individual, whether employees are experiencing burnout, and whether employees are satisfied with the workplace practices that aim to manage wellbeing. In 2023 and 2024, more than 50% of police respondents recorded unfavourable responses to these three questions.

In the five years from 2019–2020 to 2023–2024, the NSW Police Force recorded an average of 1,100 psychological injury claims each year. Over this timeframe, the cost of psychological workers compensation claims accounted for 74% of total workers compensation claims costs, with physical injuries accounting for 26% of all costs. The psychological injury numbers recorded each year grew from 790 in 2019-2020 to just over 1,200 in 2023-2024.

In 2020, the NSW Police Force conducted a one-off, point-in-time survey, the ‘Mental Wellbeing Climate Survey’. It asked police about their experience and knowledge of existing wellbeing services. However, this survey did not ask police employees about their workplace stressors, or about their views on the nature or cause of psychological risks and injuries.

The NSW Police Force is in the early stages of meeting its obligation to understand workforce psychosocial risks, but needs to do more to understand risks associated with job demands

The NSW Police Force management reporting on psychological health and safety risks has not been sufficiently detailed to assist decision-makers to identify, address, and potentially mitigate risks to the workforce. Police management reports do not contain meaningful data on the causes of psychological injuries in the workforce.

While psychological injury rates were rising across the NSW police workforce, police management reports have lacked information about psychological injury types, or the causes of these injuries. For example, the most common psychological injury type was listed as ‘other mental stress factors’. The second most common psychological risk factor was described as ‘exposure to workplace or occupational violence’, and the third was ‘work pressure’. While these categories are set by Safe Work Australia, they are not sufficiently detailed for the NSW Police Force to understand its workforce risks.

The ten psychological injury categories are listed in order of their prevalence amongst the NSW police workforce are as follows:

• other mental stress factors
• exposure to workplace or occupational violence
• work pressure
• work related harassment and/or workplace bullying
• exposure to a traumatic event
• suicide or attempted suicide
• other and multiple mechanisms of incident
• mental stress related to Novel Coronavirus (COVID-19)
• being assaulted by a person or persons
• other harassment.

From 2019 to 2024, the NSW Police Force had limited identifiers about the nature or causes of these ten risk categories, and no indication of the causes of psychological injury claims. This meant that the NSW Police Force lacked evidence on which to base its control measures, or to manage hazards.

Some of the data in health and safety reports is combined, so it is not possible to distinguish between physical or psychological injury types. For example, reports on the 1,307 injured workers who were unfit for work in June 2024, do not show differentiated data between psychological or physical injuries. Managers cannot see the proportion of 403 police who were deployed to other ‘suitable’ duties in June 2024, by those recovering from psychological injuries, compared to those with physical injuries. This means that managers lack evidence to plan rehabilitation services based on the level of requirement for different service types.

Reports show the impacts of injury on police over time, and the workforce attrition rates that are due to injury. While this data indicates overall impacts of police injury on workforce functioning, data does not show psychological and physical medical exits. In addition, reports do not show psychological medical exits by location or command. Specific data on injury type by location, may point to problem areas in different segments or locations of the workforce.

As an employer, the NSW Police Force has obligations to its employees under the Work, Health and Safety Act 2011 (NSW)

The Work, Health and Safety Act 2011 (NSW) (the Act) requires that employers identify health and safety risks and take reasonable steps to minimise both physical and psychosocial risks. Under Section 27(5) of the Act, ‘reasonable steps’ means that employers must ‘ensure … appropriate processes for receiving and considering information regarding incidents, hazards and risks and responding in a timely way to that information’.

NSW Police Force management reports on health and safety incidents show the number of incidents with psychological risk factors present. While these reports allow managers to track psychological injuries over time, information is not sufficiently detailed to indicate the causes of these injuries. Risks are not fully understood at the workforce-wide level, and so resources cannot be targeted to identified problems.

The NSW Police Force is also able to source information about workforce psychological hazards from individual risk reports made by police employees. The majority of these reports describe potential hazards to the physical safety of police, and in rare instances, psychological risks are reported to peer representatives. Reports are escalated to senior managers and provide some corporate insight into psychological health and safety risks.

Safe Work Australia has identified some of the contributing factors to workforce psychological risks. These include high job demands, excessive workloads, exposure to traumatic incidents or content, and long working hours without enough breaks. Excessive job demands become a psychosocial hazard when workload levels are unmanageable for prolonged periods. Other psychological risk factors include jobs with ‘high emotional demands’. The features of ‘high emotional demands’ have strong correlations with police work. They are:

• exposure to aggression, violence, harassment or bullying
• supporting people in distress (for example, giving bad news), or
• displaying false emotions (for example, being friendly to difficult customers).

The NSW Police Force is implementing a new incident notification system that aims to improve incident investigation reporting on psychosocial risks and hazards

At the time of this audit’s publication in June 2025, the NSW Police Force is implementing a new incident notification reporting system. This system will provide a greater level of detail about the types and causes of psychological incidents, hazards and near misses. In addition, the new system has built-in welfare response notifications that are matched to the workplace incident.

In October 2022, amendments were made to NSW Work Health and Safety Regulations. These obligations imposed a higher standard for monitoring workforce psychosocial risks. They now require that employers introduce a range of control measures to mitigate psychosocial risks and hazards and to ‘eliminate psychosocial risks so far as is reasonably practicable’. The control measures are described in Section 55D (2) of the Regulations and include consideration of:

The NSW Police Force’s new incident notification reporting system has potential to improve the level of information about psychosocial risks and hazards, including information that shows the investigation stages and outcomes, and indicates the root causes of incidents and near misses.

At the time of this audit, NSW police employees are able to report their wellbeing concerns to line managers, but a number of frontline police advised that this course of action can be ‘career limiting’. Police employees are also able to speak with peer-appointed, work, health and safety officers. Work health and safety representatives have meetings with local police in their command on a monthly or quarterly basis, depending on the size of the command. During these meetings, work, health and safety officers record staff issues relating to trauma, psychological risks, and other wellbeing matters. The minutes from these meetings are escalated to senior human resource managers.

Frontline police are able to report individual health, safety and wellbeing concerns through an online ‘safe reporting’ portal. This online option is used to report local risks along with colleague misconduct concerns. However, this feedback portal was not well known by police interviewed for this audit. Those police that knew about the portal option, were concerned that feedback would not be anonymous, and could be traced back to individuals.

The NSW Police Force does not utilise information collected from critical incident reports to identify common psychological hazards that may contribute to these events

Police management reports do not include aggregated data about the factors that were evident in the lead up to critical incidents. Individual incident reports may include information about whether fatigue, stress, or excessive haste were evident when the incident occurred. Reporting on these factors in the aggregate, may reveal to managers, some potential risks, and the root causes of critical incidents.

The NSW Police Force correlates some command-level data about police accidents, work, health and safety incidents, but does not report on the factors that contributed to the psychological injury incident. This information should be visible to central managers and decision-makers who have the authority to direct resources to the areas where risks are identified. For example, managers need information to understand whether segments of the workforce are operating under workload pressures. These pressures can be indicated through workplace accidents and incidents.

In the five years from 2019–2020 to 2023–2024, NSW police officers were involved in 171 critical incidents. Critical incidents are incidents that result in deaths or serious injuries to the public and, or police. Critical incidents are those which occur as a result of police vehicle pursuits and collisions, or the discharge of police firearms. Police managers do not receive reports that might indicate common factors in these incidents – factors that may provide insight into workforce wellbeing and optimal functioning.

Police critical incident notification forms include fields for police to record the time in the shift when an incident occurred. However, police managers have not used this information to observe trends and patterns of incident times and risks. It means, for example, that police managers did not know if factors such as fatigue played a part in police critical incidents.

There is potential for the NSW Police Force to do more to understand the stressors on the workforce. Other employers have developed mechanisms to monitor risks. For example, health providers and hospital managers review and analyse clinical incident trend data. They use this information to identify system-level harms that indicate emerging risks to the workforce and the public, and take action at an organisational level.

Safe Work Australia identifies strategies to understand psychosocial pressures on the workforce. These include monitoring and observing workforce mistakes, as potential indicators of areas where job demands are too high. In addition, Safe Work Australia recommends workforce-wide consultation processes, including the use of surveys and tools to seek the views of workers on a wide range of psychosocial risks.

Ultimately, the NSW Police Force lacks systems to understand and report on structural risks to the workforce. This level of information would allow managers to review policies if necessary, and target resources to mitigate these risks.

The NSW Police Force does not use a workforce allocation model to distribute its workforce according to workload burden

Workload stress is a significant factor in police wellbeing. The frontline police who were interviewed for this audit, were consistent in the view that unmanageable workload pressures have the greatest impact on their wellbeing. 'Work pressure' is the third most common source of psychological injury cited in police injury notification data. While police managers have information about the police workload pressures across commands, they do not use a workforce allocation model to allocate workforce resources in a way that effectively mitigates this risk. In general, police managers measure workload pressures by assessing the number of calls that local police are unable to attend within the hour across the 57 NSW local area commands.

The NSW Police Force lacks a formula to allocate and distribute its police workforce across commands. The location of police across the State has been largely determined by historical factors, such as the location of an existing workforce. Staffing levels are also determined by political decisions. Some staffing allocations are made via election commitments to place additional police in certain regions, without an analysis of workforce requirements.

The NSW Police Force has been operating with significant workforce shortages since 2023. Workforce vacancy rates differ across commands. Some police area commands and districts are operating with workforce vacancies of more than 30%. Others have lower workforce vacancy rates at 11%. While workforce vacancies are not always a true indicator of workload burden, the data can show commands under changing workforce pressures. The ability of a command to meet its call-out volumes provides a clearer assessment of workload demand. That said, the NSW Police Force has not done any analysis of its authorised workforce strength by command over the past eight years.

Each year, police managers can make minimal changes to the distribution of police across the State. This is almost exclusively through the placement of newly graduated police. The process for placing new probationary constables is determined via annual meetings with Deputy Police Commissioners and region-level commanders. During this process, police workload levels and vacancy rates are assessed, and region-level bids are made for new graduates based on regional needs.

The NSW Police Force does not use a staffing allocation model to distribute its personnel based on an assessment of the workloads of each command. While police managers have access to data that shows the areas experiencing the highest workload across the 57 NSW local area commands, they are limited in their ability to change the workforce levels across the State.

In instances where there are significant increases in crime or call-out rates, the NSW Police Force is able to temporarily deploy additional police as part of a surge capability. These deployments seek to surge police in crime hotspots. However, they are a temporary measure and do not solve entrenched under-resourcing of some commands.

Senior police managers advise that they are limited in their ability to transfer police positions, or to increase the overall workforce headcount to respond to workload demands. While Deputy Commissioners and region-level commanders can monitor police workloads, they lack a staffing allocation model that would allow them to transfer police to commands under the highest levels of workload pressure.

The NSW Police Force does not assess or compare the effects of police taking up a second job to determine whether secondary employment impacts on police fatigue, stress or performance

Over the past five years, around 1,650 NSW Police Force employees were engaged in secondary employment annually. Central managers and policy makers do not receive data or reports that would allow them to monitor and compare levels of secondary employment across commands, and its impacts on police performance.

Police managers do not receive data that correlates secondary employment levels with sick leave data or adverse incident data, for example. While police managers advise that secondary employment is monitored at the local command level, there is no capability to assess impacts centrally, and make policy adjustments if data shows impacts on workforce wellbeing or functioning.

Given that the NSW Police Force has not collected or analysed system-level, psychological risk factor information, managers are unable to inform the design of police wellbeing programs based on evidence of workforce needs.

NSW frontline police work some of the longest shifts in the country and the NSW Police Force has not sufficiently assessed the risks or impacts of this shift cycle on performance and fatigue

Frontline police complete four 12-hour shifts that are condensed into a four-day timeframe, followed by six days off. In general, frontline police complete two day-shifts followed by two night-shifts, that are completed consecutively. Police are required to have a ten-hour break in between shifts, but unplanned overtime and travel to and from the workplace and home, can reduce the time available for rest and recovery.

The NSW Police Force has a 'flexible work arrangements manual' with principles that allow for flexible rostering of shift lengths between six and 12 hours throughout the day and overnight. In practice, however, rostering patterns show that 96% of general duties police undertake shift lengths of 12 hours. Most other police jurisdictions in Australia, with the exception of the Northern Territory, implement shift lengths that vary between eight and ten hours.

The NSW Police Force does not analyse its incident notification reports to assess whether there are any trends in the times when adverse incidents occur. The NSW Police Force is not able to identify correlations between the length of shifts and incidents, or the patterns of shifts and adverse incidents. As a result, police managers do not know whether the current shift arrangements for frontline police are a contributing factor to fatigue and stress. They do not have trend data to show if fatigue is leading to increases in accidents, incidents and performance matters.

The NSW Police Force’s work readiness framework advises that a 'review of workplace incident data' is a method that can be used to identify factors contributing to fatigue. Aggregated data about the ‘time in shift’ when incidents occur, would assist managers to understand whether shift patterns have inherent safety risks.

The NSW Police Force does not have sufficient controls and tools to regulate the number of hours worked by police, and potentially mitigate police fatigue levels

The NSW Police Force currently manages fatigue through a work readiness framework that includes policies, guidelines and tools, that are designed to assist managers and employees to develop and implement work readiness management plans and strategies. Police commanders are not mandated to implement these guidelines and tools, and there is no register of police working hours or work readiness.

The framework does not address the ways in which the fatigue assessment tools will be used and monitored across local commands. The NSW Police Force does not have a process to ensure the implementation of tools and control measures. In addition, the fatigue assessment tools lack clarity or guidance on rest and stop-work directives. Some employers of emergency service workers and first responders are able to proactively monitor fatigue. For example, NSW Ambulance has an automated fatigue management calculator that allows managers to view the hours worked by employees in real time, in order to manage risks.

The NSW Police Force work readiness framework contains guidelines that can be used to mitigate some of the contributing factors to fatigue. Guidelines advise police managers to conduct 'consultation with workers'. However, there is limited evidence that the NSW Police Force has consulted with, or sought feedback from the workforce on fatigue risks. There is no evidence that police employees have been surveyed about the effects of shift hours on the available time for sleep, or on work readiness.

In October 2023, the NSW Police Force developed a risk control ‘ready reckoner’ which includes ‘fatigue’ as a risk factor in police work. This risk control system is still in draft form and has yet to be implemented. The register identifies potential controls that can be used to manage fatigue, but it does not assign owners or business areas as responsible for the controls and risks. The impact of the ready reckoner is not yet known, nor has there been any monitoring of its uptake to date.

SafeWork NSW has identified fatigue as a potential workforce health and safety hazard for employees across all industries. Fatigue has both physical and psychological impacts. According to the regulator, each employer has responsibility to identify and manage fatigue risks to employees. In recent decades, numerous supreme court decisions have found employers liable for breaching their duty of care in failing to take reasonable steps to minimise the risks of fatigue to their workers.

SafeWork NSW recommends that employers develop a fatigue policy in consultation with their employees. The policy should define clear roles and responsibilities for employers that include the management of excessive working hours, workplace assessments of fatigued workers to gauge fitness for work, and procedures for reporting hazards and managing risks.

Complaints and legal claims relating to alleged police misconduct are costly to the State

Frontline police are more likely to be recipients of public complaints than other police as they have more interaction with the public during events such as domestic violence incidents, assaults, neighbourhood disputes, mental health incidents, and other crime responses. Specialist police such as detectives and forensic experts have less interaction with the public and therefore receive fewer public complaints.

Frontline police told audit staff that complaints against them have significant impacts on their wellbeing. These negative impacts are compounded by the fact that police are not told about the nature of the complaint against them or the name of the complainant. For many police, this process seems unjust as in some instances, they have no information about what they have done to receive the complaint, and no recourse to defend their case.

Public complaints about police are handled differently across the six police regions. In one region, the region commander has determined that police will not be informed about complaints that are shown to be vexatious and declined. This is to ensure that morale is not affected. In another region, all complaints are reported to police, even if they are declined. Some police argue that declined complaints should not be recorded on their files, as is the current practice. They advise that complaints can have an adverse impact on their promotion eligibility, even when the complaints are vexatious.

Police told us that there was an inadequate level of wellbeing support available for officers who were subject to complaints or investigations. Complaint and investigation policies and procedures make mention of the availability of Employee Assistance Program services, but this is the only external support. According to the policy, local commanders are responsible for monitoring the welfare of complaint recipients and all other people involved. Procedure documents do not include any requirement for commanders to refer police to wellbeing support services.

During the five years from 2019–2020 to 2024–2025, a total of 2,124 legal claims were made against NSW police employees for misconduct matters. The NSW Police Force paid $155.44 million to settle these claims over the five-year period. Despite the significant cost of these claims, the NSW Police Force does not report basic information about these legal matters. The NSW Police Force does not report on the number of claims that were settled via payments to claimants, the number of claims that proceeded to Court, or the claims that were successfully defended in Court.

Since 2019–2020, there have been increases in psychological injury claim numbers and costs across the NSW public sector, for police these costs have risen by almost 50% year on year

Despite increases in mental health services and psychological support for police, the costs of psychological injuries have been increasing year on year. While compensation claims for physical injuries occur at more than twice the rate of psychological injury claims, the costs associated with psychological injury claims are higher than for physical injuries. Compensation costs to psychologically injured police totalled approximately $1.75 billion from 2019–2020 to 2023–2024. The NSW Police Force is not alone in experiencing increases in psychological injuries and costs, higher claim numbers and costs are also evident in other NSW government agencies.

Police compensation costs were covered by two different insurance schemes during the five years from 2019–2020 to 2023–2024. The icare workers compensation insurance scheme covered costs of $927.84 million, and the Police Blue Ribbon Insurance Scheme covered $817.29 million in costs. The Police Blue Ribbon Insurance Scheme was managed by a private insurer.

From 2019–2020 to 2023–2024, NSW police employees made approximately 3,080 compensation claims for physical injuries each year, compared to a yearly average of 1,100 claims for psychological injuries. Over this timeframe, psychological claims accounted for 74% of the total compensation claims costs, with physical injuries accounting for 26% of costs.

Exhibit 6 shows the number of physical and psychological compensation claims numbers each year, and the claim costs for the different injury types by year.

Appendix 1 – Response from entity

Appendix 2 – About the audit

Appendix 3 – 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 #408 - released 11 June 2025

About this report

Financial audit results of the NSW public universities’ financial statements for the year ended 31 December 2024.

Findings

Unmodified audit opinions were issued for all ten universities.

Six universities reported net deficits in 2024, compared to eight in 2023. Nine universities’ net results improved from 2023.

The main driver of revenue growth in 2024 was a 25.5% increase in fees and charges revenue from overseas students, due to increased enrolments of 18.9%. Revenue from domestic students increased by 12%, however, enrolment numbers remain below 2020 levels.

In 2024, revenue growth of 14.9% exceeded the 9.4% growth rate of expenses. However, universities are still recovering from the shortfalls experienced in 2022 and 2023 following financial disruptions caused by the COVID-19 pandemic.

Half of the universities show indicators of financial risk in the form of liquidity ratios of less than one and having less than three months of cash reserves to fund operating and financing activities.

The number of reported audit findings has decreased from 111 in 2023 to 98 this year. Most control deficiencies related to information technology /cyber security, governance, and payroll.

Universities are not consistently following their own procedures for recording cyber incidents, data breaches and privacy breaches.

Data breaches that required mandatory notification resulted in unauthorised access and disclosure of personal information, and mainly caused by phishing attacks and human error.

Recommendations

Universities should:

• finalise mitigating actions to address the risk of future wage underpayments and prioritise repayments to affected staff
• adequately prepare themselves to comply with the climate disclosure requirements under NSW Treasury’s reporting framework
• clearly document the requirements for business cases and post-completion reviews for capital projects
• comply with established processes when recording cyber security incidents and data breaches
• require staff to complete cyber security training regularly, include simulated phishing attacks and provide students with basic cyber security training
• create a central artificial intelligence (AI) inventory, establish and implement an AI policy and consider the benefits of establishing an AI strategy.

Financial reporting is an important element of good governance. Confidence in, and transparency of, university sector decision-making are enhanced when financial reporting is accurate and timely.

This chapter outlines the 2024 financial reporting audit results of NSW universities.

Financial performance is a measure of an organisation’s ability to use its resources to generate revenue and manage expenses while maintaining appropriate levels of net assets and cash flows.

Financial performance also encompasses financial sustainability, which is the ability to meet current and future financial obligations without reducing essential services or borrowing money to fund successive operational deficits. This is achieved by ensuring that over the medium and longer term, revenue is sufficient to cover expenses, cash flow and risks are well managed, long-term financial planning is effective and sources of revenue are diverse.

This chapter presents our observations on the financial performance of universities in 2024.

Governance is the framework of rules, processes and systems that enable organisations to achieve goals and comply with legal requirements. Good governance promotes public confidence in the integrity and effectiveness of universities’ systems and operations. A strong system of internal controls enables universities to operate effectively and efficiently, produce reliable financial reports, comply with laws and regulations, and support ethical and transparent decision-making.

This chapter outlines our findings on internal controls and governance across the ten NSW universities.

Financial audits focus on the key internal controls and governance that support the preparation of financial statements. Breakdowns and weaknesses in internal controls can increase the risk of fraud and error. Our management letters report deficiencies in internal controls, matters of governance interest and unresolved issues to those charged with governance. These letters also include risk ratings, implications, recommendations and management responses.

Universities’ primary objectives are teaching and research. They invest most of their resources to achieve quality outcomes in academia and student experience. Universities have committed to achieving certain government targets and compete to advance their reputation and standing in international and Australian rankings.

This chapter outlines enrolments and teaching outcomes for NSW universities in 2024.

This chapter focuses on the cyber security incident environment at universities, the reporting of incidents to regulators and how universities have responded to data breaches as a result of cyber security incidents. We also address how universities train their staff to identify and prevent cyber security incidents.

The Australian Government identifies that artificial intelligence (AI) presents great opportunities for all levels of government to transform service delivery and enhance productivity and wellbeing. However, AI comes with risks that require active management.

This chapter offers an overview of AI adoption in universities and the current policies in place to oversee the use of AI.

While there is no one common definition of AI, the NSW Government’s ‘Artificial Intelligence Ethics Policy’ adopts the following definition:

The Australian and NSW Governments have established policies and principles for responsible and ethical use of AI. While NSW universities are not bound by these documents, they are considered best practice. This includes:

• the Australian Government’s ‘Policy for the responsible use of AI in government’, ‘Australia’s AI Ethics Principles’ and ‘National framework for the assurance of artificial intelligence in government’
• the NSW Government’s ‘Artificial Intelligence Ethics Policy’ and ‘NSW artificial intelligence assessment framework’.

Appendix 1 - Status of 2023 recommendations 

Appendix 2 - Universities' controlled entities

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.

About this report 

The Northern Beaches Hospital is a private hospital that also provides public hospital services. The hospital was built in 2018 and is operated by a private operator, Healthscope, in a public-private partnership with the NSW Government.

Healthscope is contracted to operate the public portion of the hospital until 2038. 

This audit assessed how effectively and efficiently the Northern Beaches Hospital public-private partnership delivers public hospital services.

Conclusion 

The Northern Beaches Hospital public-private partnership is not effectively delivering the best quality integrated health services and clinical outcomes to the Northern Beaches community and the State – the standard required under the arrangement and the key objective of the project deed. 

The partnership is at risk of failure, with Healthscope requesting in November 2023, and again in December 2023, that the return of the public portion of the Northern Beaches Hospital be brought forward by 14 years. In its requests, Healthscope noted the risk to the viability of the Northern Beaches Hospital, citing insufficient funding, a lack of integration into the wider health network, and strained stakeholder relationships. 

NSW Health effectively manages the contract with Healthscope day-to-day on behalf of the State, ensuring that public hospital activity at the Northern Beaches Hospital is provided at a lower cost than if the State operated the hospital. However, the public-private partnership structure creates tension between commercial imperatives and clinical outcomes. 

The Northern Beaches Hospital has recorded concerning results for some hospital-acquired complications and has not taken sufficient actions to address some identified clinical safety risks. 

The project deed, which governs the partnership, does not support the hospital’s integration into the local health district and broader health network. This has an impact on patient journeys and access to services for patients in the Northern Beaches. Additionally, Healthscope has no obligation or commitment to implement NSW Health initiatives – such as the Safe Staffing Levels initiative. 

The Northern Beaches Hospital has achieved accreditation to ensure it meets national quality standards for hospital care but some quality and safety concerns remain. 

Recommendations 

The report made three recommendations:  

1. The NSW Government and NSW Health note the findings of the report and consider whether the Northern Beaches Hospital public-private partnership is the appropriate model to deliver the best quality integrated health care in the Northern Beaches region
    
2. Healthscope should resolve:
   1. safety and quality issues
   2. system issues
   3. reporting issues
       
3. NSW Health should consider issues raised for this public-private partnership for any future arrangement.

This chapter reports on the performance of the Northern Beaches Hospital. The first section reviews the performance of the Northern Beaches Hospital in terms of safety and quality. The second and third sections review the operational performance of the emergency department and elective surgery (including general surgery). One of the features of the Northern Beaches Hospital public-private partnership is the requirements of demand and volume management placed on Healthscope, the operator of the hospital. How that interacts with the performance of the emergency department and admitted patient areas is examined here. The fourth section reports on patient experience and complaints.

A key objective of the project deed is for the Northern Beaches Hospital to provide the best quality care for people in the Northern Beaches catchment and the people of NSW. The best quality care is operationalised in the project deed by requiring the Northern Beaches Hospital to perform in the top quartile of comparator hospitals for many measures. Only one of these measures relates to the scope of this audit – patients who left the emergency department after triage without being seen. Comparator hospitals are drawn from national hospitals for these measures.

When comparing results with NSW hospitals, the Northern Beaches Hospital is within the B1 hospital grouping, which includes Blacktown, Sutherland, Hornsby Ku-ring-gai and Campbelltown in metropolitan Sydney, and Orange, Tamworth, Wagga Wagga, Tweed Valley, Coffs Harbour, Port Macquarie and Lismore hospitals in regional NSW.

This chapter focuses on the role of the Northern Sydney Local Health District and Ministry of Health in managing the Northern Beaches Hospital public-private partnership for the State. The first section reviews identification and management of risks arising from this arrangement, including clinical risks and how NSW Health intervenes to address issues. (Chapter 3 also considered this question in relation to results for hospital-acquired complications and for sepsis and deteriorating patients). The second section looks at integration, which is one of the key objectives of the public-private partnership. Integration is the way the hospital fits into the surrounding NSW Health network. The third section then considers the efficiency of this arrangement for NSW Health.

Appendix 1 – Response from entities

Appendix 2 – Northern Beaches Hospital services and role delineation

Appendix 3 – Hospital-acquired complication data

Appendix 4 – 2023–24 abatable key performance indicators

Appendix 5 – About the audit

Appendix 6 – 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 #404 released 17 April 2025.

About this report

Bus services in metropolitan Sydney are provided by private operators under contract to the NSW government. Transport for NSW (TfNSW) determines bus timetables, routes, stops, and frequency, while the operators deliver the specified bus services.

This audit assessed the effectiveness of TfNSW’s design and management of metropolitan Sydney bus service contracts. The audit focused on the nine regions where services are provided under the Greater Sydney Bus Contract (GSBC).

Conclusion

TfNSW is not effectively managing bus contracts to ensure that operators are meeting contracted obligations and customer needs. It has not responded strategically to major changes in commuter, work and travel patterns on metropolitan bus services.

TfNSW identified significant gaps in its strategic contract management capacity since 2022 but has not sufficiently addressed these. As a result, it has not undertaken essential medium to long term strategic activities required to effectively manage the GSBCs. It has not conducted a holistic, systematic review of service levels across all regions to fully address the impacts of the post-COVID-19 period, and other changes such as new infrastructure and travel options like the Sydney Metro M1 line.

First stop on time running has stabilised since January 2023. However, operators are not consistently meeting their performance obligations for on time running, cancelled trips and customer complaints.

There are gaps in TfNSW’s contract management specific procedures and delegations. These gaps mean that the risks of inappropriate exercise of delegations, non compliance with contractual requirements and/or inappropriate use of public funds are not fully addressed.

Recommendations

The audit recommends that TfNSW improve the capacity of its bus contracts management team. It should also close the gaps in its contract management specific procedures and delegations, and start regularly auditing operator responses to customer complaints.

TfNSW should implement strategic planning, including enhanced data analytics, aimed at improving bus operator performance.

On time running (OTR), customer complaints, tracking rates, and cancelled and incomplete trips are important key performance indicators (KPIs) as they represent significant facets of the customer experience.⁷ This chapter considers OTR KPIs in detail, since the start of the Greater Sydney Bus Contract (GSBCs).

OTR is defined in Schedule 4 of the GSBC with three KPIs – first, mid and last stop OTR. All three are measured as the percentage of timetabled bus trips that are on time at the specified location. GSBC operators are required to report to Transport for NSW (TfNSW) on these three KPIs every month.

For the first and mid stops ‘on time’ is defined as between 59 seconds early and five minutes and 59 seconds late compared to the timetable.

TfNSW has advised that mid transit stop OTR has been incorrectly calculated for multiple GSBC regions and that it was in the process of re-calculating this KPI for the operators that were affected. As a result, we do not report mid transit stop OTR numbers here or draw any conclusions about them.

OTR for the last transit stop on a route is measured as a percentage of bus trips arriving on time, where ‘on time’ is defined as no later than five minutes and 59 seconds after the timetable arrival time.

First stop OTR has decreased over the duration of the GSBCs, but it has stabilised in the period from January 2023 to May 2024

Figure 8 shows the aggregated first stop OTR performance data across metropolitan Sydney as a whole (excluding region 6) for the duration of the GSBCs. It also reflects advice received from TfNSW that there is a change in bus operator performance in January 2023 and splits the time period accordingly (April 2022 to December 2023 and January 2023 to May 2024).

During the audit, TfNSW emphasised the impact of the bus driver shortage on bus service performance against KPIs, as well as seasonal effects in OTR performance. Therefore, Figure 8 also shows the reported driver shortages for each month from June 2022, as well as the January and February seasonal effects.

Figure 8 shows that, while there is an overall downward trend in performance, first stop OTR becomes stable after January 2023. Prior to that point in time, performance was declining.⁸

This chapter considers operator performance against key performance indicators (KPIs) for bus tracking rates and cancelled and incomplete trips. From the perspective of bus passengers, tracking is important to ensure timetables and real-time data are accurate and reflects the reality of the services they are receiving. Tracking is also essential for the measurement of on time running (OTR) and cancelled and incomplete trips.

This chapter considers operator performance based on customer complaints received. Customer complaints are defined in Schedule 4 of the Greater Sydney Bus Contract (GSBC) as any report of a negative experience in relation to a bus service in the categories of ‘complaint’ and ‘feedback’. This excludes vexatious complaints, and any complaints about issues that are within Transport for NSW’s (TfNSW) control and not the operators.

Customer complaints have increased since the start of the GSBC

The number of customer complaints about bus services over the entire GSBC area has increased over time. The number of complaints per 100,000 boardings in May 2024 is approximately double that in April 2022 (28.9 complaints per 100,000 boarding compared to 14.4), reflecting increasing customer dissatisfaction with the services delivered.

Complaints are measured using several key performance indicators (KPIs) that represent factors such as the number of complaints per 100,000 boardings and the time it takes operators to respond to complaints. Figure 12 represents the number of customer complaints per 100,000 boardings across the GSBC operators over the GSBC period.

Appendix 1 – Response from Transport for NSW

Appendix 2 – The evolution of bus contracting in NSW from 2003

Appendix 3 – About the audit

Appendix 4 – 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 #402 - released 29 January 2025.

About this report

Results and key themes from our audits of the state agencies’ financial statements for the year ended 30 June 2024.

It also includes observations on the following areas of focus:

• risk management
• capital projects
• shared service arrangements.

Findings

The Treasurer did not table the audited Total State Sector Accounts (TSSA) in Parliament as required by the Government Sector Finance Act 2018, and Responsible Ministers did not table 16 annual reports in Parliament by the required date.

Audit results

Unqualified opinions were issued for all but one agency.  The quality of financial statements submitted for audit improved, with reported misstatements down to a gross value of $3.9 billion in 2023–24, compared to $10.8 billion in 2022–23.

Key themes

Errors in accounting for assets led to financial statements adjustments of $1.4 billion. 

Our audits identified deficiencies in key controls across financial management, payroll, contract management and procurement.

Risk management

Risk management maturity is low across most agencies. Some of the largest 40 agencies self-assess their risk maturity as requiring improvement.

Capital projects

There is a lack of transparency in the NSW budget papers relating to significant capital projects. The estimated total costs for some major projects are not published as the amounts are considered commercially sensitive. The budget papers do not provide a complete and accurate reflection of the actual costs of large infrastructure projects.

Shared service arrangements

Three of the five agencies that provide shared services to 108 customer agencies did not obtain independent assurance over the effectiveness of their control environment. 

Recommendations

The report makes recommendations to agencies to improve controls and processes in relation to:

• financial reporting
• financial management
• risk management
• shared service arrangements
• capital projects.

Financial reporting is an important element of good governance. Confidence in, and transparency of, public sector decision making is enhanced when financial reporting is accurate and timely.

This chapter outlines our audit observations relating to the financial reporting of State Government agencies.

Appropriate financial controls help ensure the efficient and effective use of resources and administration of agency policies. They are also essential for quality and timely decision making.

This chapter outlines observations and insights from our audits of financial statements of the 40 largest agencies in the State sector. These agencies are listed in Appendix 3.

This chapter outlines audit observations, conclusions and recommendations from our review of agencies’ risk maturity, assessment processes, governance, systems and culture across the 40 largest agencies in the state sector. These agencies are listed in Appendix 3.

This chapter outlines observations, conclusions and recommendations from our review of the 15 most significant capital projects in the State.

Shared service arrangements can centralise corporate services functions such as finance, human resources, procurement and information technology (IT). Across NSW Government agencies, many business processes and IT functions are provided on a shared services model, that is, one agency operates a business function or IT platform that is used by other agencies rather than each agency maintaining their own. These services are shared by several agencies (‘customers’), but generally are operated and managed by one agency or department (‘provider’).

This chapter outlines audit observations, conclusions and recommendations from our review of shared service arrangements provided and received by the 40 largest agencies in the state sector. These agencies are listed in Appendix 3.

This report outlines the findings on shared service arrangements.

Appendix 1 – Status of audits of consolidated entities

Appendix 2 – Status of audits of non-consolidated entities

Appendix 3 – Forty largest State agencies contents

© 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.

About this report

Local councils in NSW manage a large proportion of roads across the state. Roads often represent a significant proportion of total council
expenditure.

How councils manage roads is impacted by their revenue, local conditions, and the needs of residents, businesses and other road users.

This audit was undertaken within the wider context of natural disasters and weather events that have significantly impacted the road network in NSW in recent years.

It assessed whether three councils had effectively managed their road assets to meet the needs of their communities, makes detailed findings and recommendations to each audited council, and identifies key lessons for the wider local government sector.

Key findings

All councils can improve how they link community consultation with planned service levels. Formalising these processes could help better demonstrate how current service levels meet community needs.

Clarence Valley Council

• has established a strategic priority for road asset management but not formal governance arrangements or a long-term capital works program
• is delivering and reporting on its work to respond to natural disasters but does not report against targets for road asset quality and service
• has set benchmarks for road asset maintenance, replacement and renewal but needs clear service levels.

Gwydir Shire Council

• did not have aligned, up-to-date asset plans during the audit period
• did not have a long-term capital works program but adopted a prioritisation program for capital works in August 2024
• did not effectively implement formal governance, or coordinate management oversight, to manage its road assets.

Wollondilly Shire Council

• has a strategic framework for road asset management and has used long-term plans to guide its asset capital and maintenance works
• has reported asset management outcomes against a planned capital works program but could improve how it uses KPIs to demonstrate performance.

This is the first performance audit of the local government sector that I am tabling in Parliament as Auditor-General for New South Wales.

Our performance audits are designed to provide valuable information to parliamentarians, sector stakeholders and the public. Ultimately, our aim is to ensure transparency, a principle that underpins effective and efficient use of public resources.

The management of roads and associated assets is a critical issue for local councils across the state. In recent years, many councils have had to contend with the immediate and ongoing effects of natural disasters.

These natural disasters, along with increased community expectations, population changes and complex regulatory obligations all contribute to financial sustainability risks for councils. Some councils have used short-term funding allocations (including emergency relief grants) to cover the costs of managing long-term assets. These councils do not have the capacity to generate sufficient income from their own sources, and therefore depend on assistance from other levels of government. Councils’ ability to plan and budget for the long term has also been disrupted by the need for new or restored infrastructure outside asset life cycles.

Several reports and inquiries in recent years have highlighted these significant financial sustainability risks. The parliamentary inquiry into the ‘Ability of local governments to fund infrastructure and services’,¹ due to be tabled soon, will be a critical input to a long-term solution.

The three councils audited in this report – Clarence Valley, Gwydir Shire and Wollondilly Shire –each experienced significant natural disasters, including fires, storms and floods during the audit period. Despite this, each audited council was able to deliver a large volume of road asset management works.

This report provides valuable lessons from these audited councils that can help all councils manage their roads more effectively in the face of evolving risks and competing resource demands.

I acknowledge this has been a difficult time for some councils across NSW. This report supports councils with practical steps to manage their roads as effectively as possible, improve their resilience to climate challenges and meet legislative requirements.

¹ The inquiry into the ‘Ability of local governments to fund infrastructure and services’ by the NSW Legislative Council Standing Committee on State Development commenced on 14 March 2024 to inquire into, and report on, the ability of local governments to fund infrastructure and services.

Background

Local councils in New South Wales (NSW) manage over 180,000 km of local and regional roads combined. These roads are crucial to travel within local government areas and across the state, improving community accessibility. Reliable roads ensure commercial and public transport can run on time, increase safety and keep the environment clean.

As roads age and deteriorate, they become more expensive to repair. Road surfaces and formations are vulnerable to both extreme heat and water exposure. These kinds of exposure have varying effects on the ways roads degrade, depending on the amount of traffic and the kinds of vehicles that use them.

Local conditions, business and road-user needs, and the impacts of natural disasters vary between councils and influence the way each council manages its roads. Regularly maintaining roads can keep roads functional and safe and prevent costly, unbudgeted repairs and replacements.

In the 2022–23 financial year (FY2022–23), the estimated total replacement cost of council road assets across NSW was around $102 billion. In the same year, local councils reported collective road asset maintenance expenditure of around $1 billion.

Since 2017, financial audits of local councils have identified asset management-related issues, including gaps in asset management processes, governance and systems. The Audit Office’s ‘Local Government 2023’ report outlined 266 asset management-related findings across the local government sector, including gaps in revaluation processes, maintenance of information in asset management systems and accounting practices.

Councils also provide a wide range of other services and infrastructure, including water and sewer infrastructure and services, waste management, environmental protection, housing, and community transport. Through integrated planning and reporting, councils determine how they will allocate resources to their services and infrastructure. Understanding community expectations for assets and services, alongside technical requirements, supports effective planning for function, cost and quality.

Audit objective

This audit assessed how effectively three councils – Clarence Valley Council, Gwydir Shire Council and Wollondilly Shire Council – are managing their road assets to meet the needs of their communities.

The audit assessed whether the selected councils:

• have a strategic framework in place for managing their road assets
• have effective governance, data and systems for road asset management
• are managing their road assets in line with planned service levels and quality outcomes.

Overview of findings

This audit assessed how effectively Clarence Valley Council, Gwydir Shire Council and Wollondilly Shire Council managed their road assets to meet the needs of their communities.

In assessing each Council’s performance, this audit concluded:

Clarence Valley Council has effectively established a strategic priority for road asset management, but delivery of this priority was not supported by formal governance arrangements or a long-term capital works program. While the Council is delivering and reporting on a large volume of road asset works in response to natural disasters, it does not report on consolidated targets for road asset quality and service. The Council has set benchmarks for maintenance, replacement and renewal of roads. It now needs to enhance this with clear service levels to ensure community needs and expectations are met.

Detailed conclusions and recommendations for the Council are outlined in sections 2.2 and 2.3. Recommendations include that Clarence Valley Council:

• updates and implements its asset management plan and associated improvement actions
• reviews and implements key performance indicators (KPIs)
• captures lessons learned from its natural disaster responses
• implements a long-term capital works program.

Gwydir Shire Council did not have aligned, up-to-date long-term asset management plans to support a strategic framework for road asset management across the audit period. The Council did not effectively implement formal governance and coordinated management oversight for its road assets. The Council implemented updates to its asset management plans in June 2024 and governance arrangements in July 2024.

The Council has reported on the large volume of works it is delivering, including in response to natural disasters, but is not reporting in the context of information about targets and quality benchmarks. The Council does not have a long-term capital works program, but adopted a prioritised rolling program of works in August 2024 to guide its priorities and efforts over time.

Detailed conclusions and recommendations for the Council are outlined in sections 3.2 and 3.3. Recommendations include that Gwydir Shire Council:

• implements its asset management plans and associated improvement actions
• formalises and documents community priorities and service level expectations for roads
• captures lessons learned from its natural disaster responses.

Wollondilly Shire Council has effectively applied a coordinated and strategic framework to deliver road asset management. The Council has long-term plans to guide its efforts and uses data to inform its approach. The Council has delivered a large volume of works in response to natural disasters during the audit period. The Council is reporting its road asset management outcomes and can demonstrate progress against a clearly defined capital works program, but its use of performance indicators could be improved.

Detailed conclusions and recommendations for the Council are outlined in sections 4.2 and 4.3. Recommendations include that Wollondilly Shire Council:

• finalises and implements its transport asset management plan
• reviews performance indicators for road assets
• formalises and documents community priorities within its integrated planning and reporting (IP&R) and asset management frameworks.

Key observations of good practice

While each council was separately audited, this report also identifies practices that contribute to effective road asset management across all local councils.

These include:

1. a good understanding and articulation of the community’s vision, priorities and purpose for local roads
2. asset management documents that are current and aligned with broader strategies and financial plans
3. long-term capital works planning that considers associated ongoing costs, and is supported by systematic prioritisation of works
4. clear and documented decision making processes
5. transparent performance reporting on progress and outcomes
6. reliable, accurate and assured data and systems
7. continuous improvement through both formal reviews and capturing lessons learned
8. resilience and responsiveness to natural disasters with a planned approach to disaster recovery.

Further lessons for local government can be found in Appendix 3.

Appendix 1 – Response from entity

Appendix 2 – Council expenditure profile

Appendix 3 – Lessons for local government road asset management

Appendix 4 – About the audit

Appendix 5 – Performance auditing

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Parliamentary reference - Report number #401 - released 21 November 2024.

About this report

Internal controls are key to the accuracy and reliability of agencies’ financial reporting processes. This report analyses the internal controls and governance of 26 of the NSW public sector’s largest agencies for the 2023–24 financial year.

Findings

There are gaps in key business processes, which expose agencies to risks. These gaps are identified in 121 findings across the 26 agencies—including 4 high risk, 73 moderate risk and 44 low risk findings. All four high-risk issues related to IT controls and 19% of control deficiencies were repeat issues. Thirty-five per cent of agencies had deficiencies in control over privileged access.

Shared IT services

Six agencies provide IT shared services to 120 other customer agencies. All six had control deficiencies—three of these were high risk. Four agencies provide no independent assurance to their customers about the effectiveness of their own IT controls.

Cyber security

Eighteen agencies assessed cyber risk as being above their risk appetite. Fourteen of these agencies had not set a timeframe to resolve these risks and two agencies have not funded plans to improve cyber security.

Fraud and corruption control

Agencies need to improve fraud and corruption control. Instances of non-compliance with TC18-02 NSW Fraud and Corruption Policy were identified, including gaps such as a lack of comprehensive employment screening policies and not reporting matters to the audit and risk committee.

Gifts and benefits

Management of gifts and benefits requires better governance and transparency. All agencies had policy and guidance but all had gaps in management and implementation—such as not publishing registers nor providing ongoing training.

Information Technology

Nine agencies did not effectively restrict or monitor user access to privileged accounts.

Recommendations

The report makes recommendations to agencies to implement proper controls and improve processes in relation to:

• organisational processes
• information technology
• cyber security
• fraud and corruption, and
• gifts and benefits.

Read the PDF report

Internal controls are processes, policies and procedures that help agencies to:

• operate effectively and efficiently
• produce reliable financial reports
• comply with laws and regulations
• support ethical government.

This chapter outlines the overall trends for agency controls and governance issues, including the number of audit findings, the degree of risk those deficiencies pose to the agency, and a summary of the most common deficiencies found across agencies.

This chapter outlines our audit observations, conclusions and recommendations arising from our review of agency controls to manage key financial systems.

This chapter outlines our audit observations, conclusions and recommendations arising from our review of agencies' cyber security.

This chapter outlines our audit observations, conclusions and recommendations from our review of agencies' fraud and corruption control framework, policies and practices. Our Internal Controls and Governance 2018 found a number of fraud and corruption control gaps in NSW Government.

The NSW Treasury Circular TC18-02 NSW Fraud and Corruption Control Policy (the Circular) requires NSW government agencies to develop, implement and maintain a fraud and corruption control framework. The Circular sets out minimum standards for a NSW Government agency’s fraud and corruption control framework.

Previous Audit Office report on agency fraud and corruption control

This chapter outlines our audit observations, conclusions and recommendations arising from our review of agencies' managing of gifts and benefits.

Click here for the Easy English version of the report snapshot

The Easy English version is intended to meet the needs of some people with lower literacy skills, some people with an intellectual disability, and some people from different cultural backgrounds.

The Easy English document is not the final audit report that has been prepared and tabled in NSW Parliament under s.38EB and s.38EC of the Government Sector Audit Act 1983. It should not be relied on or quoted from as the final audit report.

About this report

Australian and state legislation protects the right of students with disability to a quality education, free from discrimination. These require that students with disability be supported to access and participate in education on the same basis as their peers without disability.

This audit assessed whether the NSW Department of Education is effectively supporting students with disability in NSW public schools.

Findings

The Department has effectively designed approaches and developed reforms under its 2019 Disability Strategy and related measures.

But it still hasn’t resolved longstanding issues with funding, access to targeted supports, monitoring school practice and tracking outcomes for students with disability.

This is despite the Department being made aware of these performance gaps for almost two decades across multiple audits, parliamentary inquiries and the recent national Disability Royal Commission.

Recommendations

The report makes five recommendations to address these gaps, including that the Department should:

• annually monitor the experiences and outcomes of students with disability to be able to identify and address emerging issues, and promote good practice
• reform funding to be better aligned to student needs
• enhance guidance and support to schools and families on making reasonable adjustments for students with disability.

Background

Australian legislation protects the right of students with disability to a quality education, free from discrimination, and describes the obligations of education providers to these students.

Under the federal Disability Discrimination Act 1992 (Cth) and related legislated Disability Standards for Education 2005 (the Disability Standards), education providers have legal responsibilities to make education and training accessible to students with disability, including in enrolment, participation, curriculum and support services. This is to be done through providing ‘reasonable adjustments’ or measures and actions that assist students with disability to access education on the same basis as students without disability.

The NSW Department of Education (the Department) is responsible for supporting students with disability in NSW public schools. The Department and schools provide a range of adjustments and targeted supports, in consultation with the student and/or their parents/guardians. In 2023, approximately 206,000 children or young people in NSW public schools (around one-quarter of all public school students) had disability and received adjustments in NSW.

The state Education Act 1990, Disability Inclusion Act 2014 and Anti-Discrimination Act 1977 also protect the right of students with disability in NSW to a quality, accessible education free from discrimination. For public schools in NSW, legislative obligations are articulated in key policy and practice documents including the Inclusive Education Statement and Policy, NSW Wellbeing Framework for Schools, and Achieving School Excellence in Wellbeing and Inclusion tool and associated resources.

A number of key reviews conducted over the last two decades have considered the experiences of students with disability and the effectiveness of school and departmental practices in meeting their needs. In 2017, a NSW Parliamentary inquiry found that while there were many instances of excellence, the inclusive approach to education provision promoted in legislation and policy was not the reality experienced by many students with disability in NSW schools at that time. In response, the Department released its Disability Strategy in 2019 with a commitment to building a more inclusive education system in which all children thrive academically, physically, emotionally, and mentally. The strategy focused on four key reform areas:

• investing in teachers and other support staff
• developing new resource models and support to meet individual student needs
• streamlining processes and improving communication and access to information
• building an evidence base to measure progress.

Audit Objective

This audit assessed whether the Department of Education is effectively supporting students with disability in NSW public schools. It reviews relevant evidence relating to the six calendar years 2018–2023, guided by the following questions:

1. Has the Department designed and delivered approaches that effectively support students with disability?
2. Is the Department addressing the needs of students with disability?

Conclusion

The Department of Education has effectively designed approaches and developed reforms aimed at improving the support provided to students with disability. However, key initiatives that target longstanding and well-known issues have not been implemented in a timely way, limiting the effectiveness of the Department’s support for students with disability in NSW public schools.

The Department, in its 2019 Disability Strategy, committed to building a more inclusive education system, ‘one where all students feel welcomed and are learning to their fullest capacity’. Under the strategy the Department commenced new initiatives and strengthened existing ones to modify school funding, improve teacher skills and resources, enhance accessible school infrastructure, and increase engagement with students and families.

However, key initiatives have been in place for less than eighteen months, and some remain outstanding. The Department’s efforts have not resolved longstanding issues including unmet demand for targeted supports, gaps in professional learning and practice guidance for school staff, and inconsistent central monitoring of school practice and outcomes data. This is despite the Department being made aware of these issues for almost two decades across multiple audits, parliamentary inquiries and the recent national Disability Royal Commission.

Since 2018 the proportion of NSW public school students with disability has grown from one-fifth to one-quarter. While the Department is making efforts across a range of disability reform areas, many students, families and schools continue to feel they have not been adequately supported.

The Department does not know how effectively it is meeting the needs of students with disability because it has not consistently monitored outcomes for students with disability or schools’ inclusive education practices. Our own analysis of the Department’s data shows that there has been improvement in some student learning outcomes, but deterioration in some measures of student wellbeing.

Key findings

The Department effectively designed its Disability Strategy based on evidence and broad stakeholder input, and provides a range of supports to schools for students with disability

The Department defines an inclusive education system as one where all students feel welcomed and are learning to their fullest capacity. Under the 2019 Disability Strategy it committed to building this, and put in place a variety of measures to support schools in meeting the needs of students with disability.

In designing the strategy, the Department responded to the recommendations from the 2017 Parliamentary inquiry, and undertook a literature review analysis of evidence-based practices and personalised learning approaches. The Department also consulted widely, including with schools, experts and people with disability.

The Department introduced 15 new initiatives, and strengthened a similar number of existing ones, to better support students with disability in NSW public schools. These included initiatives aimed at:

• reforming the basis for relevant funding to better reflect student need
• increasing the provision of inclusive education courses in tertiary education and professional learning, and teaching resources for educators and school staff
• increasing access to allied health and school counsellor/psychologist services
• creating more inclusive learning spaces in school infrastructure
• improving communication to, and exploring ways to obtain better feedback from, students and parents/guardians.

The Department has established governance arrangements focused on inclusive education, and provides professional development and teaching resources for schools. Some specialist central staff roles are funded in regional teams and in schools across the state to advise schools in making reasonable adjustments for individual students with disability. The Department provides disability-specific funding on top of base school allocations, and funds infrastructure integration works in response to individual student needs for accessible school grounds. A full list of initiatives and supports for students with disability in NSW public schools is at Appendix two.

The Department’s efforts to reform support for students with disability have not been timely

Performance gaps in Department and school supports for students with disability have been repeatedly identified through public reviews over the last two decades. This includes unmet demand for targeted supports, gaps in professional learning and practice guidance for school staff, and inconsistent central monitoring of school practice and outcomes data. The 2017 Parliamentary inquiry, which the 2019 Disability Strategy responded to, found many of the same issues that were identified in our 2006 audit Educating Primary School Students with Disabilities conducted eleven years earlier. These concerns were also highlighted in a 2010 NSW Parliamentary inquiry and in five-yearly reviews of the federal Disability Standards. The Disability Strategy initiatives came thirteen years after many of the same risks were identified in our 2006 audit. Had these been implemented sooner, an entire cohort of students with disability who completed primary and secondary education in that time may have had a different schooling experience.

While the Department has delivered almost all the Disability Strategy initiatives since it commenced in 2019, the few that are outstanding are fundamental to determining the success of the Disability Strategy:

• reforming all streams of disability funding to be based on student needs, so that schools have more resources, and those resources will be more flexible
• consistently tracking outcomes for students with disability, families and teachers to understand what is changing in their lived experiences of education.

The Department did not examine whether actions in the Strategy were addressing the intent of previous recommendations

The reform areas and initiatives in the Disability Strategy reflected evidence from previous reviews, as well as contemporary research literature and broad stakeholder consultation. Stakeholders we heard from - including academics, advocates and peak bodies - broadly agreed that the strategy addressed the right areas for action.

The strategy reform initiatives targeted areas that had been repeatedly identified as issues in previous public inquiries held over the past twenty years including: insufficient funding, workforce constraints, gaps in professional learning, inadequate outcomes tracking, and limited engagement with students and families.

While the Department advised that it has implemented the accepted recommendations from previous reviews into disability support and inclusive education, the Department’s approach to tracking recommendations does not include assessing whether the action taken has met the intent of the relevant recommendation. Without this, there is a risk that previously identified gaps and performance issues are not addressed and persist or recur in the future.

While the Department’s governance arrangements were suitable for the design and implementation of the Disability Strategy, the Department did not consider why areas that had been repeatedly identified were still not resolved. This audit found that students, families and schools continue to feel the impact of issues that the recommendations from past reviews aimed to improve, raising questions about the accountability for, and effectiveness of, the Department’s responses.

The Department does not know how effectively it is meeting the needs of students with disability

Schools are legally required to provide individualised supports to students with disability where these are needed for students with disability to be able to access and participate in education on the same basis as their peers without disability. The Department captures schools’ data on the reasonable adjustments they are making for students with disability through the annual Nationally Consistent Collection of Data on students with disability (NCCD).

Where students with disability receive targeted supports such as placement in a support class or specific school funding to learn effectively in a mainstream class, schools are also required to annually review student needs in consultation with the student, their families and teachers, and respond to any changes.

The Department provides schools with guidance and specialist staff to support making reasonable adjustments for students with disability to access and participate in education on the same basis as their peers. However, the Department does not independently verify school evidence on adjustments made and does not have visibility of where reasonable adjustments provided are not meeting students’ needs (for example, where targeted supports are not available) unless a complaint is made or escalated to the Department.

Stakeholders we heard from – both from schools and families – said that there can still be conflicting views about what reasonable adjustments are required in particular situations, and that information provided is vague. The Department has accepted the recommendations of previous reviews and the Disability Royal Commission to improve its guidance and resources for schools and families about reasonable adjustments.

The Department also has a legislative and policy obligation to understand and address the particular needs and potential barriers to accessing supports that may be experienced by students with disability who also have other identities or characteristics such as being Aboriginal, living in rural or remote areas, socioeconomic disadvantage, or speaking English as an additional language or dialect (also known as intersectionality).

While the Department has taken some steps to consider intersectionality for students with disability in its policies and resources, it has not reduced the impacts where these create compounding factors of disadvantage. The Department was unable to demonstrate that it was meeting the needs of these students.

The Department’s criteria for accessing targeted supports for disability has not been updated in over 20 years

If a student with disability has moderate to high needs and requires specialist support that cannot be met with existing school funding and staffing resources, their school may apply to the Department for targeted supports through the ‘access request’ process. Applications are decided by a panel of regional departmental staff including learning and wellbeing staff; primary, high school and Schools for Specific Purposes principal representatives; and a senior education psychologist.

Access to almost all targeted supports is limited to eligible students with disability who have a confirmed medical diagnosis that falls within the Department’s 2003 disability criteria. These criteria exclude those students with undiagnosed disability or with diagnosed disabilities that fall outside the Department’s criteria, such as attention-deficit/hyperactivity disorder (ADHD) and dyslexia.

Despite limitations with the current criteria being highlighted in multiple parliamentary inquiries over the past 13 years, the Department has not updated these criteria since 2003. It advises that updated criteria will be released from term four, 2024.

The Department does not have a clear and accurate picture of demand compared to supply, or the time taken for targeted supports to be provided to students

The Department tracks if applications for targeted supports have been supported, deferred, declined or withdrawn through the access request panel process. However, the rationale for why an application has been deferred or declined is not consistently recorded in the system.

The Department does not maintain waiting lists for students deemed eligible for targeted supports where the support is not available. In particular, for support classes, while the Department has centralised statewide oversight of class numbers and locations to inform decisions about establishing new classes each year, it does not have a clear picture of demand at local geographic levels at any point in time.

Although recommended in our 2006 audit, the Department still does not monitor the time taken for targeted supports to be provided to eligible students after an application has been approved for provision, so cannot tell how long students with identified needs are waiting for supports to reach them.

The Department has not consistently monitored outcomes for students with disability

The Department started to develop a framework to measure the outcomes of students with disability, at a system level, in 2019. These include wellbeing, independence and learning growth outcomes, informed by measures including students’ perceptions, supports provided, educators’ understanding and skills, and satisfaction of parents/guardians. The framework is comprehensive and evidence-based, and includes existing datasets to minimise the administrative burden on schools. The Department tested proposed measures to validate their reliability.

While there are many complexities in comparing progress and experiences across all students with disability due to the diversity across this cohort, and a range of data limitations that needed to be addressed, the implementation of this framework was not timely. Although the domains, outcomes and metrics for the disability outcomes framework were endorsed by the Department executive in 2022, the framework was still not fully operational in September 2024. Since executive endorsement, the Department has updated the framework to reflect the final accepted recommendations of the Disability Royal Commission and to ensure alignment with the NSW Government’s 2023-2027 Plan for Public Education. It advises that it has started to implement the framework in a staged approach.

The Department has the ability to link data which identifies students with disability with a variety of its other datasets, such as student attendance, suspensions and expulsions, participation and results in the National Assessment Program – Literacy and Numeracy (NAPLAN) and the Higher School Certificate (HSC). The Department uses these linked datasets to inform the development of statewide policy and guidance on practice in schools periodically. However, it is not using the datasets to regularly monitor school practice, identify and address emerging issues, or identify and promote ‘what works’ to support students with disability.

The Department’s School Excellence Framework involves schools self-assessing and peer-reviewing their performance in learning, teaching and leading at least once every five years, but this has not had a specific focus on inclusive education to date. A policy monitoring process involves schools reporting on their compliance with specific policies annually, but this did not include the Disability Standards until 2024. Schools provide some information in their public annual reports about their disability funding expenditure, but this reporting is not outcomes-focused.

The Department runs annual surveys of students, parents/guardians and teachers called ‘Tell Them From Me’. This survey gives students with disability and their families a direct voice to schools and the Department, although the survey is voluntary and not accessible for some students with complex learning and communication needs (the Department is developing a suite of accessible tools to be able to seek feedback from these students in the future). However, the Department does not regularly analyse the Tell Them From Me survey response data to understand whether the experiences of students with disability or their families are changing since the Disability Strategy and related efforts.

Complaints are another way by which the Department can obtain insight into school practice and student outcomes. However, the Department does not have oversight of the number, type or trends in complaints that arise and are resolved at the school level, including those concerning students with disability.

The Department was aware from the 2017 Parliamentary inquiry and the Disability Royal Commission that students with disability and their families can be reluctant to make complaints to their principal about their school, perceiving a conflict of interest and risk of negative consequences. However, the Department was not seeking feedback from complainants about the resolution of their complaint when these were made at the school level, or from students with disability and their families more broadly (in the absence of complaints). The Department advises that it is taking steps in 2024 to seek and address feedback from parents/guardians on their experience in raising concerns at the school level.

The Department has not tracked the impact of the Disability Strategy on the experiences of students, families and schools

Although the Disability Strategy outlined a vision for inclusive education and success measures that sought changed experiences of students, families and teachers, the Department did not establish a time horizon by which the strategy vision and success measures were expected to be realised, nor baseline information against which change could be assessed.

While it evaluated some individual initiatives under the strategy, it did not have an evaluation framework in place for the strategy as a whole and has not assessed how the experiences of students, families and schools have or haven’t changed as a result of the implementation of the Disability Strategy overall.

The Department has taken steps to reform the distribution of disability funding, but this was not timely, and evidence on whether resourcing is adequate to meet the needs of students with disability remains unclear

The Department has publicly acknowledged that ‘effectively resourcing schools is crucial to building an inclusive education system and improving outcomes for, and experiences of, students with disability.’

Stakeholders to this audit – including parents/guardians, school staff and advocacy organisations – consistently said that existing funding to support students with disability is not sufficient to meet their learning needs. Most of the previous public reviews also identified inadequate funding as a key challenge to providing inclusive education.

The Department allocated annual disability-specific funding to NSW public schools totalling approximately $1.1 billion in 2018 rising to $1.9 billion in 2023. This represents an annual average cost above the base allocations of $7,300 per student with disability in 2018 and $9,300 in 2023.

The Department commenced a program of work in 2020 to review and reform the disability-specific funding provided to schools. This sought to change the distribution of funding so that resourcing is linked to a student’s functional needs at school and reflects a school’s efforts to support a student with disability relative to these needs, rather than relying on students’ medical diagnoses or academic performance.

During the audit review period the Department:

• forecasted future funding needs
• revised the funding model for the disability equity loading allocated to mainstream schools to use towards all their students with disability who need supports, regardless of diagnoses – the Department estimated this would more than double the number of students who could be supported by this funding
• provided supplementary funding to Schools for Specific Purposes for 2020–2024, and
• sought government approval and resourcing to change the thresholds for targeted funding support for individual students with disability who have moderate to high learning needs in mainstream classrooms (not yet implemented).

While the Department made important advances in funding reforms, these efforts were not timely, coming around a decade after being recommended by the 2010 Parliamentary inquiry.

Nationally, evidence on the costs to schools to make adjustments to support students with disability is not clear. A 2019 federal review into the Australian Government disability loading for states and territories concluded that there was significant variation in these cost estimates and recommended that joint work be undertaken by the Australian, state and territory governments to produce more nuanced estimates.

In late 2023, the Disability Royal Commission made several recommendations to review disability funding and transparency in the education sector, which the Australian Government and state and territory governments jointly accepted in principle in July 2024.

The Department’s data shows mixed results for students with disability

Our analysis of the Department’s data showed that there had been some improvements for students with disability in the time of the Disability Strategy. This includes an overall reduction in the number of suspensions and expulsions for students with disability, and an increase in the number of students with disability receiving HSC results.

However, there was limited individual student growth in NAPLAN exams over this time, and deterioration in some measures of student wellbeing relating to self-reports of a sense of belonging and experiences of bullying at school. Aboriginal students with disability were worse off than their non-Aboriginal peers with disability in relation to suspension, expulsion, individual student growth and reported experiences of bullying.

Recommendations

By January 2026, the Department of Education should:

1. At least annually, monitor the experiences and outcomes of students with disability to:
   1. identify and address emerging issues
   2. identify and promote good practice
   3. take effective steps where there is a need to improve longer-term student outcomes, and
   4. consider the impacts of intersectionality.
2. Continue to expand the use of NCCD data to support funding allocation in accordance with the needs of students with disability.
3. Work with the Australian Government on reviews of the disability loading settings to ensure NSW public schools are adequately funded to support students with disability.
4. Work with stakeholders to enhance guidance and practical support to public schools and families on reasonable adjustments for students with disability, including ways to resolve conflicting views in a timely manner.
5. Improve the planning and delivery of targeted supports by:
   1. obtaining a clear and timely picture of the supply of, and demand for, targeted supports at a local and statewide level to identify and address constraints
   2. monitoring the time taken for targeted supports to be provided to eligible students, and addressing delays so that adequate support is put in place once need is identified
   3. reducing the administrative burden for schools in applying for targeted supports, and
   4. making the basis for decisions transparent to schools and families.

Under the Disability Strategy, the Department released the Inclusive Education Statement to provide direction and guidance on supporting the inclusion of students with disability in NSW public schools (section 3.2 above). The statement expressed a commitment of the Department to ‘building a more inclusive education system… where every student is known, valued and cared for and all students are learning to their fullest capability.’ 

However, as the Department does not consistently monitor outcomes for students with disability or schools’ inclusive education practices (section 3.6 above), it does not have oversight of whether the Inclusive Education Statement is being given effect and achieving desired outcomes for students with disability, parents/guardians and schools. 

Our 2006 audit Educating primary school students with disabilities found that it was not possible to determine whether the performance of ‘special education’ services had improved over time as there had been no mechanism in place to measure results. It recommended that the Department develop a suite of performance indicators to monitor and manage supports for students with disability at a school, region and state level. This is still not being done systematically, and the Department cannot tell whether things are improving for students with disability in NSW. 

Our analysis of the Department’s data shows that over the audit review period 2018-2023 there has been improvement in some measures of school practice such as the use of suspensions and expulsions, and improvement in some student learning outcomes, but deterioration in some measures of student wellbeing. 

Self-reported survey data shows improvements in the experiences of students with disability in primary school but these have worsened for students in secondary school 

Statewide data from the annual Tell Them From Me student survey shows that secondary students with disability are less likely to agree with statements related to receiving support from teachers in 2023 compared to 2018 (47% agreeing in 2018 declining to 44% in 2023). Results for students with disability in primary school to similar survey questions have remained steady with around 70% agreeing that their teacher supports them in both 2018 and 2023. 

A higher proportion of primary school students overall reported that they had never been bullied in 2023 compared to 2018. For students with disability in primary schools, the proportion reporting that they had never been bullied lifted from 66% in 2018 to 69% in 2023, however there was variability across individual years. For primary school students without disability, 75% reported that they had never been bullied in 2018, compared to 76% in 2023. 

The proportion of students with disability in secondary school reporting that they had never been bullied increased from 65% in 2018 to 69% in 2020, but then dropped to 66% in 2023. By comparison, the rate of students without disability reporting that they had never been bulled improved between 2018 and 2020 (from 75% to 78%) but then worsened in 2023 (74%). 

Students with disability in both primary and secondary schools were less likely to agree with questions about having a sense of belonging at school in 2023 compared to 2018. For secondary school students with disability, 49% agreed with questions relevant to belonging in 2018, which dropped to 43% in 2023. In primary schools, where survey results indicate there was a greater sense of belonging amongst all students than in secondary schools, there was also a drop for students with disability from 62% in 2018 to 57% in 2023.

There has been an overall increase in parents/guardians completing the Tell Them From Me parent/guardian survey since 2018. Survey results show that parents/guardians of children with disability are less likely to have their child enrolled at their first choice of public school than parents/guardians of children without disability. The proportion of parents/guardians of children with disability reporting that their child was enrolled at their first choice has slightly worsened between 2019 (when the question was first included in the survey) and 2023, from 87% in 2019 to 85% in 2023. The proportion of parents/guardians of students without disability who said their child was enrolled at their first choice of public school remained steady between 2019 to 2023 at close to 90%. 

There was limited individual student growth in NAPLAN results for the majority of students with disability 

Individual student growth is a measure of the progress of individual students in their NAPLAN results across their educational journey from Year 3 to Year 9. NAPLAN is an annual national assessment for all students in Years 3, 5, 7 and 9. It tests skills in reading, numeracy, writing, spelling and grammar. 

For most of the audit review period, all students participating in NAPLAN were assessed against national minimum standards in each exam as being below, at, or above standards. NAPLAN assessments and reporting changed in 2023, with four proficiency standards replacing the previous 10-band structure and the national minimum standards. For this reason, NAPLAN results from 2023 cannot be compared with those from earlier years. 

Our analysis of the Department’s data found that, for students with disability who participated in a NAPLAN exam more than once between 2018 and 2022: 

• 60% had no change in whether they placed below, at or above the national minimum standards (compared to 83% of students without disability). 
• 11% had an improvement, either moving from below the national minimum standards to be at the standards, or moving from being at to above the standards (compared to 4% of students without disability). 
• 22% had a decline, either moving from being above the national minimum standards to be at the standards, or from being at the standards to being below them (compared to 9% of students without disability). 

Exhibit 23 provides a breakdown of our analysis of student growth for each test type for students with disability between 2018 and 2022.

Appendix one – Response from agency

Appendix two – Relevant initiatives and supports 

Appendix three – NCCD definitions 

Appendix four – The Department’s principles of inclusive education 

Appendix five – Student behaviour management and restrictive practices 

Appendix six – Relevant funding for NSW public schools 

Appendix seven – The Department’s Disability Criteria (2003) 

Appendix eight – About the audit 

Appendix nine – Performance auditing

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 Parliamentary reference - Report number #400- released 26 September 2024.

If you have questions or feedback about individual matters, you can:

• contact the NSW Department of Education through the website
• make a complaint to the NSW Ombudsman online or by calling 1800 451 524.