Reports
Actions for Planning and Environment 2017
Planning and Environment 2017
The following report highlights results of financial audits of agencies in the Planning and Environment cluster. The report focuses on key observations and findings from the most recent audits of these agencies.
The audits were completed for most agencies in the cluster and unqualified audit opinions issued. Issues identified during the financial statement audits of seven small agencies delayed their finalisation beyond the statutory deadline, and six of these remain incomplete. Apart from these small agencies, the quality of financial reporting across the cluster remained at a high standard.
This report provides Parliament and others with the audit results, observations and recommendations for Planning and Environment cluster agencies. The report has been structured into two chapters focussing on financial reporting and controls and service delivery.
The Planning and Environment cluster plays a role in ensuring each community across New South Wales receives the services and infrastructure it needs.
This chapter outlines our audit observations and recommendations related to financial reporting and controls of Planning and Environment cluster agencies for 2016–17.
Observation | Conclusion or recommendation |
2.1 Quality of financial reporting |
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Unqualified audit opinions were issued for 39 of the 45 cluster agencies' financial statements. |
Issues identified during the financial statement audits of seven smaller agencies delayed their completion. Six audits remain incomplete at the date of this report. Apart from these seven small agency audits, the quality of financial reporting across the cluster remained at a high standard. |
2.2 Timeliness of financial reporting |
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Seven agencies' financial statement audits were not completed by the statutory deadline with six audits incomplete at the date of this report. |
Issues identified during the financial statement audits of seven smaller agencies delayed their finalisation beyond the statutory deadline. These agencies would benefit from performing additional early close procedures in future reporting periods. |
2.3 Financial and sustainability analysis |
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Water and Electricity utility agencies continue to operate with low liquidity ratios. |
A liquidity ratio below one is an indicator that an entity may not be able to pay its debts as and when they fall due. Whilst liquidity ratios were below one, utility agencies demonstrated they can continue to support ongoing operations due to:
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2.5 Internal controls |
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One in six internal control weaknesses reported in 2016–17 were repeat issues. |
Delays in implementing audit recommendations can prolong the risk of fraud and error. Recommendation (repeat issue): anagement letter recommendations to address internal control weaknesses should be actioned promptly, with a focus on addressing repeat issues. |
Nine of these internal control weaknesses related to the creation, modification, deletion and review of user access to financial systems. |
These control weaknesses may compromise the integrity and security of financial data. Recommendation (repeat issue): Management of user administration over financial systems should be strengthened to prevent inappropriate access to financial information. |
This chapter outlines our audit observations, conclusions and recommendations relating to service delivery for 2016–17.
Observation | Conclusion or recommendation |
3.1 Premier's and State priorities |
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The Planning and Environment cluster is responsible for delivering five Premier's and State priorities. |
One priority target was achieved in 2016–17, two targets are on track to be achieved and progress towards one target slowed. Progress against one target cannot be determined. |
3.2 Planning |
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Housing Completion |
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There were 63,506 housing completions in 2016–17. This was 4.1 per cent above the Premier’s priority target of delivering 61,000 housing completions per year. |
The Australian Bureau of Statistics data shows the housing completions target was achieved in 2016–17. |
Housing supply |
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The number of approvals for new houses in 2016–17 was 72,472 against the State priority target of more than 50,000 approvals per year. |
The Australian Bureau of Statistics data indicates the housing approvals target was achieved in 2016–17. |
Major project assessment |
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State significant developments are not clearly defined for the purposes of reporting against the State priority target. | The Department of Planning and Environment will clarify with the Department of Premier and Cabinet which developments are captured by the State priority target. |
The Department of Planning and Environment’s data shows the time taken to assess complex State significant developments increased by 16 per cent in 2016–17 while the time taken to assess less complex developments reduced by 20 per cent. | The Department of Planning and Environment considers it is on track to meet the State priority target of halving the time taken to assess State significant developments, despite uncertainty over the target measure. |
Housing acceleration fund |
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Program business cases were not developed for projects in Housing Acceleration Fund Rounds 1 to 4. The Department advised a program business case will be developed for Housing Acceleration Fund Round 5 projects. |
A program business case is necessary to ensure related projects are evaluated, managed and coordinated effectively. |
A benefit realisation review process has not yet been approved for Housing Acceleration Fund projects. The Department of Planning and Environment advised it is developing a benefit realisation review process. |
A benefit realisation review process is necessary to determine whether funded projects achieved intended outcomes. |
Greater Sydney Commission |
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The Greater Sydney Commission forecasts a further 725,000 dwellings in the greater Sydney region will be required up to 2036 to meet housing demand. | In response to population growth, the Commission has set a five-year housing supply target of 189,100 houses across the five Greater Sydney Commission districts. |
ePlanning system |
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The Department of Planning and Environment did not perform a benefit realisation review for phase one of the ePlanning project. It has committed to performing a benefit realisation review after completion of phase two in 2018. | It cannot be determined if phase one of the project delivered expected outcomes as a benefit realisation review was not performed. |
3.3. Environment and Heritage |
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Litter volume in New South Wales was 6.6 litres per 1,000 square metres in 2016–17, an increase of 16 per cent from the prior year. This is above the Premier's priority litter volume target of 4.2 litres per 1,000 square metres by 2020. | The Environment Protection Authority's data indicates the progress towards the target of reducing the volume of litter by 40 per cent by 2020 has slowed. |
The NSW Government plans to invest $240 million to facilitate strategic biodiversity conservation on private land. | Performance measures have not yet been developed for the private land conservation program. |
3.4 Water |
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IPART reduced water usage charges for most Sydney Water Corporation customers in 2016–17. | Water usage prices in New South Wales compare favourably to larger water utilities in other jurisdictions. |
Hunter Water Corporation's water recycling and water conservation performance has been stable over recent years. The volume of Sydney Water Corporation’s recycled water reduced by 12 per cent in 2016–17 compared to the previous year. |
Sydney Water Corporation experienced reduced industry demand for recycled water. Several large industrial customers relocated away from Sydney. |
3.5 Arts and culture |
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A State priority target is to increase overall attendance at cultural venues and events in New South Wales by 15 per cent from 2014–15 levels by 2019. | The Department of Planning and Environment's data indicates overall attendance increased by 16 per cent in 2015–16, although attendance fluctuated across individual venues and events. This indicates progress towards achieving the overall target by 2019. |
Actions for Agency compliance with NSW Government travel policies
Agency compliance with NSW Government travel policies
Overall, agencies materially complied with NSW Government travel policies.
However, the Auditor-General found some agencies:
- did not always book official travel through the approved supplier
- had weaknesses in their travel approval processes
- had travel policies that were inconsistent with the NSW Government policy
- did not adequately manage their travel records.
We asked the 15 participating agencies to complete a self assessment of the processes they have implemented to comply with the new policy. The key observations are summarised below.
Actions for Energy rebates for low income households
Energy rebates for low income households
The Department of Planning and Environment provides more than $245 million in energy rebates to around 27 percent of NSW households. This report highlights that the department is not monitoring the rebate schemes to understand whether they are delivering the best outcomes.
Most rebates are ongoing payments applied directly to energy bills reducing the amount payable by the householder. The structure of these rebates is complex and can be inequitable. Some households are eligible for four different rebates, each with its own eligibility criteria. Also, some households in very similar circumstances receive different levels of support depending on what type of energy is used in their home or which adult in the house is the energy account holder. For example, a household using both electricity and gas receives more assistance than a household with electricity alone even if total energy bills are the same.
By September 2018, the Department of Planning and Environment should:
- Ensure effective strategies are in place to make information about rebates available to all eligible, low-income households
- Evaluate alternative models and develop advice for government to reduce complexity and improve equity of ongoing rebates
- Establish measurable objectives for schemes that provide ongoing support, and monitor and measure performance of all schemes against objectives and outcome measures
- Assess the impacts of the forecast increase in embedded networks and develop strategies to manage any increased administrative risk
- Strengthen assurance that EAPA is being provided in accordance with its objectives and guidelines by implementing accreditation and compliance programs
- Ensure those eligible for EAPA financial support are not disadvantaged by inflexible payments, inconsistent provider practices, or inability to access an EAPA provider in a timely manner. Options include:
- moving from a fixed-value voucher to a flexible payment based on need irrespective of energy type
- establishing a ‘Provider of Last Resort’ facility for households that cannot access an EAPA Provider.
Parliamentary reference - Report number #292 - released 19 September 2017
Actions for Mining Rehabilitation Security Deposits
Mining Rehabilitation Security Deposits
The Department of Planning and Environment requires mining companies to rehabilitate sites according to conditions set in the mining development approval. The Department holds mining rehabilitation security deposits that are meant to cover the full cost of rehabilitation if a mining company defaults on its rehabilitation obligations.
Parliamentary reference - Report number #285 - released 11 May 2017
Actions for 2016 - An overview
2016 - An overview
This report focuses on key observations and findings from 2016 audits and highlights key areas of focus for financial and performance audits in 2017.
Financial reporting | |
Observation | Conclusion |
Only one qualified audit opinion was issued on the 2015–16 financial statements of NSW public sector agencies, compared to two in 2014–15. | The quality of financial reporting continued to improve across the NSW public sector. |
More 2015–16 financial statements and audit opinions were signed within three months of the year end. | Timely financial reporting was facilitated by more agencies resolving significant accounting issues early, completing asset valuations on time and compiling sufficient evidence to support financial statement balances. |
NSW Treasury’s early close procedures in 2015–16 were again successful in improving the quality and timeliness of financial reporting, largely facilitated by the early resolution of accounting issues. For 2016–17, NSW Treasury has narrowed the scope of mandatory early close procedures. |
The narrowed scope of mandatory early close procedures may diminish the good performance in ensuring the quality and timeliness of financial reporting achieved in recent years. To mitigate this risk, NSW Treasury has mandated that agencies perform non-financial asset valuations and prepare proforma financial statements in their early close procedures. It also encourages them to continue with the good practices embedded in recent years. |
Although most agencies complied with NSW Treasury’s early close asset revaluation procedures we identified areas where they can improve. | Asset revaluations need to commence early enough to ensure all assets are identified and the results are analysed, recorded and reflected accurately in the early close financial statements. |
Number of misstatements | |||||
Year ended 30 June | 2015-16 | 2014-15 | 2013-14 | 2012-13 | 2011-12 |
Total reported misstatements | 298 | 396 | 459 | 661 | 1,077 |
All material misstatements identified by agencies and audit teams were corrected before the financial statements and audit opinions were signed. A material misstatement relates to an incorrect amount, classification, presentation or disclosure in the financial statements that could reasonably be expected to influence the economic decisions of users.
Significant matters reported to the portfolio Minister, Treasurer and Agency Head
In 2015–16, we reported the following significant matters to the portfolio Minister, Treasurer and agency head in our Statutory Audit Reports:
Appropriate financial controls help ensure the efficient and effective use of resources and the implementation and administration of agency policies. They are essential for quality and timely decision making.
In 2015–16, our audit teams made the following key observations on the financial controls of NSW public sector agencies.
Financial controls | |
Observation | Conclusion |
More needs to be done to implement audit recommendations on a timely basis. We found 212 internal control issues identified in previous audits had not been adequately addressed by 30 June 2016. |
Delays in implementing audit recommendations can impact the quality of financial information and the effectiveness of decision making. Agencies need to ensure they have action plans, timeframes and assigned responsibilities to address recommendations in a timely manner. |
Agencies continue to face challenges managing information security. Most information technology issues we identified related to poor IT user administration in areas like password controls and inappropriate access. | Agencies should review the design and effectiveness of information security controls to ensure data is adequately protected. |
We found shared service provider agreements did not always adequately address information security requirements. |
Where agencies use shared service providers they should consider whether the service level arrangements adequately address information security. |
Thirteen of 108 agencies required to attest to having a minimum set of information security controls did not do so in their 2015 annual reports. | The 'NSW Government Digital Information Security Policy' recognises the growing need for effective information security. With cyber security threats continuing to increase as digital services expand we plan to look at cyber security as part of our 2017–18 performance audit program. |
We identified instances where service level agreements with shared service providers were outdated, signed too late or did not exist. | Corporate and shared service arrangements are more effective when service level arrangements are negotiated and signed in time, clearly detail rights and responsibilities and include meaningful KPIs, fee arrangements and dispute resolution processes. |
Internal controls at GovConnect, the private sector provider of transactional and information technology services to many NSW public sector agencies were ineffective in 2015–16. We found mitigating actions taken to manage transition risks from ServiceFirst to GovConnect were ineffective in ensuring effective control over client transactions and data. | The Department of Finance, Services and Innovation should ensure GovConnect addresses the control deficiencies. It should also examine the breakdowns in the transition of the shared service arrangements and apply the learnings to other services being transitioned to the private sector. |
Maintenance backlogs exist in several NSW public sector agencies, including Roads and Maritime Services, Sydney Trains, NSW Health, the Department of Education and the Department of Justice. | To address backlog maintenance it is important for agencies to have asset lifecycle planning strategies that ensure newly built and existing assets are funded and maintained to a desired service level. |
Actions for Assessing major development applications
Assessing major development applications
The Planning Assessment Commission (the Commission) has improved its decision-making processes for major development applications in recent years. The Commission has improved how it consults the public and manages conflicts of interest, and now also publishes records of its meetings with applicants and stakeholders.
The Planning Assessment Commission (the Commission) is an independent body established in 2008 under the Environmental Planning and Assessment Act 1979 (the EP&A Act). It makes decisions on major development applications in New South Wales. Along with the Department of Planning and Environment (the Department) and the Land and Environment Court, it is one of three bodies that have a role in making decisions on these applications.
The Department refers development applications to the Commission where 25 or more objections have been received from the community, a local council objects to the proposal, or the applicant has donated to a political party.
These applications are often complex and controversial, and can attract a high level of public interest. This may mean that, regardless of the process, not all stakeholders are satisfied with the outcome.
The Commission is required to take into account section 79C of the EP&A Act when making decisions. Section 79C includes consideration of the likely environmental, social and economic impacts of the development.
This audit assessed the extent to which the Commission’s decisions on major development applications are made in a consistent and transparent manner. To assist us in making this assessment, we asked whether the Commission:
- has sound processes in place to help it make decisions on major development applications that are informed and made in a consistent manner
- ensures its decisions are free from bias and transparent to stakeholders and the public.
Conclusion
Over the last two years, the Commission has improved its decision-making process. It has improved how it consults the public and manages conflicts of interest, and now also publishes records of its meetings with applicants and stakeholders.
However, there are still some vital issues to be addressed to ensure it makes decisions in a consistent and transparent manner. Most importantly, the Commission was not able to show in every decision we reviewed how it met its statutory obligation to consider the matters in section 79C of the EP&A Act.
Despite improved probity measures put in place by the Commission, there is a perception among some stakeholders that it is not independent of the Department. The reasons for some of these concerns are outside of the Commission’s control. For example, the Commission becomes involved after the Department has prepared an assessment report which recommends whether a development should proceed. This creates the perception that the Commission is acting on the recommendation of the Department. The Department’s assessment report should state whether an application meets relevant legislative and policy requirements, but not recommend whether a development should be approved or not.
More can also be done to improve transparency in decision-making and the public’s perception of the independence of Commissioners. The Commission should continue to improve how it communicates the reasons for its decisions and also publish on its website a summary of Commissioners’ conflict of interest declarations for each development application.
Decision-making processes have improved but some key aspects need to be addressed
Although not articulated in one document, there is a framework in place to assist Commissioners make decisions on major development applications. This includes setting out the information to be considered, who to consult, and that a report is to be prepared. The Commission has recently improved how it conducts public meetings and the level of support provided to Commissioners to ensure they understand the decision-making process. The Commissioners we interviewed all showed a good understanding of their role.
As a consent authority, the Commission is required to consider the matters in section 79C of the EP&A Act when making a decision. However, it was not able to show how it met this requirement in every decision we reviewed. We found some evidence of these considerations in six of the nine cases we reviewed, for example in meeting notes or in its report on a decision. Of these six cases, the degree to which the Commission considered all matters under section 79C varied considerably. The larger, more complex applications were more likely to address these considerations. To demonstrate compliance with the EP&A Act, the Commission must be able to show how it considers all matters in section 79C for each decision it makes.
We found that the Commission has access to relevant information to make a decision and consults stakeholders for their views of the development. The level of consultation depends on the size and complexity of an application. If Commissioners decide they need more information to make a decision, they consult local councils, the community, other government agencies and experts as needed.
The Commission’s public meetings are a valuable part of the decision-making process, where new perspectives or issues are often raised. However, some aspects could be improved. For example, many stakeholders thought the five minutes allowed for individual speakers was insufficient. The Commission could be more flexible with this timeframe. Identifying new ways to notify the public of its meetings, other than advertisements on its website and in newspapers, would also ensure it reaches as many interested parties as possible.
Improved transparency and probity but the Commission is not seen by some as impartial
The Commission has sound processes in place to ensure that its decisions are impartial and transparent to the community. It has improved its probity measures over the last two years, following a review by the NSW Ombudsman in 2014. We found that the Commission:
- has probity policies and procedures which are available on its website
- has improved its record keeping of some processes, such as meetings with applicants and stakeholders
- publishes its decision and supporting documentation, such as meeting notes, on its website.
Conflicts of interest are a significant risk for the Commission because they could lead to corruption, abuse of public office, and affect the public’s view of its independence. The Commission manages this risk well. It has a policy in place to address potential, perceived or actual conflicts. Commissioners update their conflicts of interest records annually, and declare any conflicts when the Commission assigns them to a development application. Unlike the Commission’s probity polices, Commissioners’ conflict of interest declarations are not available on its website. Providing a summary of this information on its website when Commissioners are allocated to a development application would further improve transparency around conflicts of interest.
The Commission has been improving how it communicates its decisions to the public. It now produces fact sheets for its decisions on matters that attract a high level of public interest. Its reports on decisions for complex applications also discuss issues raised by the community. However, the level of detail varied in the decisions we reviewed, and it was not always clear how conditions placed on a development would resolve identified issues. Similarly, the reports did not clearly address the matters under section 79C of the EP&A Act. Reporting this would further improve the transparency of its decisions, and clearly demonstrate compliance with the EP&A Act.
While we did not find any issues that would make us question the integrity or independence of Commissioners, there remains a perception among some stakeholders that the Commission is not impartial. Some of these concerns are within the Commission’s control to fix, such as allowing individual speakers at public meetings extra time to discuss their issues, therefore avoiding perceptions of bias.
Other perceptions, such as the Commission being part of the Department and not an independent decision making authority, are outside the Commission’s immediate control. For example, the Commission receives applications at the end of the assessment process, after the Department has prepared an assessment report recommending whether the application should be approved. This means there are effectively two reports on an application; the Department’s assessment report and the Commission’s report on its decision. However, there is only one decision-maker: the Commission. This may cause community confusion about the roles of the Department and the Commission in the decision-making process. Clearer separation of their roles in assessing applications and preparing reports is needed.
To minimise the perception that the Commission is simply ‘rubber stamping’ the Department’s recommendations, assessment reports should not recommend whether or not a project be approved. Instead, they should provide the Department’s views on whether a project meets relevant legislative and policy requirements. The Commission should also be involved earlier in the process, so it can establish key facts and identify relevant issues sooner. It should request that the Department’s assessment report covers matters Commissioners consider particularly important when assessing projects under section 79C. Earlier referral of applications should also help the Commission to plan its work in assessing applications, and may reduce the time taken to reach a decision.
Unless these issues are addressed, stakeholders will continue to believe the Commission does not act in a transparent and impartial manner, which could erode public confidence in the Commission.
The Planning Assessment Commission
The Planning Assessment Commission (the Commission) is a planning authority established in 2008 under the Environmental Planning and Assessment Act 1979 (the EP&A Act). One of its functions is to make decisions on major development applications.
The Commission is independent of the Department of Planning and Environment (the Department) and the Minister for Planning. This means its decisions are not subject to the direction or control of the Department or the Minister.
The Department refers applications for major development to the Commission, including state significant development and infrastructure applications. These projects are generally initiated by the private sector. Applications are referred to the Commission when one or more of the following criteria are met:
- more than 25 objections are received about the proposal
- the local council objects to the proposal
- the applicant has donated $1,000 or more to a political party or member of parliament.
These applications are often controversial and may attract a high level of public interest. Of the 29 development applications the Commission received in 2015–16, almost 40 per cent were in the mining and energy sectors, and another 40 per cent related to urban development.
Section 79C of the EP&A Act outlines the matters the Commission must consider when making decisions about major development applications. These include:
- any relevant environmental and planning instruments
- likely environmental, social and economic impacts of the development
- suitability of the site for the development
- submissions received about the application
- the public interest.
In addition to making decisions about major development applications, the Commission also reviews major developments as part of the planning process, and provides independent expert advice to the government on planning and development matters. Since the Commission’s inception, it has provided advice on 76 matters, conducted 39 reviews, and made 444 decisions on development applications.
Process for approving major development applications
The Commission is one of three bodies that have a role in the planning and approval process for major development applications in New South Wales, as seen in Exhibit 1. The other two bodies are the Department of Planning and Environment, and the Land and Environment Court.
The Department determines the outcomes of major development applications. When an application meets one of the criteria listed above, it refers these to the Commission to make the decision. In certain circumstances, the Land and Environment Court hears appeals against decisions made by either the Department or the Commission.
A Memorandum of Understanding between the Commission and the Department sets out timeframes the Commission must meet when making a decision, specifically:
- two weeks where no stakeholder meetings are required
- three weeks where stakeholder meetings are required
- six weeks when a public meeting is required.
Parliamentary reference - Report number #279 - released 19 January 2017
Actions for Planning and Environment 2016
Planning and Environment 2016
Auditor-General, Margaret Crawford released a report on the planning and environment cluster today, concluding that the quality of financial reporting is improving. However, the cluster can improve its financial controls and governance framework.
Actions for Implementing Asset Management Reforms
Implementing Asset Management Reforms
Hospitals, schools, public housing, roads, bridges, buses and trains are just some of the assets used by government in providing services to citizens.
The NSW Government’s asset base is impressive in size - with a value of around $167 billion and with government plans to spend around $8 billion acquiring or replacing assets in the current year. Another $2 billion is spent each year on maintenance.
Good asset management is very important to government; even a small efficiency gain in this area can provide significant returns. Good practice by those responsible for managing assets can improve reliability, extend asset life, save on maintenance costs and aid in identifying and disposing of unnecessary or non-performing assets.
Improving the NSW public sector’s approach to asset management has been on the reform agenda for at least a decade. Changes in practice have been accelerated more recently by integrating asset management policy with the budget process.
In this audit we examined NSW Treasury’s efforts to improve asset management practices in the public sector and the progress made by 3 agencies - the Department of Corrective Services, NSW Fire Brigades and the Powerhouse Museum - towards better managing their asset portfolios.
This report informs Parliament and the community on progress to date and what more needs to be done to ensure that agencies manage assets effectively and achieve best value.
Parliamentary reference - Report number #143 - released 12 October 2005
Actions for Planning for Sydney's Water Needs
Planning for Sydney's Water Needs
Reliably supplying water to our State’s principal city, Sydney, is a major responsibility for the Government.
The community has been made keenly aware in recent years that inflows have been decreasing, and that Sydney has been using more water than is available. In April 2005 the water in Sydney’s storages dropped to 41.5 per cent of their capacity – the lowest level since the construction of Warragamba dam in 1960.
As Sydney continues to develop, it is expected that the demand for water will increase. The way that we use it will need to be sustainable, as it has a direct impact on our economy, our lifestyle and our environment.
In planning for the future the State’s water agencies face a range of uncertainties. But the task is vital.
This report informs Parliament and the community on the progress made - and what remains to be done - to ensure a reliable water supply for Sydney.
Parliamentary reference - Report number #135 - released 4 May 2005