This year’s performance audits

Addressing issues of public concern

Red Tape Reduction

Red tape refers to unnecessary costs to the community, business and government resulting from poorly designed and implemented regulation. Between 2011 and 2015, the NSW Government committed to a program of red tape reductions aimed at improving business competitiveness comprising:

  • a red tape savings target of $750 million by June 2015
  • a ‘one-on, two-off’ policy − for every new legislative instrument, two had to be repealed.

This audit assessed whether:

  • NSW Government initiatives and processes to prevent and reduce red tape were effective
  • the red tape savings initiative and ‘one-on, two-off’ policy were effective in reducing red tape.

Overall, we found that NSW Government initiatives and processes to prevent and reduce red tape were not effective. Reported red tape savings were inaccurate and the regulatory burden of legislation increased. Red tape reduction targets resulted in some savings. However, estimates of these savings were, in some cases, based on unverified or unsubstantiated assumptions, cost-transfers, or pre-implementation projections that are yet to be achieved. The targets also did not drive new reform or significant rollback of regulation.

Despite the NSW Government meeting the numerical target for reducing the number of legislative instruments, legislative complexity and regulatory burden increased during implementation of the ‘one-on, two-off’ regulation reduction initiative.

 

Response

The Department of Premier and Cabinet and the Department of Finance, Services and Innovation supported the recommendations in the report. The NSW Government established an independent inquiry into the NSW Regulatory Policy Framework in response to the report.

 


Sale and Lease of Crown Land

The audit assessed whether the Department of Industry managed the sale and lease of Crown land effectively. In making this assessment, we looked at the department’s strategy for the use of Crown land, compliance with legislation and policies, systems for ensuring quality and transparency in decision-making, and engagement with stakeholders.

We found that the department was not managing the sale and lease of Crown land effectively, although there had been some improvement. Policy and guidance for staff needed to improve – there were more than 1,300 pages of policies and guidance, and many had not been updated in the last decade.

Decisions about Crown land did not always comply with policies on rent rebates, rent determinations, debt management, and direct negotiation.

There was limited oversight of sale and lease decisions, and tenant compliance. The department only reviewed many leases when they were due for renewal, and there was no systematic checking of compliance with lease conditions during the term of a lease.

The department complied with statutory requirements to notify the public about its decisions, but did not provide consistent opportunities for people to understand or have a say in decisions about the sale and lease of Crown land. Decision-making about Crown land was not transparent and direct negotiations were common with 97 per cent of leases and 50 per cent of sales directly negotiated over the past four years.

 

Response

The Department of Industry accepted the recommendations in the report.

 


Monitoring Food Safety Practices in Retail Food Businesses

Under the Food Act 2003, the NSW Food Authority (the Authority) is responsible for ensuring that food sold in New South Wales is safe and fit for human consumption. Its responsibilities cover all sectors of the food industry, including primary production, manufacturing, transport and retail food businesses, such as restaurants, cafes, bakeries and takeaways.

This audit focused on the Authority’s responsibility to ensure that retail food businesses complied with national food safety standards. To meet this responsibility, the Authority appoints enforcement agencies, which are primarily local councils, to inspect and monitor around 40,000 retail food businesses across the State. Councils assess whether retail food businesses in their area comply with food safety standards.

At the time of our report, New South Wales had a lower rate of foodborne illness than the national average. This reflected some good practices in the Authority’s risk-based approach and councils’ long-standing commitment to ensuring food safety standards are met. We found that the Authority provided guidance and training to councils and retail food businesses to improve their knowledge and compliance with food safety standards.

However, the Authority had not implemented sufficient controls to monitor the consistency and quality of regulatory activities conducted by councils. Consequently, the Authority could not provide assurance that councils applied food safety inspection and enforcement activities in accordance with its requirements consistently across the State.

 

Response

The NSW Food Authority accepted the recommendations in the report.

 


Preventing and Managing Worker Injuries

This audit assessed how well the NSW Police Force and Fire & Rescue NSW prevented worker injuries and managed the return to work of injured workers.

We found that the NSW Police Force had introduced a number of health promotion and injury prevention programs, some on a trial basis. These were promising examples of a shift towards a more proactive approach to injury prevention, and initial feedback on the programs from police officers was positive. The NSW Police Force should use evaluations of these programs to determine whether initiatives should be rolled out more broadly. We also found that the NSW Police Force could improve access to return to work options for injured officers.

Fire & Rescue NSW promoted health, fitness and wellbeing through a range of programs. However, many of these programs were voluntary and did not adequately ensure all firefighters remained fit for duty. We recommended that Fire & Rescue NSW introduce ongoing periodic assessments of firefighter health and fitness to reduce risks of injury.

 

Response

The NSW Police Force and Fire & Rescue NSW broadly supported the recommendations in the report.

 


Government Advertising 2015–16

In New South Wales, the Government Advertising Act 2011 requires government advertising campaigns with a likely expenditure over $50,000 to be independently peer reviewed before commencement. This audit assessed whether peer review was effective in providing assurance that government advertising was needed and cost-effective.

We found that, overall, the peer review process was effective in providing assurance that government advertising was needed and cost-effective. The majority of feedback we received about the process was positive.

Noting that the process was generally effective, the audit report focussed on areas where we identified room for improvement. These included recommending changes to the process of allocating reviewers to campaigns and providing regular feedback to peer reviewers to support improvement in the quality of peer reviews.

 

Response

The Department of Premier and Cabinet supported the recommendations in the report.

 


Implementation of the NSW Government’s Program Evaluation Initiative

The NSW Government introduced program evaluation in 2013. This requires agencies to periodically assess whether service delivery programs are achieving expected outcomes and value for money. Departments each year prioritise and prepare a list of programs for evaluation in their cluster in the upcoming financial year. NSW Treasury then consolidates these lists into an annual report to the Expenditure Review Committee of Cabinet (ERC).

This audit assessed whether the program evaluation initiative was implemented in a way that informed the NSW Government’s decisions on what programs to support and fund. We reviewed NSW Treasury, the Department of Premier and Cabinet, the Department of Justice, the Department of Planning and Environment, and the Department of Industry, Skills and Regional Development.

We found that the program evaluation initiative was largely ineffective, as it was not providing sufficient information to government decision makers on the performance of programs.

Only one agency – the Department of Industry, Skills and Regional Development – had processes which gave assurance that the right programs were being listed in their annual report to the ERC.

We also found that NSW Treasury and the Department of Premier and Cabinet did not use evaluation outcomes in their advisory role to the NSW Government on funding and prioritisation of programs.

 

Response

All the departments we reviewed supported the recommendations in the report.

 


CBD and South East Light Rail Project

The Central Business District and South East Light Rail (CSELR) project is a large public transport infrastructure project. At the time of the audit, the estimated capital cost was $2.1 billion in 2014 dollars, excluding finance, operation and maintenance costs.

This audit assessed how well Transport for NSW (TfNSW) ensured planning and procurement for the CSELR project achieved value for money within the parameters set by the NSW Government.

We found the established assurance framework provided that TfNSW undertake the assurance reviews of the CSELR project. However, this approach did not provide the independent assurance required for such a major infrastructure project. In addition, the planning and governance arrangements, while approved by the NSW Government, skipped important assurance steps. Tight timeframes meant planning was inadequate and normal governance systems were not initially in place. This contributed to underestimating costs and overestimating benefits. As a result, between 2011 and 2014, TfNSW did not effectively plan and procure the CSELR project to ensure it maximised value for money for New South Wales.

TfNSW continues to manage problems created because of these shortcomings. Above all, it did not finalise key third-party agreements that affected the design and scope of works before issuing tenders and signing the major public private partnership (PPP) contract. This increased the project’s complexity and risks, and reduced value for money.

Response

Transport for NSW accepted the recommendations in the report

 


Assessing Major Development Applications

The audit assessed whether the Planning Assessment Commission made decisions in a consistent and transparent manner. We looked at whether the Commission:

  • had sound processes to help it make decisions on development applications
  • ensured its decisions were free from bias and transparent to stakeholders and the public.

We found that while the Commission had improved its decision-making process, there was more it could do to ensure its decisions were consistent and transparent. Improvements made by the Commission included standard documentation and processes for public meetings, a range of probity policies and procedures, and publication of its decisions, fact sheets for ‘high profile’ decisions, and records of meetings with applicants/stakeholders.

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 Environmental Planning and Assessment Act 1979, and its reports did not clearly address these matters.

The Commission only notifies the community of public meetings via its website and newspaper advertisements. Also, it imposes an inflexible five-minute time limit for individual speakers. There was a perception among some stakeholders that the Commission was not independent of the Department of Planning and Environment. For example, the Commission becomes involved late in the process, after the department prepares an assessment recommending whether a development should proceed.

 

Response

The Planning Assessment Commission accepted the recommendations in the report.

 


Building the Readiness of the Non-Government Sector for the NDIS

This audit assessed the effectiveness of the NSW Department of Family and Community Services’ management of the risks of the National Disability Insurance Scheme (NDIS) transition in New South Wales. It focused on the department’s work to build the readiness of the non-government sector for the NDIS.

We found the department managed the risks of the transition effectively by increasing the overall capacity of the sector and investing in provider capability building initiatives. The department supported significant growth in the non-government sector in the years leading up to the NDIS. More targeted work will be needed to build the sector’s capacity to provide services to people with the most complex support and access needs. The department evaluated the larger provider capability building programs and these received positive feedback from providers. However, the overall impact of the department’s investment on providers is not clear because of limitations in the department’s monitoring of changes in provider capability.

 

Response

The Department of Family and Community Services supported the recommendations in the report.

 


Passenger Rail Punctuality

This audit assessed whether rail agencies had plans and strategies to maintain or improve performance in getting the growing number of rail passengers to their destinations on time.

We found rail agencies were well placed to manage the forecast increase in passengers up to 2019. Based on forecast patronage increases, the rail agencies will find it hard to maintain punctuality after 2019 unless the capacity of the network to carry trains and people is increased significantly. Punctuality could be at risk sooner if recent patronage growth continues.

In addition to investment in new metro networks, sustained and substantial investment needs to be made into the existing heavy rail network to meet demand and ensure its ongoing reliability. Transport for NSW had undertaken work on strategies to increase capacity and maintain punctuality after 2019, but remained some months away from putting a costed plan to government.

Passenger rail punctuality indicators adopted in New South Wales are good practice, and measurement of punctuality is reasonably precise. Train punctuality is reported publicly, but there is limited public reporting of customer delay. System-wide train punctuality has usually exceeded target since 2005, but some services suffer from poor punctuality compared to the rest of the network.

Response

The rail agencies asked us to reconsider our conclusions citing various projects and initiatives to meet demand. We commented in the report that we had considered these in reaching our conclusions.

 


Contingent Workforce: Procurement and Management

Contingent labour are people employed by a recruitment agency and hired by agencies to provide labour or services on a short-term basis. Between 2011−12 and 2015−16, spending on contingent labour had increased from $503 million to $1.1 billion.

The audit assessed whether the approach of three agencies’ to purchasing and managing their contingent workforce met business needs and delivered value for money.

We found that none of the three agencies we reviewed could demonstrate that contingent labour was the best resourcing strategy to meet their agencies’ business needs or delivered value for money.

Two of the three agencies had limited oversight of their contingent workforce. None of the agencies routinely monitored and centrally documented the performance of contingent workers. These factors made it difficult for agencies to ensure contingent labour was engaged only when needed, at reasonable rates, and delivered quality services.

Despite the Public Service Commission’s recommended maximum tenure of six months for contingent labour, we found that the maximum tenure of contingent labour varied across agencies from nine years to more than 20 years.

Response

The Department of Education and the Department of Industry supported the recommendations in the report. Transport for NSW did not commit to accepting the recommendations, stating: ‘We again ask that you take these matters into account as we do not consider the conclusions reached accord with the level of delivery that is underway in the Transport cluster using an appropriate mix of skills, capabilities and resources.’

 


Therapeutic Programs in Prisons

This audit assessed whether prison programs aimed at reducing reoffending were available, accessible and effective. The audit focused on a selection of programs that targeted prisoners who made up more than half the prison population.

The Department of Justice had increased the roll out of moderate intensity prison programs which reached greater numbers of prisoners. However, over the same period, the number of higher intensity prison programs that addressed the therapeutic needs of sex offenders, and serious and violent offenders, had decreased or remained the same. In 2015−16, 75 per cent of prisoners who needed programs reached their earliest release date without receiving one. These prisoners were often released with incomplete or no intervention, or were refused parole and held in custody longer than their minimum term. The department had worked in partnership to independently evaluate some programs, however these had largely been inconclusive. In August 2016, the department received an additional $237 million to reduce reoffending and proposed to focus its efforts on evaluating the effectiveness of its programs by engaging external experts and increasing resourcing in its own evaluation unit, as well as increasing the number of higher intensity prison programs.

 

Response

The Department of Justice broadly supported the recommendations in the report but had concerns on the interpretation and reporting of certain data.

 


Planning for School Infrastructure

This audit assessed whether the Department of Education had a strategy and implementation model to ensure it has sufficient fit-for-purpose student learning spaces when and where needed. Over the next 15 years, the student population in New South Wales is projected to grow by 21 per cent to nearly 1.5 million. Over 80 per cent of this growth is expected to be in the Sydney metropolitan area. Many more classrooms will be needed, with many others requiring renovation.

The department had developed its first School Asset Strategic Plan to deliver sufficient fit-for-purpose student learning spaces when and where needed up to 2031. The plan proposes several changes to the way schools are planned, designed, built, managed and funded. It also proposes a significant change in the way decisions on infrastructure are made at the local level. Cluster planning will look at groups of schools that are close to each other to better distribute student numbers and improve infrastructure investments. Up until now, decisions had been made on a school-by-school basis.

Even with these significant reforms, the estimated cost of the infrastructure needed up to 2031 is significantly more than the department had been receiving. The department was yet to secure the funding required to meet the expected need.

 

Response

The Department of Education accepted the recommendations in the report and advised that work is underway to address them.

 


Mining Rehabilitation Security Deposits

This audit assessed whether the Department of Planning and Environment maintains adequate security deposits to cover the liabilities associated with mine closures if mining companies default on their rehabilitation obligations.

The total value of security deposits held had increased from $500 million in 2005 to around $2.2 billion in 2016. While a substantial increase, mine rehabilitation security deposits are still not likely to be sufficient to cover the full costs of each mine’s rehabilitation in the event of a default. This is largely because:

  • rates and allowances used to calculate deposits had not changed since 2013
  • deposit calculations did not cover, or cover adequately, some activities required for effective rehabilitation
  • the department also did not seek sufficient contingency from mining companies to cover uncertainties associated with unplanned closure.

Further, there is no financial assurance to cover unexpected environmental degradation in the long-term after a mine is deemed to be rehabilitated and the security deposit is returned. We recommended that the department investigates ways to address this risk.

This audit was undertaken almost entirely when the Department of Industry, Skills and Regional Development was responsible for administering security deposits. This responsibility was transferred to the Department of Planning and Environment on 1 April 2017.

 

Response

The Department of Planning and Environment supported the recommendations in the report.

 


Medical Equipment Management in NSW Public Hospitals

Medical equipment needs to be properly managed over its lifecycle, from planning to acquisition, operation and disposal, to ensure patient safety and quality of care. This audit assessed how well NSW hospitals managed medical equipment to meet the needs of patients. We examined the management of:

  • Positron Emission Tomography and Computed Tomography (PET-CT) scanners, a high-value piece of equipment commonly used for diagnosing cancer
  • a small sample of lower value but critical medical equipment known as biomedical equipment.

We found that while PET-CT scanners were well managed, management could be enhanced by better performance reporting and replacement planning. Separately, we found improvement was needed in the timeliness of testing and maintenance for biomedical equipment. Outdated and inefficient information systems used for day-to-day management of biomedical equipment also needed to be improved or replaced.

 

Response

NSW Health supported the recommendations in the report.

 


NorthConnex

NorthConnex is a nine-kilometre tolled motorway tunnel between the M1 Pacific motorway at Wahroonga and the M2 Hills motorway at West Pennant Hills. Major construction work commenced in February 2015 and the tunnel is expected to open to traffic in late 2019. This audit assessed whether the process used to determine the NorthConnex funding model adequately considered value for money for taxpayers and road users.

We found that the processes used to assess NorthConnex adequately considered value for money for taxpayers and road users within the NSW Government’s stated policy objectives. These processes included assessing the proposal against the costs and benefits of the NSW Government fully funding the project, adding a competitive tender process for the design and construction components, and using independent cost estimation and traffic modelling. The NorthConnex proposal met a need identified by the NSW Government. By these measures, the NorthConnex agreement represented value for money for the NSW Government.

We identified two areas where there were deficiencies. The Unsolicited Proposals Guide was not clear on the timing of key assurance stages. Additionally, record keeping for this project did not meet the standards for government record keeping.

 

Response

The Department of Premier and Cabinet and NSW Treasury supported the recommendations in the report.

 


Sydney Region Road Maintenance Contracts

In November 2013, Roads and Maritime Services (RMS) outsourced the maintenance of State roads in the Sydney region west and south zones using a new contract model called the Stewardship Maintenance Contract (SMC). This audit assessed whether RMS had effectively managed this outsourcing.

We found the SMC was an innovative approach which met RMS’ requirements for:

  • flexibility in pricing mechanisms as contractors become familiar with the road assets
  • the need for collaboration in asset maintenance planning
  • promoting innovation
  • effective performance management.

RMS established a framework to manage SMCs which included most elements of good practice. However, RMS’ management had key elements missing which reduced its effectiveness. RMS did not have procedures and authorities to guide its contract managers in exercising specific provisions of the SMC. Consequently, RMS failed to exercise several significant SMC requirements.

RMS achieved around 80 per cent of expected cost savings in 2014−15. However, it has not tracked benefits achieved since then.

 

Response

Roads and Maritime Services broadly supported the recommendations in the report.