NSW auditor-general pushes for expanded powers

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New South Wales Auditor-General Grant Hehir has gently prodded the Parliament to act on recommendations giving him more powers.

Currently the NSW Audit Office has no power to investigate public funds spent by other parties in the delivery of public services. Nor can it conduct audits of local government. Last year, the public accounts committee recommended those restrictions be lifted, allowing the Auditor-General to “follow the dollar”:

“The major recommendations of this report support an expanded role for the auditor-general, allowing him greater freedom to conduct audits and ‘shine a light’ on some areas of government spending previously outside of his remit …

“At a time when a growing number of services are provided by third parties on behalf of the government, it is imperative that the auditor-general is able to confirm that those parties are delivering services in an effective and efficient manner. Without such oversight, the committee considers that there is an increased risk for NSW, which is not adequately addressed by existing policies and controls.”

In March this year, then-premier Barry O’Farrell said the government would consider the recommendations.

Hehir resurrected the issue this week in his first annual report since being appointed to the role late last year. He encouraged the government to act on the recommendations:

“These powers will allow me to go beyond government agencies and audit how well non-government organisations or other external service providers have spent public money. This recognises government’s increasing use of private contractors and other non-government organisations to deliver government services. The Commonwealth and several other State Auditors-General already have these powers.”

Hehir added that all other eastern state auditors-general have the power to appoint local council auditors, as was recommended by another review, the Independent Local Government Review Panel: Revitalising Local Government.

In addition to the auditor-general’s nearly 500 financial accounts audits and around 12 qualitative performance audits undertaken each year, the state treasurer will from time to time request a compliance audit. However, Hehir currently can only do these within the powers granted to him to conduct performance audits, and has no power to initiate these compliance audits on his own. NSW Treasury’s Lambert Report from 2011 recommended those compliance powers be made explicit, as well as granting new powers to access cabinet papers.

Hehir, a former secretary of the Victorian Department of Treasury and Finance, has gone a step further in his annual report, requesting autonomy from the treasurer: “A far more efficient way is to allow me to independently initiate such reviews.”

Even without the additional powers and responsibilities, the auditor-general has already upped his workload for the 2014/15 period, increasing the number of proposed performance audits by half to 18. Complying with a recommendation from the public accounts committee that the audit office publish its planned performance audits for the coming 12 months, Hehir has done so and produced a multi-year performance audit program. The program indicates his focus will be assessing agencies’ efficiency and effectiveness in implementing the state government’s objectives from the state plan, NSW 2012.

The auditor-general’s proposed performance audits include assessment of:

• Premier and Cabinet for public sector productivity and government advertising;
• Treasury, Finance and Services for effectiveness of red-tape cutting, revenue management, performance of major capital works, risk management and security of IT systems;
• Trade and Investment for performance of industry assistance and water infrastructure;
• Education and Communities for commissioning arrangements in vocational education and training, and the learning management and business reform program;
• Health for length of stay and readmissions, and activity-based funding for hospitals;
• Police and Justice for performance of maximum security prisons; and
• Transport for performance of WestConnex and Opal card projects.

An audit of Family and Community Services has been postponed due to the pending results of a parliamentary inquiry into social housing.