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Government Sector Audit and Other Legislation Amendment Bill 2022

Published on: November 2022

Record: HANSARD-1323879322-129020

Government Sector Audit and Other Legislation Amendment Bill 2022

First Reading

Bill introduced on motion by Ms Felicity Wilson, on behalf of Mr Matt Kean, read a first time and printed.

Second Reading Speech

Ms FELICITY WILSON (North Shore) (10:34:50):

On behalf of Mr Matt Kean: I move:

That this bill be now read a second time.

Quadrennial Review of the Audit Office of New South Wales 2022

The Government Sector Audit and Other Legislation Amendment Bill 2022 will make amendments to the Government Sector Audit Act 1983 and the Local Government Act 1993 to implement what are commonly known as follow the dollar powers for the New South Wales Auditor-General. I will refer to those pieces of legislation as the audit Act and Local Government Act. The bill will amend both of those Acts to implement the Government's response to the recent report of the Public Accounts Committee, report No. 10/57 from September this year, entitled . I will refer to the committee as the PAC and the report as the PAC report.

I will speak first about the follow the dollar reforms before turning to the PAC report and the measures in the bill to address the important work of that committee. All members will know that the Auditor-General plays a crucial role in assisting Parliament to hold both the State Government and local governments to account for their use of public resources. A key part of that role is undertaking performance audits, which are designed to assess whether particular activities of State agencies and, since 2016, local governments are being carried out effectively, economically, efficiently and in compliance with relevant laws. In this way, performance audits differ from the much more common and imposing financial audits that the Auditor-General undertakes of the financial accounts of State government agencies and local councils.

The Auditor-General undertakes around 20 performance audits annually, covering a range of important public administration topics. This year alone the Auditor-General has published performance audit reports on matters as diverse as the effectiveness of the Biodiversity Offsets Scheme, police responses to domestic and family violence, building regulation and combustible external cladding, local government business and service continuity arrangements for natural disasters, and the integrity of grant program administration. When carrying out performance audits, the Auditor-General is currently unable to directly examine the use of public resources by non‑public sector entities that are engaged by government agencies or local councils to exercise functions or provide other public services on their behalf, such as charities and not-for-profit organisations.

In effect, the Auditor-General and Parliament's scrutiny is restricted simply by the way in which agencies or councils deliver those services. The bill will expand the Auditor-General's mandate by providing the power to conduct performance audits of any matter where public resources are used to deliver services to the community. In this way, the Auditor-General will be able to follow the dollar. That means the Auditor-General will be able to report to Parliament about whether total public resources allocated to a particular program have been managed and applied effectively, economically and efficiently and in compliance with all relevant laws. It will no longer matter whether the body delivering those services is a government or non-government entity.

Follow the dollar powers are currently available to auditors-general in every other Australian jurisdiction. The bill will confer those powers on the Auditor-General of this State. Broadening the Auditor‑General's mandate in this way will deliver more robust accountability and transparency over the use of public resources. The reform will also address gaps in external accountability arrangements that may have arisen from a shift that has occurred over time from direct service delivery by State and local government agencies to a significant level of service delivery being undertaken by non-public sector entities on behalf of New South Wales government agencies through modes including outsourcing, partnerships, grants and contractual arrangements.

The introduction of follow the dollar powers for the Auditor-General has been recommended in reports made by New South Wales parliamentary committees and other oversight bodies. In June 2022 the Government advised in-principle support to a recommendation from the Public Accountability Committee.

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