The Victorian Auditor-General's Annual Plan 2016–17 was prepared pursuant to the requirements of section 7A of the Audit Act 1994, and tabled in the Victorian Parliament on 8 June 2016.
Performance audits assess whether an agency is meeting its aims effectively, using its resources economically and efficiently, and complying with legislation. They typically extend beyond the examination of the financial affairs and transactions of a government agency to encompass wider management issues of significance to the community.
Performance audits may examine all or part of an agency's activities, or the activities of a number of agencies. They can provide assurance about activities that are performed well or represent better practice, and also identify opportunities for further improvement.
In late 2015, we restructured the Performance Audit division in order to better target audit effort and maximise our impact across the public sector. Instead of being structured in accordance with traditional sectors, the division is now structured with the following groups:
These groups were formed in recognition of the numerous cross-portfolio issues that have emerged in recent times, resulting from government activities and operations that span various sectors.
Performance audits are conducted in accordance with relevant standards issued by the Australian Auditing and Assurance Standards Board. These standards cover planning, conduct, evidence, communication, reporting and other elements of performance audits.
As each audit typically takes six to 10 months to plan and execute, we will have commenced around half of the planned topics for the 2016–17 year at the time of this plan's publication. This is why we include a two-year program in the plan.
Our performance audits often involve complex issues and multiple agencies. Thus, after we have consulted with stakeholders as part of the development of the annual plan, we will typically undertake more detailed planning and scoping to refine the criteria and lines of inquiry related to an audit. We normally do this by gathering and reviewing relevant documents as well as consulting with key stakeholders—including agencies, interest groups, academics and others—about the key issues. We then finalise the audit specification before commencing the conduct phase.
Performance audits can be conducted at any stage of a program's life cycle. In many instances, there is value in conducting an audit in the early, formative stages of a program, particularly where a program addresses matters of public significance or involves a potential substantial investment by the state. The findings from an audit conducted during the formative stage provide an opportunity for assessing whether a program has been set up in a way that supports achievement of its intended outcomes. For example, the 2008–09 audit on the Port of Melbourne Channel Deepening Project assessed how effectively the business case prepared by the Port of Melbourne Corporation informed the decision to proceed with the project.
The 2007–08 audit on the new ticketing system tender examined the governance and planning arrangements for the tender and the extent to which the associated tender process was consistent with sound procurement principles. Both of these audits were conducted at specific times early in their respective project's life cycle, so as to provide the projects with the greatest opportunity to ensure they were set up for success in their formative stages. In planning for our performance audits, each audit is carefully scheduled following consideration of the optimal value its findings can generate, both for the program itself and for the broader community.
Our performance audits are typically delivered by in-house staff who are specially trained by us, however, we do periodically engage experts to advise our performance audit teams on complex and technical issues. We also use contractors to supplement our staff resources where required.
To reach conclusions against our audit objectives, we determine criteria against which to assess agency performance. We develop our audit criteria in accordance with relevant standards issued by the Australian Auditing and Assurance Standards Board and in consultation with the audited agencies. While criteria are specific to the audit topic and scope, our criteria often share common areas of focus. Figure 5 illustrates the types of criteria commonly included in performance audits.
Figure 5: Performance audit common criteria
Achievement of the objectives or other intended effects of activities at a program or entity level.
Acquisition of the appropriate quality and quantity of resources at the appropriate times and at the best cost.
Use of resources such that output is optimised for any given set of resource inputs, or input is minimised for any given quantity and quality of output.
Compliance of an agency/program with all relevant Acts.
In 2016–17, we plan to deliver 26 performance audits drawn largely from the topics listed in this annual plan. The topics cover a wide range of issues and areas across the public sector which may be specific to one sector or may span multiple sectors.
Our audit program strikes an appropriate balance between predictability and responsiveness, thus maximising its value to Parliament, the public sector and the community.
The following section sets out proposed specifications for our 2016–17 and 2017–18 performance audits. For each audit listed, we outline our proposed objective and the issues we intend to examine. We also set out the proposed agencies, where this can be determined based on the objectives and issues. Otherwise, we signal where we are likely to choose a selection of agencies from a particular sector or from across the public sector, after further detailed planning and scoping.
Objective To assess the effectiveness of strategies to divert young people away from the criminal justice system.
Issues The trajectory into the criminal justice system starts early in life. Current systemic and welfare responses appear to have only a limited impact on preventing early contact with child protection and the youth justice system from escalating into a cycle of incarceration.
This audit will focus mainly on people in the youth justice system at risk of becoming immersed in the adult criminal justice system. This includes young people at the pre-sentencing and deferral of sentencing stage, and young offenders managed in the community through parole, probation, youth supervision orders, youth attendance orders or Youth Justice Centre orders. The audit will examine a range of youth justice support and diversion programs, including the adequacy of agencies' planning and delivery of services for young offenders and relevant reporting.
This audit is the third in a series of audits focusing on children and young people at risk. It follows the 2014 audit Residential Care Services for Children and the 2015 audit Early Intervention Services for Vulnerable Children and Families. It is also one of a series of planned or recently delivered audits focusing on managing offenders in the community, including Administration of Parole (2016), Managing community correction orders and Managing sex offenders.
Proposed agencies The Department of Health & Human Services, Victoria Police and relevant courts.
Objective To assess the effectiveness and governance of community corrections programs.
Issues This audit is part of the series of planned audits examining the administration of programs for managing offenders in the community. Other proposed or recently delivered audits in this area include Diverting young people from the criminal justice system, Administration of Parole (2016) and Managing sex offenders.
Community corrections orders involve the management and supervision of offenders in the community. These offenders are serving court-imposed orders either as an alternative to imprisonment or as a condition of their release from prison. Community safety is dependent on these programs being effective, efficient and well governed.
This audit will examine the efficiency and effectiveness of community corrections programs with a focus on maintaining public safety, achieving social and financial benefits, and training and support for community corrections staff. The audit will also assess the appropriateness of and performance against key performance indicators and measures.
Proposed agencies Corrections Victoria and Victoria Police.
Objective To examine the effectiveness and efficiency of the Victorian Commission for Gambling and Liquor Regulation in regulating gambling and liquor activities.
Issues Alcohol and gambling are accepted parts of the Australian culture and generate positive impacts for the state in the form of revenue and employment. However, misuse of alcohol and gambling can result in significant short-term and long-term harm for individuals, their families, their friends and the wider community.
The Victorian Commission for Gambling and Liquor Regulation is responsible for regulating gambling and liquor licensing. It oversees more than 21 000 liquor licences and manages the statewide cap of 30 000 gaming machines. The commission also collects approximately $1.8 billion per year in revenue on behalf of the state. The audit will examine the commission's regulatory practices, including the licensing and compliance monitoring of venues. The audit will also examine relevant activities of the Department of Justice & Regulation and Victoria Police.
Proposed agencies The Victorian Commission for Gambling and Liquor Regulation, the Department of Justice & Regulation and Victoria Police.
Objective To assess the effectiveness of advice and strategies for informing the development of justice policies, including monitoring and reporting on justice policy outcomes.
Issues The responsibilities of the Department of Justice & Regulation are devolved and include the Attorney-General, police and corrections, emergency services and consumer affairs, as well as gaming and liquor regulation. The community's safety is dependent on the administration of an effective and efficient justice system.
In recent years, the Department of Justice & Regulation has implemented a series of strategies that aim to improve community safety. Outcomes from these strategies include longer sentences, greater prisoner numbers, fewer parolees who are subject to supervision on release, an increase in the detection of crime and related court cases. Despite these strategies, Victoria Police data indicates the total crime rate is rising.
Given the significant direct and indirect economic cost and social effects of justice policies, it is imperative that they are underpinned by a sound evidence base.
Proposed agencies The Department of Justice & Regulation, Victoria Police, Corrections Victoria, Court Services Victoria and Victoria Legal Aid.
Objective To assess whether prison services contracted under public private partnerships (PPP) are operating effectively and providing value for money.
Issues The Department of Justice & Regulation manages several public private partnership contracts for prison services.
Contracts for the Fulham Correctional Centre Prison Services Agreement (October 1995) and the Port Phillip Prison Services Agreement (July 1996) have recently been extended for approximately 20 years each, representing a combined nominal investment by the state of over $4.5 billion over the life of the contracts.
Fulham Correctional Centre and Port Phillip Prison are unique amongst the private prisons in Victoria in that they are the only two 'full service' contracts in Victoria. This means the private sector provides both correctional and accommodation services, and Corrections Victoria monitors and manages the private sector provision for these services.
Together, these two prisons account for nearly 30 per cent of the total prisoner capacity in Victoria.
This audit will assess the value for money received by Victorian tax payers through these two PPP contracts, and assess the adequacy of the Department of Justice & Regulation's governance and oversight processes for private prisons. The audit will also examine the adequacy of services provided by private prisons to Victoria's prison population.
Proposed agencies The Department of Justice & Regulation and Corrections Victoria.
Objective To assess whether serious sex offenders subject to detention or supervision orders and registrants on the Victorian Register of Sex Offenders living in the community are managed effectively.
Issues The Sex Offenders Registration Act 2004 requires certain offenders who commit sexual offences to keep police informed of their whereabouts and other personal details for a period of time. It also provides for the establishment of a Register of Sex Offenders and sets out the requirements for offenders to be included on the register.
As at 30 June 2015, there were 6 056 sex offenders registered in the Victorian Register of Sex Offenders, which is an increase of over 500 from the previous financial year.
Under the Serious Sex Offenders (Detention and Supervision) Act 2009, serious sex offenders who pose an ongoing and unacceptable risk to the community may be subject to post-sentence supervision or detention. At 30 June 2015, there were 116 serious sex offenders subject to a supervision order and two subject to a detention order. Serious sex offenders subject to a supervision order are managed by specialist case managers at Corrections Victoria, either in the community or in the Corella Place or Emu Creek residential facilities in Ararat. Serious sex offenders subject to a detention order reside in a unit within Hopkins Correctional Centre, Ararat.
The audit will focus on how effectively Corrections Victoria manages sex offenders to ensure continued protection of the community. This includes ensuring that offenders are subject to a level of surveillance and monitoring in accordance with their supervision orders and the offender's assessed level of risk, and that any additional conditions imposed are complied with.
Proposed agencies The Department of Justice & Regulation and Victoria Police.
Objective To ensure that Victoria Police is conducting its property and exhibit management functions efficiently and effectively.
Issues In the course of its activities, Victoria Police collects a vast range of exhibits—property that is intended to be presented to a court as evidence—and other property. This can include seizures of property and goods in relation to offences, lost or abandoned property, or property that may be temporarily handed in as part of a condition, for example, a bail condition. Property and exhibits are held at local police stations and in other police facilities and storage warehouses.
While this is primarily an administrative function of policing, mismanagement of property and exhibits poses risks to the administration of justice and can impact the community's perception of police integrity. Past reviews have identified issues with property and exhibit management including overcrowded stores, deficiencies in record keeping, lack of training and weaknesses in property audits.
Proposed agencies Victoria Police.
Objective To assess the effectiveness of governance arrangements within Victoria's autonomous schools model.
Issues In Victoria, government schools operate under an autonomous model, with the school principal and school council responsible for operating the school. While the Department of Education & Training provides guidance and support, accountability for school performance is largely devolved to the school.
Effectively governing schools comes with many challenges. Most school principals begin their career as classroom teachers but take on responsibility for issues such as staffing, asset management and financial management. These are operational areas that the Department of Education & Training would have previously managed.
Similarly, school councils have a key governance and accountability role. These councils rely heavily on volunteers and need the right mix of skills and competencies to perform effectively. Attracting capable volunteers who can contribute to improved governance also comes with challenges, especially in rural and small schools.
Proposed agencies The Department of Education & Training and selected schools.
Objective To examine the effectiveness of the Environment Effects Statement (EES) process.
Issues Under the Environment Effects Act 1978, major projects with the potential to have significant adverse effects on the environment in Victoria may be required to undergo the EES process. While it is not a formal approval process in itself, it provides a framework for informed decisions about whether a project with potentially significant environmental effects should proceed.
If the Minister for Planning decides that an EES process is required, the project proponent must prepare the EES and perform the required investigations. The Department of Environment, Land, Water & Planning coordinates the EES process.
The audit will examine the rigour of the EES process, the quality of information for decision-making, the monitoring of conditions imposed through the process, and the extent to which previously recommended reforms have been implemented. It will also assess whether the current framework is equipped to deal with issues such as climate change impacts.
Proposed agencies The Department of Environment, Land, Water & Planning and the Environment Protection Authority.
Objective To examine the extent to which agricultural research, development and extension are used to drive innovation, productivity and practice change.
Issues Victoria's agricultural sector makes a significant contribution to the state's economy. During 2014–15, Victoria's food and fibre exports were valued at $11.6 billion—27 per cent of Australia's total food and fibre exports.
While agricultural productivity continues to grow worldwide, the rate of growth in Australia has slowed since the 1980s and 1990s. Sustained agricultural productivity growth continues to be challenged by climate variability, increasing production costs, increasingly competitive markets and intensified consumer demands.
Productive, competitive agricultural industries are underpinned by effective and efficient research, development and extension (RD&E) which can lead to enhanced farming systems and practices that increase the value and volume of production and reduce input costs.
The audit will examine how the Department of Economic Development, Jobs, Transport & Resources prioritises, delivers, monitors and evaluates agricultural RD&E activities.
Proposed agencies The Department of Economic Development, Jobs, Transport & Resources.
Objective To assess whether the Department of Environment, Land, Water & Planning is effectively managing planning schemes and the planning permit system, and whether it has achieved the intended outcomes of the Planning and Environment Act 1987.
Issues Planning decisions can have a significant impact on local communities, the environment, key industries and the broader economy. For this reason, it is important that such decisions are based on evidence and supported by a clear and transparent decision-making process that complies with the requirements of the Planning and Environment Act 1987. Effective application and oversight of these processes is essential for preventing inappropriate land use and development, and for enabling Parliament and the wider community to have confidence in the planning system.
The audit will provide assurance about whether the Department of Environment, Land, Water & Planning and selected councils are appropriately managing the statutory planning system and controlling land use and development to ensure the protection and conservation of land in Victoria.
Proposed agencies Department of Environment, Land, Water & Planning and selected local councils.
Objective To assess the effectiveness of management of Ramsar wetlands, including whether Victoria is effectively meeting its national and international obligations, and the effectiveness of interagency collaboration.
Issues As a signatory of the Ramsar Convention, Australia must list and protect its wetlands of international importance. Effective management of these wetlands requires the states, territories and Commonwealth governments to collaborate to meet Ramsar obligations. It also relies on good knowledge of the environmental, social and economic values and benefits of the wetlands and management of the numerous potential threats to these.
This audit will provide assurance as to whether management, monitoring and evaluation practices are meeting responsibilities under the Ramsar Convention. It will examine how relevant obligations under the Victorian Waterway Management Strategy are being met, and how individual strategic management plans for each site are developed and implemented to effectively deliver the objectives and strategies in the statement for each site.
Proposed agencies The Department of Environment, Land, Water & Planning, Parks Victoria, Melbourne Water, other selected catchment management authorities and local councils.
Objective To examine how effectively the state is planning for infrastructure and service provision, in both growth areas and developed areas, to meet the needs of the rapidly growing population.
Issues Victoria will grow substantially over the next 30 years. Current forecasts indicate that the state's population could reach up to 10 million by 2051, with 2.2 million people in regional areas and 7.8 million in greater Melbourne. Growth and change require effective planning and considerable investment in infrastructure and services of all types. The long-term risks of poorly managing growth are among the most serious facing Victoria. It is important that individual agencies and the state effectively plan for the delivery of necessary infrastructure and services to meet the needs of its growing population, as well as managing other issues such as urban encroachment into peri-urban agricultural lands, which may impact the state's long-term food security.
The audit may examine a selection of regional growth plans and will provide assurance on the effectiveness of planning for the delivery of the required infrastructure and services of growing communities by a selection of state government agencies and local councils.
Proposed agencies The Department of Environment, Land, Water & Planning, the Department of Treasury & Finance, the Metropolitan Planning Authority and selected state government agencies and local councils.
Objective To assess the effectiveness of the Victorian Coastal Strategy and its implementation in sustainably planning and managing Victoria's coastal assets.
Issues The coast provides great social, cultural, economic and environment benefits for all Victorians. Tourism and commercial uses such as ports, shipping, fishing and aquaculture contribute over $2.8 billion a year to the Victorian economy. The value of informal recreation such as walking, fishing, sailing, and sightseeing has been estimated at over $1.9 billion. However, coastal assets face significant risks from climate change impacts, which may result in adverse effects such as inundation and erosion, increased bushfire risk and sea level rises. Unprecedented population growth along the coast is also placing pressure on many of Victoria's coastal communities, coastal environments and marine biodiversity.
The Victorian Coastal Strategy is the state government's key policy commitment for coastal, estuarine and marine environments. This audit will examine the strategy's delivery and the extent to which the coastline and its values are being sustainably managed.
Proposed agencies The Department of Environment, Land, Water & Planning, Victorian Coastal Council, Parks Victoria and selected coastal councils.
Objective To assess the effectiveness of Victoria's water reform program to improve the security of the state's water supplies, with a focus on drinking water.
Issues Water management has been in the public eye in recent times, as a drought in Victoria between 1997 and 2009 led to fears of water shortages and the commissioning of the Victorian Desalination Plant. The government is currently in the process of developing a new statewide water plan, Water for Victoria.
The Office of Living Victoria was previously responsible for administering Melbourne's agenda for water reform under Melbourne's Future Water Strategy. This responsibility has now been moved to the Department of Environment, Land, Water & Planning after serious issues were found with the way the Office of Living Victoria was administering this process.
This audit will consider whether water is being managed to balance drinking water needs with other uses, such as irrigation. The audit will provide assurance on whether water is allocated efficiently and equitably to different uses, and on the state's preparedness to effectively implement the Water for Victoria plan and related urban water strategies, to be prepared by March 2017.
Proposed agencies The Department of Environment, Land, Water & Planning and a selection of water entities.
Objective To assess the effectiveness of the mine rehabilitation regulatory framework.
Issues The rehabilitation of mine sites is necessary to return land and water sources affected by mining activity to an acceptable environmental standard. This involves ensuring that any landforms and structures are stable and that any water sources are of acceptable quality. Rehabilitation can involve a number of activities such as the removal and safe disposal of hazardous materials, reshaping the land, the restoration of topsoil and revegetation with native species. Monitoring programs are required to ensure that measures undertaken are effective, as former mine sites can require long-term maintenance.
If the state fails to properly regulate, monitor, evaluate and report on the rehabilitation of mine sites, there can be significant social, environmental and economic impacts.
This audit will assess whether the state is effectively monitoring, reporting and enforcing compliance in line with the mine rehabilitation regulatory framework. It may also assess whether the current system of rehabilitation bonds is sufficient to cover the cost of rehabilitating mining sites.
Proposed agencies The Department of Environment, Land, Water & Planning, the Department of Economic Development, Jobs, Transport & Resources and the Environment Protection Authority.
Objective To assess how effectively and efficiently Victoria's air quality is monitored and managed.
Issues Victoria's 2013 State of the Environment report found that our air quality has continued to improve overall. However, while there have been significant gains in managing some aspects of air pollution, such as vehicle exhaust emissions, there has been less progress in other areas, including airborne particles, industrial emissions and odour.
This audit will assess progress in managing Victoria's air quality, complementing the Hazelwood Mine Fire Inquiry and related processes. It will follow up on VAGO's 2002 audit Managing Victoria's Air Quality and examine Victoria's implementation of the national and state frameworks for managing air pollution and monitoring air quality. It will not include areas directly covered by the Hazelwood Mine Fire Inquiry, such as the management of potential health effects from air pollution, but it will focus on the overall management and monitoring of air quality.
Proposed agencies The Department of Environment, Land, Water & Planning and the Environment Protection Authority.
Objective To assess the effectiveness of access to public dental health services in Victoria.
Issues Lack of timely access to public dental services for basic restorative and preventive care can result in poor oral health, particularly for already disadvantaged and vulnerable groups who rely on public services. Delayed access can also mean emergency care procedures are needed for preventable conditions.
This audit will assess whether public dental health services in Victoria are accessible and appropriately distributed across the state, and address the growing demand for general dental, preventative and emergency services.
Proposed agencies The Department of Health & Human Services, Dental Health Services Victoria and selected dental health providers.
Objective To determine whether public hospital emergency departments (ED) manage patients efficiently and effectively.
Issues High and uneven population growth across metropolitan Melbourne and Victoria places pressure on metropolitan and regional EDs. Overcrowding and prolonged length of stay in EDs can lead to poorer health outcomes for patients and unnecessary costs for the health sector. High demand on EDs can also have flow-on effects, including ambulance ramping and bypass.
Previous VAGO audits have identified lost opportunities to free up hospital resources.
The National Emergency Access Target (NEAT) was agreed by the Council of Australian Governments (COAG) in 2011. NEAT measures the percentage of patients leaving an ED within four hours which, by 2015, should be at least 90 per cent of all patients presenting to an ED. Regular reporting against NEAT highlights the performance of public hospitals and their EDs.
This audit will seek to identify opportunities for improvement in managing patient flow through public EDs.
Proposed agencies The Department of Health & Human Services and selected EDs at major metropolitan and major regional hospitals.
Objective To assess the effectiveness of the clinical governance of Victorian health services.
Issues Within health services both in Australia and overseas, poor governance and leadership have been identified as significant factors in poor patient outcomes, including increased mortality rates. A recent example involved a regional health service that was found to have a higher than average number of avoidable infant deaths. A Department of Health & Human Services review of this health service noted failings in leadership and clinical governance during this period, but the health service's national accreditation status (and the department's monitoring status) remained clear.
Previous performance audits, including those that focused on staff and patient safety, indicate persistent shortcomings in the devolved governance model of Victorian health services.
The Department of Health & Human Services has been conducting training and education to improve the capability of health service boards of management, including the leadership and clinical governance skills of board members.
The primary aim of national accreditation standards is to protect the public from harm and to improve the quality of health service provision. This audit will examine whether the Department of Health & Human Services' reliance of these accreditation standards is sufficient for assessing the effective leadership and clinical governance of health services.
Proposed agencies The Department of Health & Human Services and selected health services.
Objective To assess whether government-funded community-based youth services are achieving effective outcomes for young people and represent value for money.
Issues Services for young people need to be well-coordinated, easy to access and responsive. There are currently 127 community services providers registered with the Department of Health & Human Services to provide community-based child and family services and out-of-home care services. Youth services and youth justice initiatives received $155.7 million in the 2015–16 State Budget. Service providers complete regular self-assessments as part of their obligations to the Department of Health & Human Services, however, they have never been subject to a performance audit.
This audit will provide assurance to Parliament on the effectiveness, efficiency and economy of government-funded community-based youth services.
Proposed agencies The Department of Health & Human Services, a selection of government-funded youth services, Youth Justice Community Support Service partners, community-based child and family services, out-of-home care services operated by councils, Indigenous organisations, religious groups and unaffiliated not-for-profit providers.
Objective To assess the efficiency and effectiveness of community health centres and the Department of Health & Human Services in providing community health care.
Issues Community health centres (CHC) aim to improve the health and wellbeing of Victorians through the provision of primary health care. Priority access is given to disadvantaged populations with the poorest health and the greatest economic and social needs.
Victoria's 88 CHCs operate under two distinct legal and governance arrangements—32 are independently managed while the remaining 56 are part of rural or metropolitan health services.
CHCs have never been the focus of a VAGO performance audit in the last decade. This audit will provide important insights and assurance to Parliament on the performance of
government-funded CHCs, and the Department of Health & Human Services' related oversight and governance arrangements.
Proposed agencies The Department of Health & Human Services and a selection of community health centres operating in Victoria.
Objective To determine whether the High Value High Risk (HVHR) process has been effectively updated and applied to sufficiently and reliably assure the deliverability of HVHR projects.
Issues This is the third audit examining whether the HVHR process is improving the delivery of the intended benefits of major infrastructure and ICT investments on time and within budget.
The HVHR process is critical for assuring the successful delivery of the state's $52 billion capital program. In total, 40 projects with a combined total estimated investment (TEI) of $31 billion in 2015–16 have been classified as HVHR projects.
The scale of government expenditure on capital projects and our previous findings of weaknesses in the application and effectiveness of the HVHR process are the basis for proceeding with a third audit in this area.
The audit will provide an updated view on the effectiveness of the HVHR process by examining:
Proposed agencies The Department of Treasury & Finance, the Department of Economic Development, Jobs, Transport & Resources, the Department of Health & Human Services, Public Transport Victoria, VicRoads, Monash Health, the Royal Children's Hospital Melbourne and the Royal Victorian Eye and Ear Hospital.
Objective To assess whether Victoria's road network is being efficiently and effectively maintained.
Issues The need to improve road maintenance practices and increase the state's road maintenance investment was identified by VAGO in its 2008 audit of the regional arterial road network. Nevertheless, maintenance budgets have been reduced and still remain below the level of funding required to maintain roads to the required service standards. Although additional budget allocations were made in 2013, 2014 and 2015, concerns remain over the standard of maintenance and safety implications for road users.
Proposed agency VicRoads.
Objective To examine the effectiveness, efficiency and economy of the Department of Education & Training's planning for new school infrastructure and maintenance of existing school infrastructure.
Issues School infrastructure, consisting primarily of school buildings, is essential for the achievement of educational outcomes. At June 2015, Victorian school buildings, excluding land, were valued at $8.5 billion. Commencing in 2015–16, the government embarked on a significant education investment program aimed at providing all Victorians with access to high-quality education and training through all stages of their lives. However, for the first time in 15 years, no new schools will be opened in 2016. In January 2016, the government acknowledged that it faced huge challenges to build enough schools to accommodate the 190 000 extra students predicted to flood the education system between 2016 and 2026.
Proposed agencies Department of Education & Training.
Managing Victoria's public housing, 2016–17
Objective To determine whether the Department of Health & Human Services is managing public housing efficiently and effectively.
Objective For vulnerable people, access to stable and affordable housing is critical for minimising the impact of mental illness, drug use, criminal behaviour and unemployment. Public housing is provided for low-income Victorians who are most in need of support and a place to stay. These people also have access to community housing provided through a partnership between the government and not-for-profit registered housing agencies.
At June 2015, the state's public housing stock was valued at $17.8 billion.
Previous audits undertaken in 2004, 2010 and 2012 have identified substantial shortcomings in the management of public housing and related risks, including excessive vacancies, rental arrears, damage and vandalism or destruction of property.
Proposed agencies Department of Health & Human Services.
Objective To determine whether the expected benefits of a selection of completed HVHR projects are being realised.
Issues Under the government's HVHR process, infrastructure and ICT projects identified as being high value and/or high risk are subject to more rigorous scrutiny and approval processes, to ensure that these major investments are delivered successfully, on time, within budget, and with the intended benefits delivered in line with planned costs and time lines.
HVHR projects include large-scale, long-term projects, as well as hospital constructions, road upgrades, public transport improvements and other social infrastructure projects. As of December 2015, the total budget of projects undergoing the HVHR process was approximately $34.7 billion.
This is the fourth in a series of HVHR audits. Previous audits have mostly focused on the planning, development and delivery of these projects up to their commissioning. This audit will focus on the extent to which the expected benefits of completed HVHR projects are being realised.
Proposed agencies The agencies covered in the audit will depend on the projects selected for examination.
Objective To determine whether the level crossing removal program is being managed efficiently and effectively.
Issues The level crossing removal program aims to remove 50 crossings by 2022—including 20 by 2018—at an estimated cost of $5 to 6 billion. At June 2015, three packages of works involving 17 level crossings were underway. A new body has been established to oversee the program, the Level Crossing Removal Authority.
Key intended benefits of the program include improved travel around Melbourne for train passengers and road users, stimulated economic growth and revitalised local communities through the rebuilding of some train stations.
The audit will assess the basis on which crossings to be removed were identified and prioritised, and whether the expected benefits of the program—such as improved travel for train and road users—are being realised.
Proposed agencies Level Crossing Removal Authority, VicRoads, Public Transport Victoria and VicTrack.
Objective To examine the effectiveness of governance arrangements for audit committees, including their composition, operational arrangements and information received.
Issues Audit committees play a key accountability role in public sector agencies. Their role is primarily to provide independent assurance regarding risk management, internal controls, financial statements, compliance requirements, and internal and external audit.
A number of factors can significantly impact an audit committee's effectiveness in providing independent assurance. This includes its member composition and operating arrangements—including its terms of reference, roles and responsibilities, lines of communication and reporting, and the type and extent of information it receives from management.
Proposed agencies The Department of Education & Training, the Department of Health & Human Services, the Department of Economic Development, Jobs, Transport & Resources, the Department of Justice & Regulation, the Department of Environment, Land, Water & Planning, the Department of Treasury & Finance, the Department of Premier & Cabinet and Victoria Police.
Objective To examine whether public sector boards are effectively governing the agencies for which they are responsible.
Issues Public sector boards perform key governance roles—they have a critical role in leading public sector agencies and enabling them to achieve the objectives set for them by government.
They are accountable for the overall effectiveness of the entities they govern and need to have the capability and skills to exercise effective oversight and leadership in helping agencies achieve these objectives.
Over several years, VAGO audits and other investigations have found examples of inadequate leadership exercised by a range of public sector boards.
This audit will examine how well boards exercise their functions and, specifically, whether they understand and have the capability to perform their roles and responsibilities, and can demonstrate that they are effective.
Proposed agencies The Department of Premier & Cabinet, the Victorian Public Sector Commission, a sample of boards from major public sector agencies, and the relevant portfolio departments responsible for advising ministers on board appointments and performance.
Objective To assess the effectiveness of strategies across agencies for managing freight growth.
Issues In 2011, the freight and logistics sector contributed between $19 billion and $23 billion to Victoria's gross state product. The scale of this sector is forecast to triple by 2050. Effective management of this growth will require significant investment in road and rail infrastructure, as well as investment in new port capacity. It also requires long lead times and timely decision-making to avoid the likely high costs if required transport corridors are encroached upon or not provided.
This audit will examine the extent to which agencies are integrating their planning for the future development of Melbourne's ports to effectively and efficiently support broader transport and land-use strategies. It will also address emerging challenges from expected freight growth and the proposed privatisation of the Port of Melbourne.
Proposed agencies The Department of Treasury & Finance, the Department of Economic Development, Jobs, Transport & Resources, Public Transport Victoria, VicRoads and selected port managers.
Objective To examine whether the Victorian Public Sector Commission (the Commission) is effectively performing its functions.
Issues Victorian public sector entities deliver and manage a diverse range of services and assets across the education, health and human services, justice, emergency services, environment, transport, recreation, sport and culture and infrastructure sectors. Community trust in the capability and integrity of this public administration is essential in supporting the 'licence' for governments to make decisions on their behalf.
The Public Administration Act 2004 provides a framework aimed at supporting good governance across the public sector and establishes the Commission as a key part of this framework. The Commission's objectives are to strengthen the efficiency, effectiveness and capability of the public sector and to maintain, and advocate for, public sector professionalism and integrity. The Commission is tasked with a number of key functions, including:
This audit will examine how well the Commission performs its functions and achieves its objectives. Specifically, the audit will assess whether the Commission has the capability and strategies in place to effectively perform its functions and to demonstrate their effectiveness.
Proposed agencies The Victorian Public Sector Commission and the Department of Premier & Cabinet.
Objective To examine how effectively, efficiently and economically agencies use their internal audit resources to contribute to the management of organisational risk.
Issues For public sector entities, internal audits are an assurance activity and a critical defence against a range of risks affecting good governance, integrity, probity and the achievement of agency objectives. Internal audits typically involve 'arm's length' reviews of the effectiveness of an entity's operations.
Each public sector entity is required to establish, maintain and resource an internal audit function that is independent of management. This internal audit function is overseen by the audit committee and encompasses both internal resources and the activities of the agency's externally appointed internal auditors.
Over several years, numerous performance audits have questioned the effectiveness of agencies' use of internal audit resources. This audit will examine the procurement of internal audit functions, including how topics are identified and linked to enterprise risks, the adequacy of the internal audits, and how the agency and audit committee implements and monitors recommendations.
Proposed agencies Department of Treasury & Finance, as the central agency for this area, and a sample of public sector agencies.
Objective To examine Public Transport Victoria's effectiveness in managing the performance of Melbourne metropolitan train and tram franchisees.
Issues Metropolitan transport services are critical to the economic development of Melbourne and come at a significant cost to government, totalling multiple billions of dollars. The current train and tram franchise agreements were established in November 2009 for a maximum of 15 years, split into an initial eight-year period and a seven-year extension. The government must decide whether to extend the contracts by November 2017. This will require a close review of past performance to determine the most appropriate course of action, including future performance requirements, penalties and enforcement measures.
The audit will examine this critical review process—including the adequacy of contracts and performance monitoring arrangements—and provide independent assurance to Parliament and the community about the performance of rail franchisees.
Proposed agencies The Department of Economic Development, Jobs, Transport & Resources and Public Transport Victoria.
Objective To determine whether agencies are effectively managing records in accordance with the state's requirements.
Issues Public records are the cornerstone of an accountable government and critical to the efficient and effective functioning of all agencies. All Victorian public offices are required by law to meet the prescribed standards of the Public Records Office Victoria for effective records management.
Our 2008 audit Records Management in the Victorian Public Sector found that the state could not be assured that its records management objectives were being met. Subsequent VAGO audits across a wide range of topics have continued to highlight systemic weaknesses in public sector agencies' approaches to managing evidence of their activities.
This audit is an opportunity to identify the nature and extent of these ongoing weaknesses and the barriers that have prevented significant improvement. It will also examine whether the Public Records Office Victoria is effectively assisting agencies in their management of records.
Proposed agencies The Department of Premier & Cabinet, the Public Records Office Victoria and a sample of public sector agencies that is likely to include one or more government departments.
Objective To determine the effectiveness of community engagement and participation at the local government level.
Issues The Local Government Act 1989 embeds the need for community engagement within a council's objectives. However, a number of past performance audits have identified inadequate community engagement across a range of council functions, including service delivery, planning and the development of council plans and strategies. For some of these activities, community engagement is mandatory, such as in the development of council budgets.
VAGO released its better practice guide Public Participation in Government Decision-making in January 2015. This guide aims to assist agencies to improve their public participation activities to inform government decisions. It also provides a clear, high-level structure and criteria for managing public participation exercises. This audit will examine councils' public participation practices against the principles described in the better practice guide.
Proposed agencies The Department of Environment, Land, Water & Planning (through which Local Government Victoria works cooperatively with Victoria's 79 local councils) and a sample of metropolitan and regional local councils.
Objective To examine the effectiveness of public participation activities in agency decision-making.
Issues Transparent and well-managed public participation is a critical input for informing government policies and how these policies are translated into effective strategies, programs and projects.
VAGO released its better practice guide Public Participation in Government Decision-making in January 2015. This guide aims to assist agencies to improve their public participation activities to inform government decisions. It also provides a clear, high-level structure and criteria for managing public participation exercises.
This audit will examine public participation practices across a sample of public sector agencies against the principles described in VAGO's better practice guide.
Proposed agencies The Department of Premier & Cabinet, the Victorian Public Sector Commission and a selection of public sector agencies.
Objective To assess the effectiveness of fraud prevention strategies across the Victorian public sector.
Issues Fraud is the crime of obtaining financial or another benefit by deception. If it is committed by a public official, it is also corruption. Fraud can occur in any part of an entity's operations including procurement, asset management and human resources.
Fraud and corruption investigations by the Independent Broad-based Anti-corruption Commission and various performance audits have found that the integrity systems intended to control fraud risks have been applied inconsistently and that these systems require regular testing.
Our 2012 audit Fraud Prevention Strategies in Local Government concluded that the five councils examined had not effectively managed their exposure to fraud risk, as none had developed a strategic and coordinated approach to controlling fraud. This audit will extend this examination to state government departments and agencies.
Proposed agencies The Department of Treasury & Finance, as the key oversight agency, and a sample of public sector agencies including Public Transport Victoria, as a case study to assess its response to the Independent Broad-based Anti-corruption Commission's 2014 recommendations.
Objective To determine the effectiveness of taxi reforms and their implementation, including the role of the Taxi Services Commission.
Issues In March 2011, the government initiated a comprehensive Taxi Industry Inquiry to investigate all aspects of the taxi and hire car industry.
Following the inquiry, the government announced a major reform package and, in June 2013, enacted the Transport Legislation Amendment (Foundation Taxi and Hire Car Reforms) Act 2013, aimed at delivering improvements that will benefit both taxi customers and drivers. The emergence of Uber and other ride-sharing applications outside current regulations covering taxis presents a challenge. In January 2016, a special task force provided the Minister for Public Transport with options for regulating Uber-type services.
It is important that Parliament and the community are assured that agencies understand and are adequately addressing emerging challenges and managing the impacts of taxi reforms, including whether the reforms:
Proposed agencies The Department of Economic Development, Jobs, Transport & Resources and the Taxi Services Commission.
Objective To determine whether local government and the state government have worked effectively to support local economic development.
Issues Growing the economy and jobs is a top priority for the government—it has committed $1.4 billion to jobs and growth initiatives and a further $102 million to improve skills and knowledge, to give business access to the skills needed to grow. The government announced nine new regional partnerships in November 2015, emphasising the need to work cooperatively with local government to develop local economies.
Parliament's Inquiry into local economic development initiatives in Victoria (July 2013) identified the key role local councils play in promoting and facilitating economic development. However, it also found that few councils have adopted an integrated, whole-of-government approach to economic development.
This audit will provide assurance to Parliament and the community on the effectiveness of actions by councils and state agencies to strengthen local economic development initiatives.
Proposed agencies The Department of Economic Development, Jobs, Transport & Resources, Local Government Victoria (part of the Department of Environment, Land, Water & Planning) and a sample of urban and regional municipal councils.
Objective To examine whether reforms to the skills system in Victoria have resulted in a high-performing, economical and efficient vocational education and training (VET) sector.
Issues The government announced a $320 million TAFE Rescue Fund in late 2014 to reopen closed TAFE campuses, upgrade TAFE buildings, workshops and labs, and provide cash where necessary to support the financial viability of TAFEs. Additionally, the TAFE Back to Work Fund aims to help TAFEs better meet the training needs of businesses that hire unemployed youth, the long-term unemployed and retrenched workers.
This audit will examine the outcomes delivered by VET sector reforms, including how effectively the sector is meeting industry's demands for skills. It will also assess whether departments and the Victorian Registration and Qualifications Authority are adequately measuring and responding to performance.
Proposed agencies The Department of Economic Development, Jobs, Transport & Resources, the Department of Education & Training, the Victorian Registration and Qualifications Authority and a sample of TAFEs.
Objective To examine the effectiveness of programs aimed at supporting Victorian workers to transfer from declining industries to stable and emerging sectors of industry.
Issues Many of Victoria's industry sectors have undergone restructuring in recent times to adapt to changing economic circumstances and consumer demands. In particular, the manufacturing, retail, agricultural and tourism sectors have faced significant challenges in coping with the change and have 'transitioning workforces', where employees need to upskill, reskill or find alternative employment.
The potential large-scale job losses resulting from industry sector shifts have the potential to decrease the state's economic output and revenue available for public service delivery, while at the same time increasing the welfare dependency of many workers.
The government has committed to a range of programs to help workers transition to new occupations including:
The audit will examine the impacts of these programs in transitioning workers into productive and valuable employment.
Proposed agencies The Department of Economic Development, Jobs, Transport & Resources and the Department of Education & Training.
Objective To examine whether V/Line has delivered effective and efficient public transport services and is adequately prepared to sustain and improve performance in the future.
Issues V/Line, a public sector corporation, is Australia's largest regional public transport operator—in 2014–15, it carried 15 million train and coach passengers. However, V/Line has struggled to deliver on its performance indicators in a challenging environment, consistently failing to meet its targets for punctuality. Additionally, overall customer satisfaction for regional trains over the past three years has fallen.
V/Line faces the challenge of improving its performance in the face of expected further passenger increases and in a strict fiscal environment.
This audit will examine how V/Line is managing these current and emerging challenges. It will also examine the support provided by the Department of Economic Development, Jobs, Transport & Resources and the Department of Treasury & Finance.
Proposed agencies The Department of Economic Development, Jobs, Transport & Resources, the Department of Treasury & Finance, Public Transport Victoria and V/Line.
Objective To determine the effectiveness of government programs to achieve greater workforce participation.
Issues The 2015 Commonwealth Intergenerational Report notes that the quality of living standards will depend on continually improving productivity. However, a critical barrier to achieving this, despite continuing population growth, is the decline in Victoria's labour force participation rate.
Challenges facing Victoria's labour force participation include:
This audit will examine the impact of the state's $1.38 billion commitment to growing the economy and creating jobs and the $320 million TAFE Rescue Fund on increasing workforce participation of these groups.
Proposed agencies The Department of Economic Development, Jobs, Transport & Resources and the Department of Premier & Cabinet.
Objective To examine whether agencies are managing their workforces to ensure the ongoing delivery of effective public services.
Issues With a growing population, the rapid ageing of the workforce, likely reductions in the future size of the workforce, increased competition for knowledge workers, and changing employee attitudes to issues such as work/life balance, public sector agencies must adopt an effective approach to workforce planning, to ensure they are ready to meet growing demand for public services. These workforce planning challenges were identified in four performance audits completed by VAGO between 2001 and 2006.
These challenges are significant and intensifying. Poor workforce planning can result in organisations not recruiting, developing and retaining the type of staff they need to be effective and which allow them to successfully adapt to rapidly changing circumstances.
This audit will provide assurance to Parliament on the effectiveness of agency workforce planning initiatives for ensuring they maintain sufficient and appropriately skilled staff who are capable of delivering quality public services, both now and into the future.
Proposed agencies The Department of Premier & Cabinet, the Victorian Public Sector Commission and a sample of public sector agencies including government departments.
As part of our audit program, we are also committed to conducting follow-up audits. These follow-up audits aim to monitor agency progress in implementing actions from previous performance audits and also verify that actions taken by agencies have been effective in addressing the recommendations.
Nearing the end of a performance audit, a proposed draft of the report is provided to audited agencies. At this time, agencies are asked to provide a written response to the report and its recommendations for inclusion in the published report.
To help provide clearer and more detailed information on agency responses to audit recommendations, agencies are now requested to complete an action plan including:
The follow-up audits will seek and assess evidence to verify agency responses to performance audit recommendations. The issues identified in the initial audit, as well as consideration of the risk and materiality of the subject matter will inform the selection of follow-up audits. The audit may review all recommendations and/or agencies, or a selection of them, from the original audit.