Victorian Auditor-General’s report
29 February 2012

Government Advertising and Communications 
Audit summary
Background
Victorians have the right to be informed about tax-payer funded policies, programs and services. The government uses advertising and communications as key tools to provide this information.
While advertising and communications can assist in efficiently achieving government objectives to inform the public, they often attract controversy and political debate, mainly over the level of public funds used and their potential to be used for party political purposes.
Government advertising and communications activities need to be accountable, to offer value-for-money and to avoid promoting the incumbent government.
This audit examined:
·	whether there are appropriate levels of accountability in government advertising and communications expenditure and processes 
·	whether selected advertising and communications campaigns comply with relevant laws, guidelines and policies
·	how the 2009 Victorian Government Advertising and Communications Guidelines (2009 Guidelines) compare with current better practice.
Conclusions
At an estimated $257 million for 2009–10, government spending on advertising and communications is significant and has grown consistently since 2002. Given the political sensitivity and significance of this annual expenditure, full and fair disclosure of all advertising costs incurred is a critical accountability issue. Currently, however, the level of transparency and accountability for government advertising and communications expenditure continues to be inadequate. 
Public reporting is partial and inaccurate, and there is inadequate oversight of government advertising activities. Estimated total expenditure exceeds publicly reported costs by up to 97 per cent.
The Department of Premier and Cabinet (DPC) has not adequately monitored and overseen advertising and communications activities across government. It has not provided clear leadership and guidance, and departments and authorities are not complying with advertising and communications guidelines, particularly in such areas as evaluation and sponsorship.
DPC has not effectively managed the major advertising and communications contracts. It has not been able to demonstrate that value-for-money has been achieved, nor that the quality of services acquired has been adequate.
While the 2009 Guidelines are comparable with those in other jurisdictions, there is obvious scope for improved transparency of and accountability for this significant and contentious element of tax-payer funded expenditure.
A compliance assessment of five advertising campaigns shows general compliance with the 2009 Guidelines. However, there were notable breaches that departmental oversight processes failed to identify. 
Findings
Expenditure and reporting
From July 2006 to December 2010, 11 departments and five agencies spent over $1 billion on advertising and communications. Each year expenditure increased.
The annual expenditure for these 16 entities was at least $183 million in 2006–07, $188 million in 2007–08, $220 million in 2008–09, $257 million in 2009–10, and $152 million for the six months to 31 December 2010.
Nielsen’s Media Research reported that in both 2009 and 2010, the Victorian Government was the largest advertiser in this state, and the seventh largest in Australia. It spent more than all other state governments and some major commercial corporations, and only a fraction less than the federal government over the same period.
Reliability and integrity of reporting
There is no central collation and reporting of the full costs incurred across government.
DPC publishes annual media costs. However, there is a significant difference between ‘direct’ media costs and the full costs associated with advertising and communications activities. 
In 2008 the then government decided to reduce expenditure by 10 per cent. This was not achieved either in real or reported terms. Media spending continued to increase. Published media costs were artificially lowered by reporting net spending, after application of a 10 per cent media rebate, rather than the gross amount.
Contrary to requirements, fewer than half the advertising campaigns approved and completed in 2008–09 and 2009–10 were evaluated, and of these under 10 per cent were submitted to the government advertising and communications committees.
Again contrary to requirements, from 2006–07 to 2009–10, less than 12 per cent of sponsorships by the 16 audited agencies were listed in the DPC Sponsorship Register, and only six of the 11 departments sent sponsorship information to the register. 
For the period of the audit, DPC had no system to monitor actual media spend against approved budgets. This means that that there is no assurance that actual expenditure on individual campaigns is within budget.
Cost monitoring by entities
Tourism Victoria, the Transport Accident Commission, the Transport Ticketing Authority, VicRoads and WorkSafe keep relevant and easily accessible data on their advertising and communication expenditure. The Departments of Justice and Treasury of Finance are also reasonably placed to provide this information.
This was not the case for the other departments.
Contract management
DPC has not effectively managed the contracts for the Master Agency Media Services, the Print Management Services and  the Marketing Services Panel. 
It did not assess whether these contracts achieved their objectives, and its monitoring of expenditure against the contracts was poor. Further, DPC did not independently verify expenditure data submitted by service providers. DPC had to revise its publicly reported 2009–10 media placement expenditure, from $124 million to $130 million, after the inaccurate reporting was identified.
2009 Guidelines – compliance and better practice
DPC does not monitor the interpretation and application of the 2009 Guidelines or other advertising and communications guidelines and policies. As a result, there is no common awareness and understanding of their coverage and applicability.
Better practice
The 2009 Guidelines do not reflect developments in better practice since 2009. They can be improved to give clearer guidance and direction to increase transparency and accountability in advertising and communications activities across government.
There was no requirement or system in place to have a strategic and integrated approach across government for advertising campaign applications.
There was insufficient documentation to allow the assessment of advertising applications to be independently verified. There is therefore limited assurance that approved campaigns were consistent with government priorities, or that opportunities to leverage messages and achieve cost savings were maximised.
Whole-of-government communications strategy
DPC does not have a system in place to facilitate a coordinated advertising and communications strategy across government. This means that there is limited assurance that cost savings are realised, contradictory messages are minimised, and opportunities to leverage messages are maximised. 
At the entity-level, however, Tourism Victoria, the Transport Accident Commission and WorkSafe have annual campaign advertising plans which enable the effective scheduling of activities throughout the year, streamline the messages delivered to the public and deliver significant cost and procedural efficiencies.
Compliance assessment
One advertising campaign reviewed included elements that could be perceived as serving party political interests. Another campaign presented information that was neither accurate nor verifiable.
Recent developments
However, in the second half of 2011 DPC has worked to improve its management of the Master Agency Media Services contract and oversight of advertising and communications activities across government. This is a positive initiative for which momentum should be maintained. This should also be extended to other aspects of DPC’s role – particularly with respect to transparency and accountability in advertising and communications activities across government.
Recommendations
Number	Recommendation	Page	
1.	The Department of Premier and Cabinet should:
·	make total advertising and communications expenditure publicly available
·	require an acquittal of campaign expenditure against approved budgets
·	educate applicable parties on relevant guidelines, and monitor compliance
·	improve its management of the Master Agency Media Services contract.	23	
2.	Departments and agencies should:
·	introduce rigorous business operations processes to enable consistent and accurate reporting of advertising and communications expenditure
·	publish details and costs of advertising campaigns and sponsorships provided and received
·	comply with all relevant advertising and communications policies and guidelines.	23	
3.	The Department of Premier and Cabinet should:
·	revise the 2009 Victorian Government Advertising and Communications Guidelines in line with current better practice
·	develop and annually revise a whole-of-government communications strategy.	35	
4.	Departments and agencies should:
·	have their chief executive or responsible officer certify that their advertising campaigns were developed independent of any intention to benefit a political party or minister, and that they comply with relevant advertising and communications guidelines with objective evidence 
·	have rigorous oversight processes for finalising advertising campaign materials to assure compliance with the 2009 and subsequent guidelines, prior to publication.	35	
Submissions and comments received
In addition to progressive engagement during the course of the audit, in accordance with section 16(3) of the Audit Act 1994 a copy of this report was provided to the 11 departments and five agencies included in the audit with a request for comments or submissions.
Department and agency views have been considered in reaching our audit conclusions and are represented to the extent relevant and warranted in preparing this report. Their full section 16(3) submissions and comments, however, are included in Appendix A.