26 September 2023

Auditor finds transport asset agency off the track

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A performance audit of the design and implementation of the Transport Asset Holding Entity (TAHE) has found that it wasn’t effective.

In her report Design and implementation of the Transport Asset Holding Entity, Auditor General Margaret Crawford said TAHE is the State’s custodian of rail network assets and is responsible for $2.8 billion of major capital projects in 2022–23.

Ms Crawford said her Office audited TAHE as well as its establishing bodies, NSW Treasury and Transport for NSW (TfNSW).

“The design and implementation of TAHE, which spanned seven years, was not effective,” Ms Crawford said.

“The process was not cohesive or transparent,” she said.

“It delivered an outcome that is unnecessarily complex in order to meet the NSW Government’s short-term Budget objectives, while creating an obligation for future Governments to sustain TAHE through continuing investment, and funding of the State-owned rail operators.”

Ms Crawford said the benefits of TAHE were claimed in the 2015-16 NSW Budget before the enabling legislation was passed by Parliament in 2017.

She said this committed Treasury and TfNSW to implementing a solution that justified the 2015-16 Budget impacts, regardless of any challenges that arose.

“Rail safety arrangements were a priority throughout TAHE’s design and implementation, and risks were raised and addressed,” the Auditor-General said.

“Agencies relied heavily on consultants on matters related to the creation of TAHE, but failed to effectively manage these engagements,” she said.

“Agencies failed to ensure that consultancies delivered independent advice as an input to decision-making.”

Ms Crawford said a small number of firms were used repeatedly to provide advice on the same topic, with the final cost of TAHE-related consultancies coming in at $22.6 million – compared to the initial estimate of $12.9 million.

“The ineffective process to design TAHE delivered a model that entailed significant uncertainty as to whether the anticipated longer-term financial improvements to the Budget position could be achieved or sustained,” she said.

Ms Crawford made four recommendations, two to Treasury to improve accountability and transparency for major new fiscal transformation initiatives, and to ensure entities did not reflect the financial impact of significant initiatives in the Budget when there was uncertainty, or it created perverse incentives.

She made one recommendation to Treasury and TfNSW to review record keeping practices, systems and policies, and one to Treasury, TfNSW and TAHE to review procurement policies to ensure consultant use complied with all Government policy requirements.

The Auditor-General’s 63-page Report can be accessed at this PS News link.

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