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									                                                                      CORPORATE PERFORMANCE

Corporate performance
Fair marketplace
Performance indicators at end of section
The Fair Trading Information Centre (FTIC), the Office of Fair Trading’s major call centre,
expanded its operations by providing three new enquiry services during the year – home
building information, retail bonds on behalf of the Department of State and Regional
Development, as well as the Government Information Service.
Legislative changes brought significant improvements for consumers in the areas of home
warranty insurance, electricity safety, residential parks and real estate sales. Other legislative
changes increased fairness for traders in the areas of valuers’ fee refunds, licence restoration
fees and conveyancers’ licensing.
New home building licensing requirements will help ensure consumers are able to deal with
properly qualified people. Changes include consistent education requirements, tighter licence
application processes and programs that have removed people who had obtained licences
under false pretences.
Disadvantaged consumers using finance brokers benefited from action against a number of
rogue operators who had illegally demanded upfront fees or commissions before loans were
approved. Operators of one group were banned from the industry for up to 20 years. Victims
of another operator received more than $500,000 in total compensation.
Responding to community needs
Demand for Fair Trading Services is evidenced by the almost six million requests for service
during the year. These were handled through phone, counter and electronic channels.
Independent surveying demonstrated a high level of accuracy of the information provided and
customer satisfaction levels were well above the suggested Australian Standard target. More
than 31 000 disputes between consumers and traders were handled and over 81 per cent of
these were successfully negotiated at an informal level. Over 15,000 compliance related
activities – ranging from inspections through to more complex action in the Supreme Court,
were carried out to ensure fairness in the marketplace. A comprehensive review process
involving more than 40 separate pieces of legislation continued to ensure NSW’s fair trading
laws remain up-to-date and reflect the needs of Parliament, the community and a broad range
of stakeholders. Over 1,100 community information sessions were presented to more than
45,000 people around the State.
Policy development
Major policy development in 2005/06 included:
•   Development of a mandatory code of practice for the smash repair industry to achieve a
    balanced solution that protects consumers' rights, provides safe, quality repairs and
    maintains a viable industry.
•   Release of an Options Paper on Residential Tenancy Law Reform aimed at better
    balancing the rights of landlords and tenants, modernising the law and ways to reduce the
    volume of disputes.
•   Development of legislative proposals intended to address a number of significant
    retirement village issues, including disclosure of information, resident input into
    management, capital maintenance and budgets, deficits and other financial issues.
•   A home building industry review that covered all aspects of licensing, from the range of
    activity covered by the licensing system, the types of entities that can be licensed, the fee
    structure and entry requirements of the licensing system, and the performance
    management of licence holders.
•   Further work on harmonising regulation of intrusive telemarketing practices in conjunction
    with the Victorian Government.
•   Development of proposals to require responsible lending by credit card issuers to be
    adopted nationwide. The proposals will reflect community concerns with card issuers’

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

    assessment practices which appear to result in consumers being granted inappropriately
    high amounts of credit.
•   Continued development of proposals for consistent state and territory legislation to
    address unfair terms in consumer contracts.
•   Development of proposals to reflect NSW tenant database legislation nationally. The
    current NSW scheme protects vulnerable tenants from inaccurate and unfair use of their
    tenancy histories by real estate agents.
•   A review of Australia’s consumer product safety system led to recommendations strongly
    in favour of national uniformity.
•   Proposals to streamline the administrative and reporting requirements for incorporated
    associations to make it easier for them to manage their affairs and meet their legal
•   A review to assess current arrangements for trade measurement administration by states,
    territories, the Commonwealth and New Zealand and to consider options to streamline the
    present arrangements for cost recovery and the certification of trade measuring
•   Trade measurement reviews to consider a standard measuring method across Australia
    for pre-packaged articles such as jams, breakfast cereals and biscuits and a similar
    standard approach for weighing frozen fish and seafood.
Fair Trading Information Centre
Fair Trading’s new contact centre, was officially opened and new telephony commissioned in
August 2005. During the year it responded to almost one million calls from consumers and
traders. Initially, the information services offered included Register of Encumbered Vehicles
(REVS), rental bonds, tenancy, strata, licensing and general fair trading enquiries. The Centre
was designed from the outset to be a scalable operation and in January 2006 it began
providing three additional enquiry services. These included providing information on behalf of
the Government Information Service, as well as handling retail bond enquiries and all Home
Building Service enquiries.
Home building reforms
Several new requirements introduced during the year will see considerable improvement in
the way licences are issued to people who wish to operate in the NSW residential building
industry. To ensure better proof of identity, applicants must now present themselves in person
at a Fair Trading Centre when lodging a licence application. This was in response to the
Independent Commission Against Corruption’s (ICAC) investigation into building licences
being obtained fraudulently. Once the cases were identified by ICAC, Fair Trading took
immediate steps to cancel 76 individual licences and 29 associated company licences that
had been obtained using false qualifications.
To ensure that only appropriately qualified people obtain a builder’s licence in NSW,
experience-based qualification (the ’20 year rule’) has been replaced by the need to hold an
approved qualification. A Certificate IV level (Certificate IV in Building 3477) is now the
minimum standard. The provision of home warranty insurance was also improved with the
establishment of the Home Warranty Insurance Scheme Board to monitor the insurance
scheme. An industry deed was signed by the Government and the approved insurers. This
will help provide the Government, the insurers, builders and homeowners with a level of
confidence in the long-term viability of the home warranty insurance industry.
Register of Encumbered Vehicles
The Register of Encumbered Vehicles (REVS) has continued to improve its service delivery to
clients, concentrating on internet facilities. REVS introduced a facility to directly email
certificates to clients who made telephone inquiries through the Fair Trading Information
Centre. Previously, certificates were only mailed or faxed to inquirers. For corporate clients,
REVS commenced providing weekly information reports via email, which has resulted in
major cost and productivity savings for REVS and its clients. Fair Trading is also reviewing
the design of the REVS website, focusing on providing a more user friendly site with
expanded information to enhance customers’ access to and understanding of REVS’
services. The logistics of establishing a national system are also being considered.

                                                                      CORPORATE PERFORMANCE

Winning the war against false billers
Operators described as false billers deliberately target small businesses with false claims that
advertisements have been placed in what are often spurious publications. Businesses without
good record keeping practices often fall victim to the ploy. Fair Trading intensified its fight
against false billers through a wide-ranging strategy of increased litigation, enhanced public
awareness and legislative amendments. Successful investigations and prosecutions saw
several operators including: Moonbeam Pty Ltd, Husen Pty Ltd, Australasian Trade & Industry
Periodicals Pty Ltd, Spacelink Holdings Pty Ltd and Power Pacific International Media Pty Ltd,
either fined or otherwise put out of business.
Smoke alarms
New smoke alarm laws came into operation in NSW on 1 May 2006. Smoke alarms have to
be fitted to all premises in which people sleep. These planning laws had an impact on several
Fair Trading areas and regulations were gazetted in April 2006 to deal with the responsibilities
of parties in residential tenancy relationships, in residential parks and in retirement villages.
The main issues dealt with were the responsibility for installation of alarms, battery fitting and
replacement and notation in the inspection records.
Credit – maximum annual percentage rates
Laws to protect the most vulnerable consumers from being exploited by credit providers
commenced on 1 March 2006. Now, interest plus all ascertainable fees and charges must be
included in the calculation of the maximum annual percentage rate which is capped at 48 per
cent. The Consumer Credit (New South Wales) Amendment (Maximum Annual Percentage
Rate) Act 2005 addresses the issue of fringe lenders who had been avoiding the interest rate
cap by charging excessive fees and charges on top of a high rate of interest. Lenders can no
longer impose exorbitant costs which lead to consumers being caught in an unmanageable
debt cycle.
Action against finance brokers
Fair Trading continued its crackdown of finance brokers who illegally demand upfront fees or
commissions before loans are approved. Rogue operators continue to target disadvantaged
consumers who have difficulty obtaining credit from mainstream lenders.
In some instances it appears that brokers have made no attempt to operate a legitimate
business or obtain finance for consumers, as promised. Stephen Larkin and his son Jordan
Larkin and associates conducted a finance broking business which, over several years,
operated under a number of different names including Michaels Accounting Services,
Prestige Accounting, Fortune Finance, and Asset Accounting (NSW). Loans that had been
guaranteed were neither received nor were the upfront fees refunded. As a consequence, the
pair was restrained from operating as finance brokers for 20 years and 10 years respectively.
In another significant result, $500,000 in trust fund compensation was paid to the victims of
Credit Accounting Consultancy, which had operated a finance broking scam.
Controlling graffiti
In May 2006 the Government introduced into Parliament the Summary Offences Amendment
(Display of Spray Paint Cans) Act 2006. The Act requires retailers who sell spray paint cans
to restrict access to those cans by keeping them either in a locked cabinet or behind a
counter in such a way that members of the public cannot gain access to the cans without
assistance. The Act aims to reduce the amount of graffiti in the community by reducing the
theft of spray paint cans. Before drafting the Act, the Office of Fair Trading consulted widely
with retailers and spray paint suppliers. As a result, retailers were given the option of keeping
spray paints in a locked cabinet or behind a counter. Retailers expressed support for building
as much flexibility as possible into the Act, so that different stores can choose the option
which best suits their circumstances.
Consequently, the Act also contains a power to make regulations to allow for further options
for displaying spray paints, if these are considered appropriate in the future. The Government
has also agreed that, prior to the commencement of the Act, the Office of Fair Trading will
conduct a comprehensive education campaign which provides information not just about the
new provisions, but also about the full range of measures being used to combat graffiti. This

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

will ensure that retailers and consumers understand that restricting access to spray cans is an
important part of an overall anti-graffiti strategy.
Business Licence Information Service upgrade
Fair Trading is undertaking a major upgrade of the Business Licence Information Service
(BLIS) - an internet-based service that provides the business community and the public with
detailed information on all NSW government licences, permits and associated regulations. In
addition, BLIS provides customers with a wide range of information on general requirements
for starting or running a business in NSW. The improvements centre on a more friendly and
easy to use web-based service - which will contain more information than ever before.
The new BLIS system, which should be available in late 2006, will also be a valuable
resource for Fair Trading employees - helping them provide up-to-date licensing and
regulatory information to the public over the telephone or through Fair Trading Centres
throughout NSW.
Community support through grants
Grants are provided to not-for-profit organisations to provide community education, advice
and advocacy services for tenants, retirement village residents and consumers who need
assistance with dealing with personal financial difficulties. Our partnership with funded not-for-
profit groups ensures complementary service provision, in that we provide information,
regulation and remedy, while the community sector specialises in the provision of consumer
advice and advocacy services. Around 26,000 people were provided with advice and
advocacy under the Tenants Advice and Advocacy Program and almost 34,000 people
sought financial counselling assistance. All services reported an increase in the complexity of
matters facing their clients. (see Appendix 9 Funds granted to non-government community
Community education sessions relating to management of personal finances are also
conducted under the funding program. These sessions are very useful as a preventative
strategy, enabling people to make more informed decisions about the use of credit and day to
day financial management issues. 252 sessions were conducted this year, benefiting 8,893
In 2005/06, Fair Trading developed Think Smart Tenancy Grants as a one-off program to
provide funding to community-focused organisations who could deliver tenancy-related
initiatives to a number of specific community language groups. These included: Arabic,
Assyrian, Bahasa Indonesian, Chinese, Dari, Dinka, Persian (Farsi), Korean, Pashto,
Samoan, Tongan and Vietnamese.

                                                                        CORPORATE PERFORMANCE

2005/06 Performance indicators
Fair marketplace
Service          Indicator/Measure        04/05   05/06    05/06    Comments                    Target
                                                  Target   Actual                               (06/07)
                 % accuracy of            83%      93%      90%     The increase between         ≥90%
                 information provided                               2005 and 2006 is
                                                                    statistically significant
Provision of                                                        (though given the
accurate                                                            confidence interval of
information to                                                      ± 5% may not be as
consumers and                                                       great as it appears).
                 % of customers           87%      90%      90%     The 2005/06 result -         ≥90%
                 satisfied with service                             90% satisfied when
                                                                    combined with the 5%
                                                                    dissatisfied- exceeds
                                                                    the target described in
                                                                    the users’ handbook
                                                                    for the Australian
                                                                    Standard on
                                                                    Customer Satisfaction
                                                                    Measurement which
                                                                    suggests satisfaction
                                                                    levels to be 80% or
                                                                    more and
                                                                    dissatisfaction to be
                                                                    less than 10%
Provision of     % of prosecutions        94%      90%      86%     Results are within           90%
effective        that are successful                                historical bandwidth
enforcement                                                         fluctuations (results
                                                                    have ranged between
                                                                    86% and 94% over
                                                                    past 4 years). While a
                                                                    target of 90% is set,
                                                                    results are not
                                                                    completely within OFT
                                                                    control as outcomes
                                                                    ultimately depend not
                                                                    just on cases
                                                                    prepared by OFT, but
                                                                    on Court discretion in
                                                                    relation to defendants’
                                                                    circumstances. Fair
                                                                    Trading will continue
                                                                    to test some matters
                                                                    in the Courts with a
                                                                    view to establishing

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

Fair and productive workplaces
Performance indicators at end of section
The major focus for the Office of Industrial Relations throughout 2005/06 was supporting the
Minister and NSW Government in responding to the Federal Government’s Work Choices
legislation. Work completed as part of this project included preparing a submission on behalf
of all Australian state and territories governments (except Victoria) to the Senate Inquiry into
the draft Work Choices legislation, assisting in the NSW Government’s appeal to the High
Court of Australia over the constitutional invalidity of the Work Choices legislation and hosting
a national forum in July 2005 on the federal industrial relations changes.
Inspectors from the Office of Industrial Relations carried out Australia's largest workplace
compliance program during 2005/06, with approximately 14,000 NSW workplaces inspected.
As part of the program, the Office conducted 358 compliance campaigns across NSW. These
compliance campaigns are proving to be an effective and efficient way to assist large
numbers of NSW employers and employees to understand their employment rights and
responsibilities. The compliance program also returned over $3.5 million of back-pay to NSW
In a further expansion of its front-line services, on 2 March 2006 the Office launched Compare
What’s Fair, an innovative online tool which compares award entitlements against those
proposed in Australian Workplace Agreements. Since its launch, Compare What’s Fair has
been used by 6,280 employers and employees.
Impact of Federal Changes on NSW employers and employees
The Federal Government’s Work Choices legislation seeks to take over a significant portion of
the NSW industrial relations jurisdiction, and so presented one of the Office of Industrial
Relations’ most significant challenges during 2005/06.
The Office’s activities have principally focused on giving effect to the NSW Government’s
decision to vigorously oppose the federal legislation, including:
•   preparing legislative amendments to mitigate or annul certain effects of the Work Choices
•   participating in the development of the NSW Government’s challenge to the constitutional
    invalidity of the legislation in the High Court of Australia
•   coordinating the NSW Government’s submission to the Inquiry into the Impact of Work
    Choices currently being undertaken by the NSW Legislative Council’s Standing
    Committee on Social Issues
•   establishing the Fair Go Advisory Service to help NSW employers and employees
    understand the effects of Work Choices laws on their workplace rights and
Assisting small businesses and regional employers
During 2005/06, the Office of Industrial Relations delivered a comprehensive range of
seminars for small businesses. The Office conducted 96 seminars on workplace issues and
legislative changes, which were attended by 2,269 employers. Fifty-one seminars were
conducted in the Sydney metropolitan area and 45 were conducted throughout regional NSW.
Through strong partnerships with business enterprise centres, community organisations and
employers, the Office delivered an additional 85 presentations covering issues from legal
obligations to understanding their obligations as employers. This included 14 seminars hosted
by Australian Business Ltd/State Chamber of Commerce (NSW), which also involved
presentations to regional business groups and employers by the Australian Taxation Office
and WorkCover Authority.

                                                                     CORPORATE PERFORMANCE

Building community relationships
The Office of Industrial Relations has continued to assist vulnerable workers and job-seekers
in the community.
Special measures are now in place to assist young people who are starting work while still at
school. In August 2005 the Office of Industrial Relations launched the Money Stuff! Work
Smart syllabus-based teachers’ resource book and website. Money Stuff! Work Smart was
developed to assist young people to be aware of their rights and how to be safe in the
workplace. The resource book was distributed to all NSW high schools, and is now used in
high school commerce, business studies and work education subjects.
Another particular focus has been to help people from culturally and linguistically diverse
communities to better understand their rights in the workplace through improved access to the
agency’s resources and services. In addition to participating in more than 30 community and
business events, during 2005/06 the Office delivered almost 100 presentations on working
rights in NSW and specific NSW Awards. Strong partnerships with youth, education and
community organisations have been forged this year. Planning is well underway to deliver
information through digital television Channel NSW early in the 2006/07 financial year.
A third focus for the Office, through its ATSI Workplace Services Unit, has been to deliver
workplace information and advice to Aboriginal and Torres Strait Islander employees,
contractors, employers and community organisations.
Informing and advising employers and employees
The Office of Industrial Relations continued to provide its telephone and online workplace
information services throughout the year. Due to the popularity of its website and electronic
publications, over 88 per cent of client contacts in 2005/06 involved the Office's online
information services.
Activity on the Office's website increased by 30 per cent, with 2.09 million visitors to the site
during 2005/06. Nearly 75,000 people used Check Your Pay, the Office's online application
which allows users to calculate wages and other entitlements. Check Your Pay has now been
adopted by the Western Australian and Queensland governments to provide similar services
in those states.
Pay Rate Updates, the Office's free email update service that notifies subscribers of changes
to NSW private sector awards, also showed significant growth. The number of subscribers to
Pay Rate Updates increased by 70 per cent during the year, to nearly 77,000 users.
To ensure that employers are able to display relevant awards in their workplace, the Office
continued to provide the full text of major NSW private sector awards for free download
through its website. During 2005/06, 216,395 awards were downloaded, a 56 per cent
increase over 2004/05.
During the year, the Office's telephone information service received calls from over 263,450
employers and employees about information on pay rates and employment conditions. This
included 22,500 callers to the Office’s Small Business Advisory Service.
In the last six months of 2005, the Office of Industrial Relations undertook major radio
advertising campaigns to promote its online services throughout Sydney and regional NSW.
The campaign achieved a 20 per cent increase in the use of some of the Office's services.
Inspecting NSW workplaces
In 2005/06, the Office of Industrial Relations continued with its state-wide workplace
inspection activities, which is the largest program of any labour agency in Australia.
The Office's 358 compliance campaigns focused on non-compliance hot spots in the retail
and hospitality industry, as well as the security and construction industries. Approximately
12,000 workplaces were investigated, and inspectors identified 9,350 breaches of NSW
industrial relations legislation being committed by 4,100 employers, including over 1,500
employers underpaying workers.

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

Notable results achieved during 2005/06 included:
• a compliance campaign covering 491 employees of 52 cafes and restaurants in Byron
   Bay resulted in $35,500 in underpayments being back-paid to the workers
• inspections of 58 businesses in Kiama resulted in $27,200 being paid to employees
• six employers in Penrith back-paid staff a total of $21,200 following inspections of
   retailers in that area
• a series of compliance campaigns covering registered clubs across NSW has resulted in
   $968,300 being back-paid to staff by 337 employers in the industry.
As part of its complaint-based investigation activities, the Office undertook a further 2,000
investigations. These focused on unpaid trial work, junior employees, apprentices and
trainees. Approximately two-thirds of complaints were resolved through the Office’s early-
mediation activities, prior to formal investigations.
The Office fined or prosecuted 207 employers for breaches of NSW industrial relations
legislation during 2005/06.

2005/06 Performance indicators
Fair and productive workplaces
Service              Indicator/Measure       04/05    05/06     05/06    Comments               Target
                                                      Target    Actual                          (06/07)
Policy               % policy advice and     97%          95%    98%                             95%
development          analysis developed
and regulatory       to Director-
review and           General’s
industrial liaison   satisfaction
Employer /           % of enquiries and      85%          85%    90%                             85%
employee             complaints
workplace            satisfactorily
information and      resolved within
advisory             targeted timeframes
Employer /           % of enquiries to       83%          85%    88%     Result reflects the     80%
employee             OIR accessed                                        increased use of
workplace            through online                                      online services, and
information and      services                                            the introduction of
advisory                                                                 new services during
services,                                                                the year
Inspection and       % of non-compliant      91%          85%    87%                             85%
investigation        employers who
activities,          complied or are
compliance and       prosecuted within six
enforcement          months of being
(including           notified that they do
prosecution)         not comply

                                                                      CORPORATE PERFORMANCE

Improving NSW Government performance
Office of Public Works and Services
Performance indicators at end of section
Capital Works
The Office of Public Works and Services (OPWS), through its network of offices across NSW
continued to provide project management expertise to the NSW Department of Education and
Training (DET).
In 2005/06, OPWS completed and handed over 32 major capital school projects, providing
new halls, libraries, administration buildings and specialist high school classrooms valued at
$93.1 million, and seven TAFE projects valued at $22.77 million.
OPWS also project managed $71 million of minor capital works, providing new ramps, lifts
and air-conditioning for schools, and administered $116 million of maintenance contracts.
OPWS assisted DET to deliver its class size reduction and demountable replacement
programs by project managing delivery of a modular design range (MDR) of buildings. In
2005/06, 38 MDR buildings (76 classrooms), valued at more than $15 million, were delivered
and installed for the target date - day one, term one. Subsequently, a further 18 classrooms
and three demountable replacement MDR buildings were manufactured and delivered,
enabling DET to meet its program commitments.
Asset maintenance
In 2005/06, 19 asset maintenance contracts and two facilities management contracts were
established for DET. Twelve of these contracts are in regional and country centres, creating
employment opportunities for some 1,594 subcontractors and 3,944 people. The remaining
nine contracts, in the Sydney metropolitan area, created employment opportunities for 251
contractors and 2,203 people.
The two new facilities management contracts for the Riverina and Central Coast areas, which
include maintenance, cleaning and waste disposal, were also established and operational in
2005/06. Twenty cleaning contracts were established and commenced in 2005/06. These
contracts provide cleaning services to schools, TAFE colleges, police stations, courthouses
and other government agencies’ sites.
In 2005/06, OPWS managed 48 projects for NSW Health across the State with a total project
value of $209 million. Many of these projects contributed directly to improved health care for
regional and rural areas.
New cancer care facilities at Coffs Harbour and Port Macquarie, to be completed in 2007, will
provide radiotherapy, chemotherapy and breast screen services for the mid North Coast.
Construction of the $3.5 million Coffs Harbour Cardiac Laboratory means cardiac
catheterisation diagnostic services will be available in the mid North Coast, whereas currently
they are available only in Brisbane, Sydney or Newcastle. Construction was substantially
completed in the reporting year and hand over is planned for September 2006.
At Ballina District Hospital, construction started on a new 18-bed transitional care facility and
ambulatory care unit, to be ready by early 2007.
The Rural Health and Hospital Services Program contributes to the widespread improvement
of rural health services and facilities for rural and remote communities. OPWS, in its role as
Project Director Procurement, is assisting NSW Health and Hunter New England Area Health
Service with the program at Merriwa, Bingara, Warialda and Tingha.
Five new mental health facilities are being developed, with OPWS as Project Director
Procurement. These include 20-bed non-acute inpatient units at Shellharbour, Sutherland,
Coffs Harbour and James Fletcher Hospitals and a 14-bed specialist older persons unit at

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

The Government Architect’s Office is working with NSW Health on redevelopment of Bathurst,
Orange and Bloomfield Hospitals. With a project budget of approximately $200 million in
capital costs, the redevelopment represents a major regional investment.
Dental health has also been a focus and Sustainable Water Solutions (SWS) helped NSW
Health to improve dental health by introducing fluoride to the State’s drinking water. SWS
provided concept and detailed design and technical assistance, and reviewed tenders during
construction of the fluoride dosing plants throughout NSW.
OPWS enabled NSW Health to save more than $9 million by bulk buying electromedical
equipment through its ‘Whole of Government Period Contract System’.
Chief Secretary’s’ Building
This project, delivered by OPWS, restored and adapted the Chief Secretary’s Building, one
of Australia’s most significant heritage buildings. Built in 1880, the building now
accommodates the Office of the Governor of NSW and the Industrial Relations Commission
of NSW in modern offices, while maintaining the building’s significant heritage fabric and
The refurbishment is an example of conservation project incorporating protection,
preservation, repairs, restoration, adaptation and part reconstruction. The architectural and
engineering contribution from the Government Architect’s Office to this project has been
recognised with a number of industry awards.
Centenary Stonework Program
Commerce delivers the Minister’s Centenary Stonework Program, which funds restoration
work to stone on the State’s historically significant public buildings. Projects funded during the
2005/06 financial year included façade restoration work to Darlinghurst Fire Station, Sydney
Observatory, State Library, Sydney Hospital and Singleton Court House. The Program
provided $4.5 million of funding in 2005/06 and clients funded a further $1.5 million.
The ongoing drought, the worst on record, has concentrated attention on water supply and
quality, water conservation and related environmental issues. Commerce has been involved
in projects throughout NSW that have contributed to more efficient and sensitive use of its
water resources.
The Sydney Catchment Authority engaged OPWS to help manage the delivery of projects
forming part of the Metropolitan Water Plan 2004, the objectives of which are to secure water
supply for Sydney and the Illawarra regions. Warragamba Dam Deep Storage Access project
and Nepean Dam projects, managed by Commerce, aimed to access the deep water in the
dam’s lower level.
OPWS is also managing procurement of the Prospect Reservoir recovery pump station, which
will allow recovery of the water stored in the reservoir and delivery to the water treatment
plant for Sydney use. The pump station will provide an alternative water source in the event of
contamination and allows water stored in the reservoir to be used while the Warragamba
pipelines are shut down for maintenance.
Commerce has been engaged to identify, pursue and resource all opportunities to expedite
projects which could have a positive impact on the drought situation in Central Coast. An
estimated $125 million of works, in varying stages of development, include:
Hunter water connection project
•   Mardi Dam transfer system, dam raising and associated works
•   the Northern transfer system and link road
•   temporary desalination plants, and,
•   the Mangrove Weir to Mooney Dam Pipeline link.

                                                                      CORPORATE PERFORMANCE

In addition SWS provided technical assistance for drought management to:
•   State Emergency Management Committee, Department of Energy, Utilities and
    Sustainability and Goulburn-Mulwaree Council - contingency planning to maintain water
    supply for Goulburn in the event of continuing severe drought
•   Sydney Water - the assessment of water supply peak demand parameters for western
    Sydney following the introduction of BASIX for new dwellings
•   Sydney Catchment Authority - assessment of options to increase future water transfers
    from the Shoalhaven to Sydney.
The upgraded Sooley Dam near Goulburn was opened on 15 June 2006. SWS was involved
in project design for the $13 million project, which reduced the likelihood of structural failure
following severe rainfall and secured Goulburn’s water supply.
In a first for Australia, an innovative gate design was developed for the Tallowa Dam upgrade
project, near Kangaroo Valley. The design caters for large environmental flow releases from
the dam in a manner that allows fish to pass safely over the gate, when it operates, and down
the 30m high spillway without suffering severe injury or fatality.
Clarence Valley Council engaged OPWS to act as its project manager in the delivery of the
$180 million Clarence Valley and Coffs Harbour Water Supply project that will secure water to
Coffs Harbour and Lower Clarence area through the construction of a dam at Shannon Creek
and major pipelines. In 2005/06, Commerce delivered the $22.6 million Stage 1b pipeline
upgrade to the Shannon Creek storage site.
The Darling Anabranch to Murray pipeline project for Department of Natural Resources will
reduce the loss of water through evaporation, seepage and transmission from weir pools
along the route and improve the security of supply to water users. OPWS is project managing
the $54 million project, which involves building more than 500 kilometres of pipelines and a
number of pumping stations. Thirty per cent of the pipeline construction was completed in
2005/06 and preconstruction work started on the on-farm and in-stream phases.
Commerce has been involved in the project management of water and sewerage treatment
works. Most of these are part of the Department of Energy, Utilities and Sustainability Country
Towns Water and Sewerage Program, which ensures affordable, cost-effective and well-
managed water supply and sewerage services in urban areas of country NSW. Seventy-eight
projects to the value of $55.6 million were carried out in 2005/06 under the program.
SWS continued to make a major contribution to the Living Murray Initiatives and the NSW
Water Innovation Program, maintaining its position as the lead fishway and river structures
designer for the Murray Darling Basin Commission and inland NSW streams.
The fishway designs allow fish to migrate around or through river structures with a wide range
of fluctuating water levels and flows and, compared to previous designs, cater for an
unprecedented range of fish sizes and swimming ability associated with our native fish
During 2005/06, SWS contributed its expertise to the design and construction of two vertical
slot fishways on the Murray River and four major fishways on other inland NSW streams –
Walgett Lake Cargelligo, Dubbo Council and Brewarrina Weirs.
Valuation, audit and asset management
•   SWS assisted the NSW Audit Office in the asset audit of major water authorities and was
    engaged to develop a Total Asset Management plan for Deniliquin Council
•   On-time and on-budget delivery was achieved for valuations of a total of 450 dams, river
    headwork structures and water supply infrastructure owned and operated by State Water
•   Manly Hydraulics Laboratory carried out condition assessments of a number of the
    State’s seawalls for the Department of Lands, continued hydrometric monitoring of the
    lower Hawkesbury River and tributaries under contract to the Sydney Catchment

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

•   Strategic Water Management Unit undertook numerous “Best Practice Management”
    projects for NSW councils, including water supply, sewerage, waste management and
•   Total Asset Management Asset Services had ongoing projects for the NSW Zoological
    Parks Board to develop a long-term strategic maintenance plan for both Taronga and
    Western Plains Zoos, including the implementation of a computerised maintenance
    management system.
In an initiative of the NSW Greenhouse Plan, a Memorandum of Understanding was
developed between the NSW Greenhouse Office and Commerce, creating a partnership that
will investigate and facilitate the reduction of highly potent synthetic greenhouse gases in
refrigeration, ensuring Government is leading by example in reducing emissions.
NSW Government Cleaner Fleet Initiative
StateFleet implemented the NSW Government Cleaner Fleet Initiative from 1 July 2005. This
initiative introduced an environmental rating system for the NSW Government fleet based on
the green vehicle scores administered by the Commonwealth Department of Transport and
Regional Development.
The environmental score for the NSW Government fleet has improved from 9.55/20 to
9.88/20 in the first year of operation. The number of small/medium/hybrid vehicles has
increased by 14 per cent to represent 37.5 per cent of the total passenger fleet while large
vehicles have reduced by 14 per cent to represent only 36.4 per cent, down from 42 per cent
a year ago. This turnaround represents savings not only in greenhouse gas emissions but
also capital and running costs.
Environmental design
SWS helped develop channels, regulators, fishways and access works for NSW Koondrook-
Perricoota Forest Flood Enhancement project to allow a return to a natural water-flushing
regime for the regeneration of this large and important red gum forest. This project sets the
design precedent for similar projects in NSW in the future.
SWS devised a combined selective withdrawal intake system for the Shannon Creek Dam
project. The introduction of this design produced an estimated cost saving of $700,000
compared to the more traditional separate intake systems.
Environmental and site contamination work expanded significantly during the year 2005/06. In
addition to completing environmental assessments for several deep water access projects for
the Sydney Metropolitan Water Plan, environmental staff undertook some 13 environmental
assessments for sewage treatment plant augmentation schemes. Site contamination
assessment work reached a high level as a result of concerns about asbestos at various
gaols, schools and hospitals.
Manly Hydraulics Laboratory (MHL) developed innovative solutions for mitigating coldwater
pollution that will lead to improved environmental outcomes downstream of reservoirs and
significant cost savings. For example, Burrendong Dam’s physical model testing of a
temperature control curtain design to upgrade the current multi level offtake has the potential
to save up to $300,000 per annum over the alternative mechanical controlled option. This
innovative design can be potentially adopted at a further nine major dams.
Manly Hydraulic Laboratory’s coastal environmental monitoring network funded by the
Department of Natural Resources continued to provide high quality data to a wide range of
state agencies and local councils. MHL promptly analysed North Coast floods to provide flood
managers with a robust picture of the flood extent and return frequency.
In 2005/06, State Property managed the Crown Property Portfolio on behalf of Treasury and
assisted Treasury with the strategic review of Government's future delivery of accommodation
in Dubbo, Coffs Harbour, Grafton and Wollongong.

                                                                   CORPORATE PERFORMANCE

The continued focus on improved service delivery by government agencies has resulted in
development proposals for new office buildings. Thirteen agencies located in separate
accommodation will now be located in a single 6,200 square metres building in Queanbeyan,
due to be completed in mid 2008.
Three agencies will be co-located in a single 10,000 square metres building in Penrith,
planning for which started in 2005/06. Completion is due in mid 2008.
In October 2005, work commenced on the Parramatta Justice Precinct, for which State
Property is development manager. When complete, the development will comprise Sydney
West Trial Court Complex, NSW Children’s Court, Justice Precinct offices, refurbishment of
Jeffery House community health centre and underground car parking.
Jeffery House was handed over in April 2006 and construction of the Children’s Court and
justice building is underway. All works are currently ahead of schedule and completion is
expected in mid 2008.
State Property coordinates government leasing and use of office space throughout NSW.
Continued monitoring and efficient management has reduced government's space use from
over 24 square metres per person in 1994 to 17.17 square metres per person at year end,
bringing savings of $143 million per year in accommodation costs.
Commerce transferred its Port Kembla depot to NSW Health for $1.75 million to provide much
needed linen and laundry services for the Illawarra region.
On behalf of the Department of Ageing Disability and Home Care, State Property disposed of
five metropolitan and regional properties, generating $1.75 million. Replacement properties
are currently being sourced.
In 2005/06, the Government Architect’s Office designed, planned and documented nine
regional police stations for the Ministry for Police at Wagga Wagga, Orange, Armidale,
Muswellbrook, St Mary’s, Lismore, Dubbo, Campsie and Fairfield.
Program and project management was provided for the Police property portfolio, including
leasing, maintenance, acquisition and disposals. This also involved $116.3 million capital
works program, including 12 major developments and a Cell Improvement program at 29
sites, and a Minor Works program of $11.5 million. Six of the major works are now under
construction, including a new Forensic Centre in western Sydney. Post occupancy
evaluations show a high level of satisfaction from users.
In the area of juvenile justice, OPWS provided project management for two major projects -
the total redevelopment at Reiby Juvenile Justice Centre, near Campbelltown and the
development of the Juniperina Centre for young women at Lidcombe.
Two recently opened court houses will service their local areas - The Children's Court of NSW
at Broadmeadow in Newcastle was opened in April 2006 and the Bankstown Court House, a
local court complex, was opened in May 2006, both project managed by Commerce.
The Department of Corrective Services (DCS) $703 million capital works program is project
managed by Commerce and involves 15 major projects. The $5.1 million Junee Correctional
Centre upgrade and the $12.3 million relocation of DCS’s head office were completed in
Emergency management
Commerce provides and manages the specialist engineering function in the State Emergency
Management Committee, assisting with contingency planning for state, national and
international emergencies. It also participates in a range of district and whole of government
responses in areas such as counter terrorism, avian influenza and structural collapse and
participated in the preparation and planning for such emergencies as drought, tsunamis and
exotic animal diseases.
SWS coordinated the NSW Earthquake Action Management Plan for the upkeep of the
State’s urban accelerograph network covering Sydney, Newcastle and Wollongong. The
network provides data for the formulation of seismic codes and seismic risk determination.

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

Manly Hydraulics Laboratory monitored alert systems for flood evacuation warning, algal
blooms and coastal lagoon entrance sedimentation and played a pivotal role in evacuation
planning by the State Emergency Service and for local communities near coastal waterways.
Human services
The Office of Public Works and Services provided program and project management
assistance to Department of Ageing Disability and Home Care for its 2005/06 major capital
works program. Some new group homes, respite centres and day program centres were
provided and others upgraded.
The works, to the value of $46 million, were undertaken and completed within the nine-month
period available, enabling DADHC to meet its commitments to the community.
Aboriginal Communities Development Program
The Aboriginal Communities Development program is a $240 million program of works to
improve public housing for Aboriginal people. The Department of Aboriginal Affairs, which has
engaged Commerce as program manager, administers the program for NSW Government.
The program objectives include progressing Aboriginal enterprise development, employment
training, sustainability and improved governance (self determination).
Under the program, 15 Aboriginal building companies have been established. These have
been awarded $55 million in contracts and have created 250 jobs for at least four years. Two
hundred and twenty two apprentices/trainees have commenced and, of these, 70 have
graduated and 110 are still participating.
The program also carried out 65 emergency repairs to houses, 125 house refurbishments,
purchased five houses, upgraded 55 new houses and replaced 17 homes.
OPWS has a comprehensive program for improving safety on the construction projects it
manages on behalf of clients. The approach is based on the principles of only engaging
contractors who have demonstrated satisfactory safety management on previous projects;
and requiring the contractors to demonstrate on each project how they are effectively
managing safety.
In early 2006, Project Management, OPWS updated its project safety management
procedures to maintain the focus on engaging contractors with a proven safety record. All
project staff have been trained in the updated procedures.
OPWS achieved an average of 3.1 injuries per one million hours worked against an industry
benchmark of 21.3.
In the reporting year, the Corporate OHS Management System has been accredited to the
NSW Government OHS Management Systems Guidelines Edition 4.
Security/business continuity planning
Central Corporate Services Unit (CCSU) underwent the third successful independent
Information Security surveillance audit in May 2006 which confirms that CCSU continues to
comply with the requirements of AS/NZS 7799.2:2003, Specification for Information Security
Management Systems.

                                                                         CORPORATE PERFORMANCE

2005/06 performance indicators
Improved NSW Government performance - Projects and infrastructure
Service             Indicator/Measure      04/05     05/06      05/06       Comments         Target
                                                     Target     Actual                       (06/07)
Office of Public    % of projects          88%           95%     93%                          95%
Works &             managed by OPWS
Services            completed on time

Office of Public    % of projects          89%           95%     95%                          95%
Works &             managed by OPWS
Services            completed within

Office of Public    % of client            84.5%         80%    83%       The decrease        80%
Works &             satisfaction with                                      from 04/05 is
Services            asset solutions                                      within acceptable
                    developed on behalf                                      tolerances
                    of client agencies
Project             Lost Time Injury        Not        20%               OPWS achieved         20%
Management          Frequency Ratio        avail.     better             an average of 3.1    better
                    score to be 20%                    than                  Injuries per      than
                    better than industry             industry             1,000,000 hours    industry
                    on Commerce                                           worked against
                    Managed projects                                         an industry
                                                                           benchmark of
    Source: Workcover Statistics 04/05.

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

Office of NSW Procurement
Performance indicators at end of section
The Office of NSW Procurement (NSWP) is the NSW Government’s centre of expertise for
the procurement of capital assets and goods and services, including ICT. It is leading the
government procurement reforms and delivering efficiencies and cost savings through leading
edge procurement strategy, practice advice, products and processes and business solutions
for government agencies. Cost savings in government procurement expenditure are
imperative to help fund such key front-line services as health, education, transport, housing
and human services.
NSWP offers services that deliver value, minimise costs and manage risk across the
government. It’s key services include:
•   providing strategic advice in the procurement of government communications, advertising,
    publishing and information services
• establishing and administering whole of government goods and services standing offer
    contracts and client specific period contracts
• providing strategic sourcing and supply management advisory services
• designing and delivery of online procurement tools, solutions and services including
    smartbuy® and eTendering
• developing government-wide information and communications technology strategies in
    collaboration and partnership with government agencies
• developing strategies and plans for ICT acquisitions and delivering key ICT infrastructure
    across the NSW Government (including State Broadband service, Government Radio
    Network and NSW Government web-portal).
• designing and delivery of efficient and effective procurement process systems, supplier
    management systems, contract dispute management services, risk management
    standards and procurement guidelines including standard forms of contract templates,
    tools and user guides that manage risk allocation and procurement policy compliance
• providing expert guidance to government agencies on procurement of capital assets,
    goods & services and ICT
• facilitating Gateway Reviews of major projects to minimise procurement risk to cost and
• providing administration support for the State Contracts Control Board (SCCB) and
    Construction Agency Coordination Committee (CACC), and the CIO Executive Council.
Performance highlights
Cost savings
•   Delivered $595 million of estimated cost savings, made up of $464 million from the use of
    state contracts, administrative cost savings of $39 million, $32 million from the use of
    Master Media and Placement Contract, process efficiency savings of $22 million from
    eProcurement and the remaining $38 million savings from other procurement services.
State Contracts and Strategic Sourcing
•   In 2005/06 NSWP administered 176 state contracts for use by government agencies and
    other eligible organisations, generating $3.41 billion in sales volume representing around
    29% of the state budget and an increase of 3.3% compared to $3.3 billion sales volume
    recorded in 2004/05.
•   In 2005/06 collaborative strategic sourcing programs occurred in several NSW
    government agencies to introduce best practice supply chain techniques, procurement
    process reforms, and business management techniques. The agencies included NSW
    Health, RailCorp, Department of Ageing, Disability and Home Care, Department of
    Education and Training, Sydney Water Corporation, Meals on Wheels, and Department of
•   In total the strategic sourcing programs targeted $2.7 billion in annual goods and services
    expenditure to identify $135 million annualised savings opportunities. Savings of $7.5
    million were realised in 2005/06. For the financial year 2006/07 it is expected further
    savings will be realised and identified, thereby providing continued benefit to the people of

                                                                    CORPORATE PERFORMANCE

Procurement Reforms
Based on the major procurement initiatives highlighted in the Premier’s February 2006
Economic and Financial Statement, NSWP facilitated the government’s procurement reform
agenda by preparing a new Premier’s Memorandum which will create greater efficiencies in
government procurement through the consolidated use by all agencies of SCCB contracts
and procurement expertise. NSWP also conducted related publicity and an agency forum
attended by over 100 agency representatives.
Campaign advertising
All advertising campaigns with a total budget of $50,000 or more are subject to a peer review
process, the purpose of which is to provide the agency with an informed and independent
assessment of the campaign’s robustness.
Commerce manages the peer review process, appointing the reviewers, overseeing the
presentation by agencies and finalising the report to support a recommendation for Budget
Cabinet Committee or Ministerial approval.
During the year, 59 campaigns were submitted for peer review, with improved and more
effective tactical strategies being developed. Senior marketing personnel from a variety of
government agencies served as panel members. An additional benefit of the system is that it
encourages collaboration between agencies, for instance, Tourism NSW working with
RailCorp on a rail travel campaign, and the Motor Accident Authority working closely with the
RTA to publicise Greenslip changes.
Whole of government savings on media costs
The centralised government media contract sees all advertising booked through Mediacom,
one of Australia’s largest media buying agencies. The contract maximises the government’s
leverage in the discount on media placement rates by consolidating all advertising through
one central buying point. Annual negotiations on advertising rates are conducted directly with
the major media groups to ensure both price and service benefits.
In 2005/06 $92 million expenditure was processed through the Master Media and Placement
Contracts resulting in $32 million in savings. During the year extra discounts and “free” media
space were negotiated with a net value of which exceeded $2 million.
Advertising consultancy services
Communications and Advertising offers a consultancy service to government agencies to help
them ensure the best results from their advertising. A government forum of key marketing
personnel was established to share ideas and best practice across government.
Communications and Advertising centrally coordinates campaign submissions and is able to
offer day-to-day advice and help to agencies.
An accreditation scheme for creative advertising agencies was established during the year
with 25 agencies currently on the panel, including a number of global “full service” agencies
and local independent and specialist agencies. Government agencies wishing to conduct an
advertising campaign can now go direct to these accredited agencies without the added red
tape of an additional tender process.
Recruitment advertising services
Communications and Advertising manages job advertisements. In 2005/06, the group
handled recruitment advertising for over 100 separate Government agencies, placing 10,004
jobs advertisements in newspapers, and publishing in the Public Sector Notices and on the
government’s recruitment website, jobs.nsw.
eProcurement Services
NSWP managed and promoted a number of electronic services, including eTendering and
smartbuy® the NSW Government electronic marketplace. smartbuy® and NSW eTendering
have helped agencies to improve procurement efficiencies, by reducing costs and avoiding
infrastructure duplication, resulting in savings of $22 million.
In 2005/06 the use of smartbuy® increased significantly. Orders valued at $109 million were
transacted. In 2005/06, 23,000 purchase orders were placed through the system compared to
6,000 in 2004/05.

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

The number of procurable items on smartbuy® increased to 128,000 in 2005/06 compared to
47,000 in the 2004/05.
NSW eTendering provided a complete electronic tendering that is standard for all government
organisations and grew by 40% on the last year. In 2005/06 1373 government tenders were
published on eTendering system compared to 983 tenders in 2004/05.
NSW Government CIO Executive Council
Government Chief Information Office (GCIO) established the CIO Executive Council (July
2005) as the principal forum for providing executive level government ICT leadership and
decision-making. Its role is to set direction and implement ICT Plans in line with Government
initiatives to reduce cost and improve service delivery. In 2005/06 the Council, with GCIO,
delivered the NSW Government ICT Strategic Plan.
NSW Government ICT Strategic Plan – People First
The NSW Government ICT Strategic Plan sets the strategic direction for a coordinated
government-wide approach to ICT planning and expenditure. It will determine priorities for the
NSW Government’s annual $1billion investment in ICT across the whole of government. The
Government approved the NSW Government ICT Strategic Plan on 20 June 2006.
GCIO and the CIO Executive Council will review the Plan annually. Funding required to
implement the Plan’s individual ICT projects is subject to government approval processes.
NSW Government Broadband Services
Administered by GCIO, the Government Broadband Service is a core network, which
connects 24 regional centres and government agencies through 26 network access points.
Agencies that have entered into new contracts for data services since the introduction of the
Government Broadband Service have saved, on average, 20 per cent of the cost of provision
of those services.
GCIO monitors broadband expenditure across agencies and aggregates the procurement of
broadband requirements so that significant savings can be achieved.
NSW Government Radio Network
The Government Radio Network is an across-agency initiative for mobile radio
communications managed by GCIO. Since its inception this radio network has become the
main radio communications platform for emergency service operations in NSW. During
2005/06 further sites were added to improve and extend the network’s coverage along the
south coast and in the central and far west of NSW. This brings coverage to over one third of
NSW and reaches 70 per cent of the NSW population.
Mobile Data Radio Service
The Mobile Data Radio Service run by the Department of Commerce has been operating for
two years and enables ambulances to receive information displayed as a text message on
their mobile data terminal where it can be viewed and printed out if necessary.
The successful use of mobile data by Ambulance Services NSW has led to approval to
expand the Mobitex service to cover Newcastle and Wollongong. In addition, the Roads and
Traffic Authority and NSW Fire Brigades will trial the network with their own applications
during 2006/07.
Long Term Radio Strategy
The Long term Radio/Wireless Strategy 2003-2018, developed by all key Government radio
user agencies, sets the program for the development of wireless/radio services in NSW.
The replacement of current analogue telecommunications links with digital links to improve
performance and security is being undertaken by Soul Telecommunications. Delivery of the
links will begin in the first quarter of the 2006/07, starting with a connection to the Disaster
Recovery Site. The construction stage was completed in the fourth quarter of 2005/06.

                                                                      CORPORATE PERFORMANCE

Government Telecommunications Agreements
The NSW Government buys more than $320 million in telecommunications services annually.
Streamlining the procurement process for improved leveraging and efficiency by developing
common criteria for products and services and rationalising the range of service providers will
result in lower tender costs and overheads, reducing the cost of doing business with the NSW
The Department of Commerce is implementing the new aggregated approach to buying
telecommunications services and equipment for Government agencies. Industry is responding
to the aggregated approach by reducing prices for those agencies that need to extend their
existing contracts while new agreements are being established.
Government Licensing System
The GLS provides a platform for a single integrated licensing system, which is planned to
replace over 40 existing licensing systems used by government. The project aims to save
millions of dollars in technology infrastructure over a ten-year period and service over 3.7
million licence and registration holders.
During the year, the system was first implemented as a pilot ‘live’ internally at the Office of
Fair Trading for Valuers Registration, covering approximately 3,500 licensees. It is planned to
deliver the system to 19 agencies, covering approximately 290 licence types, over the next
few years.
Corporate Services Reform Program (CSRP)
A review of the Corporate Services Reform Program (CSRP) was conducted during 2005/06,
resulting in a new focus on sector-wide information and knowledge sharing based on a series
of benchmarking exercises and monitoring activities.
The annual corporate services data collection program is delivered online to 69 agencies.
Agencies provide details of their corporate services programs as well as costs and savings.
This information is used extensively by central agencies and general agencies to monitor and
track the cost of providing their corporate services in relation to finance, HR, payroll, records
and document management, procurement and assets.
Default procurement system
•   Over thirty NSW Government agencies have been assisted in the planning and delivery
    phases of capital works for the procurement of more than 580 construction related
    contracts valued at almost $850 million, and 500 technical consultant engagements
    valued at $15 million
•   The GC21 Contract was used as the basis for procuring 99 major construction works
    valued at more than $520 million
•   Dispute resolution support has resulted in the successful resolution of $31 million of
    claims for a pay-out of only $3.9 million, saving the NSW Government $27.1 million in
    direct costs.
•   NSWP assisted NSW Health to develop its own version of elements of the procurement
    system for construction by customising the Default Procurement System for construction
    modifying the standard contract form GC21 to create the NSW Health standard form
    contract HGC21. To complete the introduction of this new contract form Policy Support
    Services developed a contractor engagement methodology and training package for
Gateway Reviews
The NSW Government has developed the Gateway Review system to help agencies improve
procurement discipline and to achieve better service results. During 2005/06, $3.3 billion
worth of projects were submitted to 32 separate reviews, as seen in the table below. NSW
Procurement used the information from these reviews to advise agencies about procurement
practice improvement opportunities.

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

Provision of financial assessment services
•   Policy Support Services administered a period contract for the provision of financial
    assessment services across government.
•   1,100 financial assessment reviews for procurement of construction and goods and
    services valued at $2.3 billion were completed.
•   A measure of the success of the services is that no Commerce prequalified contractors
    became insolvent in 2005/06.
Procurement Certification Training Program
•   In 2005/06 NSWP delivered 25 courses to improve the procurement skills and capability
    of staff in NSW government agencies. 282 participants attended the training courses.

2005/06 Performance indicators
Improved NSW Government Performance - Procurement
Service        Indicator/Measure      04/05    05/06     05/06    Comment                Target
                                               Target    Actual                          (06/07)
State          Aggregated             $458M    $450M     $465M                           $520M
Contracts      procurement cost
               savings from whole-
               period contracts
State          Expenditure on         28.5%    28.8%     28.5%    Progress impacted       33%
Contracts      SCCB arranged                                      by structure review
               goods and services                                 and recruitment
               contracts compared
               to total NSW
               expenditure on
               goods and services
Gateway        Value of projects      $2.8B    $3.0B     $3.2B                           $3.5B
Reviews        subjected to
               Gateway Reviews
Gateway        Improvement in         76%          78%    79%     Improved scores         81%
Reviews        agencies project                                   indicate planning
               planning                                           quality for improved
               (Average Gateway                                   management of risk
               % scores across a
               total of 7 factors-
               Service Delivery,
               Governance, Risk
               Management and
Disputes       Settlement ratio for   37%          28%    14%     Amount of               15%
Advisory       construction related                               settlement $4.6M,
Service        contract disputes (%                               Amount claimed
               of amount paid vs                                  $32.5M. The data
               amount claimed)                                    related to entire
                                                                  2005/06 period and
                                                                  represents the
                                                                  disputes settled in
                                                                  this period.

                                                                      CORPORATE PERFORMANCE

Service         Indicator/Measure      04/05     05/06      05/06    Comment             Target
                                                 Target     Actual                       (06/07)
GC21 General    $ value of contracts    29%          30%     31%                          35%
Conditions of   let under GC21
Contract        General Conditions
                of Contract
                compared to
                construction budget
                of agencies not
                accredited for

eTendering      Number of electronic    30%          35%     99%                          99%
                tenders as a
                proportion of
                NSWPCA published
                government tenders
Master Media    $ savings to           $30.0M    $29M       $32M                         $34M
Contract        government
                achieved through the
                Commerce Master
                Media and
                Placement contracts
                compared to market
                media rates
Jobs.nsw        Number of visits to     2M           2.4M   2.5M                          2.7M
                jobs.nsw site

Jobs.nsw        Number of online job   49.7K         60K    62.2K                         70K
                applications lodged

NSW             Number of visits to    2.1M          2.2M   2.4M                          2.4M
Government      NSW Government
Portal          portal
Government      GRN Service             60%          70%     70%                          75%
Radio Network   coverage by
Government      GRN Service             30%          35%     35%                          38%
Radio Network   coverage by
                geographical area
Government      Number of agency         7           790     792     Government           1050
Broadband       sites using                                          Broadband Service
Service         Government                                           contract was
                Broadband Service                                    awarded on 30
                                                                     January 2005.

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232

Financial highlights
The Department of Commerce’s Net Cost of Services for 2005/06 was $82.3 million. This was
$65.6 million better than the 2005/06 budget and $90.5 million better than the 2004/05 actual
This improvement was mainly due to lower superannuation expenses from a combination of
factors including improved investment returns and the impact of International Accounting
Along with superannuation, a number of other items outside the ordinary operations of the
Department have impacted the result and when removed, highlight the underlying trend in the
finances of the Department.
Underlying Net Cost of Services1



                        80                                        $78M



                                        2003/04               2004/05                  2005/06

This graph shows the movement in the underlying Net Cost of Services for the Department of
Commerce. Net Cost of Services have improved from $87 million in 2003/04 to $72 million in
2005/06. This improvement is mainly due to lower employee related costs across the
Department. This result was achieved while absorbing the 4 per cent wage increases in
2004/05 and 2005/06.

    Underlying Net Cost of Services excludes the expenses associated with ICT projects within the Government
    Chief Information Office, superannuation expenses, voluntary redundancy payments and revenues and
    expenses associated with the divested business units, cmSolutions and QStores.

                                                                   CORPORATE PERFORMANCE

Additional depreciation and borrowing costs of around $30 million associated with the new
financing arrangements for StateFleet were recorded in 2005/06. These costs were offset by
increased leasing revenue with no material impact on the result.
Net Assets
The Net Assets of the Department of Commerce have increased from $373.4 million in
2004/05 to $415.6 million in 2005/06. This is mainly due to the impact of the underlying
improvement in the Net Cost of Services and the increase in the Department’s prepaid
superannuation balance, reflecting strong earnings within the fund and higher discount rates
for the valuation of liabilities.
The value of StateFleet motor vehicles held by the Department and disclosed within Plant and
Equipment increased by $79 million in 2005/06. This was offset by an equivalent increase to
Commerce borrowings from TCorp to finance these purchases in accordance with our fleet
financing arrangements.
The Department has improved the financial management of its projects where we act as
principal in the contract for construction works. Work in progress balances have declined from
$62 million as at 30 June 2004 to $18 million as at 30 June 2006. In addition, payments in
advance by clients have declined from $94 million as at 30 June 2004 to $46 million as at 30
June 2006. This means that projects are being better managed and clients invoiced in a more
timely manner.

NSW Department of Commerce Annual Report 2005/06 ISSN 1832-1232


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