Follow up of Oversight and Accountability of Committees of Management

There are more 8 000 Victorians who make a substantial contribution to Victoria as part of a committee of management (CoM). Through their volunteer labour, they maintain and oversee almost 1 500 Crown land reserves.

Crown land reserves are areas of public land set aside for the benefit and enjoyment of Victorians. Reserves managed by CoMs vary from sporting grounds, parks and gardens that play important roles in their local communities to historic buildings and international tourist precincts such as Phillip Island Nature Reserve and the Great Ocean Road.

The Department of Environment, Land, Water and Planning (DELWP) is responsible for managing Crown land reserves on behalf of the Minister for the Environment. For specific reserves, it delegates the land management to CoMs, but it remains responsible for the reserves and the assets on them.

This report follows up on a performance audit we tabled in February 2014, Oversight and Accountability of Committees of Management. Our 2014 audit found that the governance of CoMs required significant improvement and that the former Department of Environment and Primary Industries was not targeting its support to reserves with higher risk profiles. Consequently, it had not taken sufficient steps to ensure that CoMs are managing Crown land reserves appropriately.

This follow up audit looked at what progress DELWP has made in responding to the 11 recommendations from our 2014 audit. We did not make any new recommendations as the 2014 recommendations remain relevant.

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Ordered to be published

VICTORIAN GOVERNMENT PRINTER September 2018

PP No 438, Session 2014–18

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This report follows up our performance audit Oversight and Accountability of Committees of Management, tabled February 2014.

Performance audits focus on the efficiency, economy, effectiveness and legislative compliance of public sector agencies, and include recommendations to improve the management and delivery of public services.

Each year we ask agencies to attest to their progress in implementing actions that address previous performance audit recommendations that they accepted. Using these attestations―as well as our assessment of the public interest and materiality of audit topics―we select topics to follow up.

Our 2014 audit found that the governance of committees of management (CoM) required significant improvement and that the former Department of Environment and Primary Industries (DEPI) was not targeting its support to reserves with higher risk profiles. Consequently, it had not taken sufficient steps to ensure that CoMs are managing Crown land reserves appropriately.

This follow up audit assesses progress by the Department of Environment, Land, Water and Planning (DELWP) in responding to the 11 recommendations in our 2014 audit.

Conclusion

The actions that we recommended in our 2014 audit are increasingly relevant, as some Crown land reserves continue to deteriorate and CoMs experience increasing challenges in recruiting appropriately skilled volunteers.

DELWP's lack of progress in addressing our recommendations means that the risks that we identified in 2014 remain. The root issue we identified is unresolved—CoMs continue to report that they are not able to safely and effectively manage their Crown land reserves. As DELWP advised government in May 2018, and CoM members reiterated in our survey, real risks to public safety and assets are present on some of the land managed by CoMs. Without a robust risk assessment approach, it is not possible for DELWP to understand, or assure Victorians about, the extent or breadth of risks that exist on its 1 500 Crown land reserves managed by voluntary CoMs.

As we identified in our 2014 audit, DELWP needs to take a more strategic and risk-based approach to managing CoMs. Without undertaking the risk analysis that we recommended in 2014, DELWP cannot be assured that it is directing its limited resources to the areas of greatest risk or need, nor can it develop the business cases for increased resourcing in high-risk areas. This issue is compounded because DELWP has poor information about Crown land reserves.

Successive audits and reviews over almost 30 years have made consistent findings about poor governance and fragmented oversight by the responsible department. These reviews have also questioned the effectiveness of the CoM model for land management. The lack of progress will continue while accountability within DELWP for CoMs and Crown land reserves is dispersed and ineffective.

Findings

DELWP has not fully addressed any of the 11 recommendations from our 2014 audit—see Figure A. Several actions taken by DELWP have reduced its oversight of CoMs and consequently heightened the risks we identified in the original audit.

While DELWP's internal audit processes confirmed that it had completed necessary actions to address all of the recommendations, this is incorrect. DELWP is reviewing its internal audit processes to improve its monitoring of progress to address our recommendations.

Figure A
Status of recommendations

The action plan that DEPI provided to us in response to the original audit included four projects comprising 14 initiatives which would have partly addressed seven of our 11 recommendations. However, five of the 14 initiatives were not completed.

In addition to the action plan, DEPI committed during the audit to a range of actions against every recommendation. These actions went further than the action plan to address our recommendations. There is no evidence that DELWP has monitored or implemented these actions except for the limited number that were also in its action plan.

In December 2015, we tabled the results of our 2014 –15 follow up survey in Parliament, and we reported DELWP's assertion that it had completed its actions in response to 10 of our 11 recommendations. Instead, we assess none of the recommendations as having been fully addressed. When we sought to verify this attestation in this follow up audit, we could not verify four of the actions that DELWP had reported to us as having completed.

Response to report

We have consulted with DELWP and we considered its views when reaching our audit conclusions. As required by section 16(3) of the Audit Act 1994, we gave a draft copy of this report to DELWP and asked for its submission or comments. We also provided a copy of the report to the Department of Premier and Cabinet.

The following is a summary of DELWP's response. The full response is included in Appendix A.

DELWP acknowledged the need for further work on its oversight of CoMs and reported a number of new actions it is commencing.

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1.1 Committees of management

CoMs make a substantial contribution to Victoria. Through their volunteer labour, they maintain and oversee almost 1 500 Crown land reserves.

Crown land reserves are areas of public land set aside for the benefit and enjoyment of Victorians. Nearly 1 200 CoMs, comprising more than 8 000 volunteers, manage these 1 500 reserves—see Figure 1A. Reserves managed by CoMs vary from sporting grounds, parks and gardens that play important roles in their local communities to historic buildings and international tourist precincts such as Phillip Island Nature Reserve and the Great Ocean Road.

Figure 1A
Victoria's CoMs

Source: VAGO based on DELWP's Portal database of CoMs and Crown land reserves as at March 2018. Map data © Qlik, OpenStreetMap contributors.

1.2 Roles and responsibilities

DELWP manages the majority of Victoria's public land, including Crown land reserves, on behalf of the Minister for Energy, Environment and Climate Change.

While DELWP manages some public land directly, for specific reserves it delegates its management to groups of volunteers or other bodies such as Parks Victoria and local government. This delegation of land management occurs when the responsible minister appoints the volunteers or other body as the CoM for a reserve.

In this audit, we focused on CoMs that are made up of groups of volunteers, which DELWP refers to as 'voluntary CoMs' or 'community-based CoMs'. They may be:

• a group of three or more people, generally volunteers from the local community, who are appointed through either an expression of interest process or public election, or as nominated representatives of user groups
• a community group that has been incorporated for a public purpose under the Crown Land (Reserves) Act 1978, the Incorporated Associations Act 2012 or other relevant legislation.

The Crown Land (Reserves) Act 1978 requires CoMs to manage, improve, maintain and control their reserves for the purposes for which the land was reserved.

DELWP retains responsibility for assets on Crown land reserves. Under the Victorian Government's 2016 Asset Management Accountability Framework, portfolio departments must know what assets they have and their condition and have processes for maintaining the assets and managing emergencies.

1.3 Previous audits

Almost 30 years ago, a VAGO performance audit of Crown land reserves found that the responsible department did not have a systematic approach for administering and monitoring the delegated management of the reserves. Our follow up audit in 1997 found that the responsible department's overall framework was still deficient and did not facilitate proper accountability and monitoring of CoMs.

In 2014, our audit Oversight and Accountability of Committees of Management found that:

• DEPI needed to significantly improve its governance of CoMs
• DEPI did not take a strategic approach to supporting and overseeing CoMs, as it was not sufficiently targeting CoMs that managed reserves with higher risk profiles
• CoMs' sustainability was uncertain because DEPI had not taken sufficient steps to ensure that appropriate land managers were overseeing Crown land reserves.

During the 2014 audit, DEPI developed proposed actions to address most of the weaknesses we identified. We published these proposed actions in the final audit report as 'DEPI committed actions' against each recommendation.

Earlier this year, our audit Protecting Victoria's Coastal Assets considered how effectively DELWP supported coastal CoMs to manage coastal assets and found that DELWP's current guidance does not adequately support them. We found that not all coastal CoMs are adequately skilled to undertake the risk-based management of coastal assets on Crown land that DELWP prescribes. We also found that DELWP's limited oversight of CoMs means it does not know whether they are effectively assessing risks to coastal assets .

1.4 What this follow up audit examined and how

The objective of follow up audits is to determine whether agencies have effectively addressed the audit recommendations that they accepted in the original audit. We consider whether agencies have:

• addressed performance issues relating to the recommendations
• taken timely action to address recommendations
• put plans in place to address incomplete recommendations
• monitored their actions for review and impact.

As part of this follow up audit, we also sought to verify DELWP's attestations about its progress in addressing the recommendations and the actions it committed to undertake during the 2014 audit, which included an action plan submitted in response to the audit together with a series of committed actions negotiated with us during the audit, all of which were published in the original audit report. We reviewed documents, interviewed staff and surveyed 462 members of CoMs. See Appendix B for further information about the survey methodology and respondents.

We conducted our audit in accordance with section 15 of the Audit Act 1994 and ASAE 3500 Performance Engagements. We complied with the independence and other relevant ethical requirements related to assurance engagements. The cost of this audit was $260 000.

1.5 Report structure

The remainder of this report presents the findings of the audit including assessment of progress against our 2014 audit recommendations, and is structured as follows:

• Part 2 examines the land management model
• Part 3 looks at DELWP’s understanding of CoMs’ risks and needs
• Part 4 considers governance and appointments
• Part 5 examines guidance and support for CoMs.

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In our 2014 audit, we found situations where a CoM overseen by DEPI was not the most appropriate arrangement for managing a Crown land reserve:

• Some reserves that had only local significance and use would have been more effectively and efficiently managed by local councils, which were already providing substantial support such as insurance and maintenance, generally through informal arrangements.
• Some reserves would have been better aligned with the activities of other government departments.
• Some CoMs did not have sufficient volunteers to function effectively, so it was necessary for them to merge with neighbouring CoMs or transfer the management of their reserve to another body such as the local council.

2.1 Summary of progress

Figure 2A summarises our assessment of DELWP's progress in implementing the two recommendations from the 2014 audit that relate to the land management model, as well as progress against the actions it committed to and the updates provided through our annual follow up survey.

Figure 2A
Status of recommendations—land management model

Source: VAGO.

2.2 Performance improvements

DELWP is considering better arrangements for managing Crown land in some coastal areas, including amalgamating CoMs. A four-year project to streamline land management arrangements across three coastal areas will likely provide some important lessons about the amalgamation process and community engagement. Lessons learnt could be used in other areas, both coastal and beyond, where there are issues with sustainability and appropriateness of the CoMs to manage their reserves. It will be important for DELWP to evaluate and capture these experiences and communicate them for potential broader use.

DELWP has increased its support for volunteers involved in coastal land management—its Coastcare program now includes a volunteer forum, community grants and volunteer awards. Volunteer recognition for non-coastal CoMs varies greatly across different DELWP regions, from established programs to none at all.

DELWP has targeted its support activities to coastal CoMs because it considers them a higher risk. It does not plan to extend this support to all CoMs.

At the local level, DELWP has been engaging with councils to understand the issues they face in supporting CoMs, and to develop solutions around individual reserves as opportunities arise:

• In February 2018, DELWP's Hume region began to meet with its councils to discuss various land management issues, including discussions about CoMs on two occasions.
• In the Gippsland and the Port Phillip regions, DELWP convenes meetings of all the coastal land managers for wide‑ranging discussions which often touch on CoM issues.
• DELWP's Loddon Mallee region convened a meeting with the chief executive officers of its local councils, which included discussion of CoMs. DELWP advised that if reserves managed by voluntary CoMs were to be transferred back to DELWP, they would likely be sold off.
• In the Grampians region, DELWP identified two reserves where the council would make a more appropriate manager and initiated the necessary discussions, one of which resulted in a transfer of management.

DELWP has advised that this proactive work with councils is occurring frequently, but poor record-keeping practices limit its ability to demonstrate what is being done.

2.3 Impacts

Since our 2014 audit, six Crown land reserves have been transferred from a CoM to a more appropriate land manager. However, these changes occurred reactively, often at points of crisis. Three of these transfers occurred due to the CoM not functioning adequately. One resulted from community and council concerns about public safety on the reserve and an urgent need for maintenance of the reserve. The other two occurred in response to a request from the relevant local council to facilitate its plans to develop or manage the reserve.

2.4 Residual risks

DELWP has not taken strategic action to identify where Crown land reserves could have more appropriate land managers, and it continues to manage land even when it knows that it is not the most appropriate manager.

During this audit, DELWP advised us that 13 local councils have communicated significant concerns about supporting local CoMs—in some instances, the councils have removed insurance coverage and maintenance support for relevant reserves. The City of Bendigo has communicated its concerns to the responsible minister. During the audit, local government and DELWP were considering a joint workshop to discuss these issues.

At the annual meeting of the Municipal Association of Victoria—the peak body for local councils—in both 2016 and 2017, local councils passed resolutions calling on the state to provide greater support for CoMs managing Crown land reserves, and to work together to access resources.

DELWP has not made any progress in realigning reserves to other government departments whose portfolios better align with the use of the Crown land reserves—for example, transferring hospitals to the Department of Health and Human Services or racing tracks to the Department of Justice and Regulation. DELWP met with the Department of Health and Human Services to discuss the resource burden of leasing arrangements for hospitals. Beyond this, however, we found no evidence that DELWP had broader discussions with any department about transferring the management of Crown land reserves that better aligned with the department's portfolio.

Further, DELWP has not sought to understand where volunteer capacity is inadequate or where the CoM model is not sustainable or effective. DELWP could not advise us how many vacant positions there are on CoMs.

We surveyed volunteers in June 2018. Of the 462 respondents:

• 26 per cent said they do not have enough volunteers to do the work required to manage their reserve
• 18 per cent said they do not have enough committee members
• 19 per cent said that their CoM does not comprise the right skills to manage their reserve effectively
• 38 per cent were dissatisfied with their CoM's ability to attract new members.

There are many towns where CoMs need to draw large numbers of volunteers from small populations. For example, in the town of Granya in north-eastern Victoria, with a population of 99 people, there are four CoMs comprising 23 volunteer positions—equivalent to 23 per cent of the population. Granya has separate CoMs for the public hall, the public park, the recreation reserve and the local history museum.

Figure 2B shows there are nine towns where filling volunteer positions across their multiple CoMs would require more than 20 per cent of the population to volunteer. This type of analysis could help DELWP to identify priority risk areas for the sustainability of CoMs and opportunities for amalgamations. This is particularly important given our 2014 audit's findings about the ageing profile and declining number of volunteers.

Figure 2B
Towns and suburbs with multiple CoMs that have the highest number of CoM positions relative to their population

Note: This figure shows only those towns with the highest ratios and with multiple committees. There are additional towns that have very high ratios but only one committee.
Source: VAGO based on DELWP's 'Portal' database of CoMs and Crown land reserves as at March 2018.

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Under the Victorian Government's 2016 Asset Management Accountability Framework, DELWP has a statutory responsibility to know what assets are on Crown land reserves and what condition they are in.

Our 2014 audit found that DEPI did not adequately collect, collate and analyse information about CoMs and their performance. It was not using available information to inform its support and guidance. There were significant gaps in DEPI's internal coordination of CoMs. We also found that DEPI was only considering the financial risks of CoMs when there can also be considerable environmental and social risks involved with managing land.

These findings resulted in five recommendations that focused on the need for DELWP to analyse, review or evaluate CoMs' operations to better understand risks associated with the CoM model.

3.1 Summary of progress

Figure 3A shows our assessment of DELWP's progress in addressing the five recommendations from the 2014 audit related to understanding CoMs' risks and needs, as well as progress against the actions it committed to and updates provided through our annual follow up survey.

Figure 3A
Status of recommendations—understanding risks and needs

Source: VAGO.

3.2 Performance improvements

DELWP has introduced nine non-financial criteria for categorising CoMs—shown in Figure 3B—which consider the significance of the land, political interest in the land, whether the land is coastal and whether the CoM is subject to a governance framework separate to the Crown Land (Reserves) Act 1978. There is an additional criterion that allows regional staff to apply their local knowledge and discretion to recommend a higher level of oversight.

DELWP reports that this is an effective and appropriate risk management approach and that it considers all financial, social and environmental risks. However, this approach is not consistent with the methods for assessing the value and significance that DELWP's own entities have developed, discussed further in Section 3.4.

Figure 3B
DELWP's new non-financial criteria for categorising CoMs

(a) There are no specific criteria for CoMs in Category 3. DELWP defines CoMs in this category as those 'which DELWP has full oversight responsibility for that do not qualify as a Category 1 or Category 2 CoM'.
Source: VAGO based on DELWP's categorisation framework, 2016−17.

DELWP uses the four categories defined in its categorisation framework to scale the intensity of its planned oversight of CoMs. While DELWP has documented these oversight arrangements, it has not fully implemented them in critical areas that the framework prescribes, including annual reviews, site inspections and annual contact.

DELWP has acknowledged repeatedly that it has poor-quality information on the location, type, age, integrity and use of many assets on Crown land reserves managed by CoMs. In June 2018, DELWP engaged a contractor to deliver a $2.7 million project to improve its Crown land information and business systems by 31 December 2019. This may improve DELWP's understanding of the assets for which it is responsible, however, it is too early for us to examine how well this project will address the risks identified in our 2014 audit.

3.3 Impacts

DELWP acknowledges that poor information inhibits its ability to strategically manage CoMs. In advice to government in May 2018, DELWP described this limitation:

With poor information constraining the capacity for DELWP to make strategic decisions in relation to funding and supporting efforts across all CoMs, efforts tend to concentrate on areas that are 'broken' creating a highly reactive rather than proactive approach to public land management.

The same advice also noted that DELWP's lack of data about Crown land reserves, combined with degrading facilities, is responsible for some of the insurance claims that DELWP faces. For the five years from 2013 –14 to 2017 –18, DELWP paid $2.01 million on 25 insurance settlements for below-excess claims on Crown land reserves managed by voluntary CoMs. The Victorian Managed Insurance Authority paid an additional $3.6 million in the same period for four above-excess claims. These six claims per year on average remain a small portion of the 80 claims per year across DELWP's portfolio.

Where public land is not managed and maintained appropriately, risks to public safety can arise, especially when reserves contain sporting facilities or very old buildings, which are common on Crown land reserves managed by CoMs. DELWP's May 2018 advice acknowledged also that 'many [facilities] have deteriorated to the point that they expose users to risk of serious injury or death'.

In our survey, CoM members detailed 106 examples of public safety risks that they were managing on their reserves. The types of risks include:

• infrastructure or vegetation that is a fire risk
• buildings that expose users to injury
• dangerous trees
• roads or tracks that need to be upgraded
• insufficient lighting for safety
• sporting grounds that are dangerous to play on
• inadequate fencing
• car parks that cause safety problems
• buildings that contain asbestos
• fire safety equipment in need of an upgrade.

The case study in Figure 3C provides an example of ageing assets that pose a risk to public safety.

Figure 3C
Case study: Melbourne's former Royal Mint

Source: VAGO.

Dangerous trees are another risk to public safety on public land, but some CoMs cannot manage this risk effectively. In our survey, members provided 22 detailed reports of dangerous trees that their CoM was concerned could pose a risk to public safety. As an example, one high-risk (Category 2) coastal CoM engages an arborist every year to review and manage its highest-risk trees. The arborist consistently advises the CoM to do further work to protect public safety on its reserve, which includes a camping ground where serious incidents have occurred as a result of falling trees. However, the CoM lacks the financial and other resources to do so.

In 2017–18, DELWP's grants program Public Safety on Public Land awarded 12 of the 27 grants it made to CoMs for removal of dangerous trees. This grants program cannot fund all applications it receives each year, and it only seeks applications on advice from DELWP staff. Given the sporadic nature of DELWP's oversight of CoMs, this process is unlikely to be capturing all of the cases where CoMs need assistance to manage dangerous trees.

3.4 Residual risks

DELWP does not adequately understand the risks that exist on Crown land reserves managed by CoMs. It therefore cannot target its resources to the areas of greatest risk and need.

In 2015–16, an independent risk assessor engaged by DELWP's Public Safety on Public Land grants program made five recommendations about DELWP taking a more strategic approach to identifying and managing public safety risks on Crown land reserves. Its recommendations included ensuring that CoMs specifically improve their risk identification and reporting. However, there is no evidence that DELWP has acted in response to this advice.

The approach to assessing risks and needs of CoMs which is prescribed by DELWP's categorisation framework for CoMs is not robust or transparent and is inconsistent with approaches developed by its own entities. The framework does not define several key concepts in the criteria used to categorise CoMs, despite definitions existing in other DELWP documents.

The Victorian Government Land Use Policy and Guidelines (2017) state that determining the value of government land requires assessment of environmental, economic, social and intergenerational impacts and details the types of issues that should be considered, as shown in Figure 3D. The Heritage Council of Victoria also provides a detailed methodology for assessing whether places or objects have cultural heritage significance. The Victorian Government's Strategic Crown Land Assessment Policy and Guidelines (2017) identify four tiers of significance—local, regional, state and national—and provide definitions for each.

Figure 3D
Public value indicators defined by the Victorian Government Land Use Policy and Guidelines

Source: Victorian Government Land Use Policy and Guidelines, 2017.

When a Crown land reserve is created, it has a specific purpose registered as the reason for reserving that land for public use. During this audit, DELWP staff reported that there are reserves with significant cultural heritage that would benefit from higher categorisation which would, in turn, result in greater DELWP oversight, to ensure their CoM is managing them appropriately.

There are 31 reserves currently categorised by DELWP as low risk (Category 3) whose purpose is registered as conserving a natural, scientific or historic interest, including an Aboriginal cemetery and a war memorial. Figure 3E shows nine of these low-risk reserves whose cultural significance has been formally recognised with a heritage or similar listing. DELWP has not implemented stronger governance arrangements for these significant reserves because its regional offices do not have the capacity to provide additional oversight.

Figure 3E
Crown land reserves assessed as low risk (Category 3) that have been formally recognised as significant

(a) 'File only' means the National Trust retains a file on the reserve but it is not officially classified.
Note: This list is limited to reserves managed by Category 3 CoMs that were gazetted for historical, conservation or preservation reasons and are also recognised on a heritage register or list, as well as other reserves managed by Category 3 CoMs whose significance was identified through this audit. A full analysis of every reserve and its significance is likely to identify additional reserves that meet these two criteria.
Source: VAGO based on the Victorian Heritage Database and DELWP's Portal database as at March 2018.

DELWP does not analyse the non-financial information that it receives through annual returns from the 1 020 low-risk (Category 3) CoMs that are required to report annually, and the information is only used sporadically and reactively.

DELWP's central program area and six regional offices share responsibility for implementing its support and oversight arrangements. Despite this shared responsibility, there is no structure or process for coordinating these responsibilities aside from an informal monthly meeting of regional managers.

In our 2014 audit, we identified five areas requiring either evaluation or analysis:

• social and environmental risks on Crown land reserves
• funding needs of CoMs
• sustainability of CoMs
• information that the department collects from CoMs and how it uses it
• the support and guidance needs of CoMs.

Since the original audit, DELWP has not evaluated or analysed these issues. While it has taken action in some of these areas, as described in Figure 3A and Section 3.2, the appropriateness of those actions cannot be assured, because they were not informed by analysis that we recommended in 2014.

The poor quality of information that DELWP holds about Crown land reserves and CoMs, combined with poor information systems and record-keeping practices, have contributed to its inaction in fully understanding the risks and needs of CoMs. DELWP's current work to improve Crown land information and business systems, due for completion at the end of 2019, is positive and should increase DELWP's capacity to understand the risks and needs of CoMs. However, it was at a very early stage during this audit.

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Our 2014 audit found that DEPI needed to significantly improve the governance of CoMs. Specifically, we found that DEPI was not using consistent and sufficiently robust methods to appoint members to higher-risk CoMs, and it was not ensuring that higher-risk CoMs had adequate internal governance processes. We found that probity checks were adequate but not tailored to risk.

4.1 Summary of progress

Figure 4A shows our assessment of DELWP's progress to address the two recommendations from the 2014 audit that relate to governance and appointments, as well as progress against the actions it committed to and updates provided through our annual follow up survey.

Figure 4A
Status of recommendations—governance and appointments

Source: VAGO.

4.2 Performance improvements

DELWP has tailored its governance and appointment processes to the four categories of CoMs, which has reduced some unnecessary burdens on lower‑risk CoMs.

DELWP has also revised the process for CoMs to declare private interests—in focus groups conducted during our 2014 audit, lower-risk CoMs described the previous process as highly inappropriate and out of step with the risks of their roles, as well as creating a significant barrier to recruiting new committee members. In our survey for this audit, 78 per cent of committee members who were aware of the process for declaring private interests reported it as being appropriate for the risks they manage.

DELWP has removed the requirement for incorporated associations to provide an annual return, which was similar to their annual reporting to Consumer Affairs Victoria (CAV), addressing the unnecessary reporting burden we identified in 2014. However, creating the Category 4 classification also removed all probity checks and DELWP oversight of these CoMs and the reserves they manage, which is inappropriate.

4.3 Impacts

Good governance enables organisations to do their work well. The Australian Institute of Company Directors describes governance as the rules, relationships, systems and processes that management within organisations uses to exercise their authority and control the organisation's operations. It includes the mechanisms used to hold companies and management to account.

In our survey of CoM volunteers, 18 per cent of respondents said their CoM did not comprise the right mix of skills. They also described examples of governance challenges:

• 'I tried to apply [to join the CoM for many years] but didn't quite know how to go about it.I had spoken to the Secretary but she refused to give me information.'
• 'Even to this day people have to pay for the minutes of our meetings.'
• 'I am hoping the new [DELWP] managers will help in getting the controlling dysfunctional committee to work with the community and not for their own self-interest. DELWP are going to teach us how to hold forums with the community and lots of other interesting things which sounds reassuring.'
• 'There are five committee members. The Treasurer is resigning, I am currently the Chair and Secretary because no one was willing to take on these roles, I feel I may now need to be Treasurer as well which I'm not even sure is allowed?'

4.4 Residual risks

DELWP cannot be assured that CoMs' governance arrangements are tailored to risk because it has not analysed the risks facing CoMs, as discussed in Section 3.2.

DELWP could not provide any evidence of the review it conducted of the process for making skills‑based appointments to CoMs. DELWP advised us that it did review the process and decided that no revisions were necessary. However, there is no evidence that it has resolved the issues identified in our 2014 audit. These issues included that DELWP's appointment processes do not:

• place sufficient emphasis on governance skills and business acumen
• consider the past performance of renominating members and consult with CoM members regarding the CoM's skill gaps
• stagger appointments to allow greater continuity of CoM members.

When a CoM is confirmed as an incorporated association under the Incorporated Associations Act 2012, DELWP allocates the CoM to a very low level of oversight and does not obtain, review or confirm the annual returns the CoM submits to CAV. Further, the information the CoMs submit to CAV is limited to finance and governance matters and does not include any information that could help DELWP assess the CoMs' effectiveness or viability as a land manager. In turn, this increases some of the risks that we identified in the original audit. DELWP cannot rely solely on the CAV annual returns process to oversee CoMs and assure itself that these CoMs are managing their Crown land reserves effectively.

There are 11 CoMs that DEPI initially assessed as high risk under its 2012 framework but that DELWP has since reduced to the lowest risk category because they are incorporated associations—see Figure 4B. DELWP revised these risk assessments without considering any risks to the Crown land reserves that the CoMs manage. Three CoMs in this list have annual expenditure or a cash balance exceeding $1 million and a further eight exceed $250 000.

Figure 4B
CoMs that DELWP reduced from high-risk (Category 1 or 2) to the lowest risk (Category 4) because they are incorporated associations

Source: VAGO based on DELWP's Portal database as at March 2018.

Our 2014 audit found that the 168 CoMs appointed on an ongoing basis may pose additional compliance risks because the members are often the primary users and beneficiaries of the reserve they manage. This makes it difficult for DELWP to be assured that CoMs are managing the reserves for the broader public good, rather than for their own benefit. DELWP has failed to deliver the agreed action to determine an appropriate oversight mechanism for this group.

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Under section 13A of the Public Administration Act 2004, the secretary of a government department is responsible for 'working with, and providing guidance to, each relevant public entity to assist the entity on matters relating to public administration and governance'.

Our 2014 audit found that DEPI was not providing sufficient support and guidance to CoMs. Gaps in departmental coordination had further reduced the effectiveness of DEPI's support and guidance.

5.1 Summary of progress

Figure 5A shows our assessment of DELWP's progress in implementing the two recommendations from the 2014 audit that relate to guidance and support, as well as progress against the actions it committed to and updates provided through our annual follow up survey.

Figure 5A
Status of recommendations—guidance and support

Source: VAGO.

5.2 Performance improvements

During our audit, one region was piloting a governance training program modelled on a course from the Australian Institute of Company Directors. Volunteers from 70 CoMs participated in the training to learn about their duties and responsibilities, finance, strategy and risk, and received a workbook about effective governance. The program cost $78 000 plus 626 hours of DELWP staff time, excluding extensive travel time. DELWP is conducting an evaluation of the course, but it is not yet complete. There was no evidence that DELWP would continue the training program or expand it to other regions.

DELWP is in the very early stages of considering a coaching program for high-risk (Category 2) CoMs. It has identified that such a program needs to focus on increasing volunteers' understanding of their roles and responsibilities, insurance, risk management, governance skills and reporting requirements. However, DELWP has not allocated resources to the program and it did not provide evidence that it had committed to implement it.

Two regions have conducted an in-person induction session for high-risk CoMs—one was a presentation at a meeting of a newly formed committee, and the other brought together the four coastal CoMs in the region for a coastal committee forum. Both new and existing members were encouraged to attend.

DELWP has increased the volume of information it distributes to CoMs through a statewide newsletter, a consolidated website for Category 3 CoMs and an induction video. Individual regions have also introduced a Facebook group and a newsletter. In comparing the results from our June 2018 survey to the 2012 survey, CoM volunteers now report that they consult the DELWP website for information more frequently than they did previously—12 per cent of respondents in 2018, up from 8 per cent in 2012. However, DELWP has not monitored or evaluated the uptake and effectiveness of these mechanisms.

5.3 Impacts

One CoM did not understand its need to insure the assets on its reserve, so when their building, a 125-year-old courthouse, burnt down in an accidental fire in June 2016, it remained derelict and the CoM had to redirect its efforts to raise $1 million for repairs. This example reflects a basic misunderstanding of the CoM's obligations. DELWP is responsible for providing guidance on such matters, but it is not doing this effectively.

The need for building insurance is noted in chapter 11 of DELWP's Committees of Management Responsibilities and Good Practice Guidelines. We assessed this document at a grade 11 reading level, which is too high for public guidance. In our survey, only 42 per cent of CoM volunteers reported using these guidelines, which has decreased from 50 per cent in 2012. Surveyed CoM volunteers assessed the guidelines' usefulness as average.

5.4 Residual risks

DELWP's regional offices are primarily responsible for DELWP's engagement with CoMs. During our audit, DELWP staff repeatedly described their day-to-day approach as 'reactive crisis management'. This was reiterated by CoM volunteers in our 2018 survey:

I would like to see each member sent a copy of the guidelines and strategic planning training offered to assist on making the management of the reserve more than a series of responses to problems.

DELWP is not fully implementing the oversight arrangements it developed after our 2014 audit. Figure 5B shows seven substantial oversight requirements that are not being implemented in all regions. There is an especially low level of oversight occurring in Barwon region which has four high-risk (Category 1) CoMs. No DELWP region is making annual contact with its Category 4 CoMs or running induction days for high-risk (Category 2) CoMs.

DELWP's regional managers advised us that they could not meet all their documented oversight responsibilities with their available resources. However, during the audit, DELWP created and advertised six new positions, one in each region, for CoM coordinators—this role will lead a project to increase the capacity and capability of CoMs and provide a greater level of oversight and support to CoMs. These additional resources should increase DELWP's capacity to implement its oversight arrangements.

Figure 5B
Implementation of oversight requirements by DELWP regions

(a) Compiled from DELWP's categorisation framework, 2016 –17.
Source: VAGO based on our survey of DELWP regional managers, Land and Built Environment.

Uptake of the new communication tools that DELWP has developed is low, with:

• only 6 per cent of the Grampians region's CoM volunteers becoming members of its Facebook group
• only 72 per cent of CoMs receiving DELWP's statewide newsletter
• the induction video being viewed only 406 times.

To help CoMs apply for grants to manage their reserves, DELWP has added some links to its CoMs webpage, but it is unclear how effective this approach has been—in our survey, 25 per cent of CoM volunteers reported not receiving any information about grants, and 51 per cent reported not receiving any guidance or support on applying for grants.

Because all the new communication tools are distributed by email or online, the 28 per cent of CoMs who do not have an email address for their chair or secretary recorded in DELWP's database are not receiving any increase in communication.

In our survey, 62 per cent of CoM volunteers were not satisfied with the support and guidance provided by DELWP. More specifically, 27 per cent said DELWP never initiated contact with their CoM. This has increased from 19 per cent reporting no contact from DELWP in a 2012 survey—an increase that is statistically significant. The group that reported receiving no contact from DELWP in our 2018 survey included eight high-risk CoMs (Category 1 and 2) and included CoMs across all DELWP regions. There was significant regional variation in these results which suggests that DELWP's regions take different approaches to engaging with their CoMs.

Despite the recommendations from our 2014 audit, DELWP still does not consistently induct new committee members to help them to understand their roles and responsibilities. In our 2018 survey, 27 per cent of CoM volunteers who had been appointed since our 2014 audit reported receiving no induction to their role. A further 30 per cent reported only receiving an induction from their local CoM which did not include information from DELWP.

Local councils provide a significant amount of support and guidance to CoMs despite not being resourced or necessarily equipped to do so.

Figure 5C shows that when CoMs dealt with a significant issue on their reserve, they sought assistance equally from DELWP and their local council as a first point of contact (40 per cent and 41 per cent respectively). For general matters, 34 per cent of respondents contacted a DELWP regional representative first, while 55 per cent contacted their local council first. Similarly, 16 per cent of CoMs identified DELWP's Committees of Management Responsibilities and Good Practice Guidelines as their most common source of information while 42 per cent mostly consulted their local council's website. Of those who contacted DELWP for assistance with a significant issue, 26 per cent reported they had not received a timely and appropriate response.

Figure 5C
Responses to our 2018 survey: DELWP versus local councils as first or major source of information or support

Source: VAGO survey of CoM members, June 2018.

One of the responses to our survey demonstrated the impact of CoM volunteers not understanding DELWP's oversight role:

I didn't even know that DELWP was able to help our committee until a member came to sort out a dispute on our committee and I went to a governance training day. Unfortunately, this is 2.5 yrs into my 3 year term on the committee and I would've loved to have found this out earlier!

Communication methods that DELWP has introduced since our 2014 audit remain one way, from DELWP to CoMs. DELWP does not monitor the usefulness of its communication to CoMs nor their uptake.

Our original 2014 audit found that there could be numerous benefits in connecting CoMs that were managing reserves with similar purposes and similar issues—particularly when the CoMs were managing sites with complex technical requirements, such as cricket grounds, racing tracks or historic sites. This finding and the related recommendation drew upon research by Victoria University that recommended a 'communities of practice' model to connect CoMs with similar purposes to each other and to relevant experts within DELWP and peak bodies. Victoria University's research recommended using online communication to build these connections.

DELWP made one attempt to convene a meeting of the sixteen CoMs in Melbourne that manage public halls and mechanics institutes. DELWP could not provide us with evidence that a meeting took place or that networking occurred. DELWP has not acted on this opportunity that we highlighted in our original 2014 audit.

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We have consulted with DELWP, and we considered its views when reaching our audit conclusions. As required by section 16(3) of the Audit Act 1994, we gave a draft copy of this report to DELWP and asked for its submission and comments. We also provided a copy of the report to the Department of Premier and Cabinet.

Responsibility for the accuracy, fairness and balance of those comments rests solely with the agency head.

DELWP's response is included below.

RESPONSE provided by the Secretary, DELWP

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We conducted a survey of CoM volunteers to inform this audit. This appendix provides an overview of the methodology and a profile of survey respondents and the response rate.

Methodology

The survey contained 29 questions:

• 12 multiple-choice questions
• five questions that used rating scales
• three open-ended questions, requiring thematic analysis
• nine demographic profile questions.

Eighteen questions were directly repeated, with permission, from a survey conducted by Victoria University as part of a research project commissioned by the former DEPI—Understanding volunteer motives in public land management, published in June 2012. These questions had been developed from a series of focus groups.

We emailed an invitation to complete the survey to both the chair and 'main contact' of each CoM in DELWP's Portal database, as provided to us in March 2018. DELWP's database did not contain an email address for 334 CoMs (28 per cent). For these CoMs, we mailed a letter to both the chair and the 'main contact' inviting them to complete the survey, offering both an online option and a phone number they could call to complete the survey with one of our auditors.

Response rate

In total, 462 people completed the survey. This represents 26 per cent of people directly invited to participate in the survey, but less than 6 per cent of the total CoM volunteer population. The ambiguity in calculating the exact response rate arises because DELWP cannot report the number of people who are members of Category 4 CoMs, so the total number of CoM volunteers from which to calculate the response rate is unknown.

The response rate, by category of CoM, is detailed in Figure B1.

Figure B1
Response rate to VAGO survey of CoM volunteers, June 2018

(a) Invitations sent to chair and 'main contact' for CoMs listed in DELWP's Portal database.
Note: While we invited the chair and main contact to share the survey invitation with the members of their CoM, 80 per cent of the survey respondents were office bearers. It is not clear how many other members received the invitation to complete the survey, so we have reported the response rates as both percentage of respondents and percentage of total population.
Source: VAGO.

Profile of respondents

There is not a current demographic profile of all CoM volunteers that we could use as a comparison. We interpreted the survey results as consistent with general characteristics of the CoM volunteer profile in terms of age, years on committee and hours spent, but some groups are over-represented—females, office bearers and two regions.

Figure B2 shows the characteristics of the respondents to our survey.

Figure B2
Characteristics of CoM survey respondents, June 2018

Note: Totals may not add up to 100 per cent due to rounding.
Source: VAGO.

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