Report reveals NSW lost $776m on faulty, expired Covid gear early on in pandemic
The NSW government spent $7.5bn of largely borrowed money on health and economic stimulus in the first 18 months of the pandemic, but $776m worth of Covid-19 inventory was either defective or had expired.
The NSW government spent $7.5bn of largely borrowed money on health and economic stimulus in the first 18 months of the pandemic, but $776m worth of Covid-19 inventory such as masks and ventilators was either defective or had expired, an audit has revealed.
The findings are contained in a report by the NSW Auditor-General on the financial impact of Covid-19 on state government agencies, which warns the record spending puts the state’s AAA credit rating at risk.
The report found the government underspent on Covid-19 measures to the tune of $2.6bn, including $179m on personal protective equipment (PPE).
NSW spent $1.4bn on PPE alone, but $159m was written off because inventories did not meet regulatory standards, including masks supplied by an overseas vendor that failed to meet Therapeutic Goods Administration standards, the report found.
A further $37.6m was written off for expired protective equipment including masks, gloves and hand sanitisers, and another $20.7m for faulty equipment, primarily ventilators bought overseas that did not perform up to standard.
An estimated $559m of inventory expired before being used, though there was “a high degree of uncertainty” over the estimate.
Key areas of spending by the NSW government included $2.2bn for medical equipment and treatment and small business grants of $795m.
Auditor-General Margaret Crawford noted the report did not seek to assess the effectiveness of agency spending or initiatives, although a series of performance audits is in progress.
Ms Crawford took a thinly veiled swipe at Treasury, highlighting at one point in bold red that “NSW Treasury did not issue guidance on eligible Covid-19 expenditure or on how to record and monitor spending”.
“Reliable and accurate data on expenditure of funding is important to citizens as it helps to drive accountability and transparency,” she noted.
Ms Crawford has had a strained relationship with the NSW Treasury, previously accusing it of an “unnecessarily obstructive and difficult” bid to withhold information about the controversial state-owned rail corporation that holds $40bn in NSW rail assets.
Covid-19 response measures have put fiscal responsibility targets at risk, the report said, with implications for NSW maintaining a AAA credit rating.
The expenditure growth for 2020-21 and forecast for 2021-22 both exceeded the long-term revenue growth rate of 5.6 per cent, the report noted.
While Moody’s and Fitch reaffirmed the state’s triple-A credit rating, S&P lowered the rating to double-A plus, primarily due to the increase in debt from economic stimulus and investment in infrastructure in response to Covid-19. Improvements to operating and debt positions would assist in achieving the triple-A rating, the Auditor-General said.
Other significant expenses included quarantine costs of $613m, with $214m recovered from travellers required to pay for their accommodation. However, $107m remained unpaid at the end of the financial year. The Sydney Local Health District had assessed $28m as unrecoverable, but the Auditor- General concluded this amount was “understated”.
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