Background

The National Black Spot Programme¹ targets sites or sections of the road network that experience a high incidence of vehicle crashes and fatalities (referred to as ‘black spots'). It is a key element of the Australian Government's aim to reduce the national road fatality rate by 40 per cent over the decade to 2010. In April 2007, the Federal Government announced that funding for the Programme would continue to 2013–14 and that, as of 2009–10, annual funding would increase from $45 million to $60 million.

In 1996 the Black Spot Programme was reintroduced by the Government. At that time, the Notes on Administration were updated and endorsed by the then Parliamentary Secretary to the Minister for Transport and Regional Services. The Notes on Administration, which have been accepted by all States, are a guide to the administration of the Programme and are to be read in conjunction with the relevant legislation.²

Overall administration of the Programme is the responsibility of the Commonwealth Department of Transport and Regional Services (DOTARS). DOTARS administration is undertaken by a manager (who is also responsible for the Roads to Recovery Programme³) and two staff in the Canberra office of DOTARS. By way of comparison, programme delivery is more complicated than for the Roads to Recovery Programme. For the Roads to Recovery Programme, the Government considered Local Government Authorities (LGAs) best placed to make decisions on road investment at the local level. Accordingly, LGAs were given the freedom to use the funds as they wished, as long as it was for expenditure on roads, as defined by the legislation.⁴

Administration and delivery of the National Black Spot Programme depends to a significant extent on State road transport authorities and LGAs. Specifically, as illustrated by Table 1:

• National Black Spot projects are delivered both by State⁵ road transport authorities and LGAs. In aggregate, for the period 2002–03 to 2005–06 inclusive, State road transport authorities have been approved to deliver 40 per cent of projects and receive just over 52 per cent of funding. While projects are delivered by both state and local government, it is the responsibility of the State road transport authorities to report to DOTARS on the physical delivery of all road safety projects being delivered within the State.
• State road transport authorities play an important role as the Commonwealth's agent in respect to projects approved for delivery by LGAs, including as the conduit through which funds are paid to local government. States are to account to DOTARS for their expenditure. For projects States deliver, this reporting relates to expenditure on road work delivery. For projects delivered by local government, the reporting relates to transfer payments to LGAs, not the actual cost of road works.

Table 1 Programme administration and delivery responsibilities

Source: ANAO analysis.

The Notes on Administration specifically state that the Programme will fund all costs directly associated with an approved project, and that administrative overheads are indirect costs and therefore are not eligible for funding. Accordingly, State road transport authorities are expected to undertake their Programme administration role free of charge to the Commonwealth. However, in Victoria, the State road transport authority has adopted a practice of charging an administrative charge of 3 per cent to each 2005–06 project, rising to 4 per cent in 2006–07.

An evidence-based approach to road safety programmes

According to Austroads⁶, effective road safety programs rely on an evidence-based approach. To support its member authorities, Austroads has published various technical guidelines, manuals and research reports. As road safety is a major strategic area for Austroads, it has developed a series of guidance in relation to the administration of effective, evidence-based road safety treatment programmes. In this respect, in relation to guidance on crash location identification and treatment, the Notes on Administration refer practitioners to Austroads guidelines. Further, it has been agreed by the Austroads Council⁷ that the Austroads guidelines should be adopted widely as the primary national reference by member organisations in each relevant area of practice.

Consistent with Austroads guidance, the National Black Spot Programme requires evidence to be used as the basis for identifying black spots, developing proposed treatments and the cost of treatment, and ranking projects so that they can be prioritised for funding. This evidence-based approach to the administration of the Programme is intended to result in the highest priority road safety Black Spot projects being selected and funded so as to achieve the highest benefits from Commonwealth expenditure in this area.

In addition to the guidance provided by Austroads publications, in December 2006, revised National Guidelines for Transport System Management in Australia were published by the Australian Transport Council. DOTARS advised ANAO in May 2007 that these principles based guidelines are the appropriate source of best practice relating to the general transport system management. One of the specified principles underlying the guidelines is that advice to decision-makers should be supported by the best available data and information, quantitative and qualitative, objective and subjective.

For the National Black Spot Programme, two forms of evidence are accepted as the basis for project nominations:

• funding is mainly available for the treatment of black spot sites or road lengths with a proven history of crashes (sometimes referred to as ‘reactive' projects). For projects based on this evidence, a Benefit Cost Ratio (BCR)⁸ is determined to assess the economic benefits and ranking projects so that projects can be prioritised for funding; and
• up to 20 per cent of Programme funds are available for the treatment of locations that may not meet the crash history criteria but which have been recommended for treatment on the basis of an official road safety audit report (sometimes referred to as ‘proactive' projects).

In this context, the significant majority of National Black Spot Programme projects are nominated, ranked and approved on the basis of BCRs.⁹ Of the 273 projects in ANAO's sample (which represented 18 per cent of all projects for the period examined), 259 (95 per cent) were nominated on the basis of their crash history. The remaining 14 projects (5 per cent) were nominated on the basis of a road safety audit report.

Audit Approach

This audit is being undertaken as part of a series of audits examining Commonwealth funding of land transport infrastructure (particularly roads). The first audit in this series examined the Roads to Recovery Programme. The report of this audit was tabled in the Commonwealth Parliament on 1 March 2006.

The objective of this performance audit was to assess the administration of the National Black Spot Programme. It was undertaken in a manner similar to the audit of the Roads to Recovery Programme. Specifically, the audit approach involved:

• examination of DOTARS records and discussions with officers in DOTARS and four of the State road transport authorities responsible for administering the Programme;
• analysis of project monitoring, reporting and payment arrangements; and
• selecting a sample of 45 LGA areas across four States so that ANAO could examine projects delivered with Commonwealth funding.

State road transport authorities play a key agency role in the administration and delivery of the Programme (see Figure 1). Accordingly, this role was examined as part of the audit. This included aggregate analysis of whether payments made under the National Black Spot Programme are made through a process that protects the Commonwealth's financial interests, including whether costs charged to the Programme have been substantiated and funds have been used as intended. It also examined the reporting and accountability arrangements in place between State road transport authorities and DOTARS including the physical progress and completion of projects.

Figure 1 Project nomination, assessment, approval and delivery relationships

Source: ANAO analysis.

The States selected for inclusion were New South Wales (NSW), Victoria, Western Australia (WA) and South Australia (SA). For LGA areas in the sample, all projects approved under the National Black Spot Programme between 2002–03 and 2005–06 have been examined. In total, 273 projects were examined¹⁰ in terms of their nomination, assessment, approval, delivery of approved road works, the cost of the works, timeliness of delivery, and monitoring and reporting of project information to DOTARS (see Figure 2). ANAO also undertook a site inspection for each project.

Figure 2 Programme administrative arrangements (audit sample)

Source: ANAO Analysis

Overall audit conclusions

The evidence-based approach to nominating, ranking and approving National Black Spot Programme projects is consistent with better practice principles for road safety programmes. However, the current administration arrangements have not consistently resulted in the highest priority road safety Black Spot projects being selected and funded. Further, project delivery arrangements do not provide DOTARS with sufficient assurance that approved road works are delivered as approved, in a timely manner, to address the road safety issue that underpinned the nomination and approval of the project for funding.

In this context, State road transport authorities play a key role in the administration of the National Black Spot Programme, particularly in relation to the assessment and ranking of projects against the Programme criteria, and as the conduit through which funds are paid for the delivery of road works either by the State or local government. However, ANAO found:

• in each of the four States examined, projects that did not satisfy the Programme eligibility criteria were recommended and approved for funding;
• economic appraisal practices are inconsistent across and within each of the four States examined such that the ranking of projects has resulted in lower priority road safety Black Spot projects being selected and funded; and
• the financial accountability arrangements are insufficiently transparent, with DOTARS having limited visibility of the final actual cost of approved projects with many instances of the completed cost being significantly different from that approved by, and reported to, DOTARS.

There have also been significant shortcomings in the delivery of approved and funded National Black Spot Programme projects. Timely delivery of the approved road works at the identified black spot location is fundamental to obtaining the expected benefits from the investment of funds in an evidenced-based road safety programme. However, 56 per cent¹¹ of projects in the audit sample were not delivered in this manner, comprising:

• 39 per cent were not delivered in the approved Programme year;
• in the case of 32 per cent of projects, the State road transport authority or LGA delivered different road works to those approved by the Federal Minister, or did not deliver all of the approved road works;
• 8 per cent of projects only partially addressed the identified black spot location; and
• 1 per cent of projects were reported as complete yet road safety works were not evident on site.

In the context of the distributed administration arrangements (see Figure 2) for the National Black Spot Programme, there is a balance to be struck by DOTARS between obtaining the necessary assurance that the Programme is effectively delivering on its objectives, and the exercise of discretion by the State road transport authorities in how they discharge their responsibilities as set out in the Notes on Administration. In this context, the audit has demonstrated that, for the Programme to deliver the road safety outcomes the Government and the community expects, DOTARS should more clearly enunciate the Commonwealth's expectations of State road transport authorities and take a more active role in administration of the Programme. This is particularly in the key areas of assessing project eligibility, assessing and ranking of competing projects and the delivery of approved road safety works at the identified black spot location.

There would also be considerable merit in DOTARS implementing a risk-based program of road work site inspections. Such an approach would be consistent with the Department's agreement to improve its administration of the Roads to Recovery Programme by undertaking a risk-based program of site inspections so as to better manage delivery risks for Commonwealth funded road work projects. For efficiency reasons, inspections of National Black Spot Programme funded projects could be coordinated with site inspections of Roads to Recovery funded projects, in relation to both State-delivered and local government-delivered projects.

As mentioned earlier, the National Black Spot Programme was re-introduced in 1996. Five years later, in 2001, the Roads to Recovery Programme was introduced. Under the Roads to Recovery Programme, the Commonwealth directly funds LGAs for projects they are delivering. When announcing the Roads to Recovery Programme, the Government saw direct funding as providing programme delivery benefits. In its current inquiry into ANAO's 2005–06 performance audit of the Roads to Recovery Programme,¹² the then Chair of the Joint Committee of Public Accounts and Audit indicated that direct provision of funds to local government could be extended to other Commonwealth funding programmes.¹³

DOTARS has commented to ANAO that it is the Australian Government's policy to have different funding and operational models for the Roads to Recovery and National Black Spot Programmes. Nevertheless, the merits of different programme delivery methods is a matter that could beneficially be kept under review by the Department; decisions on the approach to be adopted for Programme delivery are ultimately a matter for the Government.

Recommendations

ANAO made nine recommendations focused on maximising the road safety benefits from the Programme.

The first three recommendations address the governance arrangements for the Programme. The last six recommendations are focused on addressing shortcomings in administration that have resulted in lower priority road safety projects being selected and funded.

DOTARS agreed or agreed with qualification to all but one of the recommendations.

Agency response to the audit

DOTARS provided the following comment on the report:

The audit found no evidence that Programme funds were not spent as intended by the Australian Government on high priority road safety Black Spot projects. The audit makes no finding that the administration of the Programme by the Department of Transport and Regional Services (the Department) is not efficient and effective nor does the audit suggest that positive road safety outcomes are not being delivered.
The audit raises some issues where consideration of future Programme administration would be warranted. The Department will work with states and territories to achieve greater consistency of understanding and interpretation of the Programme's operational requirements.
The Department agrees, or agrees with qualification, to all but one of the recommendations.
Recommendation No.1, which proposes that the Department examine the scope for direct payment of funds to Programme proponents, is not consistent with Australian Government policy for the AusLink Black Spot Programme and the AusLink legislation which states “the approval instrument for a Black Spot Project must identify the eligible funding recipient, being a state or authority of a state, to which funding may be paid”.
The report does not provide evidence that there might be sufficient benefits for the Australian Government were it to revise its policy, amend legislation and allocate the increased resources necessary to implement Recommendation No.1 nor does it provided evidence that implementing the recommendation would enhance the efficiency or effectiveness of the Programme.¹⁴

Comments from State road transport authorities in relation to this report are contained at Appendix 3 of the report.

Footnotes

1 The Notes on Administration applicable for the period of audit (replaced in July 2006) referred to the Programme as the ‘National Black Spot Programme'. For consistency, the term National Black Spot Programme has been used throughout the audit report.

2 The Programme was administered under the Australian Land Transport Development Act 1998 (ALTD Act) until 30 June 2005. The Programme is now administered under Part 7 of the AusLink (National Land Transport) Act 2005 (AusLink Act).

3 See ANAO Audit Report No.31 2005–06, Roads to Recovery, March 2006.

4 The legislation governing the Roads to Recovery Programme was framed around the following programme delivery decisions made by the Government: funds were to be paid directly to LGAs; project priorities were the choice of LGAs; and the process by which grants were paid to the LGAs was to be simple, with appropriate audit and accountability systems and arrangements put in place to ensure that there is due recognition by LGAs of the Commonwealth's contribution to local road projects.

5 Consistent with AusLink Act, the term ‘state' used throughout this report includes the Australian Capital Territory and the Northern Territory.

6 Austroads membership comprises the six state and two territory road transport and traffic authorities and the Commonwealth Department of Transport and Regional Services in Australia, the Australian Local Government Association and Transit New Zealand. Its purpose is to contribute to the achievement of improved Australian and New Zealand transport related outcomes by:

• undertaking nationally strategic research on behalf of Australasian road agencies and communicating outcomes;
• promoting improved practice by Australasian road agencies;
• facilitating collaboration between road agencies to avoid duplication;
• promoting harmonisation, consistency and uniformity in road and related operations; and
• providing expert advice to the Australian Transport Council and the Standing Committee on Transport.

7 Austroads is governed by a council consisting of the chief executive officer (or an alternative senior executive officer) of each of its 11 member organisations, including DOTARS.

8 For a project nomination based on crash statistics, in addition to the criteria relating to number of casualty accidents being satisfied, the BCR must be greater than 2.0 to be eligible for Programme funding.

9 Practices vary markedly across the States in terms of the relative proportion of projects that are nominated, recommended by the Consultative Panel and approved by the Federal Minister on the basis of road safety audits. For example, there were no projects between 2002–03 and 2005–06 in New South Wales (the State with the largest Programme allocation) that were nominated and approved on the basis of a road safety audit. In comparison, in South Australia, between 20 per cent and 22 per cent of projects in each of the four years were thought to have been approved on the basis of a road safety audit.

10 For each project, ANAO sought the following information from the entity responsible for nominating and
delivering the works (as DOTARS does not hold such information):

• Black Spot project nomination forms including details of the calculated Total Estimated Cost and the
• Benefit Cost Ratio, and supporting crash statistics (or, where applicable, the road safety audit
• report);
• any technical drawings relating to the work;
• the actual construction schedule;
• a detailed report of actual receipts and expenditure for individual projects;
• documentation associated with claims for payment from LGA’s to the State road transport authority,
• and payments made to the State road transport authority based on the status reports; and
• any other information provided that would assist ANAO’s examination of the relevant projects.

11 Some projects are included in more than one dot point but are only counted once in the overall figure.

12 ANAO Audit Report No.31 2005–06, Roads to Recovery, March 2006.

13 Joint Committee of Public Accounts and Audit, Official Committee Hansard, Review of Auditor-General's Report Nos 7 to 34 (2005–06), Friday 23 June 2006, Canberra, p. PA11.

14 ANAO comment in relation to the Department's response to Recommendation No.1 of the report may be found at paragraphs 2.57 to 2.59 of the report.