Introduction

1.1 The Australian Government has responsibility for three Australian external territories that have a permanent population:

• Christmas Island;
• Cocos (Keeling) Islands²; and
• Norfolk Island.³

1.2 No state government has responsibility for these territories. In the absence of a state government, the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts (Infrastructure) is responsible for administering state-level functions, such as health and education, to the external territories. Arrangements for service delivery in the Indian Ocean Territories (IOTs) and Norfolk Island outline that services will be delivered in a manner and to a similar standard to remote mainland communities.

1.3 Other Australian Government agencies have responsibility for matters which fall within their portfolios such as customs, social security and welfare payments, quarantine and immigration. Local shires manage specific local government functions, such as waste management. For the purposes of enrolment and voting in Federal elections, Christmas Island and the Cocos (Keeling) Islands are part of the electoral division of Lingiari in the Northern Territory. Norfolk Island is covered by the electorate of Bean in the Australian Capital Territory.

Indian Ocean Territories

1.4 Christmas Island and Cocos (Keeling) Islands are collectively known as the Indian Ocean Territories (IOTs). Figure 1.1 shows Christmas Island and Cocos (Keeling) Islands and the distance from Perth, Western Australia (WA).

1.5 Christmas Island is in the Indian Ocean, 2,604 kilometres north-west of Perth. In 2021, its population was approximately 1,692 people. The main types of employment on the island are government employment and trade.

1.6 The Cocos (Keeling) Islands are located 2,936 kilometres north-west of Perth and consist of 27 low-lying islands with a total area of approximately 14 square kilometres. There are two islands with a permanent population, Home Island and West Island. In 2021, the Cocos (Keeling) Islands had a population of approximately 593 people. The main types of employment on the islands are government employment and hospitality.

Figure 1.1: Christmas Island and Cocos (Keeling) Islands approximate distance from Perth, WA

Source: WA Department of Primary Industries and Regional Development, the location of Christmas Island and the Cocos (Keeling) Islands in relation to Western Australia, available from https://marinewaters.fish.wa.gov.au/explore/indian-ocean-territories/ [accessed 30 June 2025].

Administration of the Indian Ocean Territories

1.7 The Christmas Island Act 1958 and the Cocos (Keeling) Islands Act 1955 establish Christmas Island and the Cocos (Keeling) Islands as territories under the responsibility of the Australian Government. Through this legislation, WA laws apply and the Australian Government may enter into arrangements with WA for the ‘effective application and administration of the laws in force in the territory’. The WA Government has also enacted the Indian Ocean Territories (Administration of Laws) Act 1992 to enable WA state agencies to exercise powers, perform functions and duties, and provide services in or in relation to the IOTs.

Norfolk Island

1.8 Norfolk Island is located 1,676 kilometres northeast of Sydney in the Pacific Ocean. In 2021 it had a population of approximately 2,188 people. Of this population, 25 per cent identified as Pitcairn Islanders.⁴ Figure 1.2. shows the approximate distances between Norfolk Island and nearby cities. Tourism is a key economic activity on Norfolk Island. The top three industries of employment on Norfolk Island are accommodation and food services, retail trade, and public administration and safety.

Figure 1.2: Norfolk Island, approximate distances from nearby cities

Source: Australian National Audit Office, Auditor-General Report No. 43 2018–19, Design, Implementation and Monitoring of Reforms to Services on Norfolk Island, ANAO, Canberra, 2019, Figure 1.1, available from https://www.anao.gov.au/work/performance-audit/design-implementation-and-monitoring-reforms-to-services-norfolk-island.

Norfolk Island governance, reform and service delivery

1.9 Norfolk Island is an external Australian territory governed under the Norfolk Island Act 1979. In 2015 the Australian Government announced reforms to Norfolk Island governance and service delivery arrangements, ending the period of self-government that had been in place since 1979.⁵ One objective of the reforms was ‘consistent with the general principle that as Norfolk Island is part of Australia, those Australians who live there should have the same obligations and receive the same access to benefits as other Australians.’ The Australian Government:

• assumed responsibility for funding and delivering both national and state-level services on the island;
• abolished the Norfolk Island Legislative Assembly and Executive Council; and
• transitioned local government services and government business enterprises to the Norfolk Island Regional Council (NIRC) which would be responsible for local and municipal matters and deliver some state-type services on behalf of Infrastructure through a service delivery agreement.⁶

Infrastructure’s administration of external territories services

Program outcome

1.10 Infrastructure’s Portfolio Budget Statements 2025–26 set out its responsibility to manage service delivery to the territories under Outcome 4.

Good governance and service delivery in the Australian territories including through the maintenance and improvement of the laws and services for non-self-governing territories, and the overarching legislative framework for non-self-governing territories.

1.11 The key activities in the Portfolio Budget Statements under this outcome for Infrastructure are:

• ensuring governance and legislative arrangements are fit for purpose to support delivery of services and programs to Australia’s non-self-governing territories and facilitate national interests in the Australian Capital Territory and Northern Territory; and
• provide essential infrastructure and deliver services to residents of the external territories (Norfolk Island and the Indian Ocean Territories) and the Jervis Bay Territory.

1.12 In the 2025–26 Budget, the Australian Government provided $199.5 million to Infrastructure for the administration of the external territories, including the delivery of infrastructure and essential services to the IOTs and Norfolk Island.⁷ This funding is separate to allocations to, for example, Services Australia for the delivery of social security and welfare payments.

1.13 The Territories Division manages the administration of the territories. The division has three branches: the Indian Ocean Territories Branch, the Territories Enabling Services Branch, and the Norfolk Island and Mainland Territories Branch. For 2025–26 the division had 136 staff.

Rationale for undertaking the audit

1.14 The external territories of Norfolk Island and the IOTs are managed under their own administrative processes, governance and models of service delivery. The remoteness of the Australian external territories presents risks and challenges in providing service delivery that achieves value for money. This audit provides assurance to the Parliament on whether the service delivery arrangements for the Australian external territories are being managed effectively.

Audit approach

Audit objective, criteria and scope

1.15 The objective of the audit was to assess whether Infrastructure’s management of service delivery arrangements for the external territories was effective. To form a conclusion against the audit objective, the following high-level criteria were adopted:

• Has Infrastructure established fit-for-purpose governance arrangements for the delivery of services in the external territories?
• Does Infrastructure effectively manage service delivery for the external territories?

1.16 The audit scope included an examination of the arrangements that Infrastructure has in place to deliver state-type services in the external territories through service delivery arrangements with state governments and other providers. The audit did not examine: management of assets; services delivered by other Australian Government entities in the territories, such as social security and welfare payments provided by Services Australia; other external or internal territories managed by Infrastructure (see footnote 3); or the transition of services on Norfolk Island from the New South Wales (NSW) Government to the Queensland Government. ⁸

Audit methodology

1.17 The audit methodology involved:

• examining documentation held by Infrastructure, including service agreements and policies and guidance documents;
• meeting with stakeholders and service providers on Norfolk Island, Cocos (Keeling) Islands and Christmas Island and state agencies; and
• meetings with Infrastructure staff.

1.18 The audit was conducted in accordance with ANAO Auditing Standards at a cost to the ANAO of approximately $560,500.

1.19 The team members for this audit were Jessica Carroll, Tessa Osborne, Sophie Crandall, Stephanie Bruce, Anne Rainger and Michelle Page.

2.1 The accountable authority of a Commonwealth entity has duties under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) to: govern the entity in a way that promotes the proper use and management of the public resources for which they are responsible; measure and assess the performance of the entity in achieving its purposes; and establish and maintain appropriate risk management practices.

2.2 Infrastructure has Service Delivery Arrangements (SDA) with Western Australian (WA) Government agencies, and contracts with private entities for service delivery in the IOTs. Regardless of the commissioning framework, to meet PGPA Act requirements entities should establish robust agreements that establish clear roles and responsibilities, performance expectations, a clear approach to risk management and appropriate reporting arrangements.

2.3 Service delivery in the IOTs presents a range of challenges for Infrastructure, including:

• the need for Infrastructure to partner with a state government to deliver services;
• the majority of services are provided by WA state agencies due to existing legislative frameworks in the IOTs (WA laws are applied in the IOTs), their proven experience in remote service delivery, established organisational and regulatory arrangements, and proximity to the IOTs;
• the economic base for the IOTs is narrow and heavily reliant on government support and limited industries;
• the extreme remoteness and isolation of the IOTs from the mainland; and
• higher service provision costs, with limited suppliers available to provide commercial services.

Do service delivery arrangements clearly set out deliverables, roles and responsibilities, performance expectations, risk and reporting?

2.4 Infrastructure manages service delivery arrangements in the IOTs through the following mechanisms (see Figure 2.1):

• SDAs with WA state agencies for state-type services;
• contracts with private providers for the delivery of services such as for air passengers and freight; and
• direct delivery of Australian Government services (such as for primary healthcare, pathology and acute in-patient care) via the Indian Ocean Territories Administration (IOTA).⁹

Figure 2.1: Overview of service delivery in the Indian Ocean Territories

Note: The audit did not examine service delivery by the Shire of Christmas Island and the Shire of Cocos (Keeling) Islands.

Source: ANAO adaptation of Infrastructure records.

Service delivery arrangements with the WA Government

2.5 The Australian Government, represented by Infrastructure, has established SDAs with WA state agencies for delivery of state-type services in the IOTs. As at 1 September 2024, Infrastructure had 38 arrangements in place with state agencies for 55 services, through either an SDA or an exchange of letters.¹⁰ SDAs have been in place from 1992. Services provided under an SDA can include policy development, regulatory functions, and direct service delivery. For example, the WA Department of Education provides:

• kindergarten to year 12 classes at Christmas Island District High School;
• kindergarten to year 10 classes at Cocos (Keeling) Islands District High School — with services delivered across two campuses, one on West Island and one on Home Island; and
• other services such as recruitment of teaching staff, learning and development, and monitoring of school performance and effectiveness.

2.6 Each SDA uses a standardised approach set out in a template. The template provides the generic terms and conditions for use across all SDAs. Infrastructure negotiates the SDA template with the WA Department of the Premier and Cabinet (WA DPC) and the WA State Solicitor’s Office within the WA Department of Justice. In 2024 Infrastructure and the WA DPC commenced negotiations to develop a new SDA template. As at July 2025, these negotiations were ongoing.

2.7 The SDA template consists of:

• Header arrangement — contains the standard SDA terms and conditions. These include background, renewal or extension terms, delegations, reporting, cost recovery, review clauses, dispute resolution, indemnity and contract variation clauses;
• Schedule A — operational brief — contains objective of the state agency (in relation to the IOTs), description of services, obligation to provide services, statement on service levels, performance indicators and reporting; and
• Schedule B — financial provisions — contains the specific conditions of payment arrangements and initial budgets for services. Financial year budgets are provided as part of the yearly requirement to submit a work plan (see paragraph 2.10).

2.8 The ANAO assessed the content of 34 SDAs against the key components of service deliverables; roles and responsibilities; performance expectations; risk; and reporting. The results are set out in Table 2.1.

Table 2.1: Summary of ANAO analysis of the content of 34 Service Delivery Arrangements with WA state agencies

Key: ◯ not met ◑ partly met ◕ largely met ● fully met

Note: The SDA procedures manual states that the First Assistant Secretary, Territories Division, is the delegate to sign the SDA.

Source: ANAO analysis of 34 SDAs for service delivery in the IOTs.

2.9 Infrastructure has prepared the SDA procedures manual to assist its SDA contract managers to manage the agreements and the Service Delivery Arrangements Information Kit for state agencies providing services to the IOTs. These manuals set out further background and details on the management of the SDAs.

Work plans

2.10 The SDA template requires that state agencies must, by 1 February, prepare and submit to Infrastructure for approval a work plan and budget for the following financial year. The work plan articulates the services the state agency will provide in the coming year. State agencies are only required to provide the services as described in the work plan. The Service Delivery Arrangements Information Kit states that ‘the work plan is a flexible document, negotiated annually, to allow the services to adapt to changing needs’. The type of information and level of detail differs across the work plans. For 2024–25 state agencies complied with these requirements.

Services delivered by private providers

2.11 The SDA procedures manual states that the Australian Government can engage external parties to ‘provide services where it is believed the other service provider is better able to meet the needs of the IOTs’. In practice, Infrastructure engages private providers to deliver services that states are unable to deliver or that require support in the absence of a viable commercial market. Examples include contracts with Toll Remote Logistics to manage the airport and related services, and with Virgin Australia Airlines (Virgin) to provide regular transport and freight services.¹¹

2.12 Fourteen contracts were reviewed by the ANAO against the key components of service deliverables; roles and responsibilities; performance expectations; risk; and reporting arrangements. Results are set out in Table 2.2.

Table 2.2: Summary of ANAO analysis of the content of contracts for service delivery with private providers

Key: ◯ not met ◑ partly met ◕ largely met ● fully met

Source: ANAO analysis of contracts with private providers on the IOTs.

Contract extensions

2.13 The Commonwealth Procurement Rules (CPRs) provide that officials responsible for a procurement must consider relevant financial and non-financial benefits and be satisfied that the chosen tender achieves value for money. Infrastructure faces challenges in procuring services in the IOTs including supplier availability (see paragraph 2.3). The CPRs state that officials must demonstrate value for money even when a procurement involves a single tenderer — for example, by providing a strong rationale for sole sourcing, surveying the market and using benchmarks to assess offerings and prices.

2.14 Infrastructure extended the terms of seven of the 14 contracts in 2024–25 using an extension clause. For four contracts sampled by the ANAO, the brief to the delegate seeking approval for the extension:

• covered the need for the contract rollover, outlining circumstances of limited market options;
• outlined service delivery risks; and
• noted that service providers had longstanding presence in the IOT community.¹²

2.15 In the sample reviewed by the ANAO the rationale for extending the contract was largely sound. Infrastructure appropriately documented key value for money considerations, including the importance of ensuring continuity of service in the IOTs. One of the four briefs did not completely demonstrate how key factors, such as risk, service quality and past performance were considered collectively in supporting the value-for-money assessment.

Identifying service gaps

2.16 Infrastructure’s service delivery arrangements in the IOTs are generally long established, although occasionally a requirement for new services is identified (see Case study 1). The SDA procedures manual sets out that Infrastructure can agree with WA state agencies to include new services that fall within the scope of an existing SDA through executing a variation or amending annual work plans.¹³

2.17 Infrastructure has not documented how the current scope of services in the IOTs is sufficient to meet the program objective or service delivery needs of the IOT community. Infrastructure advised the ANAO on 31 March 2025 that requests for new services are managed on a case-by-case basis, considering factors including community need for the service and availability of funding. This framework for considering new services is not documented.

Are there fit-for-purpose governance and communication arrangements in place to manage risk and escalate issues?

2.18 Governance arrangements to support service delivery should include appropriate decision-making structures, risk management frameworks and stakeholder engagement and communication.

Governance arrangements

2.19 Effective governance supports sound decision making, provides clear lines of communication and authority and facilitates the resolution and escalation of issues. Infrastructure manages the governance arrangements of service delivery for the IOTs through:

• day-to-day management by the branches within the Territories Division;
• internal governance forums within the Territories Division; and
• coordination through the WA DPC.

Indian Ocean Territories Branch

2.20 The Indian Ocean Territories Branch within the Territories Division is responsible for policy and service delivery in the IOTs. This branch includes IOTA staff on both islands and teams in Perth and Canberra who manage policy, SDAs and the service delivery contracts. Branch contract managers are responsible for overseeing the SDAs and contracts with private providers, are the key point of contact for issues relating to delivery of the SDAs and contracts, and hold regular meetings with their state agency counterparts.

2.21 In April 2025, the ANAO consulted with providers and WA state agencies delivering services in the IOTs.¹⁶ Stakeholders advised that:

• most service delivery issues were raised with Infrastructure in real time through direct communication with contract managers;
• they were comfortable raising issues with Infrastructure contract managers and confident a solution would be found; and
• the IOT Branch was responsive to on-island issues raised by stakeholders.

Territories Division governance forums

2.22 Infrastructure has two governance forums to support oversight and management of the Territories Division. Table 2.3 outlines these governance forums and their purpose.

Table 2.3: Infrastructure Territories Division governance forums

Source: ANAO analysis of board meeting minutes and board terms of reference.

WA Department of Premier and Cabinet

2.23 The WA DPC manages the relationship between state agencies and Infrastructure for the delivery of state-type services to the IOTs. The WA DPC facilitates the negotiation of new SDAs, reviews and renegotiates SDAs and assists in resolving SDA issues with state agencies. The WA DPC also oversees state agencies’ budgets, work plans, financial acquittals and the annual performance reports (see paragraph 2.48). The WA DPC and Infrastructure discuss service delivery to the IOTs fortnightly and more frequently when needed. Infrastructure advised the ANAO in July 2025 that meeting minutes were not kept prior to 30 June 2025 and meeting summaries will be produced for future meetings.

Risk management

Shared risk

2.24 The Commonwealth Risk Management Policy states that the management of shared risks should be agreed by all parties involved.¹⁷ The SDAs do not cover risk management or roles and responsibilities for risk management. Infrastructure advised the ANAO in January 2025 that each state agency that delivers services through SDAs has its own risk plans. Infrastructure does not confirm or review these risk plans. The Territories Division risk register (see paragraph 2.25) includes a column to capture if the program risk is a shared risk. None of the eight risks on the register are categorised as a shared risk. Most (nine of 14) of the private contracts included a requirement that risk frameworks/policies be submitted to Infrastructure as part of performance reporting.

Program risks

2.25 The Territories Division has a divisional risk register for program and service delivery risks — covering both the IOTs and Norfolk Island. The register includes the risk appetite and tolerance, and outlines the challenges in service delivery to the territories and unique risks for Infrastructure — for example, in providing direct service delivery through IOTA. The risk register is based on Infrastructure’s risk template. The Territories Governance Board approved the 2024 version in March 2024. It includes eight risks, two of which are managed in separate risk registers for fraud and climate. Table 2.4 outlines the key risks and their ratings.

Table 2.4: Key risk in Territories Divisional risk register

Note: Risk ratings are applied to risks after controls are put in place. A control is an action to mitigate and/or influence a risk. If the risk rating is deemed to be not accepted, treatments (future actions) are then actioned.

Source: Territories Division risk register.

2.26 The risk register is a standing agenda item of the Territories Governance Board, and this was reviewed at each meeting. The Territories Division also has a WHS risk register, which supports management of the territories’ WHS risk environment. The Territories Governance Board reviews the WHS risk register regularly.

2.27 Infrastructure has processes in place for managing day-to-day operational issues and risks on the IOTs such as active contract management, regular feedback from the Administrator (see from paragraph 2.39) and escalation of issues within the division or governance forums. These mechanisms are effective in addressing immediate and short-term service delivery challenges. However, Infrastructure has not documented in its program risk register how it is managing longer-term service delivery risks, including quality service delivery to the external territories. For example, two risks — unsustainable funding impacting program outcomes and the challenge of ageing infrastructure — have been identified in Infrastructure’s risk register (see Table 2.4). These risks were also raised by stakeholder during the audit (see paragraph 2.44). Controls for these risks include:

• estimates variation process¹⁸;
• reporting to governance forums;
• arrangements entered into on a short-term basis based on funding allocations; and
• development of an assets management strategy and framework by June 2025.¹⁹

2.28 These program risk register does not fully capture controls and treatments to support strategic risk management and provide long-term assurance over service delivery pressures and quality services.

Community consultation and engagement

2.35 The SDA procedures manual sets out the importance of consultation with communities. It explains that determining community needs and delivery of corresponding services is done through ‘negotiating access to the full range of services that a state agency is ordinarily responsible for through the SDAs and implemented through the annual work plans’.

2.36 The IOT community can provide feedback and input into service delivery needs through:

• direct engagement with state agencies and/or Infrastructure contract managers when they travel to the IOTs or via email or phone contact²⁰;
• engagement with the Administrator or their office; and/or
• participation in department-led community consultation forums for specific services or areas.

2.37 Case study 2 provides examples of community consultation.

2.38 Infrastructure also distributes information to the community on how to access services through the Infrastructure website (including via factsheets on the SDAs available in English, Chinese, Malay and Cocos Malay languages²¹), local media and newsletters such as The Islander and The Atoll, and the publication of the IOTs SDA annual reports (see paragraph 2.49).

Role of the Administrator

2.39 The Administrator of the Territories of Christmas Island and the Cocos (Keeling) Islands (the Administrator) is a statutory appointee of the Governor-General of the Commonwealth of Australia. The Administrator has three key functions: representative of the Minister for Regional Development, Local Government and Territories; communication and advocacy; and facilitator — for example, in coordination between agencies with an on-island presence.

2.40 The Administrator releases a newsletter that is posted online for the IOT community. The newsletter covers updates of past and upcoming events, lists job vacancies and shares information on new projects for community consultation. The Administrator has requested community input on the management of IOTs marine parks, the coastal hazards risk plan and the Cocos runway project. There are also external forums to support consultation on key services outside the SDA governance such as the Emergency Management Committee and the Indian Ocean Territories Health Services Committee. ²²

2.41 Infrastructure advised the ANAO in March 2025 that the Assistant Secretary and the IOT Branch meets with the Administrator of the IOTs fortnightly (or as needed) to discuss community issues or complaints. Minutes or records for these meetings are not kept. Infrastructure should implement practices to record outcomes and key decisions of meetings/discussions with key stakeholder (see Recommendation no. 4 at paragraph 3.25).

Complaints

2.42 Infrastructure advised the ANAO in March 2025 that it does not have an overall/formal complaints management framework for the IOTs, and that community members can lodge complaints and provide feedback through multiple channels — for example, state agencies, the Administrator, on-the-ground staff at IOTA or the Infrastructure website.²³ Infrastructure manages complaints on a case-by-case basis though the IOT Branch. The ANAO saw examples of complaints received being sent to the responsible authority — for example, the relevant state agency.

Concerns raised by stakeholders consulted for the audit

2.44 Stakeholders and service providers in the IOTs reported to the ANAO concerns around (see Appendix 3 for further details):

• being excluded from national and state grants and programs, resulting in inequitable treatment compared to mainland Australia;
• existing budgets are insufficient and hinder effective service delivery and long-term planning;
• with flight and freight reliability — such as offloaded baggage and limited access for essential personnel; and
• essential infrastructure suffering from maintenance backlogs due to environmental challenges, limited funding, and logistical constraints.

Does Infrastructure monitor and seek assurance that services are being delivered in line with the arrangements?

2.45 Good quality performance information helps to demonstrate whether outcomes are being achieved. Regular and appropriate reporting by service providers/delivery partners allows entities to monitor whether quality services are being appropriately delivered and meeting the objectives of the program.

Performance information

WA state agency performance expectations under service delivery arrangements

2.46 Schedule A of Infrastructure’s SDAs with WA state agencies include standard performance indicators and examples of performance measures that could be used as set out in Table 2.5. The schedule states that these performance indicators ‘will be used by the Commonwealth in determining the effectiveness of the provision of services’. Twenty-five of the 34 SDAs reviewed by the ANAO only contain these generic set of performance indicators, with no corresponding performance measures or targets set.

2.47 This approach is not effective for measuring the quality of services being delivered, or to assess whether service delivery standards are consistently being met. Without clear performance measures, Infrastructure is unable to determine the effectiveness of services, identify areas for improvement, or ensure accountability in service delivery.

Table 2.5: Standard performance indicators in Service Delivery Arrangements with WA state agencies

Source: ANAO adapted from service delivery arrangement with WA state agencies.

Performance reporting

2.48 The SDAs set out the reporting requirements for state agencies. The main form of state agency reporting is the annual performance report. Infrastructure provides state agencies with a report template that includes three sections:

• a summary of services provided;
• highlights and activities for the financial year; and
• any issues or matters that may arise during the following financial year that are not considered business-as-usual.

2.49 Once Infrastructure receives the annual performance reports, it consolidates them for the Assistant Secretary and IOT Branch approval. Infrastructure publishes the consolidated reports on its website (see Table 2.6 for examples from the past two years).

Table 2.6: Indian Ocean Territories service delivery arrangement annual reports

Source: ANAO analysis of IOT SDA Annual Report 2022–23 and 2023–24 Infrastructure, Service Delivery Arrangements (SDA) Annual Report Indian Ocean Territories 2022–23 and 2023–24 available from https://www.infrastructure.gov.au/territories-regions-cities/territories/indian-ocean-territories-christmas-island-and-cocos-keeling-islands/service-delivery-arrangements.

2.50 The publication of the annual reports supports transparency and provides a degree of information about the services delivered on the IOTs. However, the WA state agency annual performance reports do not report against the performance indicators included in the SDAs and Infrastructure does not collect other data to enable it to report against those performance indicators or on the effectiveness or quality of service delivery in the territories. In addition, Infrastructure does not review the reports to determine whether services have been delivered in line with the agreements and whether action is required.

Private provider performance reporting under contracts

2.57 The ANAO reviewed 14 arrangements Infrastructure has made with private providers. Each contract included performance measures that were specific and measurable (quantitative or qualitative) to the services set out in the contracts. For example, the contract with Casa Leisure for the management of Christmas Island Recreational Centre contains measures on memberships, occupancy and patronage. Corresponding targets are set, with written reporting to be submitted monthly.

2.58 A sample of reports tested by the ANAO for the airport contract, ferry service, port services, airline services, and recreation centre met the reporting requirements as outlined in the contract. Reports are reviewed by the relevant contract manager. For example, Virgin was required to provide weekly uplift and quarterly reports to Infrastructure on metrics including: passenger numbers; freight and mail in kilograms; and passenger baggage weight (including offloads due to aircraft weight restrictions). These reports were actively reviewed by contract managers and followed up with Virgin as needed. As the movement of passengers and freight to and from the IOTs is one of the key concerns of IOT stakeholders and residents, the flight uplift reports are also reviewed by the Administrator.

Does Infrastructure undertake evaluations of the service delivery arrangements for the Indian Ocean Territories?

Benchmarking of services

2.59 In 2007 the Minister for Finance and Administration asked the Commonwealth Grants Commission to advise on the level of funding required to provide the IOTs with state-type services consistent with those in comparable WA communities. The Commission in its 2007 report noted that:

No communities in Western Australia are directly comparable with Christmas Island and the Cocos (Keeling) Islands. None are separated from the nearest centre by vast distances of ocean, nor do they have the same cultural mix in their populations.

2.60 The Commission further stated that the requirement ‘to take account of the circumstances of the Territories recognises that, in many ways, they are unique and a simple copy of Western Australian services and cost levels may not be appropriate.’ Notwithstanding challenges with the comparison, the Commission concluded that the arrangements at the time, with only minor adjustments, provide a level of services consistent with those in comparable communities in WA.

2.61 The SDA template specifies that ‘the state agency will provide the Services in a manner and to the standard that would be exercised by the state agency in providing similar services in the State’. The SDA procedures manual states that:

SDA work plans are the key mechanism through which DITRDCA [Infrastructure] ensures state agencies are providing comparable services … When discussing and reviewing work plans with a state agency, the intention is to capture how a particular work plan compares to the services and frequencies delivered in similar WA regional and remote communities.

2.62 Infrastructure has not undertaken any contemporary benchmarking of state-type services to the IOTs, nor has it assessed the SDAs (or work plans) made with the state agencies against any benchmark or comparable services on mainland Australia.

Review of service delivery arrangements

2.63 SDAs can be extended by a letter of extension or deed of variation.²⁴ For example, Infrastructure has extended the SDA with the Department of Health 19 times, the SDA with BreastScreen WA 16 times, and the SDA with Water Corp five times.

2.64 Infrastructure has a documented process for reviewing individual SDAs, including a rolling program for review and renegotiation of a set number of SDAs each year from 2024–25 to 2028–29 based on expiry dates. The reviews are to include key activities such as confirming the template remains appropriate, meetings with state agencies and a consideration of state agency performance reports. Infrastructure advised the ANAO in March 2025 that the SDA review process had not occurred as per the schedule due to its negotiations with the WA Government on the new SDA template.

2.65 In June 2024, Infrastructure extended 11 of its 34 SDAs with WA state agencies through letters of extension. The letters stated that service delivery arrangements would continue on the same terms and conditions until July 2025. Updated SDAs were expected to commence, subject to negotiations, from 1 July 2025 with the new template. In June 2025 Infrastructure extended 14 arrangements via letters of extension (for the original 11 plus three new agreements that had been due to expire), given the delays in implementing the new SDA template.

2.66 The Assistant Secretary, IOT Branch, approved the 2024–25 and 2025–26 extensions via a minute. The minute set out the delays in negotiations for the new template and attached the letters for signature. The minute did not include details of a review, a value for money assessment or information around the performance or quality of service delivery, noting reviews of the agreements had been paused.

External reporting

2.70 Infrastructure has two performance measures on service delivery to the territories in its corporate plan, described in Table 2.7. Infrastructure is required to self-assess its performance and report on these measures in its annual report. The performance measures and corresponding targets are primarily output and policy focused, and do not provide an assessment of the quality, effectiveness or outcomes of service delivery. This limits their usefulness in evaluating whether services are meeting their intended impact or meeting community service delivery needs.

Table 2.7: Infrastructure’s annual performance statements 2024–25

Source: Infrastructure’s 2024–25 Annual Report.

3.1 Service delivery in Norfolk Island involves unique challenges, including:

• the need for Infrastructure to partner with a state government to deliver services — with two state partners being involved (NSW and Queensland governments) since 2015, and supplementation from the NIRC;
• its remoteness and isolation;
• higher service provision costs, with limited suppliers available;
• a narrow economic base with a strong reliance on tourism;
• small population size; and
• unique governance arrangements together with ongoing changes in its governance models since 1979.

Do service delivery arrangements clearly set out deliverables, roles and responsibilities, performance expectations, risk and reporting?

3.2 Service delivery arrangements in Norfolk Island are delivered through the following mechanisms (see Figure 3.1).

• an intergovernmental partnership agreement (IGA) with the Queensland Government (Queensland);
• a service delivery agreement with the NIRC; and
• commercial contracts with private providers for services such as air freight and passenger services.

Intergovernmental partnership agreement with Queensland Government

3.3 Since 1 January 2022, Queensland has delivered state-type services to Norfolk Island under an IGA (see Figure 3.1).²⁵ The IGA comprises:

• Head agreement — a high-level description of the legal framework, terms of the agreement, roles and responsibilities, governance and decision making, dispute resolution, activities to be undertaken, payments, work health and safety, risk, insurance, privacy, and confidentiality and security.
• Governance framework and guide — sets out oversight and governance arrangements to support implementation of the IGA.
• Service schedules — each service schedule includes sections on the legal framework for delivering services on Norfolk Island, term for provision of services, overarching principles and commitments, transition provisions, roles and responsibilities, deliverables, funding, governance, review and variation clauses and any terms and conditions.

3.4 The ANAO assessed whether the IGA contains the elements expected to be in agreements of this nature and the extent to which these are clearly set out. See Table 3.1 for results.

Table 3.1: Summary of ANAO analysis of the content of the intergovernmental partnership agreement with Queensland

Key: ◯ not met ◑ partly met ◕ largely met ● fully met

Note a: The IGA also provides that, where the standard of service delivery to Norfolk Island diverges substantially from standards in remote areas of Queensland, the reason is to be noted in the service schedule.

Source: ANAO analysis of IGA documentation.

Service delivery agreement with Norfolk Island Regional Council

3.5 Between 2014 and 2016, Infrastructure designed and implemented reforms to service delivery on Norfolk Island but was unable to obtain NSW Government agreement to deliver all state-type services.²⁶ As a result, Infrastructure engaged the NIRC through a service delivery agreement to deliver certain state-type services.²⁷ The service delivery agreement consists of:

• Head agreement — includes governance and decision making, roles and responsibilities, process for including new services, payment, performance management, fees and charges, risk management, reporting, assets, WHS requirements, dispute resolution, complaint and query handling, stakeholder consultation, privacy and confidentiality.
• Service schedule — the service schedule for each service includes a description of the service standard, key performance requirements and allocated budget.

3.6 Table 3.2 summarises the ANAO’s assessment of whether the service delivery agreement clearly set out deliverables, roles and responsibilities, performance expectations, risk and reporting.

Table 3.2: Summary of ANAO analysis of the content of the Norfolk Island Regional Council service delivery agreement

Key: ◯ not met ◑ partly met ◕ largely met ● fully met

Note a: Infrastructure intended to use the baseline to determine whether the NIRC was progressing towards meeting service delivery standards, to determine funding and service delivery models for future years and to build NIRC capability.

Source: ANAO analysis of NIRC service delivery agreement.

3.7 On 1 November 2021, Infrastructure entered into its most recent iteration of the service delivery agreement with the NIRC to deliver 15 services. Since then Infrastructure has made three variations to the service schedule:

• July 2022 — included four new services (discussed in paragraph 3.15);
• June 2024 — extended the agreement through an update to the service schedule; and
• September 2024 — increased funding for the Energy Bill Relief Fund service.

3.8 The 2021 head agreement was due to expire in June 2024. The service delivery agreement sets out that it can be extended as agreed in writing by both parties. In June 2024, Infrastructure extended the agreement via a new service schedule titled ‘Schedule of Service 2024–25’. In July 2025, Infrastructure advised the ANAO that services were ‘still being delivered and the department continue to make payments to the NIRC, based on the [2024–25] Schedule of Services, quarterly performance and financial reporting’. Infrastructure further advised the ANAO in August 2025 that it had interpreted its July 2024 variation to the service schedule, which included a budget for 2025–26, as sufficient to show that the schedule was intended to apply to 2025–26. Infrastructure further advised ‘We are looking to improve the record keeping around the SDA by working with NIRC now to adopt a modernised agreement’. Infrastructure did not provide the ANAO with any other evidence that the June 2024 extension was to apply for two years or on what terms and conditions.

3.9 Infrastructure advised the ANAO in July 2025 that it is implementing a service delivery agreement ‘uplift project’ to ensure the agreement is fit for purpose, including reviewing the service schedule and performance framework.

State-type services delivered through other arrangements

3.11 Infrastructure has eight arrangements in place to deliver other services to Norfolk Island:

• five contracts with private and not-for-profit organisations for airfreight (Toll Remote Logistics), air passenger (Qantas Airways Limited), workers compensation (Gallagher Bassett Services), child welfare (Key Assets the Children’s Services Provider Australia) and ambulance services (St Johns Ambulance NSW);
• a service delivery agreement with the Norfolk Island Health and Residential Aged Care Service (NIHRACS) for the island’s hospital.²⁸
• a letter of exchange with the Australian Federal Police (AFP) for the provision of police services and regulatory services; and
• a memorandum of understanding with the Commonwealth Director of Public Prosecutions for prosecutorial and coronial (support) services.

3.12 Table 3.3 summarises the ANAO’s assessment of whether the five contracts with private providers clearly set out deliverables, roles and responsibilities, performance expectations, and risk and reporting.

Table 3.3: Summary of ANAO analysis of the content of contracts for service delivery with private providers

Key: ◯ not met ◑ partly met ◕ largely met ● fully met

Source: ANAO analysis of contracts.

Identifying service gaps

Intergovernmental partnership agreement with Queensland

3.13 Infrastructure is responsible for developing plans for additional services, including seeking agreement from the NIOC as part of the annual work plan process.²⁹ Should Infrastructure and Queensland agree on a proposed new service, the relevant Queensland state agency develops a business case covering the delivery mechanism and commences developing or amending the relevant service schedule — including by identifying any legislative changes needed to enable Queensland to deliver the service on Norfolk Island. Case study 3 provides an example of Infrastructure exploring new services with Queensland.

3.14 When the IGA commenced on 1 January 2022, Queensland delivered two services (education and health), with Queensland Department of the Premier and Cabinet (Queensland DPC) providing a central policy and coordination function. Apprenticeship and traineeship services (November 2022), Queensland Corrective Services (June 2024) and TAFE (December 2024) have since been added. In March 2025, the NIOC agreed to explore the potential delivery under the IGA of seven additional services — for example, Avian Influenza response planning.

Norfolk Island Regional Council

3.15 Infrastructure and the NIRC must develop a business case to include a new service or function. The business case sets out the terms and conditions, including resourcing requirements, fee structures and costs. Infrastructure and the NIRC must then agree to the business case before including the new service in the service schedule. In July 2022, four new services were included in the service schedule but Infrastructure did not develop a business case before these new services were included. In July 2025, Infrastructure advised the ANAO it ‘relied on regular engagement and operational review mechanisms’, including its monthly meetings with the NIRC and annual reviews of the service schedule. Infrastructure does not consistently record meeting minutes or outcomes of the monthly meetings with the NIRC. Infrastructure further advised that the annual reviews are completed informally.

Service delivery budgets

3.16 Under the IGA with Queensland, state agencies submit a budget for each service to Infrastructure for approval.³¹ State agencies must provide an annual statement of expenditure by October each year to acquit expenditure against the budget. For 2024–25, Queensland complied with these budget requirements.

3.17 The budget for the NIRC is set out in the service schedule to the service delivery agreement. Infrastructure budgeted $3.5 million for 2024–25 and $2 million for 2025–26. In addition to the service schedule, under the service delivery agreement Infrastructure must provide financial assistance grants that NIRC may allocate at its discretion.³² The service delivery agreement sets out that this amount is to be paid to the NIRC by 30 September each year.³³

Are there fit-for-purpose governance and communication arrangements in place to manage risk and escalate issues?

Governance arrangements

3.18 Infrastructure manages the governance arrangements of service delivery for Norfolk Island through:

• day-to-day management by the branches within the Territories Division;
• internal governance forums within the Territories Division; and
• governance forums under the IGA with Queensland and the service delivery agreement with the NIRC.

Norfolk Island and Mainland Territories Branch

3.19 The Norfolk Island and Mainland Territories Branch of the Territories Division is responsible for policy and service delivery to Norfolk Island. The branch has staff located in Canberra and Brisbane and a smaller team based on Norfolk Island. Brisbane-based contract managers are responsible for overseeing the agreements with Queensland, the NIRC and private providers. Norfolk Island staff are responsible for operations including management of heritage sites, maintenance of assets, managing on-island relationships and meeting regularly with the NIRC and other private providers. The Territories Division governance forums outlined in Table 2.3 also cover service delivery in Norfolk Island.

Governance arrangements with Queensland

3.20 The IGA governance framework and guide outline governance arrangements for Queensland’s delivery of services to Norfolk Island. The corresponding toolkit includes procedures, templates and the terms of reference for individual governance forums.³⁴ The governance arrangements for the IGA include three levels of governance committees, as set out in Table 3.4.³⁵

Table 3.4: Governance forums for intergovernmental partnership agreement with Queensland Government

Source: ANAO analysis of Infrastructure records.

3.21 The IGA governance framework and guide provides that the Queensland DPC coordinates Queensland’s involvement with the IGA. Functions are set out in a central policy and coordination schedule to the IGA.

Governance arrangements with the Norfolk Island Regional Council

3.22 The governance arrangements for the service delivery agreement with the NIRC are set out in a governance document. The document outlines the decision-making framework, governance forums and reporting requirements. The governance forums are set out in Table 3.5.

Table 3.5: Governance forums with Norfolk Island Regional Council

Note a: In December 2021 the governing body of the NIRC was dismissed and a NIRC Administrator was appointed for three years as part of interim administrative measures. On 6 December 2024 the Minister for Regional Development, Local Government and Territories announced the new governance model for Norfolk Island and appointed two new NIRC administrators.

Source: ANAO analysis of Infrastructure records.

3.23 Infrastructure advised the ANAO in July 2025 that it does not take minutes for the situation report meetings. Infrastructure contract managers (rather than the assistant secretary) hold service delivery agreement meetings with the NIRC. Infrastructure started documenting meeting outcomes from January 2025 and has recorded outcomes from three of the 2025 meetings.

3.24 Infrastructure’s records of outcomes and decisions from meetings with the NIRC and other key stakeholders is not consistent or complete. Record keeping is particularly important given that it uses these governance committees and operational discussions to manage risk and performance of agreements.

Risk management

Shared risk

3.27 The IGA governance framework and guide sets out Infrastructure and Queensland’s approach to risk management. The guide provides that, while the Australian Government is ultimately responsible for ensuring the availability and quality of services to Norfolk Island, the Australian Government and Queensland have a shared responsibility to manage risks associated with service delivery. The framework covers the principles for risk management, approach and reporting requirements.

3.28 Infrastructure’s service delivery agreement with the NIRC included a requirement that NIRC keep a risk register and prepare a risk report as part of the reporting requirements. NIRC has not prepared this register nor completed reporting. Infrastructure advised the ANAO in July 2025 that the risk register is in development.

Program risk register

3.29 The Territories Division has developed a divisional risk register that outlines the high-level risks to service delivery to the territories, including Norfolk Island (see paragraph 2.25). The risks covered in the risk register also apply to Norfolk Island. The work, health and safety (WHS) risk register described in paragraph 2.26 also applies to Norfolk Island service delivery.

3.30 As with the IOTs (see paragraph 2.24) Infrastructure manages risks and issues to service delivery through operational, business-as-usual mechanisms. Infrastructure should strengthen its risk planning and management, including shared risk with the NIRC, documenting its strategies to mitigate longer-terms service delivery risks and regularly reviewing and updating its strategic risk assessment to capture emerging and future risks (see Recommendation no. 1 at paragraph 2.29).

Community consultation and engagement

3.31 Infrastructure states on its website that it is committed to ‘to open communication and engagement with Norfolk Island, working with the community to achieve mutually beneficial outcomes.’ To support consultation, Infrastructure:

• developed two strategy documents to guide its approach to community engagement on Norfolk Island — a 2019 community engagement framework it developed with contributions from members of the Norfolk Island community³⁶ and a 2023 community consultation and engagement strategy for its partnership agreement with Queensland;
• published fact sheets, summaries and lists of frequently asked questions about its service delivery on its website and through media releases.³⁷ Infrastructure has also published consultation papers and draft laws for public comment;
• established the Norfolk Island Governance Committee, which in addition to advising on governance-related matters would function as a ‘key channel for community engagement on the design and delivery of government services’; and
• receives feedback from staff located on the island or those who travel to the island.

Norfolk Island Governance Committee

3.32 The Norfolk Island Governance Committee (NIGC) is made up of the Administrator for Norfolk Island, a representative from Infrastructure and the Queensland DPC and three elected Norfolk Island community representatives. The NIGC meets quarterly and holds additional meetings as needed. Outcomes and status of the matters considered at the NIGC are published on the NIGC’s and Infrastructure’s websites.³⁸ As at July 2025, the NIGC meetings have focused on the new governance model (see footnote 6).

3.33 On 1 November 2023 the NIOC agreed to establish formal two-way communication with the NIGC ‘to ensure that we are all progressing towards solutions that will provide benefits to the Norfolk Island community.’ The NIOC has been updated on the NIGC at its meetings on 23 February 2024, 16 May 2024 and 1 December 2024. The meetings covered the proposed new NIGC governance model and feedback from community consultation on matters including local government legislative powers. As at July 2025, the NIOC has not updated the NIRC on discussions.

Role of the Administrator

3.34 The Administrator of Norfolk Island (the Administrator) is appointed by the Governor-General of the Commonwealth of Australia. The Administrator is a representative of the minister, engages and advocates for the community, facilitates communication between the community and stakeholders and has a range of functions relating to the delivery of government services on the island.³⁹ The Administrator prepares a newsletter for the Norfolk Island community, which is posted on Infrastructure’s website. It provides an update from the Administrator and information on past and upcoming events.

3.35 Infrastructure and the Administrator hold fortnightly meetings during which both parties provide operational updates. In addition, in November 2023, the Administrator provided community feedback to the NIOC, for example, on health service delivery and the aged care services provided at the hospital.

Complaints

3.36 Infrastructure advised the ANAO in July 2025 that it does not have an overall, formal complaints management framework for Norfolk Island. It noted that community members can submit complaints through different channels including the departmental website, the Administrator, service providers or the minister’s office. As with the IOTs, Infrastructure should monitor complaints on service delivery to inform ongoing decisions on the effectiveness of the arrangements (see paragraph 2.43).

Does Infrastructure effectively monitor and seek assurance that services are being delivered in line with the arrangements?

Intergovernmental partnership agreement with the Queensland Government

3.37 Infrastructure and Queensland’s overarching commitment is that services under the IGA will be delivered to ‘standards that are equal to or above current standards, comparable with similar mainland remote communities, considering the current availability of services, existing infrastructure and other factors unique to Norfolk Island’.

3.38 The description of service standards in each service schedule is high-level. For example, the performance expectation for the apprentices and traineeship service schedule is:

Providing the full range of support services for Norfolk Island apprenticeships and traineeships that the States provides in Queensland… having regard to

a) the remote location, the unique needs of and size of the community, and other constraints on workforce availability and the provision of Services;

b) the role of other agencies in the maintenance and administration of the Services on Norfolk Island;

c) the legislative and regulatory framework relevant to the provision of the Services; and

d) the interdependencies between the Parties in the implementation of the governance arrangements to support service provision to the Norfolk Island community.

3.39 The service schedules do not include specific measures or targets on which Queensland must report on. The IGA outlines that ‘in many cases, certification by an appropriate authority in the Service Delivery Agency that the services have been delivered to a similar standard as services delivered in remote areas of Queensland will be sufficient evidence for the Commonwealth that Schedule commitments have been fulfilled.’ Queensland does not report on whether it has achieved the standard in its reporting to Infrastructure. In the absence of setting performance measure or targets or assurance/reporting from Queensland, Infrastructure is unable to determine if performance expectations are being met.

3.40 Infrastructure receives reporting on the IGA services through an annual report and quarterly dashboard reports on the activities outlined in the work plan. Table 3.6 provides details on the reports for 2024.

Table 3.6: Intergovernmental partnership agreement performance reporting requirements

Note a: Infrastructure, Norfolk Island State Services Partnership, available from https://www.infrastructure.gov.au/territories-regions-cities/territories/norfolk_island/norfolk-island-state-services-partnership [accessed 23 June 2025].

Source: IGA documentation and ANAO analysis.

Norfolk Island Regional Council

3.41 Under the service delivery agreement, Infrastructure and the NIRC agreed to ‘establish and continually improve performance management’ and that performance management ‘will be equitable and mutually beneficial’.

3.42 The NIRC provides Infrastructure with quarterly performance reporting against the KPIs for each service in the service schedule. The agreement with the NIRC includes around 140 KPIs for the 19 services it delivers. As identified in Table 3.2, these KPIs do not enable Infrastructure to make an assessment on the performance of service delivery against targets. Infrastructure has identified this issue and advised the ANAO in July 2025 they are reviewing the performance framework as part of the service delivery agreement ‘uplift project’. Table 3.7 provides an example of KPIs included in the service schedule for 2024–25 and corresponding reporting.

Table 3.7: Example of key performance indicators from the Norfolk Island Regional Council 2024–25 service schedule

Note a: This is one of four KPIs for this function under the 2024–25 service schedule.

Note b: The NIRC classified KPIs not met as either ‘some disruption’ or ‘major disruption’.

Note c: BESY Energy is the energy retailer for Norfolk Island.

Source: ANAO analysis of performance reporting.

3.43 The ANAO assessed the four quarterly performance reports from NIRC between May 2024 and February 2025 and found:

• they were not always delivered on time, complete or signed off by the relevant officer;
• Infrastructure held monthly service delivery agreement meetings with the NIRC. Agenda items were operational updates and none focused on performance; meeting minutes for these meetings have only been kept since January 2025; and
• the NIRC reported a slight downward trend of KPIs being on track, with 92.2 per cent of KPIs being on track for quarter 3, 2023–24; 88.7 per cent on track for quarter 4, 2023–24; 79.9 per cent for quarter 1, 2024–25; and 79.2 per cent for quarter 2, 2024–25.

Private providers

3.44 Four of Infrastructure’s five contracts with private providers for service delivery to Norfolk Island include performance expectations or KPIs. Each contract requires that Infrastructure must be satisfied that services have been performed in line with the contracted requirements before making payment for services.

3.45 The ANAO reviewed a sample of the performance reporting required under the contracts for 2024–25. Of the contracts reviewed, Infrastructure did not receive reporting against the KPIs as required for three of the four arrangements. Instead, it received activity-based reporting that it then discussed at meetings with the providers. For example, St John Ambulance NSW provided Infrastructure with monthly reports that covered information on staff, total hours, an overview of training provided and planned, operational activity (number of emergency calls and medical evacuations) by month, and community engagement. These monthly reports did not include performance against the agreed 15 KPIs.

3.46 Infrastructure does not use the performance information provided by Queensland, the NIRC, private providers and other service delivery partners to determine whether they were providing quality services. Infrastructure should ensure that the performance framework for the arrangements on Norfolk Island incorporates appropriate performance measures, reporting and follow up actions where required (see Recommendation no. 2 at paragraph 2.51).

Does Infrastructure undertake evaluations of the service delivery arrangements for Norfolk Island?

3.47 Norfolk Island’s governance arrangements have been the subject of several reviews, including parliamentary inquiries, financial audits and performance audits. For example:

• Auditor-General report No. 43 of 2018–19, Design, Implementation and Monitoring of Reforms to Services on Norfolk Island;
• 2019 Norfolk Island inquiry, Commonwealth Grants Commission, November 2019, requested by Infrastructure to provide costing related to state-type government and local government;
• Public Inquiry into the Norfolk Island Regional Council, Carolyn McNally, 4 November 2021 — requested by the minister to consider whether the NIRC had managed its finances in accordance with relevant principles and practices and the governing body had complied with relevant obligations;
• In 2022, to assist with planning Infrastructure engaged a consultant to undertake a detailed mapping of service delivery on Norfolk Island and consult with service providers to identify gaps. The review did not assess the arrangements against service delivery needs; and
• Restoring Democracy — Report of the inquiry into local governance on Norfolk Island — Joint Standing Committee on the National Capital and External Territories, November 2023.

3.48 Infrastructure has not undertaken an overall program evaluation of service delivery to the territories or Norfolk Island. Its corporate plan includes two performance measures that apply to service delivery to Norfolk Island (see paragraph 2.70).

Evaluation requirements for intergovernmental agreement with Queensland

3.49 The IGA requires that the parties formally review the agreement after two years of operation and evaluate and review the agreement every subsequent five years. The NIOC is to set the timing, scope and mechanism of the reviews. The first formal review (due in 2023) has not been undertaken. Infrastructure advised the ANAO in April 2025 that it will conduct the review internally in 2025.

3.50 In preparation for the formal review, Queensland consulted with state agencies, Queensland DPC and Infrastructure staff between January and March 2024. The review sought to understand stakeholder perspectives on the performance of the IGA in relation to decision making, risk management, cost recovery processes, legal framework and key achievements since the inception of the IGA. A summary of themes from the consultation was tabled at the NIOC in May 2024.

3.51 The IGA includes performance reporting requirements for each service schedule. Queensland and Infrastructure are to jointly review:

• individual service schedules to identify and recommend amendments to NIOC; and
• the legislative framework to ensure it supports the delivery of services as outlined in the individual service schedule.

3.52 The relevant working group for each service must complete the reviews and provide them to the NIOC. Infrastructure advised ANAO in July 2025 that these reviews had not been finalised and ‘work remains in the preliminary stages’.

Evaluation requirements with the Norfolk Island Regional Council

3.53 The service delivery agreement between Infrastructure and the NIRC includes a requirement that both parties ‘meet and review its operation biannually for the duration of the agreement’. Infrastructure advised the ANAO in April 2025 that:

Evidence of a formal review is unclear from our records. We know that over time amendments have been made via an exchange of letters between parties.

3.54 Under the service delivery agreement, the NIRC and Infrastructure are responsible for reviewing financial performance for each service and agreeing to any funding changes that might have been required in 2022–23 and 2023–24. This was to be based on a consideration of changes in service levels and risks, revenue and expenditure data from the previous year and projected revenue and expenditure for the coming year. Infrastructure did not undertake this process.

3.55 Infrastructure should conduct periodic reviews of service delivery arrangements to ensure they remain fit for purpose, meet service delivery needs and achieve value for money (see Recommendation no. 3 and paragraph 2.67).

Appendix 1 Entity response

Appendix 2 Improvements observed by the ANAO

1. The existence of independent external audit, and the accompanying potential for scrutiny improves performance. Improvements in administrative and management practices usually occur: in anticipation of ANAO audit activity; during an audit engagement; as interim findings are made; and/or after the audit has been completed and formal findings are communicated.

2. The Joint Committee of Public Accounts and Audit (JCPAA) has encouraged the ANAO to consider ways in which the ANAO could capture and describe some of these impacts. The ANAO’s corporate plan states that the ANAO’s annual performance statements will provide a narrative that will consider, amongst other matters, analysis of key improvements made by entities during a performance audit process based on information included in tabled performance audit reports.

3. Performance audits involve close engagement between the ANAO and the audited entity as well as other stakeholders involved in the program or activity being audited. Throughout the audit engagement, the ANAO outlines to the entity the preliminary audit findings, conclusions and potential audit recommendations. This ensures that final recommendations are appropriately targeted and encourages entities to take early remedial action on any identified matters during the course of an audit. Remedial actions entities may take during the audit include:

• strengthening governance arrangements;
• introducing or revising policies, strategies, guidelines or administrative processes; and
• initiating reviews or investigations.

4. During the course of the audit, the ANAO did not observe changes in the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts approach to the audit topic.

Appendix 3 Key themes raised by stakeholders during fieldwork for Indian Ocean Territories

Table A.1: Key themes raised by stakeholders during audit fieldwork

Source: ANAO record of stakeholder meetings.