SALARY SACRIFICING

The Hon. R.L. BROKENSHIRE (14:30): Farmers are very hardworking, and I am pleased to hear that the Minister for Primary Industries is supporting farmers. I seek leave to make a brief explanation before asking another minister, namely, the Minister for Industrial Relations, questions regarding salary sacrifice.

Leave granted.

The Hon. R.L. BROKENSHIRE: I read with interest an article entitled 'Holden link a factor in salary tender's success', featuring a statement from the minister. The article explains that a company known as Maxxia had won sole contractor rights to provide salary sacrificing arrangements to approximately 30,000 of South Australia's 100,000 public servants.

For 12 years, there has been a panel of service providers for this system, comprising Remunerator and Maxxia, since 1998, and then Smart Salary was added to the panel in 2008. That panel has operated to provide salary sacrificing benefits to public servants, which can be a significant benefit to Public Service employees, particularly those in the health sector. I understand that, roughly speaking, the market share of the panel providers to date is 60 per cent Maxxia, 30 per cent Remunerator and 10 per cent Smartsalary.

The article attributes statements to the minister that Maxxia has been selected by the government after—and again I quote—a 'comprehensive procurement process and represented the best value proposition to government and employees using the service'. My questions are:

1. Why has the government decided to end 12 years of choice in panel providers when the trend nationwide is towards panels and not sole providers?

2. Is the minister aware that this decision now positions South Australia as the only state with a sole provider for these services?

3. What evidence can the minister present to the parliament that Maxxia had achieved the best relative performance standards and relative pricing points, including fees and brokerage, to justify the claims the minister made in the article?

4. While the minister investigates this issue, will he commit to the other panel companies being permitted to continue holding their significant customer base beyond 30 June this year until such time as the minister and his government have demonstrated the merits of the government's decision?

The Hon. R.P. WORTLEY (Minister for Industrial Relations, Minister for State/Local Government Relations) (14:33): On 29 August 2011, the government approved an open procurement process for the ongoing South Australian government salary sacrifice arrangements. The procurement was conducted by Public Sector Workforce Relations, with oversight from a portfolio steering committee with an independent chair and comprising representatives from Department of Treasury and Finance, Department of Health and Ageing, Shared Services SA and Public Service Workforce Relations.

There was an open market call from 13 October until 16 November 2011. Following a procurement process, a contract was entered into with Maxxia Pty Ltd as the sole external service provider for six years from 1 July 2012. The benefits and improvements in the new arrangements for all those employees currently salary packaging include:

Lower fees. The salary packaging fee will be reduced.

Simpler. For many people the need for paper claims will be eliminated. Management of salary sacrifice arrangements will become simpler.

Service. Maxxia will be required to meet services standards for the management of salary packages. These performance standards will be communicated to each individual. A customer advocate will oversee Maxxia's performance and intervene where necessary. Individual employees can also contact the customer advocate if they consider their customer service representatives have not met these commitments.

Vehicle leasing. A vehicle lease continues as normal with the current provider. While the administration will be transferred to Maxxia at a later date, the current lease will operate until expiry. From 1 April, if an individual chooses to enter into a novated lease for a new General Motors Holden vehicle, Maxxia will provide access to preferential pricing.

Taxation. The ability to salary sacrifice is a function of federal taxation provisions and requires accurate taxation reporting. Maxxia has well established processes and systems in place. In addition, a dedicated taxation specialist will be appointed to assist agencies with reporting requirements for salary sacrificing.

There will be simplified payroll and taxation administration for public sector agencies and Shared Services SA.

Maxxia will progressively transition the existing South Australian government salary sacrifice business of the two current unsuccessful service providers (Remunerator and Smartsalary). This will take place over the next few months and PSWR will coordinate the transition and implementation process in consultation with agencies and Shared Services SA.

Maxxia has advised that it is committed to a significant increase in local resources pursuant to their appointment as the sole provider to South Australia. They have advised that they are presently recruiting an additional five customer education managers, who will undertake on-site activities, including induction sessions. These staff will be supported by an additional customer education coordinator and an additional customer service officer. This will bring Maxxia's total new resource team to seven within about the next 60 days.