CONSTRUCTION INDUSTRY LONG SERVICE LEAVE (MISCELLANEOUS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 18 October 2012.)

The Hon. R.I. LUCAS (16:57): The Liberal Party supports the second reading of the bill. It seeks to extend the board's power to vary the levy rate within prescribed parameters. The levy is defined in the act as a percentage of the total remuneration of employers and construction workers. Currently the levy rate can be adjusted on the advice of the actuary who must be a fellow or accredited member of the Institute of Actuaries of Australia. Any adjustment is then subject to the board providing a report to the minister recommending a change to the levy rate. The levy rate is then prescribed by regulation. A copy of the report must be laid before both houses of parliament.

This bill gives the board the capacity to vary the levy rate upon the recommendation of the actuary so long as the variation does not take the levy above 3 per cent. The proponents of the legislation believe that this will increase efficiency in changing the levy rate, providing greater flexibility for the board to protect the fund from potential losses of levy income and ensuring employers are paying levies appropriate to the relevant financial position of the fund.

The board will be required to inform the minister of its intention to vary the levy rate and there will be a 14-day grace period to allow the minister to seek any clarification from the board, if necessary. The government has advised that, since 1 January 2008, the levy rate has been fixed at 2.25 per cent and has never been higher than 2.5 per cent. Under this bill, the levy rate can go up and down, but it cannot go above 3 per cent.

The opposition has been advised that the bill is supported by Business SA, the Australian Industry Group, the Master Builders Association and the Housing Industry Association. Whilst we contacted SA Unions looking for their response, we did not receive any response from SA Unions, but the government and others who claim to be aware of SA Unions' position indicate that they also support the bill.

AIG did indicate to us that it had had some concerns in the lead-up to the introduction of the bill. They included the process by which the levy increases are implemented and the prevention of expansion of the coverage of new areas. In relation to the process to increase or decrease the levy rate, AIG noted that any recommendations of the board need to be approved by the minister and proposed that, once the minister receives such a recommendation, he or she should conduct a wider consultation process. This was because not all stakeholders are represented on the board, despite being asked to put forward nominations to the board. The final decision remains that of the minister.

AIG also asked that the minister's second reading speech, as well as the explanatory memorandum of the bill, would outline that the express intent of new schedule 5 would ensure that the coverage of the Construction Industry Long Service Leave Act 1987 was not expanded from its coverage prior to amendment by the bill. AIG has informed the Liberal Party that it is satisfied that these matters were satisfactorily addressed by minister Wortley's second reading speech on 18 October. For those reasons, the Liberal Party supports the legislation.

The Hon. T.A. FRANKS (17:01): The Greens rise to support the Construction Industry Long Service Leave (Miscellaneous) Amendment Bill 2012. Briefly, this bill will see a series of minor amendments made to the Construction Industry Long Service Leave Act 1987. This act, a precursor of which was established in 1977, is similar to others operating in all other Australian states and territories and allows for workers in the construction industries to aggregate long service leave entitlements according to the length of service that they have in the industry as a whole rather than with any single employer.

The bill seeks to improve the efficiencies in the administration of the scheme that is currently managed by the Construction Industry Long Service Leave Board and also to extend the board's current powers to vary the levy rate within the prescribed parameters but not above 3 per cent. This will allow for greater flexibility in responding to changes in circumstances to protect the fund and ensure employers are contributing appropriately. It also removes the ambiguities surrounding the predominance rule, whether or not an employer is liable for payment.

We understand, as the opposition also indicated, that this bill has been supported by those relevant stakeholders, including the Australian Industry Group, who, I also understand, received undertakings from the minister regarding clarifications in terms of potential increases to the levy, but also employee and employer representatives, including Business SA, SA Unions, SafeWork SA and various construction industry groups, including the Civil Contractors Federation, support this bill.

The Greens commend this industry for actually addressing the issues of such a transient industry and affording its workers the ability to access long service leave in these particular conditions. Certainly, this is something that would be welcomed in other sectors. I know that the community sector has previously looked to have some sort of portable long service leave program and certainly as jobs become contract and short term, and people in fact do not start their working life in one particular company or industry even, it would be advantageous for all Australians to be able to access portable long service leave. With that, the Greens commend this bill to the council.

The Hon. A. BRESSINGTON (17:03): I rise to indicate my support for the Construction Industry Long Service Leave (Miscellaneous) Amendment Bill. Essentially, the bill proposes three key amendments to the act. Firstly, the Construction Industry Long Service Leave Board would be granted the ability to alter the employer contribution levy rate up to a maximum of 3 per cent. Currently, the levy is altered on the board's recommendation by regulation, which last occurred, I believe, in 2008 when it went from 2.5 per cent to 2.25 per cent.

However, industry understandably complained of the delay between the board's recommendation to lower the levy rate and the minister promulgating the regulation some six months later. To overcome this, the board itself will be able to vary the levy rate provided it notifies the minister within 14 days of its intention to do so.

Secondly, the bill seeks to update the schedule of awards to which the act applies to reflect the new modern awards. Whilst the new awards are referred to in schedule 3, it is schedule 5 which achieves the intention of restricting the scheme to those employees who would have been covered prior to 31 December 2009; that is, the modern awards do not expand nor narrow the scope of employees covered by the scheme.

Thirdly, the bill seeks to address concerns with the existing predominance rule as provided for in section 5(1)(c)(i). The board has identified that the 'whole period of employment' test can lead to situations where employers have been making contributions for an employee who has not worked at least half of their employment on-site and, as such, are entitled to a refund of their contribution. The bill addresses this by replacing the predominance rule with a new scaled rule that requires less predominance on-site the longer the employee works.

As the minister is aware, my office identified a concern with wording of the proposed new predominance rule, specifically new subsection (B). Essentially, subsection (B) deals with employees who have worked longer than a month but less than three months and is written to presume that if they worked predominantly on-site in the first month, then their employer must continue making contributions to the scheme for the second and third month.

However, in doing so, the wording potentially excludes an employee who only works one week and four days of the first month on-site, but works the majority of the second and third month on-site. An example is an employee who has worked 11 weeks, seven of these on-site, but only one of which was in the first month. Unintentionally, this employee is excluded from the benefit of the scheme.

Having spoken to numerous stakeholders and employees of the board, I am satisfied that, whilst this is a possibility, in all likelihood, given modern working arrangements, this is unlikely to occur. Further, from these conversations and having spoken to parliamentary counsel, amending subsection (B) to address this concern could very well have unintended consequences of its own. As such, I have instead approached the minister and requested that subsection (B) be included in the review of the act which is foreshadowed in the board's annual report as part of its 2012-15 corporate plan. I seek from the minister confirmation during committee stage that this issue will be addressed as part of that review.

I also seek from the minister clarification as to why the other legislative amendments seemingly required to the act, as referred to by the board in this year's annual report, which states 'several provisions have been identified as out-dated and requiring amendment to accommodate changes that have occurred within the construction industry', have not been included in this bill. Whilst I know a review is scheduled, if deficient provisions have been identified, then why was this bill not utilised to address these concerns? With that said, I look forward to the minister's commitment and the passage of this bill.

The Hon. R.P. WORTLEY (Minister for Industrial Relations, Minister for State/Local Government Relations) (17:09): I would like to thank all the members for their contributions. I have a number of things that I need to say in regard to the points picked up by the Hon. Ms Bressington but I will say that in clause 1 so that we can go into committee.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. R.P. WORTLEY: I would like to thank the Hon. Ms Bressington for the point she raises regarding the potential exclusion of some workers under subsection (B) of the act. I would also like to note that the Construction Industry Long Service Leave Board considers the scenario highlighted by the honourable member to be unlikely but, nevertheless, I can reassure the honourable member that the board will be undertaking a review of the operations of the Construction Industry Long Service Leave Act 1987 as part of its 2012-15 corporate plan, and that the concern she raised will be considered as part of that review.

I will be considering any proposed amendment that results from the board's review for future introduction into parliament, including anything related to the issue raised by the honourable member. Also, the board did not request any other amendments as part of this bill. The board was happy and, indeed, keen for the amendments to progress independently of any other issues raised in its annual report, and I will continue to work with the board to consider any future amendments.

Clause passed.

Remaining clauses (2 to 9) and title passed.

Bill reported without amendment.

Third Reading

The Hon. R.P. WORTLEY (Minister for Industrial Relations, Minister for State/Local Government Relations) (17:12): I move:

That this bill be now read a third time.

Bill read a third time and passed.