Southern State Superannuation (Parental Leave) Amendment Bill

Committee Stage

In committee.

(Continued from 22 March 2016.)

Clause 1.

The Hon. P. MALINAUSKAS: Firstly, I would like to acknowledge that it has been some time since we have addressed this bill in this place, but I understand there has been a fair bit of work that has gone on in the intervening period, principally around a number of questions that the Hon. Mr Lucas had. I think I have stated in this place previously that I thought they were good, legitimate questions.

I understand there has been some correspondence that has gone back and forth, or at least gone to the Hon. Mr Lucas. Most recently, there was correspondence to the Hon. Mr Lucas on the 22^nd of this month that outlined answers to a range of questions he has. I am hopeful that the government can see this committee stage through now that there are a number of answers that are on the record to Mr Lucas. If Mr Lucas likes, I am happy to transcribe that correspondence into Hansard, if that is of benefit to him; otherwise, he might want to do that himself.

The Hon. R.I. LUCAS: Given these questions were raised 18 months ago, I would like the answers from the government that have been conveyed to me by way of letter dated 22 September 2017 to be part of the committee stage Hansard debate. So, I leave it to the minister. Either he reads the Minister for the Public Sector's letter to me onto the public record or I am happy to do it. By rights, I suspect it should be the minister to read it on behalf of the government.

The Hon. P. MALINAUSKAS: Thanks; I am happy to do that. I am just reading from a letter from the Attorney-General to the Hon. Robert Lucas, dated 22 September:

Dear Mr Lucas,

Following the last debate on the Southern State Superannuation (Parental Leave) Amendment Bill 2016, some investigations were undertaken into the scheme, and the implementation of the Statutes Amendment and Repeal (Superannuation) Act 2012.

I offer the following by the way of background.

The payment of superannuation for State Government employees is governed by the Southern State Superannuation Act 2009, and Section 3 of the Triple S Act contains the definition of 'salary'.

The 2012 Act made amendments to the definition of salary to exclude state parental leave payments. This brought the Triple S Act into line with Commonwealth superannuation guarantee legislation, which explicitly excludes parental leave payments from the salary definition for the purposes of employers calculating their minimum superannuation guarantee requirements. This was done as the Government generally seeks to align itself to the minimum requirements under Commonwealth superannuation law.

Despite the 2012 Act, it was subsequently discovered that superannuation continued to be paid on state parental leave as a result of administrative error. This was initially discovered by a Super SA employee in December 2014. This led to an investigation of the status of payments under the 2012 legislation between Shared Services and Super SA.

This issue was rectified in April 2015 in relation to employees on the main payroll systems used by the Government. Employees on some of the smaller payroll systems however continued to be paid this superannuation on parental leave payments.

Upon review, it was apparent that the error came about as a result of ineffective communication between the government parties involved, which has now been addressed. The steps that have been taken to rectify this situation include enhanced communication between Super SA, Shared Services SA and impacted agencies for all legislative changes. Shared Services SA has also appointed a designated liaison officer who manages communication with key stakeholders. It is worth noting that Shared Services SA is an agent of the relevant agencies, and cannot independently change employee pay arrangements.

In May 2015, Super SA became aware that a cabinet submission was being prepared by the OPS to draft and introduce legislation to repeal the 2012 legislation. This cabinet decision to legislatively repeal the 2012 legislation was made in August 2015. When it became apparent through the decision of Cabinet to rescind the 2012 legislation, it was determined that employees on other payroll systems who were still being paid superannuation on Parental leave would continue to be paid as such.

It was in January of 2016, following the Cabinet determination to legislatively repeal the 2012 Act that I took over from Minister Close as the Minister for the Public Sector.

Since the 2012 amendment any superannuation paid in respect of State parental leave payments is beyond what is required of the State as an employer obliged to pay superannuation under the Triple S Act. Although the overpayments were not made in breach of superannuation or industrial laws, the payments, arising as they did from a technical error in the application of the amendments to the Triple S Act, were unauthorised.

As far as the existing enterprise agreement is concerned, the Government did not have specific legal advice on the relevant enterprise agreement in existence at the time in the context of the removal of parental leave payments from salary for superannuation purposes.

I do however note that the enterprise agreement is silent on the payment of superannuation on parental leave payments. I would agree with the principle that the terms of an enterprise agreement are technically overridden by the terms of the relevant statute.

Even though the Commonwealth legislation provides that superannuation need not be paid on parental leave payments, this legislation sets minimum amounts that must be paid for superannuation. There is no restriction on payment being made beyond these minimum requirements.

It is worth noting that some other public sector jurisdictions do pay superannuation on paid state parental leave, including Queensland, Victoria, Tasmania and Western Australia. The Government is not aware of the legal advice obtained by other States, but in choosing to make superannuation guarantee payments on parental leave, they would not appear to have been acting outside of the federal legislation. This is on the basis that the Commonwealth legislation sets out minimum payments only and employers may choose to make superannuation payments over and above these minimums. New South Wales has determined to restrict superannuation to Commonwealth minimal entitlements so does not pay superannuation on parental leave.

On this basis the Government has determined to pay superannuation on State based parental leave, despite the Commonwealth legislation. In particular, this Bill seeks to amend the Triple S Act to rescind the 2012 amendments. The government is seeking to make this legislation retrospective so that all employees are treated equitably. The government has chosen to legislatively repeal the 2012 legislation and in doing so has decided to reinstate the position prior to the 2012 legislation.

As a result of this Bill, superannuation paid in error will not need to be repaid by those employees who were paid superannuation on parental leave until the error was detected. I can indicate that there are 4,062 employees who fall into this category. In agencies where the error was addressed, employees who subsequently received state parental leave payments will need to be paid superannuation in relation to that leave. I can indicate that approximately 3,800 employees will be entitled to this benefit. These back payments will equate to approximately $6.75 million.

On the passage of this Bill, back payments of superannuation will be facilitated by Shared Services SA. Any employees who have left Government in the meantime will be notified of monies owing to them and will be asked to nominate a superannuation fund into which payment will be made.

Clearly the way we have arrived at this point is not ideal, but I have undertaken investigations since the last time we were debating this Bill, and I am confident that the appropriate arrangements have been put in place so that an error such as this does not occur again.

Yours Sincerely

John Rau

Deputy Premier

Minister for Public Sector

The Hon. R.I. LUCAS: I have been advised by way of text message from a staff member of the Minister for the Public Sector—and I ask that this be confirmed on the record—that the annual cost or saving of the original 2012 bill, if it had been implemented, was $3.7 million per year. Can the minister confirm the accuracy of that particular figure?

The Hon. P. MALINAUSKAS: My advice is yes, I can confirm that.

The Hon. R.I. LUCAS: The minister's letter that minister Malinauskas has now read onto the public record, and I thank him for that, says that back payments will equate to approximately $6.75 million. The letter also indicates that, upon the passage of this bill, those payments will be made. Can I assume that the government has budgeted the $6.75 million in this financial year as part of its 2017-18 budget contingencies?

The Hon. P. MALINAUSKAS: I am advised that individual agencies that are affected will have to meet that cost out of their own budgets.

The Hon. R.I. LUCAS: For 2017-18, has Treasury increased the appropriation for individual agencies for the component of the $6.75 million back pay, or is this just to be added to the savings task of individual agencies?

The Hon. P. MALINAUSKAS: My advice is that Treasury has not increased the appropriation as a result of this.

The Hon. R.I. LUCAS: I will just make some concluding comments. All I can say is that this is just symptomatic of the financial mismanagement and incompetence of the Weatherill Labor government and its ministers, including minister Rau and all those who have been responsible in relation to this. Put simply, what we have here is a situation where this government introduced legislation back in 2012 which said and directed that if the parliament passed the legislation, which it did, certain things should happen, that is, certain payments should not be made, a saving of $3.7 million a year. What minister Malinauskas has read out on behalf of minister Rau is that this government and its agencies just ignored the passage of an act of parliament.

We as an opposition did not introduce the legislation: the government introduced the legislation. The parliament passed it and what we are being asked to accept is simply the reality that the agencies of government for which ministers are responsible just ignored the passage of the legislation and continued to make the payments contrary to the intentions of the legislation that had been passed. Whereas savings of $3.7 million a year were meant to be achieved, they did not do so. Then, two or three years later, when they discover it, what we are being asked to do, and what we are doing now, is to fix the problem retrospectively.

What is going to happen is that we have to retrospectively pay $6.75 million. I instanced in the second reading contribution nearly 18 months ago, as a former minister for education, that there were many examples where there were overpayments by the education department to teachers and education department staff and there were requirements under Treasurer's Instructions and various other government directives where you are compelled to enforce the repayment of any overpayments. Now, to cover the government's financial mismanagement and embarrassment on this issue, we are being asked to fix the problem here, and the parliament is going to fix the problem.

This issue was raised by me 18 months ago, and for the life of me, I cannot work out why it has taken the minister and the government 18 months to address it. The legislation was introduced. Questions were asked 18 months ago and the letter that has now been read into the public record was only written to me in the last couple of weeks. It has taken 18 months for all the various arms of government—Super SA, Shared Services, Treasury, Office for the Public Sector, and heaven knows how many other government agencies—to actually concoct a reply to come back to questions that have been asked in the parliament.

We now find that in addition to the significant savings tasks that government departments and agencies have outlined in various transcripts of evidence to the Budget and Finance Committee—for example, Health only recently told the Budget and Finance Committee that in the final year of the current forward estimates their savings task is $405 million—the minister has just outlined that this error of $6.75 million is going to be added to the savings task of individual departments and agencies.

I will not belabour the point at the committee stage, other than to again indicate and highlight to those who read, listen to or watch the proceedings of the parliament that if ever there was a need for further evidence to justify after 16 long years of a Labor government saying, 'Enough is enough! How much financial mismanagement, incompetence and negligence can any state or any collective of voters put up with?' the Southern States Superannuation (Parental Leave) Amendment Bill is a perfect example of the incompetence of this particular government.

I thank the minister on behalf of the minister for putting on the record the evidence of what this has cost the taxpayers of South Australia and indeed for highlighting the incompetence of this government.

Clause passed.

Remaining clauses (2 to 5) and title passed.

Bill reported without amendment.

Third Reading

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Climate Change) (16:20): I move:

That this bill be now read a third time.

Bill read a third time and passed.