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Legislative Council - Fifty-Second Parliament, Second Session (52-2)
2012-07-19 Daily Xml
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SALARY SACRIFICING

The Hon. R.I. LUCAS (14:21): I seek leave to make an explanation prior to directing a question to the Minister for Industrial Relations on the salary sacrifice scandal.

Leave granted.

The Hon. R.I. LUCAS: In response to some questions yesterday the minister made a series of claims relating to a fraud scandal involving companies associated with the company to whom the minister and his agencies gave a monopoly contract for the provision of salary sacrifice services for all public servants in South Australia. First, the minister sought to downplay the significance of this fraud scandal when he said that the fraud transactions were 'for very small amounts'. The fact is that the Queensland minister has publicly identified that the very small amounts the minister is referring to totalled $492,763.

The second claim the minister made was that 'the suspected fraudulent activity commenced some years prior to McMillan Shakespeare's acquisition of RemServ'. The fact is a simple Google search shows that McMillan Shakespeare actually took over RemServ in 2004, almost eight years ago. If one is to believe the minister, the fraudulent activity within companies associated with the company to whom he has given a monopoly contract in South Australia have been going on for almost 10 years before being known to the company in late 2010 and before being publicly revealed in the middle of this year. Of course, an alternative explanation is that the minister's claim was not true.

An inspection of the tender documents issued by the minister and his agency for the tender process in late 2011 shows that on page 7 of part A of that document the minister and his agency said:

The respondents will be evaluated against general criteria—

and amongst those are listed—

prior performance, risk management and quality systems.

If one looks at part C of the tender specification documents, on page 11, in terms of the response schedule required of the tenderers, they are 'required to provide other information as necessary for full financial disclosure under this RFP (request for proposal), including any subsequent material events which are not otherwise reflected in the attached statements'.

Page 15 of part D says, under the heading 'Information required on corporate governance and related matters', that they must provide detailed responses to effective corporate management and oversight, ethical and responsible decision-making, integrity of financial reporting, recognition and management of risk. Finally, on page 42 of part D of the response required from tenderers, under the heading of Organisational Ethical Employment and Subcontracting Policy, the tenderer is required to:

Provide details of compliance with all relevant commonwealth and state legislation with respect to conditions of employment and all other matters for all persons employed or utilised in the supply processes outlined in your response that are produced in Australia.

Those brief areas, and many others within the tender documents, make it clear that there is a requirement for tenderers to reveal details of significant fraudulent activity along the lines that have now been publicly identified. My questions to the minister are:

1. Did Maxxia reveal details of this fraudulent activity in a sister company at any stage in the tendering process in late 2011? In particular, did they reveal it in answer to the sections of the tender documents which I have referred to already in my explanation when they responded in their tender document, before they were given the contract by the minister and his agency?

2. Did the minister knowingly mislead the house yesterday when he claimed: 'the suspected fraudulent activity commenced some years prior to McMillan Shakespeare's acquisition of RemServ'?

3. If the minister is standing by that particular claim, does he expect members in this chamber and the community to believe that he has given a contract to a company where fraudulent activity was going on for a period of almost 10 years in that sister company and it perhaps not being revealed to the government during the tendering process in late 2011?

The Hon. R.P. WORTLEY (Minister for Industrial Relations, Minister for State/Local Government Relations) (14:27): It is not unusual for the Hon. Mr Lucas to get up and make statements of a slanderous nature. It is also a part of his campaign of scaremongering. He did it the other day in regard to Ferro Con. At a time when people should be respecting the sensitivities of what was happening, the Hon. Mr Lucas tried to score political points by casting some doubt over the legitimacy of the prosecution.

As I said later in my ministerial statement, there were no problems at all and the Crown solicitors were fully aware of that issue with regard to the Corporations Act and there was not an issue. It is not unusual for the Hon. Mr Lucas to get up and make outrageous and sometimes the most ridiculous statements just for political pointscoring. With regard to salary sacrificing arrangements, Maxxia has advised the public works sector of the fact that there was suspected fraud activity.

The Hon. R.I. Lucas: When?

The Hon. R.P. WORTLEY: I told you yesterday.

The Hon. R.I. Lucas: No, you didn't.

The Hon. R.P. WORTLEY: Don't interrupt while I am talking. This fraud came to light through McMillan Shakespeare's internal auditors. They detected it as part of their routine risk and compliance review activities. It came out that there were 61 payments. When you consider that the Hon. Mr Lucas is talking about $500,000, 61 payments is about $9,000 to $9,500. Those are not big cheques when you are talking about a company with such big amounts of money. They obviously slipped under the radar for a while, but they were picked up in a routine compliance activity. They were picked up and they were dealt with. If anything, we should have confidence in the fact that their processes are working well. I know the Hon. Mr Lucas does not want to hear that.

Maxxia has been a major provider for these salary sacrificing arrangements. Out of the three, they are the major one, and they have been operating very diligently and very efficiently. I know it upsets the Hon. Mr Lucas that the government has taken a position that will save public servants' money and that they have such good compliance activities. I look forward to our public servants enjoying many years of good salary sacrificing arrangements.

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