ACT Long Service Leave

Authority

Statement of Intent

201718

LONG SERVICE LEAVE AUTHORITY

TheLong Service Leave Authorityis a Territory Authority established under the LongServiceLeave (Portable Schemes) Act 2009.

This Statement of Intent for 2017-18has been prepared in accordance with Section 61 of the Financial Management Act 1996.

The responsible Minister, Ms Rachel Stephen-Smith, was consulted during the preparation of the Statement of Intent.

The Statement of Intent, which focuses on the 2017-18 Budget year, has been developed in the context of a four year forward planning horizon to be incorporated, as far as practicable, into the Long Service Leave Authority’sstrategic and business planning processes.

The Long Service Leave Authority’s2017-18 Statement of Intent has been agreed between:

1

Glenys Roper

Chairperson on behalf of the Governing Board

Andrew Barr MLA

Treasurer

1

Rachel Stephen-Smith MLA

Minister for Workplace Safety and Industrial Relations

1
LONG SERVICE LEAVE AUTHORITY STATEMENT OF INTENT
/
2017-18

Contents

Purpose...... 4

Nature and scope of activities...... 4

Performance measures and targets...... 6

Employment profile...... 10

Monitoring and reporting...... 12

Financial arrangements...... 12

Attachment 1 - Organisational Chart for Long Service Leave Authority...... 36

Long Service Leave Authority

Purpose

The Long Service Leave Authority (the Authority) was established under the Long Service Leave (Portable Schemes) Act 2009 (the Act) to administer portable long service leave benefit schemes, for workers in the ACT engaged in the building and construction industry, contract cleaning industry, security industry and the community sector. The primary objectives of the Authority are to ensure that:

  • the maximum number of eligible employers and their employees are registered with theAuthority;
  • long service leave payments to employees, contractors, and reimbursements to employers, are made in accordance with the Act;
  • employers’ contribution levies are collected efficiently and effectively; and
  • long service leave funds are invested prudently, with the objective being to ensure a modest long-term surplus of assets over liabilities in matured schemes.

Nature and scope of activities

General activities

The Authority will engage in the following activities in order to achieve its stated objectives:

  • undertake daytoday operational activities, including collecting worker service credit information and levy contributions from employers, along with the processing and payment of all long service leave claims, in an accurate and timely manner;
  • investment of employer contributions to ensure there are sufficient funds to meet all long service leave payments;
  • undertake regular reviews of the Investment Plan, to keep pace with changing conditions;
  • maintain a compliance program to ensure the maximum number of eligible employers and employees are registered in the schemes; and
  • monitor the operation of its database to ensure data integrity.
Business Priorities in 2017-18

The Authority will pursue the following priorities in 2017-18:

  • review the appropriateness of the current Investment Plan and associated investment arrangements, including the strategic asset allocation;
  • assess any recommendations contained in the triennial actuarial report against current business operations;
  • maintain the focus on corporate governance reforms, particularly in relation to risk management practices, staff performance management and development processes, and workplace health and safety;
  • maintain a strong focus on business continuity and succession planning practices;
  • maintain sound working relationships with relevant stakeholder groups; and
  • coordinate the move to new office accommodation for the Authority and divest the existing office space.

Risks

Investment risk
  • The Authority is required to prudently invest long service leave employer contributions to ensure that there are sufficient assets to meet long service leave liabilities. A key risk for the Authority is a reduction in the value of funds invested as a result of volatile market conditions. The Authorityreviews its investment strategy regularly in light of market conditions and will undertake a further review after the actuary’s Triennial Report due September 2017.
Information technology risk
  • The Authority is heavily dependent on its IT systems, therefore the continued functionality of the system and the integrity of the data is a significant risk. The risk is mitigated through undertaking daily backups of the entire database, which is securely stored off-site. The Authority has a business continuity plan that can restore full operational capability of the IT system within 24 hours. The business continuity plan is tested annually.
  • Security of our IT systems and data held by the Authority is a risk that requires constant monitoring and response, to ensure system and information integrity. The Authority also conducts IT penetrating testing to mitigate such risk and potential consequences of data misuse or loss and conducts systems controls audits as part of its audit program.
Contribution Levy payment risk
  • An ongoing risk to the Authority is that eligible employers do not register, declare service for employees or pay the required contribution levy. The Authority mitigates this risk by ensuring that its Compliance Team monitors the activity of covered industries in the Territory and liaises with employers and their representative associations to ensure that all eligible employers and employees are registered. The Authority also works cooperatively with other ACT Government organisations including Shared Services Procurement, the Office of Regulatory Services and the Building and Construction Industry Training Council.

Key performance indicators for 2017-18 to 2020-21

Objective / Measure / Target
201718 / Target
201819 / Target
201920 / Target
202021
Ensure the maximum number of eligible employers and their employees are registered with the Authority. / Percentage of employer registrations completed within 10 working days of receipt of a correctly completed and verified application form. / 97% / 98% / 99% / 100%
Number of visits to employer sites or premises to ensure that all employees working in the covered industries are registered with the Authority. / 80 / 90 / 100 / 110
Contact registered employees who have not had service recorded for 2 years or more to check if they have been working in a covered industry. / 400 / 450 / 500 / 550
Annual statements made available to employees by 30 September. / 100% / 100% / 100% / 100%
Ensure that employers’ contribution levies are collected efficiently and effectively. / Percentage of employer returns and payments submitted by due date (fiveworking days after the end of the month following the relevant quarter). / 80% / 80% / 80% / 80%
Ensure that payments to employees, contractors and reimbursements to employers are made in accordance with the Act. / Percentage of payments completed within 10working days of receipt of a correctly completed and verified claim form. / 85% / 85% / 85% / 85%
Ensure that long service leave administered schemes’ funds are invested to ensure a long-term surplus of assets over liabilities. / Annual net return for each administered scheme on funds under management is in accordance with the Investment Plan. / 3.5% aboveCPI averaged over fiveyears for each scheme / 3.5% aboveCPI averaged over fiveyears for each scheme / 3.5% aboveCPI averaged over five years for each scheme / 3.5% above
CPI averaged over fiveyears for each scheme
Ensure each scheme has adequate assets to meet its liabilities. / The ratio of total assets over total liabilities as at 30 June of the financial year for each administered scheme is maintained at least of the target. / 110% / 110% / 110% / 110%

Assessment of performance against 2016-17 objectives

Objective / Measure / Planned 201617 / Est. Outcome 201617 / Explanation of variance
Ensure the maximum number of eligible employers and their employees are registered with the Authority. / Percentage of employer registrations completed within 10working days of receipt of a correctly completed and verified application form. / 97% / 100% / All applications processed in the required time frame.
Number of visits to employer sites or premises to ensure that all employees working in the covered industries are registered with the Authority. / 80 / 90 / Additional employer visits undertaken to assist employers with scheme compliance.
Percentage of eligible unregistered active businesses, identified through a Yellow Pages review, are contacted and registered with the Authority. / 100% / 100% / N/A
Annual statements made available to employees by 30 September. / 100% / 100% / N/A
Ensure that employers’ contribution levies are collected efficiently and effectively. / Percentage of employer returns and payments submitted by due date (five working days after the end of the month following the relevant quarter). / 80% / 83% / N/A
Ensure that payments to employees, contractors and reimbursements to employers are made in accordance with the Act. / Percentage of payments completed within 10working days of receipt of a correctly completed and verified claim form. / 85% / 100% / All of the applications are expected to be processed in the required time frame.
Ensure that long service leave administered schemes’ funds are invested to ensure a long-term surplus of assets over liabilities. / Annual net return for each administered scheme on funds under management in accordance with the Investment Plan. / 3.5% above
CPI averaged over fiveyears for each scheme. / 6.2% above CPI averaged over five years for each administered scheme. / The market has stabilised after the flow on effect of the global financial crisis and has performed relatively well in the last five years.
The Authority also increased the growth asset allocation from 55% to 65% in 2014 after the current investment plan was endorsed by the Treasurer.
Ensure each scheme has adequate assets to meet its liabilities. / The ratio of total assets over total liabilities as at 30 June of the financial year for each administered scheme is maintained at least of the target. / 110% / Construction: 114%
Cleaning:162%
Community:123%
Security:123% / All the four administered schemes are expected to meet the target as at 30 June 2017.

Employment profile

The Authority’s staff are officers of the ACT Public Service, employed under the Public Sector Management Act 1994. The Registrar is also the Chief Executive Officer (CEO) of the Authority and a non-voting member of the Authority’s Governing Board. The CEO is employed under a long-term executive contract from 2015 to 2018. All the other staff are covered under the ACT Public Service enterprise agreement.

Organisation form
  • The organisational structure of the Authority is disclosed at Attachment 1.
Workplace Health and Safety (WH&S)
  • The Authority ensures its operations and practices are in compliance with theWorkHealth and Safety Act 2011. In addition to providing ongoing training and updates on the Act to the staff, the Authority liaises with the Injury Management and Safety Team within CMTEDD for advice on any WH&S issues.
  • Over the 201718Budget year, the Authority will continue to implement appropriate and effective work health and safety policy and procedures with the aim of providing ongoing support, preventing injuries to staff and reducing compensation costs where possible.
Consultants and contractors
  • The Authority engages external consultants or contractors from time to time in response to the Authority’s operational needs. The Authority is bound by the provisions in the Government Procurement Act 2001 and the Government Procurement Regulations 2007 when contracting for goods and services.
  • The Authority also discloses its use of consultants and contractors in its annual report.

ACT Long Service Leave Authority organisational profile at 30 June 2017
Position / Est. Outcome
as at 30/6/17 / Est. FTE
201718 / Years of Service
as at 30/6/17 / Gender
201617
M F
Registrar & Chief Executive (SES1.2) / 1 / 1 / 2 / - / 1
Chief Operations Officer (SOGB) / 1 / 1 / 8 / 1 / -
Chief Finance Officer (SOGB) / 1 / 1 / 6 / - / 1
Compliance Manager (ASO6) / 1 / 1 / 6 / - / 1
Finance Manager
(ASO6) / 1 / 1 / 17 / 1 / -
Finance Officer
(ASO 5) / 1 / 1 / 2 / - / 1
Customer Service Team Leader (ASO5) / 1 / 1 / 9 / - / 1
Personal Assistant to CEO (ASO4) / 1 / 1 / 6 / - / 1
Compliance Team Leader (ASO5) / 1 / 1 / 1 / - / 1
Compliance Support Officer (ASO4) / 1 / 1 / 2 / 1 / -
Customer Service Officers (ASO4) / 2 / 3 / 3.5,1.5 / - / 2
Project Manager (ASO 6) / 1 / - / 0.25 / 1 / -
Total / 13 / 13 / 4 / 9
Age of workforce / FTE 201617 Actual / FTE 201718 Estimate
Under 35years / 3 / 4
35 – 55years / 9 / 8
Over 55years / 1 / 1

Monitoring and reporting

The Long Service Leave Authorityshall satisfy the requirements of the Chief Minister’s Annual Reports Directions. The Long Service Leave Authority Annual Report will, amongst other things, report against the requirements of this Statement of Intent. The Authority is not funded by budget appropriation and itsaccounts are not consolidated into the whole of government budget.

Annual reporting

As part of preparations for end of year reporting, the Chief Minister, Treasury, and Economic DevelopmentDirectorate will advise the dates when the following documents are required at the Chief Minister, Treasury, and Economic DevelopmentDirectorateand at the Auditor-General's Office:

a)Certified financial statements.

b)Management discussion and analysis.

c)A full and accurate set of audited financial records for the preceding financial year in the form requested.

Financial arrangements

The budgeted financial statements included in this Statement of Intent reflect the financial activities of the Authority.

In 201718 the Authority is expecting to make an overall operating surplus of $6.002million. This consolidated result is aggregated from each administered scheme’s budgeted 201718 operating results below:

  • Construction: operating surplus of $3.589million;
  • Cleaning: operating surplus of $0.259million;
  • Community: operating surplus of $2.092million; and
  • Security: operating surplus of $0.062million.

Financial statements

Budgeted financial statements for the 2017-18 Budget year, as well as forward estimates for the three financial years commencing 2018-19appear below. These general purpose financial statements have been prepared in accordance with the ACT’sModel Financial Statements and include:

a)Operating Statement;

b)Balance Sheet;

c)Statement of Changes in Equity;

d)Cash Flow Statement;

e)Notes to the Financial Statements as appropriate; and

f)Individual Scheme Financial Statements.

ACT Long Service Leave Authority (Consolidated)
Operating Statement
2016-17 / 2016-17 / 2017-18 / 2018-19 / 2019-20 / 2020-21
Budget / Est. Outcome / Budget / Var / Estimate / Estimate / Estimate
$’000 / $’000 / $’000 / % / $’000 / $’000 / $’000
Income
Revenue
23,751 / Contributions Received / 24,531 / 25,370 / 3 / 26,267 / 27,233 / 28,263
3,639 / Gains/(Losses) from Investments / 2,014 / 2,083 / 3 / 2,168 / 2,262 / 2,358
91 / Interest Received / 71 / 74 / 4 / 77 / 80 / 81
20 / Net Rental Income / 20 / 0 / -100 / 0 / 0 / 0
5,244 / Other / 7,087 / 7,241 / 2 / 7,721 / 8,180 / 8,920
32,745 / Total Revenue / 33,723 / 34,768 / 3 / 36,233 / 37,755 / 39,622
Expenses
101 / Depreciation and Amortisation / 81 / 66 / -19 / 116 / 121 / 116
791 / Supplies and Services / 572 / 803 / 40 / 727 / 758 / 785
27,704 / Long Service Leave Benefit / 25,061 / 26,103 / 4 / 27,554 / 29,113 / 29,905
1,271 / Employee Expenses / 1,550 / 1,600 / 3 / 1,656 / 1,714 / 1,774
172 / Other / 115 / 194 / 69 / 121 / 126 / 129
30,039 / Total Expenses / 27,379 / 28,766 / 5 / 30,174 / 31,832 / 32,709
2,706 / Operating Result / 6,344 / 6,002 / -5 / 6,059 / 5,923 / 6,913
2,706 / Total Comprehensive Income / 6,344 / 6,002 / -5 / 6,059 / 5,923 / 6,913
ACT Long Service Leave Authority (Consolidated)
Balance Sheet
Budget / Est. Outcome / Planned / Planned / Planned / Planned
as at 30/6/17 / as at 30/6/17 / as at 30/6/18 / Var / as at 30/6/19 / as at 30/6/20 / as at 30/6/21
$’000 / $’000 / $’000 / % / $’000 / $’000 / $’000
Current Assets
2,808 / Cash Assets / 2,633 / 2,772 / 5 / 2,402 / 2,119 / 2,004
9,035 / Receivables / 9,017 / 9,670 / 7 / 10,465 / 11,250 / 11,718
8 / Other / 8 / 8 / - / 9 / 10 / 11
137,514 / Investments / 147,335 / 160,183 / 9 / 173,477 / 187,444 / 201,816
149,365 / Total Current Assets / 158,993 / 172,633 / 9 / 186,353 / 200,823 / 215,549
Non Current Assets
1,006 / Property, Plant and Equipment / 856 / 482 / -44 / 446 / 413 / 382
503 / Intangibles / 405 / 584 / 44 / 599 / 611 / 545
190 / Investment Property / 230 / 0 / -100 / 0 / 0 / 0
1,699 / Total Non Current Assets / 1,491 / 1,066 / -29 / 1,045 / 1,024 / 927
151,064 / TOTAL ASSETS / 160,484 / 173,699 / 8 / 187,398 / 201,847 / 216,476
Current Liabilities
596 / Payables / 768 / 790 / 3 / 744 / 774 / 802
117,489 / Provision for Long Service Leave Benefits / 112,532 / 118,832 / 6 / 125,844 / 133,893 / 142,452
508 / Employee Benefits / 530 / 548 / 3 / 557 / 581 / 604
118,593 / Total Current Liabilities / 113,830 / 120,170 / 6 / 127,145 / 135,248 / 143,858
Non Current Liabilities
14,334 / Provision for Long Service Leave Benefits / 10,507 / 11,378 / 8 / 12,038 / 12,459 / 11,564
43 / Employee Benefits / 18 / 20 / 11 / 25 / 27 / 28
14,377 / Total Non Current Liabilities / 10,525 / 11,398 / 8 / 12,063 / 12,486 / 11,592
132,970 / TOTAL LIABILITIES / 124,355 / 131,568 / 6 / 139,208 / 147,734 / 155,450
18,094 / NET ASSETS / 36,129 / 42,131 / 17 / 48,190 / 54,113 / 61,026
EQUITY
18,094 / Accumulated Funds / 36,129 / 42,131 / 17 / 48,190 / 54,113 / 61,026
18,094 / TOTAL EQUITY / 36,129 / 42,131 / 17 / 48,190 / 54,113 / 61,026
ACT Long Service Leave Authority (Consolidated)
Statement of Changes in Equity
Budget / Est. Outcome / Planned / Planned / Planned / Planned
as at 30/6/17 / as at 30/6/17 / as at 30/6/18 / Var / as at 30/6/19 / as at 30/6/20 / as at 30/6/21
$’000 / $’000 / $’000 / % / $’000 / $’000 / $’000
15,388 / Opening Balance / 29,785 / 36,129 / 21 / 42,131 / 48,190 / 54,113
2,706 / Operating Result for the Period / 6,344 / 6,002 / -5 / 6,059 / 5,923 / 6,913
2,706 / Total Comprehensive Income / 6,344 / 6,002 / -5 / 6,059 / 5,923 / 6,913
18,094 / Closing Balance / 36,129 / 42,131 / 17 / 48,190 / 54,113 / 61,026
ACT Long Service Leave Authority (Consolidated)
Cash Flow Statement
2016-17 / 2016-17 / 2017-18 / 2018-19 / 2019-20 / 2020-21
Budget / Est. Outcome / Budget / Var / Estimate / Estimate / Estimate
$’000 / $’000 / $’000 / % / $’000 / $’000 / $’000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts
22,656 / Contributions from Employers and Contractors / 23,680 / 25,061 / 6 / 25,989 / 26,864 / 27,802
20 / Rental Revenue Received / 20 / 0 / -100 / 0 / 0 / 0
286 / Other / 309 / 226 / -27 / 240 / 256 / 263
22,962 / Operating Receipts / 24,009 / 25,287 / 5 / 26,229 / 27,120 / 28,065
Payments
16,783 / Payments of Long Service Leave Benefits / 15,326 / 18,932 / 24 / 19,882 / 20,643 / 22,241
2,031 / Payment to Suppliers and Employees / 2,114 / 2,381 / 13 / 2,263 / 2,451 / 2,472
18,814 / Operating Payments / 17,440 / 21,313 / 22 / 22,145 / 23,094 / 24,713
4,148 / NET CASH INFLOWS/(OUTFLOW) FROM OPERATING ACTIVITIES / 6,569 / 3,974 / -40 / 4,084 / 4,026 / 3,352
CASH FLOWS FROM INVESTING ACTIVITIES
Receipts
0 / Proceeds from Sale of Property, Plant and Equipment / 0 / 800 / # / 0 / 0 / 0
0 / Proceeds from Sale of Investment Property / 0 / 230 / # / 0 / 0 / 0
1,010 / Proceeds on Sale of Investments / 100 / 0 / -100 / 40 / 100 / 200
1,010 / Investing Receipts / 100 / 1,030 / 930 / 40 / 100 / 200
Payments
0 / Purchases of Property, Plant and Equipment / 0 / 500 / # / 0 / 0 / 0
210 / Purchases of Intangibles / 205 / 185 / -10 / 95 / 100 / 0
5,078 / Purchases of Investments / 5,240 / 4,180 / -20 / 4,399 / 4,309 / 3,667
5,288 / Investing Payments / 5,445 / 4,865 / -11 / 4,494 / 4,409 / 3,667
-4,278 / NET CASH FLOWS FROM INVESTING ACTIVITIES / -5,345 / -3,835 / 28 / -4,454 / -4,309 / -3,467
-130 / NET INCREASE/(DECREASE) IN CASH HELD / 1,224 / 139 / -89 / -370 / -283 / -115
2,938 / CASH AT THE BEGINNING OF THE REPORTING PERIOD / 1,409 / 2,633 / 87 / 2,772 / 2,402 / 2,119
2,808 / CASH AT THE END OF THE REPORTING PERIOD / 2,633 / 2,772 / 5 / 2,402 / 2,119 / 2,004

Notes to the Financial Statements

Significant variations are as follows:

Operating Statement
  • contributions received:

–the increase of $0.780million in the 201617 estimated outcome from the original budget mainly reflects a small upturn in the construction activity of the Building and Construction Industry scheme in the 2016-17 financial year; and

–the increase of $0.839 million in the 2017-18 Budget from the 2016-17 estimated outcome is largely in line with the industry wage growth of the four administered schemes.

  • gainsfrom investments:

–the decrease of $1.625million in the 201617 estimated outcome from the original budget is mainly due toa larger part of the investment return (capital growth plus distributions) that is expected to be allocated in the investment distributions as a result ofincreased turnover due to realised capital gains and index rebalancing. An overall 6-6.5 percent full year return is anticipated for 2016-17which aligns with the Authority’s long term investment annual forecast under the current asset allocations.

  • other income:

–the increase of $1.843 million in the 2016-17 estimated outcome from the original budget is due to higher than anticipated investment distribution from the Authority’s investment manager, Vanguard Australia, as discussed above.

  • long service leave benefit expenses:

–the decrease of $2.643million in the 201617 estimated outcome from the original budget is largely due to the actuarial forecast on the present value of the long term long service leave liability which factored in somereduction in the industry activities mainly in the Building and Construction Industry scheme and Contract Cleaning scheme; and

–The increase of $1.042 million in the 2017-18 Budget from the 2016-17 estimated outcome is mainly due to the growth in the Community Sector and the Security Industry schemes.

Balance Sheet
  • receivables:

–the increase of $0.653million in the 201718 Budget from the 2016-17 estimated outcome is mainly due to the anticipated increase in the fourth quarter investment distribution for all administered schemes from the growth of the investment portfolio.

  • investments:

–the increase of $9.821million in the 201617 estimated outcome from the original budget is mainly due to higher than expected investment return achieved for 2015-16 (3.72 per cent) than expected (nil) when the original budget was prepared and the follow on effect on the full year investment performance at end of June 2017; and