Despite possibly tipping more into their entitlements from working more hours, casual miners pull out less on the other end from the entitlements pool at Coal LSL. I also queried $33 million dollars that has been paid out at Coal LSL with no description of why.
If that wasn’t enough, we also believe there are money laundering risks due to insufficient record keeping and the amount of money being held by Coal LSL. The entire model and governance needs a root and branch review as it is totally inadequate.
Transcript
[Chair]
Senator Roberts.
[Malcolm Roberts]
Thank you, Chair. And thank you for coming again. First of all, The Coal LSL Scheme. The Coal Long Service Leave Scheme was established specifically for the Coal Mining Sector. Is that correct?
[Witness]
That’s correct. Back in 1949, The portable long service leave scheme was established.
[Malcolm Roberts]
Thank you. The objective of this scheme is to provide long service leave for employees in the Coal Mining Sector. Is that correct?
[Witness]
For eligible employees who are defined under the Admin Act? Yes.
[Malcolm Roberts]
The scheme provides the ability for employees to request to be paid extra amounts directly rather than contributing into the scheme. If they do this, it immediately becomes their money rather than going into the pool funded Coal LSL. Is that correct?
[Witness]
You’re referring to the clause on Waiver Agreements,
[Malcolm Roberts]
Yes
[Witness]
Senator, I believe and that is underpinned by a separate regulation, but yes Waiver Agreements are enabled under the legislation.
[Malcolm Roberts]
Thank you. Coal LSL has a guidance note explaining how it calculates the “levies” on the eligible wages for coal employees. It provides two formulas; one for casual employees and one for permanent employees. Casual employees are required to pay the levy on all hours worked. Whereas permanent employees contribute based on a maximum of 35 hours per week. Is that correct?
[Witness]
It’s the employers who are paying Senator, but 3B under the Payroll Levy Collection Act does outline how the different calculations are to be performed by the employer. And they are linked to the employees classification, employment classification but the employer is paying that payroll levy.
[Malcolm Roberts]
So, a casual employee though, accept that so casual employee working the same weekly shifts as a permanent employee pays in more because they contribute on all hours worked whereas a permanent pays not more than for 35 hours. Is that correct?
[Witness]
No, the employer is paying the levy and it is a different calculation. So it is linked to different assessment of hours. That’s correct, but the formula is different between the two classifications.
[Malcolm Roberts]
When it comes to a crowing and taking long service leave casuals and permanents are treated differently again. Permanents automatically get long service leave accrued for the maximum of 35 hours , regardless of the hours worked in that week. But the casual only gets it for the actual hours worked in a week. If the roster patterns of a casual don’t fall neatly in a week, there is the potential for them to work the same shift pattern as a permanent employee yet accrue less entitlement than a permanent on the same shift. Is that correct?
[Witness]
Correct. In the sense we’re relying on the hours reported for the employees working week to inform the accrual calculation for the casual employee. That’s correct.
[Malcolm Roberts]
So casual employees working in the coal mining sector can work the same weekly shifts as a permanent employee, but pay more in levies to Coal LSL through their employer and get a lower accrual of long service leave than a permanent employee. This is despite working the same shifts. They pay in more, their employer pays in more on their behalf but they get less out of it. Is that a fair outcome?
[Witness]
I don’t agree that the employers paying more in that scenario Senator, because they are very different formulas that are linked to the wages that are paid for each in different employee. So I don’t agree that is as simple as the way it’s been described. And I’d also say for the casual who is working the 35 hour week, they will accrue the same entitlement as the full-time equivalent. So if they are working the 35 hour week and the employer reports those hours they’ll accrue that full-time equivalent.
[Malcolm Roberts]
A lot of them are not working that 35 hour week, if they’re on production, they’re on a roster.
[Witness]
We’re relying on the hours and yeah
[Malcolm Roberts]
Yeah, we’ve seen what happens with that relying on employers hours. This is in the past, this is all based on a Coal LSL guidance note, which interprets the act. Given the potential for such an inequitable outcome, is it possible that your interpretation is wrong?
[Witness]
No, I’m confident our interpretations right. It’s been through legal channels over the years and that guidance note is verified. It has not been tested in a court as such but it has been formulated based on legal interpretation.
[Malcolm Roberts]
When the coal, this is the last question on this thread. I’ve got some more on others. When the coal long service leave system was established for coal mine workers. Do you think that it was intended to make one employee through their employer pay so much more and get less?
[Witness]
I don’t agree, that it’s as simple as that Senator.
[Malcolm Roberts]
Sorry.
[Witness]
Okay. The intent of the scheme coming back to the intent of a long service leave scheme is for the employee to access a benefit when they meet certain milestones. So i think the intent of the scheme is structured correctly and that all workers should be able to access an equivalent entitlement when they meet the AES qualifying service milestone.
[Malcolm Roberts]
Okay. So moving on to another topic, do you ensure that casuals are made aware that they do not have to pay contributions paid to coal LSL and that they may be able to X to be paid the approximate 2% cash in hand, so they can elect to take the cash instead of having it accumulated.
[Witness]
Colleague will talk to the detail their regs of a Waiver Agreement.
So Peter Kembrey, General Manager legal calls Hill. Senator there is information on our website in regard to the Waiver Agreements. I think it is important to point out that Waiver Agreements are only available for a small category of employees. So they’ve targeted. The intent of that is for people coming to either on high incomes or coming to the end of over 55 that already have the 8 years qualifying service or have no qualifying service to be able to redirect those contributions as you say, to other forms of savings whether that be superannuation, which is the commonly what we see is, is the conversation that we have with people that are interested in that. So most people in this game, can’t quote don’t count
[Malcolm Roberts]
But those who are eligible for the Waiver, are they notified?
[Witness]
Well, they are not notified individually but there is information in respect of
[Malcolm Roberts]
So they’re not notified. They could have to go to a website, which they might not know about.
[Witness]
Senator. We don’t know the ages of people necessarily who are in the fund.
[Malcolm Roberts]
No, but no employers do it either. Is that right?
[Witness]
I can’t speak for what employers do, but
[Malcolm Roberts]
Do you tell the employers that they need to do it?
[Witness]
Well, we don’t instruct the employers to do it but we certainly make it clear to employees that information in regard to aspects of the fund are contained on the website. There is information in regard to Waiver Agreements, better than say the waiver Agreements. There’s no many people in the fund or a significant minority of people in the fund can actually apply for these.
[Malcolm Roberts]
From the research we’ve done into Coal LSL it would seem that when an employer registers an employee with Coal LSL, that Coal LSL just asks for a name and a date of birth. Does this mean that because you did not take a Tax file number that you are not able to verify that people named are indeed real people that they exist. What do you do to verify they are real people and provide me with a summary of the last three occasions when this was done.
[Witness]
Sorry. The last three occasions we verified people
[Malcolm Roberts]
When you verified someone was done.What was real?
[Witness]
My understanding of the process is when a new entrant comes. Firstly, I say, we are not authorised to collect tax file numbers. That would mean amendments in legislations. So it’s not it.
[Malcolm Roberts]
Is anyone raised that with the government?
[Witness]
It’s been raised, but like, it’s there’s very few entities that can do that. But, so we don’t collect tax file numbers at this point in time.
[Malcolm Roberts]
But you collect names and dates?
[Witness]
We collect names and dates of birth.
[Malcolm Roberts]
And you collect money
[Witness]
And we collect money, Yes. We collect money and we keep records of entitlements but we write to those new entrants into the scheme at the time that they appear on it. So we get their addresses, we contact them and we follow them up in regard to this is what we’ve been told, are these details correct? Particularly in cases where there might be employers registering them in registering them in regard to historical service. So we asked, we say this is what the records we’ve been given. Can you verify these are correct.
[Malcolm Roberts]
So let me continue then. Also from the research we have done, I was concerned to see reference to approximately $33 million in levy reimbursements made to entities with a statement beside it saying, “not readily available”. This is a lot of money to have no detail attached to it. Can you explain what’s happening. And I can give you a reference in the report, given last Senate estimates. The report was EEC-BE20-82, pages 121-144. As you provided to me.
[Witness]
Senator, the further detail that we provided in that written response to the question on notice was to explain why that reference was associated to a number of the transactions. So in the Excel spreadsheet that were provided to you which was data from July 17 to June, 2020 had 5,594 lines. And there was a 100 or 407 odd lines, which had that category. The reason being we insourced our operations in 2017. So when we took over the administration from the previous administrator that resulted in us implementing a new financial system. So all the records live in the administration system going back to day one. So all the historical records reside there which is the employees entitlements, the money in and the money out. We, and in our response to we said it would be an unreasonable division of resources to be able to extract that data because we were only migrating it to our new finance system from 2017 where we’re able to readily access the data through reporting frameworks that had been established. So the period of three months where we had that description that we explained in our response to the QON that was that migration stage. And all of the detail, I’ll say migration hadn’t been established but I do assure you, it will always residing in the administration system but it would be unreasonable allocation of time and money to be able to put a reporting framework around that, to extract that data, as you requested.
[Malcolm Roberts]
So you don’t know about it then. You don’t know
[Witness]
No, we do know about it
[Malcolm Roberts]
But you know about it but you don’t know the identities.
[Witness]
No, we do. It lives in the administration system and should we receive inquiries at a transactional level, We will investigate or access that transaction to pay but to pull thousands, hundreds of thousands of lines of records out of that system, establish the reporting framework to extract that in the timeframe that was needed. It was an unreasonable allocation of resources to extract that. And we’ve provided you with the information that was readily available.
[Malcolm Roberts]
Thank you. I note from records provided that registered and unregistered employers, make long service leave contributions. And then in some instances they claim the funds back. Yet I’ve seen no evidence whether these bulk refunds made by Coal LSL are linked to a list of employees or that if employees are referred to that, they are real people. To me, this leaves open the question as to whether the coal LSL could leave themselves open to claims of potential money laundering. Do you ensure that the money laundering does not happen? And if so, how, how do you do it?
[Witness]
It would be highly unlikely for money laundering to be existing in the fund. For an employer to come into this scheme, through a registration project process, we verify their details through ASIC, ABN and verify their bank banking details. So their, the source information that we rely on to ascertain that the employer or the entity is a found entity. The employer would then need to have an employee in their records for years of years of service and paying a levy for that period in order to see that that employee meets the qualifying service provisions and then ultimately access any reimbursement from the fund should that employee access their long service leave. So it is, there are many hurdles that an employer would need to jump through over a very extended timeline in order to launder money through our fund. So first up, Senator Roberts look at the time, we’ve got a minute left. So the one very quick question or we have to ask you to put the rest on notice, please.
[Malcolm Roberts]
How many board members or members of the bodies they represent have been on either registered or unregistered companies that made contributions and or received reimbursements from Coal LSL? Could you please provide a list of them and the entity names and the dollar value of all the transactions.
[Witness]
The current directors?
[Malcolm Roberts]
Yes.
[Witness]
Senator,
