Employment and Workplace Relations portfolio

The Employment and Workplace Relations portfolio was formed on 1 July 2022 following the Administrative Arrangements Order announced on 1 June 2022. The portfolio covers a range of functions and policy areas, including: skills, vocational and employment pathways; workplace relations; work health and safety; and rehabilitation and compensation.

The Department of Employment and Workplace Relations is the lead entity in the portfolio and is responsible for ensuring Australians can experience the social wellbeing and economic benefits that training and employment provide.

The department is also responsible for workplace relations and work health and safety, rehabilitation and compensation. Further information is available from the department’s website at dewr.gov.au.

In addition to the Department of Employment and Workplace Relations there are 9 entities within the portfolio that are responsible for delivering programs and initiatives in relation to workplace relations, and work health and safety. The portfolio’s material entities are the Coal Mining Industry (Long Service Leave Funding) Corporation and Comcare.

In the October 2022–23 Portfolio Budget Statements (PBS) for the Employment and Workplace Relations portfolio, the aggregated budgeted expenses for 2022–23 total $7.4 billion. The October PBS contains budgets for those entities in the general government sector (GGS) that receive appropriation directly or indirectly through annual appropriation Acts.

The level of budgeted departmental  and administered  expenses, and the average staffing level for entities in the GGS within this portfolio are shown in Figure 1. The Department of Employment and Workplace Relations represents the largest proportion of the portfolio’s expenses, and administered expenses of the portfolio are the most material component, representing 81 per cent of the entire portfolio’s expenses.

Figure 1: Employment and Workplace Relations – total expenses and average staffing level by entity

In determining the 2022–23 audit work program, the ANAO considers prior-year audit and other review findings and what these indicate about portfolio risks and areas for improvement. The ANAO also considers emerging risks from new investments and changes in policy or operating environments.

The primary risk identified for the portfolio relates to the implementation of the new employment services model which is a major change in delivering key services to the community. Specific risks in the Employment and Workplace Relations portfolio relate to service delivery, regulation and financial management.

Service delivery

From 1 July 2022, a new employment services model, Workforce Australia, will be implemented by the department to replace the Jobactive program. A core component of Workforce Australia is the development of a new digital services platform with a greater focus on online service provision.

Regulation

The portfolio carries regulatory responsibilities for the vocational education and training sector through the Australian Skills Quality Authority (ASQA).  The COVID-19 pandemic resulted in border closures affecting international education providers. The government provided assistance to the sector during the pandemic to assist it in remaining financially viable. As international students return and courses are re-established, ASQA’s regulatory activities will be important to ensuring the quality of courses has been maintained.

Financial management

Comcare and the Coal Mining Industry (Long Service Leave Funding) Corporation, respectively, estimate the liabilities for workers compensation reported by participating portfolio entities, and the reimbursements to participating employers. The estimation of these liabilities requires a significant level of judgement to select appropriate underlying assumptions. This raises risks regarding transparency, consistency and appropriateness of the valuations.

Overview

On 1 July 2022 an Administrative Arrangements Order (AAO) took effect which included the creation of the Employment and Workplace Relations portfolio. Entities which are now part of this portfolio are shown in Table 1. The risk profile for each entity is based on the 2021–22 financial statements which were prepared prior to the AAO taking effect on 1 July 2022.

Table 1: Employment and Workplace Relations portfolio entities and risk profile

Department of Employment and Workplace Relations

The Department of Employment and Workplace Relations is responsible for ensuring Australians can experience the social wellbeing and economic benefits that training and employment provide. The department is also responsible for workplace relations and work health and safety, rehabilitation and compensation.

On 1 July 2022 an Administrative Arrangements Order (AAO) took effect which included the creation of the Department of Employment and Workplace Relations. The department’s total budgeted expenses for 2022–23 are just over $6.7 billion, with suppliers and subsidies representing 40 per cent and 39 per cent, respectively, as shown in Figure 2. Trade and other receivables represent 80 per cent of total budgeted assets.

Figure 2: Department of Employment and Workplace Relations total budgeted financial statements by category ($’000)

Source: ANAO analysis of 25 October 2022–23 PBS.

Financial Statements Audit

There is one key risk for the former Attorney-General’s Department 2021–22 financial statements that the ANAO has highlighted for specific audit coverage that will be relevant to the Department of Employment and Workplace Relations in 2022–23.

• The management of the Fair Entitlements Guarantee scheme, which protects certain unpaid employment entitlements for employees who have lost their jobs due to the liquidation or bankruptcy of their employer.

Coal Mining Industry (Long Service Leave Funding) Corporation

The Coal Mining Industry (Long Service Leave Funding) Corporation (Coal LSL) collects levies from employers to fund long service leave payments made to employees in the Australian black coal mining industry. The levies collected are invested until the employee takes long service leave, at which point the employer makes a payment to the employee and seeks reimbursement from Coal LSL in accordance with legislative arrangements.

Coal LSL’s total actual liabilities for 2020–21 were just under $1.8 billion, with the majority of these liabilities attributable to the provision for reimbursements, as shown in Figure 1. Unit trusts were attributable to almost 94 per cent of Coal LSL’s total actual assets, which was just over $2.1 billion.

Figure 3: Coal LSL’s total actual financial statements by category ($’000)

Source: ANAO analysis of Coal LSL’s 2020–21 annual report.

There are two key risks for Coal LSL’s 2021–22 financial statements.

• The complex valuation processes used to determine the fair values attributed to unlisted trust investments.
• The significant judgement required by management to estimate the value of the liability for reimbursement of employers’ long service leave obligations, due to a range of assumptions relied on to underpin the valuation methodology and estimation process.

Comcare

Comcare is the Commonwealth’s work health and safety regulator with the stated purpose to ‘promote and enable safe and healthy work’. It also administers the Commonwealth’s workers compensation scheme and acts as an insurer and claims manager. Comcare’s enabling role is focused on supporting engagement and better practice approaches to health and safety across its scheme.

Comcare’s total budgeted liabilities for 2022–23 are just under $2.8 billion, the majority of which relate to provisions, as shown in Figure 2. Budgeted revenue is $294.3 million, with around 67% attributable to workers’ compensation premiums.

Figure 4: Comcare’s total budgeted financial statements by category ($’000)

Note:  Amounts in Figure 2 represent departmental components of the PBS. Administered components relate to the Seafarers Safety, Rehabilitation and Compensation authority (Seacare Authority)

Source: ANAO analysis of 29 March 2022–23 PBS.

There are two key risks for Comcare’s 2021–22 financial statements.

• The judgements required in selecting assumptions when calculating workers compensation and asbestos-related disease claim provisions and related expense accounts.
• The timing of revenue recognition relating to the collection of workers’ compensation and common law asbestos premiums, which involves complex calculations prescribed in legislation.