Delivering on Our Targets

2023-26 Corporate Plan

The Authority’s 2023-26 Corporate Plan sets out the Authority’s short and medium-term priorities along with key target measures for success. These priorities focus the Authority on ensuring that:

1. Covered employers and workers are registered
2. Service of workers is captured
3. Outstanding levies are paid
4. The Authority has a strong, intelligence-led and risk-based compliance and enforcement program
5. The Authority is claims ready

With key priorities directing the Authority’s actions to June 2026, the specific areas of strategic focus for the Authority as approved by the Governing Board are:

• Better identification of under registered workers and employers.
• Strengthening our compliance and enforcement approaches.
• Improving internal infrastructure to ensure better practices and procedures across the Scheme.

During the 2023-24 financial year, the Authority has successfully executed specific areas of strategic focus, operating in a fiscally responsible manner while maintaining strong governance frameworks. This is reflected in the results detailed below, with the Authority exceeding and remaining on-track for 11 of the 12 targets set out in our 2023-26 Corporate Plan.

Better identification of under registered workers and employers

The Authority continues to support the Scheme's growth through outreach and engagement efforts. The Authority is implementing strategies to ensure we can directly communicate with workers particularly when they change employers. We utilise a range of data bases, collaborative arrangements with other agencies, and engagement with industry stakeholders to improve our capacity to identify likely areas of under-registration.

Notwithstanding a gradual shift in the Authority’s regulatory strategy towards strengthening our compliance and enforcement approaches, the Authority recognises the continued need to engage with employers and workers directly. The Authority is continuing a large program of targeted work on educational activities, which during the current financial year, included a significant project centred around streamlining employer submission of quarterly returns by collaborating with employers following their feedback.

As one of Australia’s largest portable long service benefits schemes, the Authority recognises its leadership role nationally and during the year initiated and hosted the first in-person conference of national portable long service leave authorities to discuss industry trends and operational insights since 2019.

Unfortunately, due to delays with the Authority's website enhancement project, the Authority was unable to complete its full target of publication insights for the 2023-24 financial year. This work has been prioritised for 2024-25 financial year with additional resources and assistance to ensure its success.

National Conference on Portable Long Service Leave hosted in Victoria

In February 2024, leaders from Australia’s nine state and territory-based Portable Long Service Leave Authorities gathered in Bendigo for the first in-person conference since 2019. The event was hosted at the Galkangu Bendigo GovHub building by Victoria’s Portable Long Service Authority.

Over two million workers across industries including construction, community services, contract cleaning and security benefit from these state-administered portable long service schemes.

The two-day conference offered a valuable platform for knowledge-sharing and discussions around challenges in administering and growing portable long service leave schemes.

Key themes included enhancing IT systems, strengthening compliance and enforcement, and ensuring the sustainability of long service leave schemes. Online sessions allowed senior staff from finance, legal, compliance and IT to collaborate in key issues, sparking new ideas and solutions.

Authorities participating in the conference represented all regions of Australia, reflecting the national commitment to portable long service leave across diverse industries.

• LeavePlus - Victoria’s construction industry
• Long Service Corporation NSW - New South Wales construction and contract cleaning industries
• ACT Leave - Australian Capital Territory’s construction, contract cleaning, community and security industries
• MyLeave WA - Western Australia’s construction industry
• Portable Long Service Leave - South Australia’s construction industry
• NTBuild - Northern Territory’s construction industry
• QLeave - Queensland’s construction, contract cleaning and community services industries
• TasBuild - Tasmania’s construction industry

Improving employer collaboration: Payroll to quarterly return project

The Authority is committed to streamlining its processes for the benefit of both employers and workers.

A recent initiative in this effort is the ‘Payroll to Quarterly Return’ project, which simplifies employers submitting their quarterly returns.

The Authority sought feedback from employers to gain a better understanding of their experiences with the quarterly returns process. This feedback has been invaluable, revealing several opportunities to refine and improve processes.

The Authority is now using this feedback to review the submission of the quarterly returns process. These insights will help shape future enhancements to ensure a more efficient and smoother experience for all stakeholders.

Transition to digital project: SMS campaign to streamline communication with workers

The Authority has previously relied on written correspondence through direct email and newsletters to communicate with workers about the Scheme and their entitlements. This meant that if workers changed their employer or contact details, delays could result.

To increase engagement, the Authority launched a pilot project in May 2024 to send SMS messages encouraging workers to log into the worker portal to update their personal details and avoid delays in processing requests.

The campaign included posting information about the new initiative through digital and traditional communication channels. An additional advertising campaign targeting workers is planned in the coming 12 months to expand on these initial positive results.

Strengthening our compliance and enforcement approaches

* Based on the last quarter
**Progress is discussed below

As of the last quarter of the Authority's operations, the regulatory posture of the Authority focused on educating and supporting employers and workers.

Specifically, the Authority worked closely with employers to ensure that they understood the Scheme and their obligations as an employer. This approach has been successful, with the Authority exceeding its registration targets and most employers complying with their legal obligations.

However, some employers remain non-compliant with the Act. To address this, the Authority has continued to sharpen its focus in 2023-24 on evolving its compliance and enforcement activities to target the following four key areas of regulatory non-compliance:

1. Registering non-compliant employers;
2. Ensuring timely submission of quarterly returns;
3. Investigating inaccurate quarterly returns and under registration of workers and/or their recorded service; and
4. Ensuring prompt or complete payment of levies.

The Authority is on track to strengthen its effort in these areas to protect workers’ rights and hold non-compliant employers accountable.

During the 2023-24 financial year, the Authority commenced a number of compliance investigations, including field work and other compliance activities. These activities were a combination of field investigations as well as strategically planned desktop investigations.

Specifically, during the financial year, the Authority:

• investigated over 300 tip-offs of unregistered employers;
• issued 45 letters of demand to employers who failed to pay invoices for levies resulting in the recovery of over $300,000 in unpaid levies;
• undertook a range of other targeted compliance activities in relation to overdue quarterly returns; and
• published a refreshed regulatory approach on the Authority’s website informing employers and the public of the Authority’s evolution from an education-based and intelligence-led stronger compliance approach.

As the Authority’s compliance and enforcement framework matures, the sophistication of current investigations will increase further. This will allow the Authority to more accurately define formal and informal compliance investigations and activities for reporting in future reporting years.

Finally, the Authority is on track to continue to reduce the number of days to issue invoices towards the 60 day target by 2026. Also, further refinement of the Authority’s current policies for payment extensions and payment plans need to be undertaken in 2024-25. The Authority is aware of the impact arising from changes to these policies on smaller business operators who are more sensitive to changes in broader macro-economic conditions.

Refreshing our Regulatory Strategy

We refreshed our Regulatory Strategy following extensive planning and internal collaboration and consultation across the Authority’s business units and staff, drawing on the learnings and insights over the Authority’s five years in operation.

In June 2024, our Regulatory Strategy was published to ensure employers and the public understand the Authority’s approach to its compliance and enforcement activities.

The strategy ensures decisions are risk-based, intelligence-led, and align with the Authority’s Compliance and Enforcement Policy and Corporate Plan 2023-26. It focuses on four key areas:

1. Registering non-compliant employers;
2. Ensuring timely submission of quarterly returns;
3. Investigating inaccurate quarterly returns and under registration of workers and/or their recorded service; and
4. Ensuring prompt or complete payment of levies.

Strengthening Compliance Action

Registered employers are required to pay levies for their workers promptly each quarter. Successful recovery of these levies is vital to the long-term sustainability of the Scheme for workers in the three covered sectors.

As part of growing the Authority’s civil enforcement process, the Authority has strengthened its compliance steps to recover unpaid levies from employers. This graduated approach has included the Authority issuing 45 employers with letters of demand for payment.

One employer with longstanding arrears in excess of $24,000 had failed to make payment or engage with the Authority’s calls and was issued a letter of demand. As a result, this employer made payment in full and has continued to remain fully compliant with its obligations.

At the same time and in the face of the cost-of-living crisis, the Authority is conscious of balancing the recovery of unpaid levies with supporting struggling small businesses. Rising inflation, energy costs and wage challenges have put significant pressure on small businesses, making it difficult for some to meet their legal obligations.

One small business employer in the cleaning sector who was issued a letter of demand advised the Authority that they had difficulty in making the large payment. The Authority engaged with the employer and supported them to enter into a payment arrangement. This enabled the employer to comply with their obligations, whilst reducing the financial burden associated with large arrears.

Improving internal infrastructure to ensure better practices and procedures across the Scheme

The growth in the Scheme has also seen a continued increase in the demands on the Authority's workforce. During the 2023-24 financial year, there were 20,663 total calls through the Customer Services contact centre (split between 7,560 inbound calls and 13,103 outbound calls) with an average wait time to answer calls of 42 seconds.

The Authority processed and collected invoices totalling over $165 million during the 2023-24 financial year, a 32% growth on the previous financial year predominately due to increased number of registered employers and workers. Total collections have been invested in accordance with the Authority’s investment strategy as set out by the Governing Board. This ensures that entitlements of registered workers are managed prudently while the sustainability of the Scheme has also been reviewed by the Authority’s appointed independent actuary in the current year. This review has also resulted in the recommendation to the Governing Board to maintain the current levy rate settings.

In relation to investment performance of collected funds, the Authority has continued to exceed its investment return objective of CPI + 3.0% p.a. with a return of 9.4% for the 2023-24 financial year. This has increased the funding ratio (for all 3 schemes in total) to 107.8%, which remains on-track to surpass the target of 110% by 2026.

To achieve the Authority’s objectives, investment in the Authority’s staff was also identified as a key priority across the next three years noting that our staff are integral to the successful implementation of the above outlined strategic priorities.

With a majority of staff based in regional Victoria within the Victorian Government’s newly built Galkangu Bendigo GovHub premises, areas of key focus for the Authority's leadership include:-

• the need for dedicated investment in time and focus on work place culture (especially in a hybrid working environment)
• ensuring clarity of role alignment to organisational objectives
• educating staff on the values and expectations of the VPS
• empowering staff to be accountable in their roles.

As a result of this work, the Authority is pleased to report that it was able to exceed the VPS People Matter Survey target participation rate for the 2023-24 financial year of 85% by recording a participation rate of 94%. Positive improvements were recorded across the board, including 92% of our staff understanding their personal contribution towards achieving our organisational goals and getting a sense of accomplishment through their work. Consistent with other VPS entities, the results of the Authority People Matter Survey are available publicly through the Victorian Public Sector Commission’s information databases.

Finally, work continues to progress within the Authority in readiness for the first portable long service benefit payments for workers should they wish to take the benefit from the first day of eligibility. This includes not just efficient processes and strong controls but also a skilled workforce with an acute awareness of cybersecurity risks in the digital age.

With management of over $500 million in financial assets, the need to protect digital systems, networks and data from unauthorised access and hostile assaults is central to the work being done by the Authority to prepare for claims readiness. While this remains on-track, the Authority is ever vigilant of the dynamic changes and quick shift in risk profiles of the cybersecurity landscape.

Implementing Multi-Factor Authentication (MFA) for Enhanced Security

In late 2023, the Authority took decisive steps to enhance the security of its digital platform. The Authority worked with the technology provider Formation CRM to develop Multi-Factor Authentication (MFA) for both the Employer and Worker Portals. The goal was to provide a more robust layer of protection against unauthorised access and safeguard sensitive information across the platform.

Phase 1: MFA Rollout for Employer Portal

In October 2023, the first phase of the MFA implementation focused on employers registered with the Authority. As part of the new security initiative, employers received emails outlining the steps to authenticate their accounts when accessing the portal. This helps minimise the risk of unauthorised access to sensitive data.

Phase 2: Extending MFA to Worker Portal

The Authority has developed and will extend MFA to be mandatory for the Worker Portal in 2024. The Authority, through the worker SMS campaign and employers maintaining mobile contact details.

For workers, the two-step verification process will verify their identity beyond just a simple password process. This method of ‘double-checking’ will reduce the risk of data breaches by confirming the authenticity of the person attempting to access the account.

Supporting career growth in Regional Victoria

Leon Harper’s journey with the Authority exemplifies the opportunities available in regional Victoria for staff in the VPS. Originally recruited as a Lawyer while working in Melbourne, Leon is now Senior Lawyer within the Authority’s legal team based in Bendigo.

Initially splitting his time between the Melbourne and Bendigo offices, Leon developed an affinity with the Bendigo area. Recently, he made the decision to relocate his family to Bendigo, drawn by the lifestyle, flexibility and the ease of commuting.

The Authority’s commitment to creating specialist opportunities in regional Victoria has been a key factor in Leon’s career growth. As an employer, the Authority is eager to promote professional development and career progression, especially in regional areas in need of talent and specialist skills.

Leon now enjoys working in the Galkangu Bendigo GovHub’s state-of-the-art facilities, which foster collaboration across departments and provide the resources for individual and team success.

Financial Performance

Five-year financial summary

The Authority commenced operations on 18 March 2019. Five full years of comparative financial information is shown below.

Authority five-year financial summary

Current year financial summary

The Authority administers three schemes that provide portability of long service leave benefits for registered workers in the community services, contract cleaning and security industries in Victoria.

The Authority levies registered employers for workers in the covered sectors and industries in accordance with the Long Service Benefits Portability Act 2018 (Vic) and the Long Service Benefits Portability Regulations 2020 (Vic) and makes payments for benefits taken.

In the 2023-24 financial year, the Authority’s net result was $26.6 million compared to $17.5 million in 2022-23. The major performance drivers in the current year’s net result were levy contributions of $165.8 million from employers (2022-23: $125.1 million) and total returns from investments held by the Authority of $36.4 million (2022-23: $21.0 million), offset by an increase in the portable long service benefits liability of $166.1 million (2022-23: $120.8 million). The increase in the portable long service benefits liability is consistent with the growth of the Scheme and reflects the increased expectation as measured by the Authority’s appointed Scheme Actuary that more workers will now be eligible for future portable long service leave entitlements.

Levy contributions from employers and contractors are based on levy rates set by the Governing Board and this was the largest source of income from transactions. Levy contributions increased by $40.7 million in the current financial year due to increase in registered workers. There are now over 350,000 workers registered in schemes across the three covered sectors and industries.

During the financial year, the Authority transferred $143.8 million to the VFMC Balanced Fund, Victorian Funds Management Corporation (VFMC) increasing total investments held with VFMC to $473.9 million.

The portable long service benefit expense for 2023-24 is $166.1 million, representing an increase in the benefits liability for workers of $45.4 million ($120.8 million 2022-23).

Administration costs totalled $10.5 million with $6.8 million relating to employee benefits expense of the Authority and its regulatory operations and $3.7 million for information technology costs, office expenses, professional services, promotion costs along with internal and external audit fees.

Financial position balance sheet

The Authority’s net asset position at 30 June 2024 was $57.7 million and the funding ratio of all 3 portable long service leave schemes was 107.8%.

Cash at bank totalled $29.2 million, which includes mainly Scheme funds collected and not transferred to VFMC investments as at 30 June 2024.

The Authority increased its investments with the VFMC to $473.9 million and accrued $22.0 million representing an investment distribution due from the VFMC that was paid in July 2024.

Operating cash flows

Net cash flow from operating activities was positive for the year totalling $145.9 million, which included $162.7 million of receipts from employers for their worker levy contributions.

The Authority transferred $143.8 million to the VFMC Balanced Fund and received $10.2 million of investment distributions during the financial year.

Investment performance

The Governing Board has approved an investment strategy based on an analysis of desired investment returns against investment risk appetite.

The investment objectives of the Authority at 30 June 2024 are:

• Return: To achieve an average return objective of at least CPI + 3.0% p.a. with greater than 60% probability over a rolling 10-year period; and
• Risk: To limit the likelihood of a negative annual return to no more than one year in every five years, and when negative returns occur not to exceed a 10% loss of capital.

The Authority exceeded its investment return objective of CPI + 3.0% p.a. with a return of 9.37% for the 2023-24 financial year.

Current year investment performance

Under the Act, the Authority is permitted to invest Scheme assets for the benefit of the schemes.

The Authority has appointed VFMC as its investment manager and VFMC has determined the following balanced asset allocation of investments for the Authority’s portfolio:

For the 12 months from 1 July 2023 - 30 June 2024, the Authority recorded a gain on fair value of investments of $9.4 million against total Scheme funds of $473.9 million at 30 June 2024. The Authority received $10.2 million of investment distribution during the year.

Outlook

The Authority is continually working with its investment manager to adjust portfolio positioning in response to market movements and changes to economic conditions and policy outlook of governments, which may affect key investment asset classes.