Employment and Workplace Relations portfolio

The Employment and Workplace Relations portfolio is responsible for: 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 well-being 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.

In addition to the Department of Employment and Workplace Relations, there are eight 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 Department of Employment and Workplace Relations, the Coal Mining Industry (Long Service Leave Funding) Corporation and Comcare.

In the 2024–25 Portfolio Budget Statements (PBS) for the Employment and Workplace Relations portfolio, the aggregated budgeted expenses for 2024–25 total $6.7 billion. The PBS contain budgets for those entities in the general government sector (GGS) that receive appropriations 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 74 per cent of the entire portfolio’s expenses.

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

Source: ANAO analysis of 2024–25 Portfolio Budget Statements.

In determining the 2024–25 audit work program, the ANAO considers prior-year audits and other review findings and what these indicate about portfolio risks and areas for improvement. The ANAO also considers emerging risks from new investments, or changes in the operating environment and coverage across the sector.

The primary risk identified for the portfolio is the appropriate use of purchaser–provider arrangements in place within the Department of Employment and Workplace Relations (DEWR), specifically in the employment, skills and training program areas.

Specific risks in the Employment and Workplace Relations portfolio relate to service delivery, regulation and financial management.

Service delivery

Monitoring of performance through effective contract management is required to ensure programs are being delivered effectively and achieving intended outcomes . Workforce Australia was implemented on 1 July 2022  and places a greater focus on online service provision for job seekers that have the capability to actively look for employment opportunities. It also has face-to-face and more intensive supports to assist disadvantaged jobseekers, including the long-term unemployed.

The accurate application of eligibility determination and administration of the payments and supports ensures that the correct person is paid the correct amounts, and the aim of the program is being achieved. DEWR’s role in Vocational Education and Training (VET) includes service arrangements for the delivery of the Australian Apprenticeships Incentive System , and the Australian Apprenticeships Support Network. DEWR also administers other financial supports for people undertaking training, such as VET Student loans and scholarships.

Regulation

Maintaining effective regulation in the face of change or reform is critical to ensuring consistent, fair and accurate decision-making. A number of portfolio entities have responsibility for regulatory functions — Australian Skills Quality Authority, the Fair Work Commission, Office of the Fair Work Ombudsman, Comcare  and Seacare Authority. There are also two entities within the portfolio that are responsible for policy coordination and working alongside regulators — Safe Work Australia and the Asbestos and Silica Safety and Eradication Agency. These entities need to ensure they prioritise compliance, enforcement, and assurance activities where appropriate. These activities should be risk based and data driven.

Financial management

There are risks regarding transparency, consistency and appropriateness of the valuations for three entities within the portfolio.

• The Coal Mining Industry (Long Service Leave Funding) Corporation collects levies from industry employers, estimates the liabilities for long service leave entitlements, manages the pooled fund, and makes reimbursements to participating employers. Comcare collects workers’ compensation scheme premiums from Australian Government employers, manages the premium pool, predicts claims liabilities, and pays supports to claimants. For both entities, the estimation of liabilities requires careful judgement to select appropriate underlying assumptions.
• Seacare Authority oversees the national occupational health and safety and workers’ compensation arrangements for defined seafarers. Seacare Authority administers the Seafarers Safety Net Fund and collects levies from Seacare scheme employers. There is a financial risk due to Seacare Authority not been able to negotiate insurance for the Seafarers Safety Net Fund from an authorised insurer beyond 31 March 2022 in accordance with requirements of section 102(1) of the Seafarers Act 1992.

The ANAO’s performance audit activities involve the independent and objective assessment of all or part of an entity’s operations and administrative support systems. Performance audits may involve multiple entities and examine common aspects of administration or the joint administration of a program or service.

During the performance audit process, the ANAO gathers and analyses the evidence necessary to draw a conclusion on the audit objective. Audit conclusions can be grouped into four categories:

• unqualified;
• qualified (largely positive);
• qualified (partly positive); and
• adverse.

In the period between 2019–20 to 2023–24, entities within the Employment and Workplace Relations  portfolio were included in tabled ANAO performance audits seven times . The conclusions directed toward entities within this portfolio were as follows:

• one was unqualified;
• three were qualified (largely positive);
• three were qualified (partly positive); and
• none were adverse.

Figure 2 shows the number of audit conclusions for entities within the Employment and Workplace Relations portfolio that were included in ANAO performance audits between 2019–20 and 2023–24 compared with all audits tabled in this period.

Figure 2: Audit conclusions 2019–20 to 2023–24: entities within the Employment and Workplace Relations portfolio compared with all audits tabled

Source: ANAO data.

The ANAO’s annual audit work program is intended to deliver a mix of performance audits across seven audit activities: governance; service delivery; grants administration; procurement; policy development; regulation and asset management and sustainment. These activities are intended to cover the scope of activities undertaken by the public sector. Each performance audit considers a primary audit activity. Figure 3 shows audit conclusions by primary audit activity for audits involving entities in the Employment and Workplace Relations portfolio.

Figure 3: Audit conclusions by activity for audits involving entities within the Employment and Workplace Relations portfolio, 2019–20 to 2023–24

Source: ANAO data.

Overview

Entities within the Employment and Workplace Relations portfolio, and the risk profile of each entity, are shown in Table 1.

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

Note a: Sourced from Public Governance, Performance and Accountability Act 2013 (Flipchart of PGPA Act) Commonwealth entities and companies (Department of Finance) as at 1 March 2024.

Department of Employment and Workplace Relations

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

The Department of Employment and Workplace Relations’ total budgeted expenses for 2024–25 are $5.9 billion, with suppliers and subsidies representing 45 per cent and 19 per cent respectively, as shown in Figure 4. Trade and other receivables represent 79 per cent of total budgeted assets.

Figure 4: Department of Employment and Workplace Relations’ total budgeted financial statements by category ($’000)

Source: ANAO analysis of 2024–25 Portfolio Budget Statements.

There are four key risks for the Department of Employment and Workplace Relations 2023–24 financial statements that the ANAO has highlighted for specific audit coverage, including two risks that the ANAO considers potential key audit matters (KAMs).

• The accuracy of Workforce Australia program expenses, due to the complexities in implementing a relatively new program including new payment structure and compliance requirements. (KAM – Completeness and accuracy of Workforce Australia expenses)
• The estimation and valuation of the Vocational Student Loans program (VSL) and Australian Apprenticeship Support Loan (AASL) receivables, due to the complexity of the actuarial estimation process. (KAM – Valuation of VSL and AASL receivables)
• The establishment of a new company code for the Department of Employment and Workplace Relations, requiring the transfer of staff, opening balances and other financial data.
• The completeness and accuracy of financial balances, as a result of the complexity and range of IT systems that are used to maintain information and process payments.

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 assets for 2022–23 were $2.2 billion, with unit trusts attributable to 93 per cent, as shown in Figure 5. Total liabilities were $1.8 billion, with the majority of these liabilities attributable to the provision for reimbursements.

Figure 5: Coal LSL’s actual financial statements by category ($’000)

Source: ANAO analysis of Coal LSL’s 2022–23 Annual Report.

There are two key risks for the Coal LSL’s 2023–24 financial statements that the ANAO has highlighted for specific audit coverage.

• 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 work health and safety regulator, a workers’ compensation scheme administrator and an insurer and claims manager. Comcare’s purpose is ’to promote and enable safe and healthy work’. Comcare’s strategic priorities for 2024–25 are focused on the prevention of work-related injuries and delivering better return to work outcomes particularly in relation to psychological injuries.

Comcare’s total budgeted liabilities for 2024–25 are $2.6 billion, with other provisions representing 98 per cent as shown in Figure 6. Budgeted revenue is just under $381.3 million, with 63 per cent attributable to workers’ compensation premiums, 16 per cent attributable to other revenue and eight per cent attributable to regulatory contributions.

Figure 6: Comcare’s budgeted financial statements by category ($’000)

Note a: Amounts in Figure 6 represent departmental components of the PBS. Administered components relate to the Seafarers Safety, Rehabilitation and Compensation authority (Seacare Authority).

Source: ANAO analysis of 2024–25 Portfolio Budget Statements.

There are two key risks for Comcare’s 2023–24 financial statements that the ANAO has highlighted for specific audit coverage:

• Valuation of Workers’ Compensation and Asbestos Claims Provision due to the judgements involved in the assumptions, calculations underpinning the actuarial assessment, and the availability, quality and completeness of data used to derive the valuation.
• Revenue recognition due to the complexity of legislation involved and the significance of the amounts involved in the ongoing operations of Comcare.