Northern Territory Second Reading Speeches

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CONSTRUCTION INDUSTRY LONG SERVICE LEAVE AND BENEFITS AMENDMENT BILL 2009

Madam Speaker, I move that the bill be now read a second time.

The purpose of this bill is to amend the
Construction Industry Long Service Leave and Benefits Act to introduce a $1bn project cost threshold for large scale construction projects above which an actuarially determined levy rate would apply. The Northern Territory’s portable long service leave scheme for building and construction industry workers enables eligible workers to qualify for long service leave entitlements based on service in the industry, rather than service to a single employer.

An inherent design feature of the Territory’s scheme is there is a high degree of cross-subsidisation from larger scale projects. This is due to these projects having higher capital costs while labour represents a lower percentage of overall project costs compared with smaller construction projects such as residential developments. This is necessary to fund entitlements for those workers employed by the smaller scale projects which do not contribute financially to the scheme. However, very large capital intensive projects, the levy income derives under the current flat levy rate structure may far outweigh the long service leave costs incurred on the project and cross-subsidisation may be too large.


At the completion of the scheme’s third year of operation the scheme actuary undertook the first formal actuarial review of the scheme. In addition to the prescribed scope of the review, advice was also sought on options for accommodating large scale construction projects. The review found there is scope to adjust the levy mechanism for very large projects by establishing a $1bn project cost threshold and introducing an additional levy rate based on the estimated impact on scheme liabilities to apply to project costs above a threshold. Accordingly, it is appropriate to introduce the actuarial recommendations regarding large scale construction projects in a timely manner to encourage further investment in the Territory during the current downturn in the international economy.


As such, the Construction Industry Long Service Leave Amendment Bill 2009 introduces a two tier levy regime for construction projects with construction costs in excess of $1bn. The prescribed levy rate which applies to all eligible construction projects under the scheme, would apply to the first $1bn. A project’s specific levy rate, determined by myself as the responsible minister, would apply to project costs in excess of the $1bn threshold.


The project specific levy rate would be set at a level sufficient to meet the liabilities imposed on the scheme by the project costs above the $1bn threshold. Under the proposed bill, I must determine the project’s specific levy rate after considering a review by the scheme actuary. I believe the amendments before the House today will reduce impediments to investment in major projects in the Territory, while preserving the financial viability of the scheme and its ongoing capacity to provide long service leave entitlements to workers in the construction industry.


I commend this bill to honourable members, and I table the explanatory statement to accompany the bill.


Debate adjourned.


 


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