The state government has secured a last-minute deal with the community services sector to reduce a portable long service leave levy by 25 per cent in the first year after warnings the financial burden could lead to service closures and additional costs for taxpayers.
The industry, which counts 250,000 workers, has been in negotiations with Industrial Relations Minister Sophie Cotsis since the NSW government legislated the portable long service leave scheme in June 2024. But the agreement was struck less than a week before the first payments were due and a day after the Herald asked questions about industry warnings the full 1.7 per cent levy would “place untenable pressure” on providers.
The reforms, designed to manage burnout and keep essential workers in the sector, are modelled on a scheme that has been in effect in the building and construction industry since 1975. The sector spans aged care, disability support, youth work, mental health and homelessness, focusing on the state’s vulnerable and disadvantaged.
Under the changes, community service workers can now accrue 6.1 weeks of long service leave after a seven-year tenure in the industry rather than 8.7 weeks after 10 years at a single company.
National Disability Services NSW state manager Lowri Williams welcomed the temporary reduction in the levy, saying the measure was a practical response to the real financial pressures facing organisations in the sector.
On Tuesday, before the deal, she said survey data showed nearly three-quarters of disability service providers were operating at a loss or just breaking even, and the full levy “places untenable pressure” and “risks service withdrawals and closures across NSW” unless a transitional approach was implemented.
NSW Council of Social Services had previously estimated the total additional cost of the levy to the sector at $84 million per year.
Industrial Relations Minister Sophie Cotsis said the state government had listened to the community services sector and understood the financial pressures they were under.
“We’ve listened to the workers in this sector, including the women who make up 75 per cent of this workforce and have been calling for this reform to help minimise burnout and fatigue,” she said.
“This approach also tackles recruitment and retention issues by incentivising workers to stay in the industry with the confidence that their long service entitlements move with them from job to job.”
The decision landed as federal Health Minister Mark Butler announced sweeping reforms to the National Disability Insurance Scheme (NDIS). Under the proposal, 160,000 participants will be taken off by the NDIS by 2030, with the yearly growth rate reduced to 2 per cent until the end of the decade.
After the Herald emailed questions to Cotsis about noon on Tuesday, a previously unplanned meeting between the minister’s office and advocacy groups was scheduled for 8.30am the following day. The agreement, which will reduce the levy by a quarter for the 2025-26 financial year, was hammered out by Wednesday afternoon.
The government said the decision will save the sector about $50 million.
Interaction Disability Services chief executive Brett Thompson said the reduction was “welcome relief”. He had earlier warned that without change, the full 1.7 per cent levy was projected to increase his average yearly long service leave payments from $127,500 to $282,500 over each of the next two financial years.
Under the new model, those payments are made to the Long Service Corporation on a quarterly basis rather than when each employee reaches the threshold for long service. Thompson said there was no clarity about what would happen to the funds for employees who left the sector before they reached the threshold for long-service leave.
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Max Maddison is a state political reporter at The Sydney Morning Herald.
