Cathy McGowan (Indi, Independent) Share this | Hansard source

I move:

That this House:

(1) notes that:

(a) the Superannuation Guarantee system—in conjunction with voluntary superannuation contributions and a means-tested, government funded age pension—forms an integral part of Australia's retirement income policy;

(b) recent analysis by Industry Super Australia indicates employers failed to pay an aggregate amount of $5.6 billion in Superannuation Guarantee contributions in 2013-14;

(c) this amount represents 2.76 million affected employees, with an average amount of more than $2,000 lost per person in a single year;

(d) within the electoral division of Indi there were 16,068 affected employees, with an average amount of $2,001 lost per person in a single year;

(e) evidence received by the Senate Economics References Committee inquiry into the Superannuation Guarantee indicates a failure to adequately detect and address that Superannuation Guarantee non-compliance causes long term financial detriment to millions of Australian employees, significant competitive disadvantage to compliant employers, and an unnecessary impost to Government finances through additional reliance on the age pension; and

(f) in its report, the Committee:

  (i) concluded the current approach of the Australian Taxation Office (ATO) in identifying and addressing Superannuation Guarantee non-compliance is inadequate and recommends that the ATO takes a more proactive stance;

  (ii) argued that there is a compelling need for the determination of a reliable Superannuation Guarantee gap figure annually in order to track rates of Superannuation Guarantee non-payment, analyse which policies are effective, and ultimately minimise the problem;

  (iii) recommended the current Superannuation Guarantee Charge framework, with its reliance on employer self-reporting, should be reviewed in order to ensure that penalties are strong enough deterrents; and

  (iv) considered it is crucial to move Superannuation Guarantee compliance from the 'paper age' to the 'digital age', enabling a greater focus on proactive methods, and in turn increasing the effectiveness of efforts to detect and remedy Superannuation Guarantee non-compliance; and

(2) calls on the Government to accept and act upon all 32 recommendations made in the Committee's report to address the significant problem of Superannuation Guarantee non-compliance.

In moving this motion, I call on the government to recognise that the superannuation guarantee system in conjunction with voluntary superannuation contributions and a means-tested government-funded age pension form an integral part of the Australian retirement income policy. All employees must receive the full benefits of their superannuation guarantee entitlements. They should not be short-changed by employer noncompliance or bankruptcy. I believe in fact that we've come to an emergency situation, where hundreds of thousands of people have fallen through the cracks and have missed out on their superannuation entitlements, often thousands of dollars, through no fault of their own. Superannuation guarantee noncompliance has, according to the super funds themselves, cost as many as 2.7 million Australian workers an estimated $5.6 billion in one year alone: 2013-14. When employers fail to meet their obligation to pay employees their proper entitlements, we see poorer retirement outcomes for those workers who miss out. As a consequence, there's a higher age pension liability for the Australian government.

In December 2016 a report from the Industry Super Australia and CBUS indicated that retirement incomes have been undermined over many years by employers who have not met their obligations on behalf of workers. On average, Australian workers have missed out on more than $2,000 per person each year. On 30 August, the ATO, the Australian Taxation Office, reported that Australian workers are denied as much as $2.8 billion in superannuation payments each year. So we've got a serious problem here.

I first became aware of this when the employer of a constituent—and I would like to acknowledge Cheryl Robl, of Wangaratta—claimed bankruptcy, leaving her retirement fund short-changed by more than $8,000. There have been at least another five constituents who have approached my office with similar stories of lost savings. We as an office have had limited success in working with them to resolve this. The sensitivity around their loss and the betrayal of trust is such that they are reluctant to make their identities public. Ms Robl recently advised the Australian Taxation Office that her employers had failed to honour the superannuation guarantee charge to her fund. She followed the ATO formal superannuation recovery process to the letter, but, even after the ATO took steps to collect the debt owed to her, she was left empty-handed, and earlier this year the case was closed. The bankruptcy trustee advised that there's no money to be claimed. Despite this devastating outcome, Ms Robl directed her energies into highlighting the impact of what happens when employees miss out on the superannuation guarantee entitlements. She's become the face of this issue in my electorate. I want to thank and acknowledge her for her determination in ensuring that this problem remains before the government, needing a solution.

I also want to acknowledge the work of the North East Media newspaper journalist Jamie Kronborg, who told her story and the personal stories of others impacted by this superannuation emergency. And, through the Wangaratta Chronicle, Jamie Kronborg has followed these stories. I acknowledge the role of the local media in bringing these cases to my attention and to that of the public. Their work ensures that we have a clearer understanding of the extent of the problem and its impact on our constituents. Following this, I made representation to the Minister for Revenue and Financial Services, Kelly O'Dwyer, in December 2016 and also asked the minister a question in parliament. While there is a clear legislative framework for the ATO to protect employees, the legislation only works if there is adequate resourcing for the ATO to respond quickly to claims. Ms Robl did everything absolutely correctly but was still unable to recover her superannuation.

Late last year, the Senate agreed to an inquiry into unpaid superannuation. The inquiry made its report in March 2017, with 32 recommendations. The minister also established a superannuation guarantee cross-agency working group, which released its final report on 14 July this year, with nine recommendations. I'd like to place on record my support for the minister and my acknowledgement of the action she has taken. Perhaps it is too little too late, and there's a long way to go before this issue is resolved. On 29 August—in fact, last week—Minister O'Dwyer announced that the government would introduce a package of reforms to give the Australian Taxation Office near real-time visibility over superannuation guarantee compliance. I welcome this package. It includes measures to require that superannuation funds report contributions received at least monthly to the ATO. It requires a rollout of the single-touch payroll, or STP, system, which will reduce the regulatory burden on businesses and transform compliance by aligning payroll functions with regular reporting of taxation and superannuation obligations. This is long overdue. The package involves the improvement of the effectiveness of the ATO recovery powers, including strengthening director penalty notices and the use of security bonds for high-risk employers to ensure unpaid superannuation is better collected by the ATO and paid to employees' super accounts. It gives the ATO the ability to seek court ordered penalties in the most serious cases of nonpayment, including employers who repeatedly fail to pay their superannuation guarantee liabilities. In July, the government introduced legislation to close a legal loophole used by employers who have previously counted salary sacrifice amounts paid by employees towards their own employer contributions. That was very welcome.

All these changes are, in fact, welcome, but they come too late for my constituent and others in my electorate and they come too late for millions of others who may never see their full entitlements paid. The ATO is dealing with about 20,000 complaints about unpaid super each year from both current and former employees. In announcing the government's most recent package, Minister O'Dwyer pointed out that employers' failure to meet their superannuation guarantee obligations to their employees has been a problem since the guarantee was first introduced in 1992. Successive governments have failed to make significant reforms to the system. The ATO has managed to recover more than $2 billion owed to employees since 2010, but even it admits estimates of losses to employees are conservative. So I welcome the strengthening of employer penalties for noncompliance and the increased powers for the ATO when dealing with repeat offenders. The move to single-touch payroll electronic payment systems will give the ATO near real-time visibility on an employee's wage and super payments, particularly amongst small businesses, where the problem of noncompliance is most acute.

However, the government needs to act on further key reforms, including all 32 recommendations of the Senate Economics References Committee. The super industry has been united in calling for an expanded taxpayer funded safety net to cover super entitlements for workers in cases where their employer goes broke. The existing Fair Entitlements Guarantee, the FEG, is limited to outstanding wages, is only for bankrupt and insolvent companies and doesn't cover super. The government needs to consider a recommendation to improve pay-slip reporting to help employees keep better track of their super payments by providing the ability to check that their super has actually been paid into the fund. The requirement for improved pay-slip reporting to include superannuation guarantee payments is outlined in a private members' bill proposed by the member for Mayo. The bill will be introduced to the House in the near future. I welcome that.

In closing, I want to acknowledge the work that the government has done so far, but it's not enough. We need to go much further. We need to address many of the issues that people in my constituency are feeling. I welcome the work of the ATO in prioritising this work, but they need more resources. They need significantly more resources to get on top of what I call this emergency. As a local independent member of parliament, I'm proud to bring these issues to parliament. I'm really proud to have this debate today, and I thank my colleagues for participating in it. I ask for your continued support as we work with the government to make sure people's super guarantees are protected for their retirement, thus saving the government money through pension schemes.

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