Bruce Billson (Dunkley, Liberal Party, Minister for Small Business) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Today I introduce the Superannuation Guarantee (Administration) Amendment Bill 2015 to amend the Superannuation Guarantee Administration Act 1992 to simplify when a standard choice form—which allows an employee to nominate their chosen superannuation fund—has to be offered by an employer to an employee.

The government's commitment to cut $1 billion a year in red and green tape will result in a more efficient government and more productive businesses. To date this commitment has seen us remove $2.45 billion. But our conviction is to go further and tackle overreaching excessive and unnecessary compliance burdens. This bill is part of a package of measures that will further contribute to extending our progress by reducing the superannuation compliance costs for employers.

These changes play an important role in further delivering on this conviction of reducing red tape, particularly for small businesses.

Small businesses play a very important role in our economy. Around 97 per cent of businesses are small. However, as they are small, often these businesses lack economies of scale. While a big business may have an overall higher compliance cost, we need to remember that small businesses have fewer staff than big businesses and often have less expertise and capacity in dealing with complex regulation.

For example, a big business may have a number of expert staff performing specialised functions, whereas small business owners may be responsible for not only the core business of the enterprise but all of the general administrative tasks that go along with running a business, such as managing the accounts, the payroll and superannuation. These tasks are important but the time a small business has to spend managing these tasks can take enterprising men and women away from the key task of running their business and become a barrier to employing more staff.

Reducing red tape and making life easier for these businesses to comply with the superannuation guarantee regime is a vital step in encouraging these businesses to grow.

Businesses that do not meet their superannuation guarantee obligations risk harsh penalties so it is important that we make it as easy as possible for all employers to pay their workers' superannuation on time.

In January 2014, we made a public commitment to the Australian people that this government would make life easier for small business by reducing their superannuation compliance burden.

Part of this commitment was to move the government operated small business superannuation clearing house to the Australian Taxation Office.

The clearing house is a free online service that helps small businesses meet their superannuation guarantee obligations by allowing employers to pay superannuation contributions in one transaction to a single location to reduce red tape and compliance costs.

By moving the clearing house to the ATO we ensured this free service is within the agency that knows who is eligible for this free service. This means the ATO can help increase awareness of the benefits of the service to eligible businesses, and this will in turn increase the take up rate of the clearing house.

We have already seen an increase in the number of small businesses registered to use the service since we moved it into the ATO. Between 1 April 2014 and 30 April 2015, around an additional 42,500 employers registered with the superannuation clearing house service. This brings the total number of employers registered to use the service to just over 100,000.

By increasing the use of the superannuation clearing house, we are also helping small businesses comply with SuperStream. Under the new SuperStream arrangements all superannuation contributions from employers must be made electronically from 1 July 2016. Businesses who are registered with the superannuation clearing house will automatically meet their SuperStream obligations.

In January 2014, we also made a commitment to consult extensively on the drivers of superannuation compliance costs and develop options to reduce this burden on small businesses.

To help us meet this commitment, in 2014, the Treasury undertook two rounds of public consultation. This consultation explored these compliance costs and canvassed options to reduce the regulatory compliance burden. The changes in this bill were developed during this consultation process.

One of the changes this bill brings about is that employers will no longer have to provide a standard choice form to temporary residents. A standard choice form allows employees to nominate their superannuation fund. Generally employers have to give this form to employees within 28 days of the employee starting their job.

I would like to emphasise that the government is not taking away the right of a temporary resident to choose a superannuation fund. What we are doing is simplifying the paperwork requirements for businesses that employ temporary residents such as those on a working holiday visa.

Under these changes, employers will no longer have to supply a standard choice form to temporary resident employees. It also means time-poor small businesses will no longer have to spend time explaining how to complete the form.

This change will also make it easier for employers to pay their workers' superannuation on time.

As I have already mentioned, temporary residents will still be able to choose their superannuation fund if they wish to do so.

This change may be especially beneficial in industries that are reliant on large numbers of working holiday-makers to meet peak workloads, such as in the hospitality and agricultural sector.

The majority of businesses in these sectors are small businesses. Around 92 per cent of businesses in hospitality and 99 per cent of businesses in agriculture are small businesses.

This means that although these changes will benefit all businesses, they will be particularly beneficial to the many small businesses in those sectors that often employ people on working holiday visas for short-term and intermittent work.

By removing these requirements employers will no longer risk incurring a choice shortfall penalty if they do not supply a standard choice form to temporary residents.

To make this change streamlined across all visa classes, we have also included New Zealand residents in the definition of a temporary resident even though these workers can generally stay indefinitely in Australia as Australia has a special relationship with New Zealand. We made the decision to include New Zealand residents in the measure as exempting New Zealand residents would have added complexity for time-poor small businesses. By including New Zealand residents in this measure, employers will not have to keep track of whether or not an employee is from New Zealand when relying on this exemption to provide a standard choice form.

This bill also introduces a second change to the superannuation choice regime. Currently, when a superannuation fund merges with another superannuation fund, there is an obligation on employers to re-offer a standard choice form to employees.

This obligation is an unreasonable burden on employers. It is also an obligation that many employers may not be aware of. Currently, employers may incur the choice shortfall penalty if they do not comply with this requirement. This bill removes this requirement on employers.

An employee whose superannuation fund has merged with another fund will continue to be notified of their new fund. This is a requirement under the corporations law.

We are not limiting an employee's right to choose their fund. An employee whose fund has merged with another fund will still be able to choose a different superannuation fund and roll over their money if they are dissatisfied with the new fund.

This bill balances the need to protect choice for employees while at the same time reducing red tape and making the superannuation guarantee regime easier to comply with.

Both of these changes to the superannuation guarantee regime will commence from 1 July 2015.

As I have mentioned before, this bill reduces the compliance costs on businesses, especially small businesses. These changes will result in around $45 million in annual compliance costs savings for business, which will help the government further progress well beyond its red and green tape targets. These changes also complement other measures the government is implementing to reduce the compliance costs on small business.

The government will expand the eligibility of the government's superannuation clearing house service. From 1 July 2015, small businesses with a turnover under the small business entity threshold, which is currently $2 million, or that have fewer than 20 employees will be able to use this free online service to pay their workers' superannuation. Currently only businesses with fewer than 20 employees can use the service.

This change means around an additional 27,500 small businesses will be able to access to the clearing house from 1 July 2015. Expanding the clearing house also means businesses that exceed the current employee threshold by hiring temporary or casual staff to cover peak work periods, such as seasonal work, will still be able to access this service if their turnover is under $2 million.

Simplifying when a standard choice form has to be provided by an employer and expanding the clearing house is another part of a package of reforms that the government has announced to reduce superannuation compliance costs. This second phase of the reforms will be changes to reduce the harshness and simplify the superannuation guarantee charge. The changes to the superannuation guarantee charge will commence from 1 July 2106.

The full details of the amendments are contained in the explanatory memorandum. I commend the bill to the House.

Debate adjourned.