There's Nothing Super about Lowering Superannuation Penalties
03 Feb 2016
Originally published on Huffington Post on Wednesday, 3 February 2016.
Are you one of the 690,000 or so Australians who weren't paid superannuation correctly last year? Most of us can depend on our employers to do the right thing and contribute quarterly to our retirement savings, but if you're the one in 15 Australian workers, you might be missing out.
Research by Tria Investments for CBUS found that Australians are losing $2.6 billion in super annually, a figure growing at around 5 percent per annum. With such a widespread problem bubbling under the surface of our superannuation sector, you'd be right to expect your Government to do something about it.
And they are -- incredibly, this Turnbull Government intends to make it worse. What Minister O'Dwyer hasn't mentioned when discussing the Government's plans for super recently is her proposal to lower the penalties for employers who do not meet their superannuation obligations.
As it stands, if your employer is caught not paying adequate superannuation obligations to your nominated fund on time, they are liable to pay the shortfall, plus interest and a fee. Remarkably, the Government has introduced legislation to lower the shortfall, decrease the period over which the interest is calculated and remove the specific fee.
If it sounds outrageous, it's because it is. Her predictably disappointing defence of this policy is that the penalties are "red tape". In fact, they introduced the legislation during one of their "red tape repeal day" stunts.
But in my opinon, complying with the super guarantee laws isn't red tape, it's ensuring that Australians get the superannuation they have worked for and are entitled to. Dismissing that speaks volumes about the Government's cold and callous ideology.
Australian workers need to know about the billions of dollars they're missing out on, or the big and growing problem with unpaid super, or the Government's legislation which will make things worse.
It's easy to get lost in the big numbers that are bandied around in the super debate, so think of it this way -- the 690,000 Australians affected by non-compliance lose an average of $3,800 a year.
That's bad, but it's worse when you consider the compounding impact of that lost super at retirement time. If you're a 20-year-old dudded by your employer in super this year, by the time you retire that $3,800 lost could mean a $100,000 hole in your super balance.
The ATO described non-compliance with SG obligations as "endemic", and the Australian National Audit Office found in 2015 that as many as 11 to 20 percent of employers could be non-compliant with their SG obligations. These are the Government's agencies: they should pay them more heed.
It's called the Super Guarantee for a reason; it's not an optional extra. Employers should be penalised when they don't comply with those laws. If Governments don't want to improve the situation they should at least not make it worse.
While the Minister has some worthy ideas around employee choice of fund on the table, the most consequential parts of her plans for super are of a piece with the damaging ideological agenda pursued under Tony Abbott and continued apace under Malcolm Turnbull.
This change to SG penalties, as well as their plans to freeze the super guarantee at 9.5 percent and abolish the Low Income Super Contribution for 3.6 million Australians (including 2.2 million women) will make the super system worse, not better, for everyday Australian workers.
In the last week of Parliament last year, I moved a motion to scrap these harmful changes to the super guarantee charge system. If the Government was interested in improving the super system, they'd endorse this amendment when debate resumes in the House of Representatives this week.
But if the Turnbull Government proceeds with these changes, Labor's commitment to the 690,000 Australians who miss out on their super, and those who will be more likely to miss out in the future, is that they will have a fight on their hands.