Rebekha Sharkie (Mayo, Centre Alliance) Share this | Hansard source

The $4 trillion Australian superannuation system is, overall, I think, a success. It covers around 90 per cent of workers, allowing them to plan for financial independence in their retirement; it makes financial capital available for large-scale investment in Australian infrastructure and enterprise; and it reduces some of the costs of age pensions for taxpayers. The better the superannuation system, the less we need to draw down for the age pension. So looking after workers is the right thing to do, and effective super policy does make good economic sense.

Notwithstanding this success, many constituents over the years have approached me because they have not been paid their superannuation entitlements. In fact, it has shocked me over the years—the people who have approached me. It's been very difficult for them, particularly if they are still with that employer, to raise this issue, and they're not alone. According to the Super Members Council, unpaid super is costing working Australians $110 million a week. In 2021-22, 2.8 million Australians missed out on $5.1 billion in superannuation entitlements. The Super Members Council's latest figures show unpaid super has grown to $5.7 billion a year.

This affects more men than women, as they work in industries and occupations with higher rates of underpayment and, on average, make more income than women. But the impact on women is often more acute, as they often have lower super balances going into retirement. Blue-collar workers in construction, trades and transport are most likely to miss out—and I've certainly heard from many mechanics and those working in factories in my community that have experienced this—with 41 per cent of labourers experiencing unpaid super. In other industries which experience high rates of business insolvencies, unpaid super is also more common. Retail trade and accommodation and food services have also been found by the ATO to be of high risk in recent years. The average worker will miss out on around $26,000 in super for women and $36,000 for men at retirement due to the effects of unpaid super and that compounding loss over time. My electorate of Mayo has actually been one of the worst affected communities for this, with the highest average underpayment of any South Australian electorate, totalling $33 million in superannuation debt. That affects over 19,500 workers, with an average underpayment of $1,690 per person.

Unpaid super allows non-compliant businesses to compete on an uneven playing field with those who pay their workers' entitlements and pay them on time. This bill will require employers to meet key obligations to accurately calculate employees' individual superannuation guarantee and the quantifying earnings; make contributions before the end of the seventh business day after payment of those earnings, or 14 days for a new employee; and comply with the employee's choice of fund. These reforms will go some way to protect employees by ensuring superannuation is paid in real time and not months later—or, indeed, perhaps not at all. It will reduce the unpaid debts that accumulate before some employers collapse or restructure, and it will empower the Australian Taxation Office to assess and recover unpaid superannuation more promptly. It will also hold directors accountable through stronger penalties for systematic noncompliance.

I think it must be said that the vast majority of employers in Australia do the right thing, and I think nearly every employer in Australia does want to do the right thing. It is going to make a big difference to workers like my constituent Katherine in the future. Earlier this year, Katherine's employer terminated her employment and that of several of her colleagues. They were told by the business that, while it was not currently able to pay their entitlements, they would be paid in full. After weeks of seeking payment of their entitlements, Katherine and her former colleagues contacted the Fair Work Ombudsman. Their former employer advised the ombudsman that they would be paid within the week, but they were not. They made complaints to the Australian Taxation Office regarding their unpaid wages and superannuation owed. Katherine is trying to maintain hope, but they remain in limbo, as the former employer, which is an NDIS registered provider, still continues to trade but says that it lacks the funds to pay their entitlements. With the passage of this payday superannuation bill, it will be much harder for Katherine's former employer, or others like it, to get into this situation in the first place. Employers will not be allowed to accumulate a superannuation debt under the radar because they will be required to pay within the seven days after pay day, rather than quarterly. Employees and, importantly, the ATO will become aware sooner if superannuation payments are not being paid into their fund.

There have been concerns raised that employers may not have enough time to deploy, test and implement changes pre-commencement of this act, particularly system changes. I absolutely appreciate that the timeline is tight—eight months from passage to commencement—and some challenges may remain that need to be addressed. I absolutely have sympathy for some businesses, particularly small businesses, who are worried about this additional compliance burden. We know this has been coming for some time; it was flagged in the 2023-24 budget. It must be said that workers have been waiting at a collective cost to them of over $5 billion a year in unpaid super. I feel that that loss must be addressed. I understand the ATO's first-year compliance approach will allow some leniency during this initial period for low to medium at-risk employers who are genuinely trying to make efforts to comply; I understand that this is genuinely the case.

For too long I have been raising concerns about unpaid superannuation. In fact, in 2017 in this place I introduced a private member's bill called the Fair Work Amendment (Recovering Unpaid Superannuation) Bill. My bill would have improved notification requirements of payment, or indeed nonpayment, for employers and superannuation funds and included superannuation within the National Employment Standards, providing more avenues for employees to pursue their unpaid superannuation debts. That bill contained other measures, including the ability for employers to claim salary-sacrificing super as if they were employer superannuation contributions—we needed to get that removed—and an exemption allowing employers to not make superannuation contributions to employees when they earn less than $450 in wages each month. I'm glad those issues have been addressed.

It's really important that we provide employees with every avenue we can to try and recover their super. In my experience, when I've seen notifications from employees who have tried to use the ATO to recover funds, it has not always been very successful. It's very important that we look to include superannuation in the National Employment Standards. This would mean that most employers would have that access rather than relying on the ATO to do that debt recovery. I remember seeing one form from the ATO when a constituent was owed several thousand dollars. The ATO recovered something like $2.50, an absolutely nominal amount, and said, 'We've made a recovery and we're closing the case.' We need to have a much, much better system; perhaps that's more people working in the ATO on this issue of superannuation and debt recovery, which is what it is. It makes it very, very difficult. I've heard from apprentice hairdressers, from hairdressers who are qualified hairdressers and have been in the industry for a long time, from mechanics and from people who work in retail. In some cases, they've been working at businesses that are very, very well-known businesses in my community. The level of unpaid superannuation that exists in our nation has shocked me.

In 2021, only 17 per cent, or under $1 billion, of unpaid superannuation guaranteed entitlements were recovered from $4.7 billion total of unpaid super. The 2022 Australian National Audit Office report into superannuation guarantee noncompliance found that the ATO's use of the framework was only partially effective. While 9,594 fines were issued in the 2021 period by the ATO, only 43 per cent of them required a business to pay a penalty above the unpaid amount, and less than one per cent included the maximum 200 per cent penalty. And the burden of reporting remains with workers, who report 78 per cent of recoveries, with automated detection by the ATO remaining very, very low. We need prompt and proactive compliance. Recovery action really is the best chance for people to get that super back into their balance, because we need that interest to compound. Further work will be needed in future on recovery of entitlements for workers in cases where there's business insolvency. Super entitlements are usually last in line after wages and business debts—they're certainly well behind secured debts—with ASIC data showing that, in 2022-23, 15 per cent of insolvency cases involved unpaid wages but 45 per cent of cases involved unpaid superannuation.

Just this week the Herald Sun reported that 200 workers for a disability provider will be missing out on their unpaid super following the company's collapse. It is reported that 174 staff are due a total of $264,000 in unpaid superannuation contributions, with the company having 74 unsecured creditors owed $330,000 and a net bank balance of $3,000. While unpaid wages, along with leave and redundancy pay, can be claimed under the Fair Entitlements Guarantee—the Australian government's compensation scheme of last resort—in cases where there's a business insolvency, the Fair Entitlements Guarantee does not at present cover superannuation. I think that it really should so that, in cases such as this, workers will be looked after by the FEG in terms of their superannuation entitlements. It sends a very clear message that superannuation is as important as wages.

I call on the government to take that next step and to consider amending the Fair Entitlements Guarantee to include superannuation guarantee contributions aligned with the ability to claim unpaid wages. I understand how businesses can get behind. Wages and super are some of the largest expenses that businesses experience. But we need to ensure that workers receive the entitlements they are absolutely entitled to have. This is part of their salary and it must be paid, and that is the long and short of it.

I want this bill to succeed in order to prevent more of my constituents being blindsided by unpaid superannuation. Often it's a year or so before they realise that they're not getting paid superannuation—just like my constituent, Katherine. I don't want to hear from more employees who are struggling, particularly those who haven't been able to find other work and are still in that workplace, having to have those very difficult conversations with their employers about why their superannuation hasn't been paid. I commend the bill to the House.

The House of Representatives transcript was published up to 12:02 . The remainder of the transcript will be published progressively as it is completed.

The DEPUTY SPEAKER ( Ms Lawrence ) took the chair at 09:30.

See this speech in context