Tuesday, 11 February 2020
Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019; Second Reading
Our superannuation system is a significant national achievement. It sits alongside Medicare, the Pharmaceutical Benefits Scheme and the NDIS as something that has made our nation stronger, and it makes Australians proud. Unfortunately, unpaid super has become a huge problem. It impacts on workers right across Australia. Industry Super Australia modelling shows that workers are losing $5.9 billion per year in unpaid superannuation. More than 91 per cent of Australians strongly support the superannuation system. The Australian people know that super is part of a worker's pay and conditions, and every worker deserves to receive the superannuation that they're entitled to.
The proposed Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill contains a single schedule that would provide for a one-off 12-month superannuation guarantee amnesty for employers who have not paid their required superannuation guarantee contribution over the past 26 years. Labor strongly disputes the need for an amnesty for unpaid superannuation guarantee entitlements. On 19 December, the Senate referred the provisions of the bill to the Economics Legislation Committee for inquiry. The inquiry uncovered a distinct lack of stakeholder advocacy for the amnesty. This is not a bill that has a lot of love. In fact, what stakeholders told us was that there are concerns that the amnesty could be counterproductive to broader compliance effort.
This bill totally misses the mark. It fails to address the unpaid super issue. Rather than increasing penalties for employers who don't pay their workers, for example, the government wants to give them a free pass. Why? On what basis? What's the rationale? The academic literature on the effect of amnesties is mixed. Recent work from the International Monetary Fund suggests that amnesties may be counterproductive and reduce further compliance, particularly if amnesties become a regular occurrence and employers assume that they just have to wait for the next one to come along.
During the Senate inquiry, Treasury confirmed that $230 million is expected to be brought forward under the amnesty—a very small amount when you consider this is to cover a 26-year period which, according to Industry Super's modelling, might see as much as $5.6 billion underpaid to workers. The ATO has a more conservative estimate. Their estimate is that the gap is $2.8 billion not being paid to workers over 26 years. Even accounting for inflation, nominal rates et cetera, $230 million is a very, very, very small amount to be recovering from this paltry measure. The grandly titled 'Recovering Unpaid Superannuation' bill doesn't go anywhere near that task.
Treasury officials also confirmed that the inclusion of tax deductibility for payments under the amnesty is intended to be a further driver of encouraging better behaviour from employers. Think about what that means. It means that unscrupulous employers will get a tax break when they finally own up for having done the wrong thing. Businesses who do the wrong thing and steal from workers should pay the price for that misconduct. They should not get a tax break. Usually when employers don't meet their superannuation guarantee obligations they can be liable for penalties or charges. Under the government's proposed amnesty the administration component of the superannuation guarantee charge, and the penalties, would be waived.
If you are an employee and you steal from your employer, you have the book thrown at you. The police will come around to your place. But, under this government's plan, if you are an employer and you want to steal from an employee, no worries, so long as you say sorry. We establish an entirely different rule for employers who steal deferred wages from employees. It is not right and it is not fair. An amnesty for employers who have stolen guaranteed superannuation payments from their employees is outrageous and sends the wrong message that wage theft is acceptable. The bill doesn't penalise wage theft; instead it rewards it. Furthermore, it punishes employers who do the right thing, by allowing their competitors to gain a competitive advantage through noncompliance.
The government's key justification for this bill is that some businesses unintentionally underpay their workers' super. They claim that businesses are too busy, forget or simply don't know that they're required to pay superannuation. It's argued that this is essentially just a kind of maladministration, a mistake. If it's just a mistake, if it's not a deliberate strategy, if it's not a part of the business plan, then why aren't we dealing in equal measure with a superannuation overpayment crisis? I asked about this in the inquiry. Could anyone point me to employers who are finding it very difficult because they had accidentally overpaid their employees their superannuation? Nobody could point to that circumstance, because that is not the dynamic in workplaces and not the dynamic in the market. This is not just maladministration; this is wilful disregard of entitlements that are owed to working people, and it has real consequences. People suffer real hardship when super is not paid.
I want to point of the specific consequences for women. For many women the superannuation guarantee is their only source of superannuation savings. They're not working in jobs where they're stashing away a lot of extra, and nonpayment leaves women facing even greater insecurity in retirement, even greater risk of poverty, housing stress and homelessness.
Every day we hear of another company underpaying their workers, and these stories have real impacts on real people—people like Pamela, who has only $3,000 in her superannuation account after a 20-year career as a chef. Her last job, at Alimentari cafe, paid her cash in hand below the minimum wage with no super. Anna Langford was one of nine staff who was paid less than the minimum wage and therefore underpaid superannuation. When she complained, her shifts were cancelled and she was threatened with a lawsuit. They are workers like Jason, who for the entirety of his employment with a construction company in regional New South Wales was not paid superannuation. After a court decision, he was awarded $30,000 in wages and nearly $7,000 in unpaid superannuation. These stories aren't uncommon, but this bill provides no meaningful remedy for any of those cases.
There are alternatives. One obvious alternative would be to include a right to superannuation within the National Employment Standards—a right which would give employees the power to pursue their unpaid superannuation contributions. Labor intends to introduce amendments to do this.
Currently, unpaid or underpaid employer superannuation contributions are a debt owed to the Australian Taxation Office rather than to a worker. Unless there is a clause in their award or their agreement, workers can't chase this money. It is not technically owed to them. Workers who lodge claims with the ATO may not see action for months, years or at all, with very little information given as to why. The ATO is restricted in the information it can provide workers, so it doesn't share the details of payment plans, nor does it allow anyone to contest employers' claims should they say that they do not have the capacity to repay in a reasonable time. By placing superannuation within the National Employment Standards in the Fair Work Act, all employees would be empowered to recoup unpaid super from employers through the Fair Work Commission or through the Federal Court.
Workers and their unions should have this right. They should have the right to pursue unpaid superannuation as an industrial entitlement and they should have the ability to inspect records of payment. If the government were serious about unpaid super, they would support this amendment. They would ensure that superannuation provisions are in the National Employment Standards and they would allow workers to enforce their rights at work.
This government, as has been more than obviously on display this week, has no plan for the economy, no plan for wages and no plan for Australia. The only plan they have—and it's the plan before us—is to give businesses who do the wrong thing and steal from workers a tax break. Australia's super system is the difference between poverty and a decent, dignified retirement for many people, and our focus should be on improving it. Our focus should be on addressing the fact that the average woman retires with almost half the retirement savings of a man. Labor created our world-class superannuation system and we will always fight to protect it.
I rise to speak on the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019. Of all the rorts that exist in this country, nothing compares to superannuation. With $3 trillion under management, $40 billion in tax concessions to the wealthiest 20 per cent of the population, $34 billion in management fees for shuffling paper and $600 billion invested offshore, superannuation is devouring the real economy. Furthermore, it is completely undemocratic. Why? Because no party ever took the idea of taking 9½ per cent of people's wages and giving it to someone else to manage to an election. Can you imagine if, back in 1992, Paul Keating had actually been honest with the people and told them that they were going to take 9½ per cent of their incomes and give it to someone they had never met, and they may or may not get it back until they're 60? Do you think the people would have voted for that?
Labor have a hide to talk about sports rorts when they are defending the biggest rort in town. The amount of money in super—around $3 trillion—is about 50 per cent bigger than Australia's GDP or the amount of money invested in the stock exchange. Despite this, superannuation works against so many parts of our communities. Our drought-affected regions are drained of money at a time when they need it most. How much of the money sent to the cities from the regions actually gets sent back to the regions? It is next to nothing. These communities need every last cent of income now, today, not sometime decades down the track. Why are rural communities that have no money reinvested into their communities by super funds subject to compulsory superannuation? That sucking sound is the sound of people having their pockets siphoned. I thought we were supposed to be a free country with free markets. Superannuation makes a mockery of that.
Superannuation also discriminates against stay-at-home parents; if Senator McAllister were here, I would point out that they are mainly women. Why should stay-at-home parents miss out on superannuation concessions because they have decided to raise their children and, like many are, be heavily involved in the school community? Having been a stay-at-home parent, I can tell you how important it is to have parents involved in the school community. Our teachers can't educate our children by themselves. Our schools rely on stay-at-home parents to man the tuckshops, run the fetes and help out on sports days. Stay-at-home parents can also help with aged care by keeping an eye on their parents, which in turn will relieve the pressure on our aged-care sector. Being a stay-at-home parent is also good for parents themselves. Really, do you really want to drink someone else's Kool-Aid all your life? I fail to see the logic or fairness of such a policy that punishes people for being involved in the community. Superannuation doesn't even help people on low incomes; in fact, it taxes people's income when their income is below the tax-free threshold. They end up paying 15 cents in the dollar when they normally wouldn't pay anything at all.
Why doesn't Labor stand up for low-income earners? Because trade union-owned industry super funds today effectively compensate unions for the ill effects of their collapsing memberships. Just when the rivers of gold that sustained the trade union movement for decades have slowed to a mere trickle, following a crash in union membership and lost fees, compulsory superannuation has today turned those golden streams into a virtual tsunami of cash. Therefore, perversely, at a time when trade union membership is at historic lows, especially in the private sector industry, unions' bank balances and the amounts they can afford to donate to the Labor Party have never been healthier—and it's all down to super. If trade unions really were the champions of the working class that they pretend to be, then, rather than simply passing buckets of cash to the Labor Party, they would abolish super today and let Australian workers keep their money. At the very least, superannuation should be voluntary, not compulsory. This is a view that I'll be putting to my colleagues for serious consideration. My own internal polling suggests it is a view shared by many, both here in this chamber and in the other place.
At the end of the day, super isn't working. When it was introduced in 1992, around 75 per cent of Australians got some form of the pension. Today it's closer to 68 per cent. Given tax concessions cost the budget around $40 billion, wouldn't it cost a lot less and be much more equitable to pay the pension to everyone, including stay-at-home parents, low-income earners and people in the regions? The false economy of all this, however, is that the number of people aged between 55 and 65 retiring with a mortgage has risen from 10 per cent in the mid-nineties to around 40 per cent today, and the number of people retiring without a mortgage has dropped from 70 per cent to around 40 per cent today. What do people now do when they retire? They cash in their super as a lump sum, pay off their mortgage and then go on the pension. In other words, superannuation is a false economy. It's an expensive false economy that bleeds the regions, stay-at-home parents and low-income earners to line the pockets of inner city financial elites, many of whom work for the unions. In the words of the great bard:
Fair is foul, and foul is fair.
Hover through the fog and filthy air.
The aim of this bill is to improve the quality of people's retirements by having their full superannuation entitlement paid to their nominated super fund. This bill provides a one-off amnesty to employers who choose to disclose historical noncompliance. This is done by reducing the penalties imposed on employers who take up this amnesty and pay an additional charge imposed in relation to the disclosed shortfall. In order to incentivise this self-reporting, employers who qualify for the amnesty will face lower penalties than usual. The amnesty period will be backdated to commence on 24 May 2018 and will expire six months after this bill becomes law. The payment period covered by the amnesty is July 1992 and all subsequent quarters up to and including the third quarter of 2017-18, ending on 31 March 2018. No employer will be able to benefit from the amnesty for a superannuation shortfall that relates to subsequent quarters from 1 April 2018. Essentially, the amnesty is designed to address historical noncompliance only and is not available for behaviour that occurred after it was announced.
To further incentivise the take-up of the amnesty offer and return super entitlements to workers as quickly as possible, employers will also face higher minimum penalties should they fail to come forward during the amnesty period. It is the object of this bill to ensure that any employer who chooses to roll the dice on historical noncompliance by ignoring the amnesty will receive a far greater penalty than would otherwise be imposed. It must be made clear that this amnesty is not a free pass; it is a powerful incentive for employers—who, whether by accident or design, have failed to pay guaranteed entitlements to employees—to pay those entitlements in full as quickly as possible.
The Australian superannuation industry has noted in a submission to the inquiry to consult on this bill that since the amnesty was announced on 24 May 2018 there's been a substantial increase in business paying outstanding superannuation guarantee contributions. The evidence is clear: this bill stands to make, by Industry Super's own estimate, up to 2.85 million workers better off. In the face of such a significant benefit to so many hardworking Australians, how could this chamber, right down to the last senator, with a clear conscience not support this bill? Those opposite who aim to block this bill should think again or hang their heads in shame.
This bill further complements the Morrison government's package of reforms to improve super guarantee compliance through improving the visibility of superannuation guarantee payments to the Australian tax office, introducing stronger penalties for noncompliance and ensuring more reliable collection liabilities for unpaid superannuation guarantee in the future. Australian workers want this bill passed. I commend the bill to the Senate.
I've been listening to a number of the representations from the government on the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019. There's one amazing thing—picking up on a point made by Senator Rennick, the previous speaker—and that is there are more than two million workers in trade unions. Many millions of workers work in worksites that have bargains as a result of contributions from trade unionists. There are many millions of families that contribute and receive better benefits—in actual fact, a lot of the reasons that low-income earners become middle-income earners is because they've had a chance to collectively bargain through their union. Sometimes non-union members are collectively bargaining with union members.
Part of that process has brought us to a situation where superannuation and dignity in retirement exist. But we've got a government here that wants to turn around and say that the people who steal from them should get a free holiday. They should be treated as someone who's A-OK in the eyes of this government. Well, they're certainly not A-OK in the eyes of good, hardworking Australians. They turn around and say that wage thieves should be held to account.
This bill really takes the cake. Australia is in the depths of a dual wage and superannuation crisis. On the one hand wages are not growing, and on the other hand some of those opposite want to see superannuation rolled back rather than expanded. If you listened to the previous speaker, it's confirmed: you shouldn't have superannuation. In actual fact, if you look at the most recent reports and studies from Per Capita, a well-respected think tank, they say there has not been a wage breakout as a result of the superannuation guarantee being frozen by this government. In actual fact, there's wage decline. The simplistic views and approaches by this government and by those within the government and their constant fracturing within this government in their constant fight over how they deal with wages policy—shall we take more off working people or should we just take a hell of a lot more off? That's the battle. They want to take money off people, and that's exactly what they're doing. In actual fact, they want to say to the people who are stealing money from them, 'Go right ahead, and you can have a free holiday.'
Analysis by Industry Super Australia has found that, in 2016-17, 2.85 million Australians had their superannuation stolen, to the tune of $6 billion. Where's the strategy to get that money back? That's an average of $2,070 per Australian. These are real people; these are mums and dads, granddads, people about to retire, those in their youth who hope to retire with dignity. They are people like Pamela, who, after a 20-year career as a chef, had only $3,000 in her superannuation account because her employers insisted on paying in cash, below the minimum wage, with no superannuation. Chad Parkhill, who worked at Host Dining in Brunswick, Victoria, is still trying to get 2½ thousand dollars in unpaid super back. Kerry McCulloch was employed by Blackwood Fitness in South Australia. Last May she was awarded a payout of more than $65,000 by the South Australian Employment Tribunal for non-payment of super and consistently late salary payments. Another former employee of Blackwood Fitness, Bianca, was awarded a payout of some $42,000 by the South Australian Employment Tribunal, including more than $20,000 in unpaid super. Then there was Nicholas French, who never saw a cent of the superannuation he earned from two years of working at an inner city Perth cafe. His employer turned out not to have paid any of the 15 staff members' superannuation. Most were of them part-time university students, some of them were single mums and some of them were people just trying to earn a living for their family. Nicholas only discovered he had been short-changed when he resigned and began chasing annual leave pay and superannuation, a process he described as like getting blood from a stone. After several emails and constant promises of 'next week', Nicholas had had enough and reported his employer to the Australian Taxation Office. The company had gone into liquidation and his superannuation can't be recovered. How does the government respond? It responds with a bill that gives amnesty to the very same people doing this thieving.
Let's just turn the tables for a minute. Every Australian worker goes out and steals $6 billion from their employer tomorrow—it's okay; you will get an amnesty! Those that get caught hand it back. Those that want to hand it back get an amnesty. Theft is theft is theft.
As a Labor senator's dissenting report into this legislation correctly points out, noncompliance of the superannuation guarantee is a form of wage theft. Every Australian knows it, except the government doesn't. When an employer foregoes paying superannuation to their employee, they are taking what was legally owed to that employee. Yet the government answers this rampant superannuation and wage theft with a wink and a nod and looks the other way.
This bill gives employers who have had track records of skimping on their employees' superannuation an amnesty and a tax incentive. Where is the tax break for workers with stolen superannuation? Where is the bill for the protection of employees who blow the whistle on superannuation theft in the workplace? We have a prevailing culture of wage and superannuation theft. It has become a business model for employers who think they're above the law.
Let's make this point: those many thousands of employers out there who don't see themselves above the law have been paying superannuation with dignity. In actual fact, in a number of circumstances, they have been paying extra super in negotiations with collective agreements. How does the government reward them? It rewards them by giving the same people they're competing with a competitive advantage, saying it's legal, it's justified and it's okay. Company after company are getting caught out by brave employees taking a stance supported and empowered, yes, by their unions. Bunnings owed 40,000 current and former workers some $3.8 million in unpaid superannuation; Woolworths, $300 million-plus in stolen wages and super; Heston's restaurant, $4 million in unpaid wages and superannuation; and George Calombaris, $8 million in entitlements.
In a case I know well, food delivery company Foodora, which continues to owe at least $8 million to food delivery workers, forked out just 28.9 cents in the dollar. And Deliveroo and Uber Eats are actually doing the same theft as Foodora, but where's the government? People on the other side of the chamber are espousing the virtues of working for these companies that are stealing from wages in food delivery. One senator said that this is a personal contract, like it's okay to work below conditions and rights. Now the government wants to justify it by giving amnesty to the same thieves while not pursuing them. The public is rightly outraged.
The economy is struggling. Of course, the government has never seen a problem they think a tax cut wouldn't fix: 'The economy is struggling. Give them a tax cut. Banks are committing fraud on a grand scale. Give them a tax cut. Businesses are stealing from workers. Give them a tax cut.' The only problem you haven't thrown a tax cut at is Barnaby Joyce, Angus Taylor and Bridget McKenzie! This sort of legislation is precisely the kind of law that senators opposite, who want to see an end to superannuation, would support. What would you expect; it's in their DNA. It's a government that barely tolerates—and, in some cases, hates—superannuation.
If the government is worried that the companies won't come forward, there are a dozen fairer and more efficient initiatives they could take. Firstly, they could put superannuation in the National Employment Standards, ensuring that employees have the power to pursue their unpaid superannuation, not just wait for clumsy, under-resourced responses from the Australian Taxation Office. Putting a right to superannuation in the National Employment Standards would empower working people, and their representatives, to pursue their moneys through the Fair Work Commission or the Federal Court.
Secondly, they could substantially increase the penalties for stealing wages and superannuation from employees. They could put some real teeth into the fines and penalties schemes to break the 'wage theft' business model. They could beef up the number of inspectors the Fair Work Ombudsman has. In a submission to the Attorney-General last year, Dr Clibborn, from the University of Sydney Business School, said:
There has been a large drop in funding in the Fair Work Ombudsman in real terms when calculated on a per employee basis.
As usual, the government response is to underfund the regulator. The odds remain stacked against employees. And they could go back to a scheme that was there before Prime Minister John Howard, who got rid of what was working very effectively. Prior to a lot of the wage theft that we have seen going on in this country, prior to John Howard and the notorious Peter Reith, they could re-empower unions and their officials to inspect the books of companies within their industries. Heaven forbid—working people contributing to have representatives to make sure a fair wage and a fair income are paid! Allow workers, and their representatives, to see what wages are missing. Where superannuation is missing, report it. Get those workers' entitlements back where they're deserved. And have decent wages and fair competition with people in the market who are abiding by the law. Those are companies that you don't represent, that you refuse to represent, because they're not thieving from people! They are not gig companies stealing from their workers by calling them 'contractors' when they are actually employees. We need to empower unions, not drag them down in red tape.
If the Morrison government are serious about fighting wage and super theft, they will remove the barriers that are preventing employers from being held to account. They will look at all those instances that we have seen on so many occasions where millions of dollars have been stolen in unpaid superannuation. They will look at those industries where we have so many thousands of people misclassified as contractors. They would be resourcing the Fair Work Ombudsman. They'd be resourcing and making sure that unions have the capacity to enforce integrity in the industry. They'd be listening to employers who say: 'We do the right thing. Why shouldn't the company down the road that competes with me do it as well?' They'd be coming in here with legislation to make a difference for hardworking Australians. They wouldn't have people like 48-year-old Pamela, who quit her job in disgust. She was getting paid $5 per hour below the award rate with no payslips and, of course, no superannuation.
Time and time and time again you see those on the opposite side reach out to the people who are thieving and give them a break. They don't give the people who can make a difference the resources to do it or the capacity to do it. We're in a crisis now, with incomes not increasing. There's a need to make sure we empower those that can negotiate. The Reserve Bank might be able to say it's a good idea to go out there with a cup and that the only problem we have is that people aren't asking for wage increases. That fell flat, because the last person who did that was Oliver Twist, and we know where he ended up. What you need is a collective voice to go and talk to your employer in a positive way and engage in negotiations, as has been done on so many occasions with superannuation, where it has been paid above the SG.
When this government turns around and doesn't follow through on its arrangements with regard to SG increases they also double-penalise competitive companies, because, when they reach agreements, they do so on the basis of what the future holds, of what certainty government policy brings. When those opposite talk about destroying super and holding back superannuation increases, what they're saying to all those decent companies, who say that dignity in the future, in retirement, is important to their employees and their families, is critical when they sit on industry boards and discuss how to get the best return for their employees—not some dodgy deal where the retail companies or banks turn around and give some sort of incentive on loans, which has time and again been proven to occur, regardless of its illegality. They wouldn't be up here espousing ways and means of attacking industry funds or the superannuation guarantee, or giving the shoplifter the night off and a pat on the back; they would be turning round and holding those thieves, and those people unfairly competing, and taking the side of employers, unions and workers in this country. (Time expired)
It's always good to come back into the Senate and hear Labor senators run the lines that have been written for them by the industry super movement. One of the problems with the superannuation industry is that it is the most entitled industry in Australia—and who's to blame them? What other sector is getting 10 per cent, or thereabouts, of people's salaries and wages for these, effectively, two large sectors to have a culture war against one other constantly? Every single time there is a bill to do with financial sector regulation or superannuation we hear Labor senators run the same old tired lines—all the navel-gazing from the industry super funds, most usually.
Labor hates small business. They always have. You heard that from Senator Sheldon's contribution. Labor hates small business. If they took a minute to remove themselves from their attachment to the union sector, they would know that superannuation is actually a very complicated business for a small-business owner to comply with. One of the hardest things a small business has to do is pay its staff and also pay their superannuation. If you listen to the council of small business CEO, Peter Strong, he thinks superannuation compliance costs small business about a billion dollars each year. It is very, very, very complicated.
But when you spend all your time talking to union officials in the Qantas Club and elsewhere, you wouldn't have a clue about what small-business people actually think and are concerned about, and that's true. The amnesty is the only chance that people have for actually being reunited with their super that hasn't been paid. There you have the Labor Party arguing against people having more super—go figure! This measure does not let employers off the hook; in fact it increases penalties where they haven't complied with their super guarantee obligations, which, I repeat, are very complicated. It is very complicated, if you are running a small business, to comply with these complex obligations that are imposed on small businesses by this parliament.
Of course, running through these points does not reflect the real truth here, which is that Labor is not interested in the policy discussion. They oppose every single superannuation change we put forward. Their own superannuation changes, like the retiree tax, all come from the same source: the industry super movement. This is all about politics. Labor just does the bidding of the unions day in, day out on every single measure.
The financial links between industry super funds and the unions are well known. Tens of millions of dollars disappear from people's industry super funds into the coffers of the unions. In the case of Senator Sheldon, who gave the previous presentation, the TWU super fund has paid $9 million of workers' money from the super fund into the union in recent years. What's this money for? Who knows? We'll never know, because it's not transparently disclosed to members. It should be. But what it does indicate is the very, very close-knit arrangement between the super funds, the unions and the Labor members of parliament, who come into this place every single day and run the tired old lines.
Who would believe that the Labor Party would come into the Senate and argue against more superannuation for people who missed out on their superannuation ostensibly because it's a very complicated system and small businesses are worried about running their businesses, not worried about their complicated obligations, which are confusing? They're now going to be easier because of Single Touch Payroll and a range of other reforms, but there you have it: the Labor Party doesn't want workers to have their super, which is extraordinary. The only reason, I suspect, is that they just run the tired old lines that are written for them by the industry super funds.
I dare say all the Labor contributions on the bill this evening will be characterised by lots of paper. People will need to read their talking points because they don't actually know the arguments as to why they're against an amnesty that is designed to reunite people with super they wouldn't otherwise get. There is no other way that these workers will get their super back. This is the only chance. So voting against it and arguing against it is arguing against the workers that people on the other side of the chamber purport to represent, which is just extraordinary. The only reason they're against the amnesty is politics. We put forward the idea after it had been raised by the small-business sector. Labor hate small business and love the industry super funds, and they're doing what they've been asked again. It's very sad.
I rise to speak on the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 because safe and secure superannuation is important to the wellbeing of all Australians. It's so good to follow Senator Bragg. He came in here, rambled on and talked a lot of nonsense and mistruth about Labor's support for superannuation, so let's put some things on the public record. We all need superannuation. It's fundamental to our financial and social security and to a happy, healthy and, very importantly, dignified retirement. Labor are not supportive of this bill in its current form, so we are seeking to amend it.
There are still many Australians in our country who do not retire with enough super. There are Australians who have super stolen from them and Australians who are doing everything they can to find their lost super. Unpaid superannuation is a massive problem across Australia. Industry Super Australia has estimated that 2.4 million Australian workers are losing $5.6 billion in payments each year—that is, $5.6 billion annually. That is equal to workers losing $2,000 per year which should be going into their retirement savings. Superannuation is part of a worker's pay and conditions. Every worker deserves to receive the superannuation they are entitled to. It's up to the government and to law enforcement to ensure companies and individuals are not stealing people's superannuation.
Super is an investment in yourself and your retirement, and Australia is very fortunate to have a superannuation system that benefits not only individuals but the wealth and prosperity of our entire nation. As of October 2019, Australians have A$2.93 trillion in superannuation assets, making Australia the fourth-largest holder of pension fund assets in the world. That is a feat in itself.
We thank the union movement and the likes of former Prime Ministers Bob Hawke and Paul Keating for their vision and creation of superannuation, something we should all hold dear. In 1983, an agreement between the government and the trade union movement made super available for all Australians. But superannuation across the economy didn't really occur until the early 1990s, under Paul Keating. The employer contribution rate for superannuation has been 9.5 per cent since 1 July 2014. As of 2015, it's planned to increase gradually from 2021 to 12 per cent in 2025. I want to briefly explain why the trade union movement and Labor, all those years ago, wanted to introduce compulsory superannuation. It was a twofold plan: firstly, to enable working Australians to have dignity when they retire; and secondly, to raise funds for our country—a pool of funds that would make our community and our economy stronger. The economic security of Australians could be guaranteed with universal superannuation.
Super is perhaps more important than it has ever been because wages remain at historic lows. We know this government has not had a plan for increasing wages and ensuring that Australian workers' pay and conditions keep up with the pace of inflation and the need to have a strong economic future. There have been no additional compulsory superannuation contributions over the last five years, and there has been very little change when it comes to real wages. In an era where wage theft continues—we hear and read about it only too often in the media; and we note the recent case of Woolworths underpaying 5,000 of its workers to the tune of $300 million—super is more important than ever before. There are 12.9 million Australians in the workforce today who rely on superannuation for their retirement, and this is their money. It is money invested in every single one of those working today. It is not some government fund. It is the workers' money. It's their entitlement. It is there to ensure they have a dignified retirement.
The superannuation guarantee has virtually wiped out Australia's net income deficit for the first time since European settlement. For the first time in our history, Australia has now become a capital exporting country. The domestic manifestation of this has been much lower cost of capital to Australian businesses. So business is also gaining from this, which is not the picture that was painted by the previous senator—who, quite frankly, didn't know what he was talking about. This year an Australian 10-year Treasury bond pays less than one per cent, yet the larger industry funds this year recorded returns on average of nine per cent. You get nine per cent from industry funds and one per cent from the Treasury bonds. I know which one the Australian workers deserve, and I know which one they would prefer.
The larger industry funds, as I said, recorded nine per cent—a wonderful achievement. In the words of the former Prime Minister, Paul Keating:
Where else, in this low interest rate world, would an ordinary working person be able to earn 9% on their savings?
That's what's important. But obviously those opposite don't really care about Australian workers. They only care about their friends at the big end of town. Only a relentless Liberal government would act to damage Australia's superannuation system.
With the deficit sitting at almost $40 billion, responsible governments must ensure every dollar of Commonwealth money is targeted and well spent. The government's proposed new superannuation loopholes will cost the budget $12.3 billion over the decade. This is not affordable in the current climate. In fact, I'd suggest that it's not acceptable or affordable at any time.
Currently, unpaid or underpaid employee superannuation contributions are a debt owed to the Australian Taxation Office rather than the worker. Unless there is a clause in their award or agreement, workers can't chase this money, as the money is not technically owed to them. Placing superannuation within the National Employment Standards in the Fair Work Act would mean all employees would be empowered to recoup unpaid superannuation from employers through the Fair Work Commission or the Federal Court. Individuals would be empowered to chase their own unpaid superannuation instead of waiting for the ATO to do it for them.
The Morrison government's proposed changes mean an employer could have kept superannuation entitlements from an employee for more than 25 years and will not face any penalty if they pay it back during the amnesty period. Rather than increase penalties for employers who do not pay their workers' superannuation, the government wants to give them a free pass. That's what this government is all about: a free pass for those who steal from Australian workers. You cannot trust the Morrison government. They want to allow employers to continue to steal Australian workers' superannuation. Rather than increase penalties for employers who do not pay their workers' superannuation, as I said, what do they want to do? They want to give them a free pass. Businesses who do the wrong thing and steal from workers should pay the price for their misconduct, not get a tax break. For everyone else, if you do the wrong thing and breach the law, you pay the penalty. But those people on that side want to protect their mates.
There are no recent parliamentary reports into unpaid super guarantee that have actually recommended such a measure. Labor senators who inquired into the measures in the 45th Parliament found that, while employees have the book thrown at them for stealing from employers, the government, by introducing an SG amnesty, is establishing a different rule for employers who steal deferred wages from their employees. Treasury confirmed that $230 million is expected to come forward under this amnesty, a very small amount when this one-off amount for a 26-year period is compared to ISA's estimated annual SG gap of $5.9 billion and the ATO's estimated SG gap of $2.8 billion.
Labor built Australia's superannuation scheme. That's what we did under Hawke and Keating. We will always work to ensure that it is fair and sustainable and sets Australians up for a comfortable and dignified retirement. That's what everyone deserves. Workers and those who are out there day in, day out, doing the jobs that we have to have to keep this economy going, deserve their superannuation. They deserve dignity in their retirement, just like everyone sitting around this chamber.
I want to make some other comments about women and superannuation. As stated, we know that employers don't always honour their legal requirements to pay the Australian workforce their super. On average, Australian women who retire today will do so with 47 per cent less superannuation than men. Almost 40 per cent of single women live in poverty and endure poor economic security in their retirement, and we know the fastest-growing cohort of homeless people in this country is older women. That's why I'm passionate about women being able to get what they're entitled to as far as their superannuation is concerned.
There are almost 220,000 women missing out on $125 million of superannuation contributions, as they unfortunately fail to meet the current requirements to earn $450 per month from a single employer before tax. Many women work several part-time jobs, often in addition to spending an average of five hours per day catering for family needs. Female graduates earn $5,000 less than their male counterparts, making it difficult for them to meet mandatory superannuation earning requirements. Also, on average women are out of the workforce for five years, caring for children and family members, which can cause their superannuation savings to stagnate and begin to fall behind men. The current 0.5 per cent superannuation guarantee disadvantages most women in accruing enough superannuation savings for a dignified retirement, meaning that 8.5 per cent of women between the ages of 65 and 74 will still have a mortgage to pay when they retire.
As a country and as legislators we must do more. Superannuation can always be improved. This bill, as it stands, will only weaken it. The system and Australians will be poorer if this legislation gets through the parliament without amendment. We have a responsibility. On this side we understand what the struggle before the introduction of superannuation was all about. I can remember working for a company in the short-term money market. As a female, you had to work for Chase Manhattan for 10 years to maybe be invited to join their superannuation—maybe be invited, as if being a female made you less qualified. The men got access to their superannuation when they signed on the dotted line of their contract. Why were women forced to wait 10 years? And then it might have only been on their invitation. Obviously I didn't hang around long enough to qualify for their superannuation.
This is the history. This is why we on this side are so passionate about superannuation. We want equality. We don't want to see homeless women on the street because they have had broken relationships and they don't have the superannuation they need for a dignified retirement.
I rise this evening to speak in support of the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019. Having listened to some of the submissions of those on the other side I am once again—would it be putting it too high to suggest this?—flabbergasted by the approach taken by the Australian Labor Party. This is not an opportunity to play politics. It sometimes seems in this place that if we on this side of the chamber were to put up the colour black we would simply get back the colour white from the other side of the chamber. It does make you wonder what is the modus operandi of those who sit opposite.
This is not, as we hear so often, anything to do with the so-called big end of town. I challenge anyone to find out for me what the big end of town actually is. What this bill actually represents is the Morrison government creating a new era of superannuation enforcement by legislating the superannuation guarantee amnesty, which was first announced way back on 24 May 2018. It's a piece of legislation which is designed to encourage employers who were not compliant to come forward to ensure employees receive the superannuation that they are entitled to.
I'm not going to cast myself as some journeyman in this place, but I am old enough to know that once upon a time the Australian Labor Party considered itself to be the party of the workers. That seems not to be the case anymore, though, Madam Acting Deputy President. Let me assure you it's no longer the case. I can show you example after example confirming that, in fact, the Morrison government is the friend of working Australians, that the Morrison government is on the side of working people in this country. And the Morrison government has the track record to prove that this is so.
We can show it demonstrably in the last period, because the Australian tax office has released data in recent days which show that in fact the government's personal income tax plan has given 8.1 million Australians in the order of $6.1 billion in additional income in the first six months since implementation. Income earners in the range of $37,000 to $90,000 in that tax bracket have received around 80 per cent of the additional income from the government's tax cut. They are receiving, on average, $967 from the low- and middle-income tax offset up to a maximum of $1,080. These low- and middle-income tax offsets contributed something in the order of $4.5 billion, or around 60 per cent of the growth in household disposable income in the September quarter, which has been the largest increase in a decade. Had these tax cuts not been paid, income would have grown by about one per cent, not 2.5 per cent. This is just one simple example, but one can well imagine what would have happened in circumstances where the Australian people had elected a Bill Shorten led government in this country. We would have seen $387 billion stripped from the economy—$387 billion ultimately stripped from the workers.
This government wants employers to bring nonpayments and underpayments out into the open to ensure that employees actually get in their hands the superannuation to which they are entitled. This is a piece of legislation which is designed fairly and squarely in the interests of workers. Don't believe what you hear from across the chamber; this is for the working people of this country. With new powers given by this government to the Australian tax office recently, there is no longer anywhere for employers who do the wrong thing to hide. Unscrupulous employers will be caught—and that doesn't sound very much like we are this so-called friend of the big end of town. That is a nonsense, that is a furphy and that is a creation of those opposite. These measures are, of course, forward-looking. They don't address historical underpayments and nonpayments of superannuation. Reuniting as many workers as possible with superannuation which is rightly theirs is the priority of the government. This bill represents a rare opportunity for businesses to come forward, do the right thing and clean the slate for their future.
I think it's important at this point to briefly outline the background in relation to the government's position: what's already been legislated and the rationale for this particular segment of legislation. In the last parliament, the package of legislation was passed to ensure that employers can no longer hide from their obligations. The government did this because of the significant issue with noncompliance. We now know that in 2015 to 2016 that noncompliance amounted to something in the order of $2.8 billion that went unpaid to employees. Once again, that doesn't sound like something that is in the best interests of this fabled big end of town that we hear so much about. This sounds very much to me like something which is framed fairly and squarely for the workers of this country. In March 2019, this government introduced a suite of reforms designed to improve the superannuation guarantee system and, most importantly, to better detect and deter noncompliance by employers. This included measures such as the Single Touch Payroll regime, bringing payroll reporting into the 21st century and aligning payroll with regular employer reporting of tax and super obligations. More frequent reporting of employer superannuation guarantee obligations is now being complemented by near real time reporting for superannuation funds on the contributions that they actually receive, enabling the ATO to identify and take action against noncompliance. So the government has actually strengthened the ATO's collection and enforcement capabilities already. The ATO now has a broad suite of new powers, which include the ability to be able to send out director penalty notices, security deposits and also, in some instances where employers are able to defy directions, the ATO can now apply for punitive court ordered penalties, including up to 12 months of imprisonment for those who are noncompliant. Once again, this does not seem to me to be something framed in the interests of anyone other than workers. It is a nonsense.
The government understands that there are times when employees are simply unaware that they've not been paid superannuation. Consequently the ATO can now inform all potentially affected employees of any investigation into their employer's compliance. Previously, the ATO could only communicate with employees who had made a complaint to the ATO regarding their unpaid superannuation, leaving other affected employees in the dark—once again, always in the interests of the employees.
This government understands that the ATO cannot do its job without proper funding and resources. This government provided an additional $133.7 million in the 2018-19 budget for the ATO to fund this process, such is the compulsion to make this process work and make it viable. A critical limb to this process, one which furthers the sentiment that the government is absolutely serious about protecting workers and their hip pockets, is that as a result of that funding in the 2018-19 period the ATO contacted more than 22,000 employers and, as a result of reviews or audits, recovered something in the order of $805 million in unpaid superannuation.
The government's crackdown on noncompliance therefore complements reforms to protect low-balance and inactive superannuation accounts from undue erosion and to put members' interests first. The protecting your superannuation act, which commenced on 1 July 2019, does that job and seeks to protect Australians from excessive fees, unnecessary insurance premiums and inefficiencies from having multiple accounts. These reforms also provide the tax office for the first time with the ability to proactively reunite Australians with their low-balance or inactive accounts.
Together, these reforms to which I speak will result in millions of Australians saving billions of dollars in fees, charges and insurance premiums, and will reduce unnecessary duplicate accounts. All of this is background, framed for the purpose of showing the other side of this chamber that the suggestion to oppose this bill being somehow in the interests of workers and being a good thing is not a good thing. It's a furphy. It's a nonsense.
The bill before us today, if passed, will allow employers to come forward to disclose non-payments—or in fact underpayments—for the period from 24 May 2018 to six months after this bill receives assent and pay their workers what they're owed. They will be required to pay a significant sum of interest—so that's punitive enough for the employers—but they will avoid the usual penalties and fees that would apply, and will be entitled to claim a tax deduction for the amount they pay during the amnesty period. Importantly, employers will not be able to use the amnesty if they come forward after an ATO prosecution has already begun. This is about trying to flush out that which is owed to workers. It is about trying to recover as much as we can for workers by providing incentives to do so. The bill ensures that employers who came forward in good faith when the amnesty was announced are covered by the amnesty.
Without playing politics with this issue, the important thing is that since the amnesty was first announced over 7,000 employers have come forward. Those employers cannot receive the full concessional treatment under the amnesty until it's legislated. Treasury estimates that a further 7,000 employers will come forward once the amnesty is legislated.
It's a nonsense to suggest that this amnesty simply lets employers off the hook. That's not the case. And it's a nonsense to suggest that this legislation will somehow leave workers worse off. The amnesty is exclusively designed to benefit employees. Employers will only get the benefit of this amnesty if they pay their employees the full entitlement of that which has been underpaid,, or that which has not been paid in total, in full with the significant interest penalty. It simply provides an opportunity for employers to review their compliance history, to come forward in good faith and to pay anything that is owed before the ATO actually begins their investigation. Employers with a significant historical underpayment who have voluntarily failed to disclose those underpayments to the ATO after the amnesty will be subject to penalties.
So, once again, this is designed in order to act in the best interests of those for whom the scheme was originally designed. This is a piece of legislation which is designed to act in the interests of employees. As I have already pointed out, it's important to note that this is not just in relation to nonpayments and this is not just in relation to instances where employers have simply forgotten to pay or have deliberately avoided paying superannuation. This is also in relation to the presumably very common instance of underpayment of superannuation.
When this bill was first introduced, the community sought what could only be described as a bigger stick to be used against employers who were either inadvertently doing the wrong thing or deliberately doing the wrong thing. This iteration of the amnesty achieves what we on this side of the chamber believe to be the perfect balance of what we have described and what those in the other place have described as being the carrot and the stick. That's a very simple analogy. The carrot in this case is the amnesty itself, along with the suite of other measures that have already been legislated. And the stick is the significant penalties which will be imposed if this not complied with during the amnesty period.
So the bill complements the entire integrity package legislated earlier and it provides employers with an opportunity to come clean and to pay their historical debts before the new enforcement arrangements come into effect. Once again, it highlights, as I have said multiple times, that this government is on the side of workers. This is a piece of legislation which is designed to protect the employees. As they say, in life one gets more with honey than one does with vinegar. That's very important to take into account.
I take this opportunity to commend this bill to the Senate.
I am grateful for the opportunity to speak on the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019. It's an extremely important issue for millions of workers all over the country—the issue of superannuation theft. While I have enjoyed listening to the care and concern presented by the self-proclaimed friends of the workers on the other side, I am grateful for the opportunity to share my concerns about this bill.
Every year in this country, almost three million Australian workers will experience theft of their superannuation through underpayment or nonpayment. In 2015-16 the amount of unpaid super was estimated to be almost $6 billion—$6 billion in theft of workers' superannuation. This has real impacts for real people, because the workers who are losing out on their super are going to face real hardship when it comes to their retirement as a direct result of this theft.
And that is exactly what it is: it is theft, and theft is illegal. In any other walk of life thieves do not get let off the hook, but that is exactly what this bill does. It lets companies that have stolen their workers' superannuation off the hook. The government wants to provide an amnesty for employers who have stolen superannuation from their employees. The government has proclaimed tonight that this bill is for workers, and that it's on the side of workers. But that is just not the case. The government should be on the side of the workers who have been ripped off. And they should be on the side of those hardworking Australians who would just like to save for their retirements and to receive the income that they've worked hard for. So the government should be sending the strongest possible message to employers that superannuation theft will never be okay.
Employers know that they need to pay superannuation—they know. I'm not sure what the excuse for not paying it is when the superannuation guarantee has been law since 1992. Hopefully, people who employ other Australians have figured out in the last 28 years that they need to pay super. Super is not the only obligation that employers have to their staff. It's not the only system that they need to follow, so to suggest that paying super is somehow more difficult and more complicated for employers than complying with other relevant laws is just absolutely bizarre. It seems that so many non-compliant companies don't make the same errors when they're setting their own salaries, their own incentive schemes and their own complicated tax arrangements. They just don't make the same errors when dealing with a range of other business practices and regulations that they seem to make when dealing with superannuation and their workers' wages.
By providing an amnesty for employers that have stolen from workers, the government is essentially setting up two different rules: one for employees, who have the book thrown at them if they're ever caught out stealing from their employer; and another rule for employers, who get let off for stealing from their employees. This should not happen. Employers should not be let off from paying their workers the legal minimum rate of pay in Australia today. This bill is sending out the wrong message at the wrong time. This amnesty is not good for workers.
It is also not good for those employers who do the right thing either. Time after time, when I meet with employers about the issue of wage theft, what they tell me is that they want a level playing field. They want all employers to be compliant with the relevant award and with relevant minimum wages and conditions. What this bill does is tell dodgy employers: 'Hey, we've got an amnesty, and you might just get away with underpaying your super.' If you're one of the many good businesses that play by the rules, if you're a business that looks after your staff properly, if you provide them with the entitlements that they're due, pay them correctly and contribute to their super, what do you learn from this amnesty? You have been put at a competitive disadvantage by those businesses who are not playing by the rules, who don't pay their staff correctly. The message that this bill is sending those employers who are doing the right thing is that the government just doesn't care about you.
We also know, because there is evidence about this, that the jury is well and truly out on whether these sorts of amnesties even recover the amount of money that they claim to. In some cases amnesties have been found to be counterproductive. By the Treasury's own data, less than four per cent of stolen super might be recovered through this amnesty. That is a small proportion of what Australians are owed, of what Australians are estimated to lose every year in stolen super. Every year it is estimated that three million Australian workers have been ripped off almost $6 billion in superannuation. The risk of encouraging noncompliance with the temptation of further amnesties into the future is just too high to justify this particular method of trying to recover stolen money.
The consequences of employers being allowed to get away with not paying super are extreme for everyday Australians. We know that if the government tells employers it's okay not to pay your superannuation workers will face lower living standards in their retirement. It's often those workers who are in low-paid industries who are at the most risk of being ripped off by their employers, whether it be in their wages or in their superannuation. They are workers in industries like agriculture, cleaning and hospitality. These are the workers who are most likely to fall victim to wage theft and theft of superannuation.
The theft of superannuation is all part of a larger problem that Australian workers are facing, and that is wage theft. And much like the underpayment of super, this is an issue that the government has been telling us that it really cares about, that it's going to act on. But, in reality, we are still waiting to receive the government's plan to stop wage theft. In this case of superannuation theft, what they're giving us is something that absolutely lacks any teeth to deal with the underlying problems that are causing theft of superannuation. It seriously seems like not a day goes by when there is yet another story about wage theft on the front pages of our newspapers. In each of these cases workers want to know what it is that the government is going to do about that wage theft, because so far the government has been entirely unwilling to be the tough cop on the beat that people need when they're having their wages ripped off by their employers. And in some industries, industries like hospitality, the theft of wages and superannuation—it is basically a business model for employers because they know they can get away with it, because they know there is no strong government cop on the beat in Australia today.
In 2018 the Fair Work Ombudsman found that almost three out of four hospitality venues were noncompliant with the award. This problem is out of control, and the solutions the government is presenting are just way too small to deal with the scale of the problem, and they are solutions that are sending the message to employers, 'We're going to let you off the hook for the wage theft that you engage in.' People should not have to work for their wages twice—once on their shift and again when they have to go and fight to be repaid by their employers.
While the government pretends to take action on these issues, their real priorities seem to be placed elsewhere. Late last year we saw exactly where those priorities were: attacking the very organisations that stand between workers and wage theft, that stand between workers and superannuation theft—the Australian union movement. The government, whose own integrity is currently in tatters, chooses to prioritise attacking the integrity of unions and their members rather than taking serious action on the theft of wages or super.
So, at a time when the cost of living continues to rise, when the government has already cut the age pension, what will the government do to help those who have less in retirement due to the theft of their superannuation? Too many Australians are retiring without adequate retirement savings, and that is why our superannuation system needs to be strengthened, not weakened. So if the government wants to do something to get non-compliant employers paying their super, then it needs to become a much tougher cop on the beat. If it wants to make sure people are paid what they're owed, then it needs to actually address the fundamentally flawed process for workers to recover their unpaid super today, a process involving the ATO that is slow and opaque. This is a process involving the ATO instead of a tribunal, where workers would have some rights to be heard and would have some rights to appeal decisions that are made. And if the government wants to put more super in people's retirement savings, then it needs to start moving the superannuation guarantee to its legislated 12 per cent. These are some things that the government should do if it wants to actually strengthen the superannuation system.
What we need to do is change the laws to include a right to superannuation within the National Employment Standards, because that is a change that would give people rights to pursue their unpaid super, to pursue the employers who are stealing superannuation. That would be a change that would give all employees the opportunity and the power they need to actually address the theft of superannuation. By placing super in the National Employment Standards in the Fair Work Act—