Australia’s employers have failed to pay $17bn in super belonging to their employees since 2009, and tax authorities have only been able to detect and claw back $3bn.
The Australian Tax Office has published estimates of the amount of unpaid super in Australia for the first time.
The data broadly confirm figures published by Phil Gallagher, a former director of Treasury’s retirement income modelling taskforce between 1993 and 2013, who issued repeated warnings about workers being short-changed on their compulsory super entitlements.
Gallagher released his own estimates this year, revealing the average super underpayment is worth $2,025 a person each year in Australia, with more than 2.7m workers affected.
The ATO data estimate Australia’s employers failed to pay $17bn in super to their employees between 2009-10 and 2014-15.
That $17bn “super-guarantee gap” is the difference between the theoretical amount payable by employers to be fully compliant with their super-guarantee obligations, and actual contributions received by funds.
The ATO says it has successfully detected and clawed back $3bn of that money, leaving employees’ super savings $14bn out of pocket since 2009.
“While this analysis shows that 95% of the estimated superannuation guarantee (SG) is paid to employees, the gap exists because some employers appear not to be meeting their super-guarantee obligations either by not paying enough or not paying it at all,” ATO deputy commissioner James O’Halloran said.
“Superannuation has a vital role in providing for people’s retirement, and any non-payment is of concern.”
Matt Linden, from Industry Super Australia, says the new data from the ATO show why the Turnbull government needs to urgently reconsider the 25-year-old laws that allow employers to use employees’ super for business cash flows and ultimately not pay the money at all.
“The ATO is to be commended for finally releasing this data, knowing full well questions would be asked as to why so much money is not being paid without detection,” Linden said on Tuesday.
“With a compliance regime that is highly dependent on employee complaints and employer self-reporting, it is no surprise billions in unpaid super is going unchecked”.
The ATO has used a different methodology to Gallagher for its estimations, and has got smaller figures as a consequence.
Gallagher warned last year that without action from the government and the ATO, unpaid super could amount to over $66bn by 2024, including lost earnings.
Last year a report from the commonwealth auditor general found the ATO’s internal risk assessment indicated that 11% to 20% of employers could be non-compliant with their super guarantee contributions, and that non-compliance was “endemic”.
The ATO said it now meets on a quarterly basis with the Australian Prudential Regulation Authority, Australian Securities and Investment Commission and the Fair Work Ombudsman to monitor the operation of the superannuation guarantee system.
“In addition to following up all reports of unpaid SG, we are increasing our proactive SG casework by one third this financial year,” O’Halloran said.
“While business insolvency remains a reason that 50% of unpaid SG is not able to be collected by the ATO, we aim to find ways to increase the collection of outstanding superannuation guarantee debt.
“The payment of superannuation guarantee is an important obligation on employers and should be paid quarterly.”
The ATO said the introduction of single-touch payroll would improve visibility on reporting and simplify tax and super interactions for employers, allowing tax authorities better identify non-compliance over time.
