Labor has targeted the government’s plan to drop penalties for employers who dob themselves in for failing to pay employees’ superannuation.
After a landmark Productivity Commission report called for reforms to combat unnecessary superannuation fees and the proliferation of unwanted multiple accounts, Labor used question time on Tuesday to switch focus to the $2.85bn that employers have failed to pay into employees’ retirement accounts.
On Thursday the revenue and services minister, Kelly O’Dwyer, introduced a bill for a 12-month amnesty to encourage non-compliant employers to come forward.
Under the plan employers will have to pay all the super that is owing to their employees, with interest, but will not have to pay a 50% penalty to the government on top.
Bill Shorten opened the batting for Labor on Tuesday by asking Malcolm Turnbull about his plan “to forgive businesses who have illegally failed to pay employee superannuation” for 25 years, which prompted an answer from the prime minister about multinational tax avoidance.
After a follow-up Turnbull then deferred to O’Dwyer, who explained that the government “is not letting anybody off the hook from paying the superannuation guarantee”.
“Far from it,” she said. “This government has put in place a mechanism to allow small and medium-sized businesses, who otherwise have not paid [super], to come forward, under an amnesty and make good every single dollar ... that they owe their workers.”
Shorten suggested the amnesty rewarded “dodgy businesses” who effectively stole their workers’ superannuation, prompting Turnbull to respond that the initiative would recover “$200m – hopefully more – of unpaid contributions for the benefit of workers”.
The prime minister also cited changes in the 2018 budget to ban exit fees for superannuation, improving the ability to reunite people with their lost accounts and making insurance through superannuation opt-in for members under the age of 25.
The Treasury laws amendment (superannuation 2018 measures) bill 2018 also includes a power for the Australian Taxation Office to seek court-ordered penalties in cases where employers defy directions to pay their superannuation guarantee liabilities, including up to 12 months in jail in the most egregious cases of non-payment.
The bill requires superannuation funds to report contributions received more frequently, at least monthly, to the ATO to help it identify non-compliance.
The ATO estimated that in 2014-15 $2.85bn of superannuation went unpaid, a 5% non-compliance rate for compulsory superannuation guarantee payments.
In August 2015 the ATO first conducted consultations with business and superannuation stakeholders about an amnesty. The plan was welcomed by the Australian Chamber of Commerce and Industry, which argued that the current regime of penalties was harsh and could discourage particularly small businesses from coming forward and catching up on missed payments.
On Thursday the Australian Council of Trade Unions assistant secretary Scott Connolly said the government should be increasing penalties for unpaid super and “instead they are giving employers a green light as long as they return the money they stole”.
“The egregious double standard being created here is an insult to all Australian workers, more than 2.4 million whom have had super stolen by an employer,” he said.
The Productivity Commission report found that about one-third of superannuation accounts – about 10m – are unintended multiple accounts, resulting in unwanted fees and insurance contributions costing workers $2.6bn a year.
It said more than a quarter of the 74 funds offering MySuper products failed to meet benchmark performance returns and, if workers in those funds had moved to the median of the top-10 performing products, “they would collectively have gained an additional $1.3bn a year”.
On Tuesday O’Dwyer said she was “very encouraged” by the commission’s proposal to overhaul the superannuation system by creating a new body to recommend 10 high-performing funds to workers. But she stopped short of promising to implement this central recommendation.
Labor did not rule out supporting the plan but called on the Coalition to drop attacks on industry super if it wanted cooperation.
