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Tuesday, 7 December 2004
Page: 87


Senator STEPHENS (5:39 PM) —The Taxation Laws Amendment (Superannuation) Bill (No. 2) 2002 and the Superannuation Guarantee Charge Amendment Bill 2002 were passed in 2002. Amongst the changes these bills introduced was the introduction of quarterly payments of superannuation guarantee contributions by employers. Quarterly payments were introduced for a number of reasons, including the safety and financial advantages more regular payment provided for employees, gains in government revenue and administrative advantages for the ATO. At the time, approximately 90 per cent of employers were paying on a quarterly or monthly basis, so the changes impacted only on the remaining 10 per cent—overwhelmingly small businesses.

As part of the introduction of quarterly payments, a further requirement that employers report superannuation guarantee contributions paid on an employee's behalf to that employee within 30 days of the payment was introduced. This measure was seen as enabling the employees to follow up quickly where the employer might be defaulting on SG contributions. Labor had for some time been arguing for these changes and, prior to the government introducing the bills in 2002, had moved amendments on two occasions. After a year of quarterly payments and reporting to members, the government has now introduced legislation that removes the requirement to report to members superannuation guarantee contributions paid on their behalf.

The removal of the reporting requirement was announced by the government during the election as part of its small business policy. The government's view is that reporting to employees creates an unnecessary compliance burden on employers and, in particular, small business. The government admits that by removing the requirement there will be a higher burden placed on superannuation funds that will have to deal with greater numbers of inquiries regarding the payment of contributions but believes that it is more important to reduce the burden on employers. The removal of the reporting requirement creates a major gap in the safety net for employees. The reporting enables the employee to keep track of his or her superannuation guarantee contributions. If they are reported regularly, it gives the employee the opportunity to follow up before the situation becomes irretrievable. If an employee is only notified annually by the fund, which is the most common situation, it may well be too late to remedy that situation.

There are significant non-payment problems in relation to the superannuation guarantee, and often the problem is not identified until the business concerned is bankrupt or in the hands of a liquidator. Whilst it is difficult to obtain an accurate number of superannuation guarantee payment defaults on business failure, it is certainly in the tens of thousands each year. Many workers have lost years of superannuation in these circumstances. Most often they are those workers who can least afford to lose their superannuation savings—low-income workers and those who will face difficulty finding employment after the collapse of their employer's business.

Labor's comprehensive employee entitlements protections scheme would have provided full compensation. Although the employee may still contact the fund to find out if contributions are being made, it is unreasonable to expect employees to do this on a regular basis and it is also unreasonable to place the extra burden on the funds—an extra burden that will involve costs which in turn will reduce fund returns and ultimately the retirement nest eggs of Australian workers. Superannuation industry organisations and superannuation funds across the board have attacked the proposed change as a watering down of the safety provisions. Of particular concern is the so-called choice of fund legislation commencing 1 July 2005. Nonetheless, there is an argument for exempting from the reporting requirements employers who have a high turnover of employees. Examples have been given to Labor of some employers in the rural sector that employ seasonal and/or transient employees and the hospitality industry, which has a high turnover of casual employees.

There is some irony in the government's stated concern about the impact of superannuation legislation on employers when from 1 July 2005 employers will be hit by a massive new wave of regulation as a consequence of the so-called choice of super fund. New forms, new regulations, extra costs and additional legal liability will come with so-called choice—but more of that closer to the time. Labor is most concerned about the effect the removal of the reporting requirements will have on the ability of employees to monitor the payment of their superannuation guarantee contributions. Labor will reluctantly support this bill but will move during the committee stage of the bill to have it amended to ensure that the ATO reports on the levels of non-payment of superannuation contributions, as follows:

(1) Schedule 1, page 3 (after line 10), at the end of the Schedule, add:

3 At the end of section 44

Add:

(2) A report prepared in accordance with subsection (1) must include:

(a) the number of employers who have failed to pay one or more of their employees' superannuation guarantee contributions by the date required by law;

(b) the number of employees whose employers have failed to pay their superannuation guarantee contributions by the date required by law;

(c) details of the total amount of superannuation guarantee contributions outstanding at the close of each reporting year;

(d) the number of defaulting employers who paid outstanding superannuation guarantee contributions after the payment date required by law;

(e) the number of actions taken by the Australian Taxation Office to enforce the payment of unpaid superannuation guarantee contributions;

(f) the number of actions taken by the Australian Taxation Office to enforce the payment of unpaid superannuation guarantee contributions that were fully or partially successful;

(g) the total amount of outstanding superannuation guarantee contributions recovered at the close of the reporting year.

These will be requirements for inclusion in the annual report.