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Economics Legislation Committee
12/06/2018

GALBRAITH, Ms Fiona, Director, Policy, Association of Superannuation Funds of Australia

McCREA, Mr Glen, Deputy Chief Executive and Chief Policy Officer, Association of Superannuation Funds of Australia

[12:08]

Evidence was taken via teleconference—

CHAIR: I welcome Mr Glen McCrea and Ms Fiona Galbraith from the Association of Superannuation Funds of Australia. Thank you both for appearing before the committee today. Do you have an opening statement for the committee?

Mr McCrea : It's a very brief one from me. ASFA is a non-profit, non-political national organisation whose mission is to continuously improve the super system so all Australians can enjoy a comfortable and dignified retirement. While we consider that all employers should comply with their SG obligations and pay SG obligations when they are due, we support measures that will address noncompliance and ensure that individuals do receive their correct entitlements.

We are hopeful that the proposed amnesty will encourage employers to come forward and therefore have an impact on historical noncompliance. On that basis, we are supportive of the amnesty, especially when considered with TLAB measures No. 4 bill 2017, which will also strengthen the ATO's powers to address future noncompliance.

CHAIR: Thank you very much, Mr McCrea. I've got a couple of questions for you. I note that you didn't submit, did you?

Mr McCrea : No, we haven't.

CHAIR: Does ASFA deem compliance with the superannuation guarantee to be onerous?

Mr McCrea : No, we don't. I assume you're looking here from an employer's point of view.

CHAIR: Yes.

Mr McCrea : No, we don't. We think our compliance obligations are reasonable.

CHAIR: You have said you support the bill. Do you believe the amnesty will lead to greater ongoing employer compliance with the superannuation guarantee?

Mr McCrea : I suppose our response in relation to the amnesty is that we see it very much as a one-off. That's the only way amnesties can really work. I think one of the examples used in the debate is the gun laws changes which occurred in the nineties. Really, the way we see this is as a one-off. It's an opportunity for employers to do the right thing and to comply; otherwise, there's a big stick coming down. The only way we think this package can work is if it is a one-off with the stick to come. Hopefully, sensible employers who have capacity to pay the correct entitlement come out and actually do the right thing.

CHAIR: Do you think the amnesty will help distinguish between those businesses that are willing to comply but for whatever reason have been unable to do so and those businesses that are simply unwilling?

Mr McCrea : That's an interesting question. I think it's going to be interesting to see how the amnesty plays out. I think the system isn't that hard to comply with. Obviously, we find it strange that employers aren't doing the right thing at the moment, but you will have an evidence base at the end of the year, and I think that would be very useful from an ATO point of view regarding those employers who have come forward. It will enable the ATO to work with those groups going forward to make sure that on an ongoing basis they can comply with the law. There is the potential that, with a positive outcome, the ATO will be able to identify those who have stepped forward. Obviously, those who don't step forward are on notice that the ATO is going to take a dim view and, obviously, after a period of time, there will be legal ramifications for them.

CHAIR: Do you think the government's broader superannuation guarantee integrity bill will help deal with those persistent noncompliers? That's the stick compared to this legislation being the carrot?

Mr McCrea : Looking at it in its entirety, we are optimistic it will make a difference with the gap. It's hard to know until you try these things how successful they will be, but we are calling on this legislation to be passed as soon as possible so government and the ATO can get on with it. Let's have a look at the end and see how successful it was in ensuring that people got their correct SG entitlements.

CHAIR: Thank you. Senator Ketter.

Senator KETTER: Mr McCrea, for the record, you support this bill?

Mr McCrea : Yes, we support this bill.

Senator KETTER: Outside of the SG amnesty schedule, do you have any concerns about any other elements of the bill?

Mr McCrea : Fiona, is there anything you want to add?

Ms Galbraith : Only to pick up on a couple of submissions that were published as of this morning—I know the website has been refreshed just now with some new submissions. We note that both the Law Council and the Tax Institute flagged concerns about the retrospectivity of the third measure—the non-arm's-length income definition. I guess that is something that, as with any change to tax system that disadvantages a taxpayer, should be properly clear that it is only with prospective effect. That's probably the only issue from the submissions that were published as of Friday. I must admit there are four or five new ones and I haven't had a chance to look at those, because the website has just come live now.

Mr McCrea : Whilst we support the multiple-employers initiative, we see as an exception to the rule allowing people to effectively opt out of super. The success of this system is based on it being compulsory. This is a unique set of circumstances and, whilst it works in this case, we certainly wouldn't want it replicated in any other situation.

Senator KETTER: On the amnesty itself: did you advocate for this policy to government before the bill was released?

Mr McCrea : We haven't expressed a view, as far as I'm concerned, on the amnesty previously.

Senator KETTER: So you haven't approached the government about this matter?

Mr McCrea : We haven't directly gone to government to recommend an amnesty, no.

Senator KETTER: When did you first become aware the government was working on a bill that would include an SG amnesty?

Mr McCrea : We became aware when it was introduced into parliament.

Senator KETTER: You became aware via the normal means, through reporting on that; is that right?

Mr McCrea : Yes.

Senator KETTER: Do you support the notion that superannuation is deferred wages?

Mr McCrea : Yes, we do.

Senator KETTER: This is a question of how seriously you think the issue of unpaid SG should be treated: would you support a wage theft amnesty?

Mr McCrea : When you say 'wage theft amnesty', where in particular are you heading with that?

Senator KETTER: If an employer refuses to pay correct wages to employees, do you think it's appropriate for an amnesty to be provided to employers?

Mr McCrea : I do see this is a slightly different issue. I hear what you're seeing in terms of the origins of SG being deferred wages. We've looked at this bill and the other bill in terms of the gap and what can be done to address the gap. We think both have the potential to make an impact, so we think it's worthwhile trying the carrot-and-stick approach and seeing what happens.

Senator KETTER: When you say they might have the potential, that's a fairly vague or not fulsome support for it.

Mr McCrea : We're optimistic! I think the one thing about public policy is that often you need to go ahead and implement things and then evaluate how successful they are. But I think this is a genuine way forward to make a bit of an impact. I can't guarantee what the quantum of the impact will be, but I'm certainly optimistic it will make a difference.

Senator KETTER: Have your members been calling for an SG amnesty?

Mr McCrea : Not far as I'm aware.

Senator KETTER: Okay. Have you consulted with your membership on this measure?

Mr McCrea : In a broad sense, no, we haven't. As you'd be aware, there's a lot happening in the super space at the moment, and we haven't had any direct representations from members on this issue.

Senator KETTER: Would you agree that it's very important for employers to comply with SG?

Mr McCrea : Absolutely.

Senator KETTER: I note your comment in response to questioning from the chair indicated that compliance obligations are, I think you said, reasonable.

Mr McCrea : We think that the current obligations are reasonable on employers. We're in a situation now where we've got the stock of SG that hasn't gone to those people who need the money to ensure they will have a good retirement. We're looking at this bill under that lens. If this being implemented with a stick makes a difference then that will mean those people end up with a much better outcome in retirement.

Senator KETTER: Okay. Thank you.

CHAIR: Thank you very much for joining the committee today. We'll let you go.