Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Economics References Committee
Superannuation guarantee non-payment

HARDY, Dr Tess, Private capacity

STRECKFUSS, Ms Karen, Private capacity

Committee met at 09:00

CHAIR ( Senator Ketter ): I declare open this public hearing of the Senate Economics References Committee. The committee is hearing evidence on the committee's inquiry into the impact of non-payment of the superannuation guarantee. The Senate referred this inquiry to the committee on 1 December 2016 for report by 22 March 2017. I welcome you all here today.

This is a public hearing and a Hansard transcript of the proceedings is being made. Before the committee starts taking evidence, I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to a committee. The committee prefers all evidence to be given in public, but under the Senate's resolutions witnesses have the right to request to be heard in private session. It is important that witnesses give the committee notice if they intend to ask to give evidence in camera. If a witness objects to answering a question, the witness should state the ground upon which the objection is taken and the committee will determine whether it will insist on an answer, having regard to the ground which is claimed. If the committee determines to insist on an answer, a witness may request that the answer be given in camera. Such a request may, of course, also be made at any other time.

Finally, on behalf of the committee, I would like to thank all those who have made submissions and sent representatives here today for their cooperation in this inquiry. I now welcome Ms Karen Streckfuss and Dr Tess Hardy. Do you have any additional comments to make on the capacity in which you appear today?

Ms Streckfuss : I am a barrister.

CHAIR: Thank you for appearing before the committee today. I invite you to make a brief opening statement, should you wish to do so, and then we will open it up for questions.

Dr Hardy : Thank you very much for the opportunity to be heard today. As I mentioned in my submission, superannuation is somewhat of a hybrid entitlement in that it straddles a number of areas of law. Even though it is primarily administered by the tax system, it is, of course, an entitlement that is inherently related to the performance of work. The interconnection between superannuation and employment is, in my view, critical because of the regulatory challenges, and opportunities identified in the workplace relations sphere may be instructive for how we approach some of the similar problems arising in relation to the superannuation guarantee scheme.

Since I made my submission, the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 has been introduced into parliament, and I wish to address two aspects of that bill today which I foresee as most relevant to the inquiry. The first relates to the strengthening of penalties associated with record-keeping contraventions. In the past, record keeping has been seen as tedious, trivial and somewhat benign. I think the 7-Eleven case, amongst others, demonstrated that these assumptions are misplaced. Record keeping is, of course, critical for the superannuation system. I noticed the submission of the Australian Taxation Office identified that 20 per cent of cases of unpaid super were said to have arisen due to poor record keeping. The tax office has also identified a need for greater information and data, and obviously there is a whole range of proposals as to how this might be improved through SuperStream, Single Touch Payroll and otherwise. The point I wish to make is that where there is deliberate noncompliance or systematic noncompliance with those record keeping and reporting obligations it is essential that there are sanctions strong enough to deter that behaviour, because without those record keeping and reporting obligations being complied with the substantive superannuation guarantee obligation is undermined.

The second aspect of the Fair Work Amendment (Protecting Vulnerable Workers) Bill that I would like to touch on is the extension of liability to entities other than the employer. Again, the ATO has identified that the insolvency of the employer is a particular challenge in enforcing and recovering superannuation guarantee entitlements. Similarly, under the Fair Work Act, the Fair Work Ombudsman has identified that the insolvency of the employer is a particular problem which has foiled their efforts to recover minimum wages.

The way that they have sought to address at least certain instances of insolvency of the employer is to extend liability to lead firms—in particular to parent companies and franchisors in particular circumstances where a franchisee or subsidiary has breached the Fair Work Act in a particular respect. This can include breaches of modern awards and enterprise agreements, which is of course most relevant to superannuation because superannuation entitlements can arise not only through the superannuation guarantee scheme but also under modern awards enterprise agreements and employment contracts. There is a parallel superannuation enforcement regime through the workplace relations sphere.

Where franchisees and subsidiaries have engaged in unlawful behaviour of that nature and the franchisor or parent company has failed to take reasonable steps to prevent those contraventions occurring where they knew or ought to have known that those contraventions would occur, then they may be held liable for those contraventions—not only for compensating for the loss arising as a result of those breaches but they may also face civil penalties. This reform in my view is especially significant; it is momentous. It is one of the most important changes to the fair work regime in terms of strengthening enforcement and compliance in the workplace relations sphere.

I also believe that to the extent that it addresses some of these issues—insolvency allowing employers to escape liability, a failure to address systemic drivers of noncompliance—it is an important step in strengthening the compliance and enforcement regime, and one that could provide or be instructive for the superannuation guarantee scheme. The question is to what extent the parallel regime, the parallel mechanism, may operate in a similar way within the superannuation guarantee scheme. Thank you. I look forward to your questions.

Ms Streckfuss : Like Dr Hardy, I thank you for being able to come today. One of the key issues for this inquiry is how we characterise SG, or what it actually is, because that has implications in terms of whose money it is and for regulation and compliance issues. It is unlike pay-as-you-go tax, which is taken out by the employer and remitted to the Commissioner of Taxation essentially for government services—for roads and hospitals et cetera. In a sense, superannuation is a private right in that it is a worker's entitlement to pay, be it deferred on the basis of retirement or some pensionable event. It is part and parcel of their entitlement.

That is evidenced by the history of superannuation guarantee legislation, in that it was a trade-off for wage increases. Its distinguishing feature, unlike an underpayment-of-wages claim—so, if I do not get paid what I am entitled to, I can bring a claim in the Magistrates Court in the industrial division—is that there are not the corresponding private rights in relation to superannuation. In part, that is because of the legislation and because the Australian tax office is currently in charge of enforcement and levying of that area.

So we have this interesting hybrid system. In a way it is deferred wages, but we have the tax office obviously paying a big role in the levying and collection of that money. So questions obviously arise as to who should enforce this payment and who should be able to direct it into superannuation funds. Obviously it is not an amount that can be paid to the employee at the time. It is my view that not enough consideration has been given to who can enforce this payment or to other bodies such as the Fair Work Ombudsman, unions, lawyers or super funds playing a more active role in that area.

Why should that possibly be considered? If you come at it from a premise that this is a deferred workers' entitlement, there is always a question of resources in terms of a worker being able to ensure or trying to enforce that amount of money. Who has the time and money to be able to follow up—for example, in a court? I think evidence to this committee has been that there are some industries that are particularly targeted in terms of noncompliance—for example, the food services area. They are the ones that are essentially most affected by nonpayment. These sectors are often badly paid and highly casualised with a cash economy or a hidden economy and, as I said, can employ more vulnerable workers. So I think, given all that, consideration needs to be given to enforcement or recovery options in the courts. I am a litigator, so I probably have a bit of a bias there.

If you look at, for example, the Melbourne Magistrates Court's website, under the heading 'Industrial Division' it says:

The Industrial Division of the Magistrates’ Court deals with claims brought under the Fair Work Act 2009 for disputes by an employee against an employer … These claims are generally in relation to matters such as entitlements under a contract of employment, an award—

so you have both a contract of employment and an award—

or Australian Workplace Agreement. Proceedings may also be brought under the Long Service Leave Act1992, the Public Holidays Act 1993

et cetera—

Examples of entitlements that might be claimed are; wages, annual leave and long service leave. Industrial Division matters do not include claims relating to unfair dismissal—

because that goes to the Fair Work Commission; if you have been unfairly dismissed, you can make a claim—

or superannuation.

So you can go to the magistrates court and you can put in a claim under the Fair Work Act, under an award or under a contract of employment where the Fair Work Ombudsman is a little bit hindered in the sense that their jurisdiction is under the Fair Work Act and under an award. And superannuation is clearly not part of the magistrates court's jurisdiction.

Importantly, claims up to $20,000 are filed with the small claims section of the industrial division. There are specific forms relating to that. There is a specific small claims procedure that essentially makes it easier for underpayment-of-wages claims to go through the system. I think consideration needs to be given—and I am not saying it is easy—to possibly looking at whether that can be expanded so that when somebody puts in an underpayment-of-wages claim and, as is often the case, they have not been paid their super either they can go in and get that all dealt with at the same time.

It seems to me that there is this dichotomy between superannuation and underpayment of wages claims in different jurisdictions. The Fair Work Ombudsman will say, 'Go ring up the tax office,' and, for employees, it is kind of messy and confusing, and it is duplicate, in my view. I appreciate it is not an easy thing, because of all the data et cetera and the role that the tax office plays. I would say that consideration needs to be given to looking at other ways of dealing with that issue. I think that would have an educational effect as well, in terms of education in the community—that it can bring these claims. Also, if there are claims made, they can get media coverage and have an educational element as well.

CHAIR: I will take up that point you just mentioned. We had the opportunity of speaking with the Fair Work Ombudsman, and my recollection is that they indicated that, whilst they do have jurisdiction to deal with superannuation, they tend to refer it to the ATO, as they see that as being the most relevant agency. So there is this interesting trade-off. The ATO is seen as being big and scary and a very effective regulator, but I very much take your point that there is a duplication going on here, that in the first in instance it seems logical that the Fair Work Ombudsman could be empowered to deal with it, or the industrial jurisdiction of the Magistrates Court. There is a trade-off between those two things. How do you reconcile that? If we forgo the big and scary ATO option in favour of the Fair Work jurisdiction, how do you see that trade-off working?

Ms Streckfuss : I read the transcript of the Fair Work Ombudsman's appearance before this committee, and I am aware that there is information-sharing, I think, between the two agencies, although, from my recollection—and correct me if I am wrong—it was a six-monthly exchange of information, which may not be regular enough. In terms of the tools of armoury that the Fair Work Ombudsman have, they obviously have a punitive function in the sense that they can impose penalties or seek penalties under the Fair Work Act. They can publish enforceable undertakings, which are on the internet so that people can see companies that have not complied and they undertake to do that. If I can say, they have a reputation of being a bit more nimble than the tax office, of being proactive in terms of audits and proactive actions. Apart from that, I am not sure I can add anything.

Dr Hardy : I think it is an interesting idea. One of the questions I would have is to what extent they would have the necessary or relevant information and data available to them. The Australian tax office obviously have data and information available to them which is not necessarily available to the Fair Work Ombudsman. There is currently no reporting obligation to the Fair Work Ombudsman, so they have the ability to inspect records, but, in terms of the employer providing them with information on a proactive basis, that currently does not exist under the Fair Work Act. Of course, if they were to take on those functions, then they would need a lot more resources, in my view, to allow them to properly deal with that huge influx of information and data.

The other point I would make is that they do currently have the ability to leverage administrative penalties. Whilst a lot of their work is through the courts and is high profile, there is quite a bit that happens in-house in terms of infringement notices and the like. So to some extent it does reflect the way in which the ATO seeks to deal with non-payment or underpayment of superannuation guarantee to the extent that there is a sort of automatic charge that is levied against employers. So to what extent would you allow the Fair Work Ombudsman the ability impose an administrative penalty of that type? Those are the sorts of issues you might want to consider if there were increased sharing of that function.

CHAIR: Is there a high degree of correlation between unpaid wages and unpaid superannuation?

Dr Hardy : Yes. It is virtually automatic. Given that superannuation guarantee is calculated on the basis of your ordinary time earnings or the wages you receive, if you have an underpayment it is automatically going to result in a superannuation guarantee shortfall. So there is a high correlation. Certainly, although the Fair Work Ombudsman has a practice of dealing with underpayments of minimum wages and referring the superannuation shortfall issues to the ATO, there are a number of cases where it has pursued superannuation entitlements as part of a broader proceeding in relation to underpayment of wages. It is certainly within their ambit to pursue superannuation entitlements where, of course, they arise within their jurisdiction, which is under a modern award, under an enterprise agreement or as a safety net contractual entitlement. They have done so. There was a recent case in the Federal Court of the Fair Work Ombudsman and Grouped Property Services, which involved the underpayment of wages, various other entitlements and superannuation contributions. There were 48 award-covered employees and three award-free employees. For the 48 award-covered employees the Fair Work Ombudsman was able to seek compensation for lost superannuation and lost interest. The three award-free employees would have to rely on the ATO to take action on their behalf. That is kind of an illustration of the way in which the award coverage has implications for the Fair Work Ombudsman's jurisdiction and recovery of those underpayments through the courts.

Ms Streckfuss : Even the issue of whether you are under an award is not often a simple matter—for people to know whether they are actually covered by an award. I think there is an advantage in the sense of including a common law contract of employment. You might get a letter of offer that says you are employed as a waitress for $25 an hour, and that includes super or whatever. That is probably a clear case where you are covered by an award, but it may be difficult, particularly given that we rely so much on employees making those notifications. It can be a difficult thing to assess.

CHAIR: Do you have a view about what changes need to be made to the Superannuation Guarantee (Administration) Act to enliven the fair work jurisdiction for penalties and enforcement?

Ms Streckfuss : I have not gone through it and specifically turned my mind to what specific changes would need to be made in that legislation, no.

Dr Hardy : Another avenue, I would have thought, is to amend the Fair Work Act. Rather than amending the SGAA, amend the Fair Work Act to provide the Fair Work Ombudsman with powers under that act, which is the cornerstone of their jurisdiction.

CHAIR: Do you have a view as to whether we could maintain the best of both worlds? To retain that right for the ATO in some instances to pursue it, but to also give the industrial jurisdiction that power to enforce?

Dr Hardy : Are you proposing that the Fair Work Ombudsman have the power to enforce superannuation guarantee where it does not arise under a modern award, enterprise agreement or safety net contractual entitlement?

CHAIR: In all circumstances.

Dr Hardy : The Fair Work Ombudsman already has jurisdiction to enforce superannuation contributions insofar as they are set out in a modern award and enterprise agreement or in their contract of employment that takes the form of accepting their contractual entitlements. It is only in respect of award-free employees—or employees who are not covered by enterprise agreements—who have to rely on the superannuation guarantee system administered by the ATO that the Fair Work Ombudsman does not already have jurisdiction to enforce superannuation entitlements. There are already two schemes in operation that are operating in parallel, sometimes overlapping and sometimes not. The standard provision in modern awards references the superannuation guarantee system under the SGAA, so there is an inherent interconnection between the modern award provision and the SGAA.

CHAIR: In your view, what explains the Fair Work Ombudsman's reluctance to engage in this area? Are there some administrative difficulties for them which makes it easier for them to refer to the ATO or is simply that the ATO is recognised within government as being the relevant enforcement agency? Is there something other than just an informal division of responsibilities?

Dr Hardy : I certainly think there is the perception that the ATO is the principal regulator in this space. The other obvious issue would be one of resources. The more time they spend on enforcing superannuation entitlements, the less resources they have for addressing other issues that they might perceive as more squarely within their jurisdiction or not within someone else's jurisdiction.

CHAIR: Although there is that point that you raised, Ms Streckfuss, that magistrates courts do not have the power to deal with superannuation. Does the Fair Work Ombudsman have the ability to impose the obligation rather than taking the matter to court? How does that work?

Ms Streckfuss : I think part of the answer to that question—you would probably have to go through the Magistrates Court Act and regulations, the Fair Work Act and regulations, and that sort of thing. I guess the question is, 'What is the ill that you are trying to address?'—not 'ill'; I am trying to think of the right word. At the moment, an employee cannot force, in certain circumstances, an employer to pay, and they cannot force the ATO to act, so there seems to be a gap, considering, as I said before, that it is actually their money; it is not the government's money. There seems to be a gap between being able to bring an action to recover that matter or to direct it into the superannuation fund. Without going through all of the acts, you would probably need to amend a number of acts to change that jurisdiction in terms of the Fair Work Ombudsman's ability to do that, I would imagine, because, as I said, under the Magistrates Court Act superannuation is not something that they will consider.

Dr Hardy : Just to add to that, my understanding is that the bulk of enforcement proceedings initiated by the Fair Work Ombudsman are brought within the federal court system—so the Federal Circuit Court of Australia or the Federal Court of Australia—and I am aware of cases in both of those jurisdictions where compensation for lost superannuation and lost interest on that superannuation has been awarded by those courts. So they certainly have jurisdiction to deal with superannuation entitlements insofar as they arise under the Fair Work Act instruments.

Senator HUME: Let me take a step back. Let us say you have a client who comes to either of you and says, 'I believe that I have been underpaid,' or 'My employer has shut down and I've got at least three weeks work owing.' What are the processes that you go through to recover their wages, their entitlements and their superannuation?

Dr Hardy : Do you want to have the first go? You are in practice; I am an academic at the moment.

Ms Streckfuss : Obviously the issue, if they are going to shut down—you are talking about going into liquidation or administration?

Senator HUME: Let us use that as an example.

Ms Streckfuss : There are obviously issues with legislation and what that covers, and I am not an expert. I think Professor Helen Anderson is coming this afternoon, and she may be able to shed a bit more light in terms of where companies essentially go belly up and that sort of thing. Generally speaking, if there is money available, like in any area, often a letter of demand or a lawyer's letter saying, 'You owe this amount to my client; please pay or we'll bring an action,' can fix matters or at least get the ball rolling in terms of progressing it. But where companies have essentially gone belly up and do not have money, I am afraid that is not my area of expertise. I apologise.

Dr Hardy : One avenue that might be open to an employee in that situation, if the entity does ultimately fold and there is no ability to pursue the employer for those lost entitlements, is to initiate an action under section 550 of the Fair Work Act, which is commonly used by the Fair Work Ombudsman and can be used by an employee or a union—they also have standing under the Fair Work Act to pursue these types of actions. Under section 550, they are entitled to pursue compensation and civil penalties against a person who is said to be involved in the contravention. In practice, this commonly means that they bring actions against the directors of that company. That might be one way in which they could recover some of the money were the entity is about to shut up shop. Of course, there are still problems associated with that in terms of directors declaring themselves bankrupt or if they simply do not comply with court orders. There have been instances where the Fair Work Ombudsman has then had to get the sheriff involved. The extent to which employers and the directors behind them seek to evade their responsibilities is kind of staggering, and I think we saw that with 7-Eleven and the other cases explored as part of other Senate inquiries.

I guess one of the points I would raise is that that the problem that is sought to be addressed by the protecting vulnerable workers bill to the extent that the insolvent employer is a franchisee or a subsidiary as part of a corporate group. If that bill is enacted then they would have another avenue available to them—that is, they could pursue the parent company or the franchisor to the extent that they have failed to take reasonable steps to prevent the contraventions occurring. That is another reason why I see that bill as so important in terms of addressing the problem you have just raised.

Senator HUME: I suppose what I was trying to get at is that the extent to which you need to administratively work under different jurisdictions to recover what is essentially owned by the employee, whether it be wages, whether it be entitlements or whether it be superannuation.

Dr Hardy : A preliminary question would be, 'Are you covered by an award or an enterprise agreement or does your contract refer to superannuation entitlements, in which case you could pursue both the wages and the superannuation in one action under the Fair Work Act?' If they are not covered by an award or an enterprise agreement or have safety-net contractual entitlements in respect of superannuation then you would have to pursue separate actions.

Senator HUME: Do you have a sense of what proportion of workers who would make such a claim are covered by an award as opposed to are not?

Ms Streckfuss : I think the Fair Work Ombudsman would probably be a better source of information for that.

Senator HUME: Dr Hardy, you mentioned the systemic drivers of noncompliance. I am interested in, for the benefit of the record today, what you feel those systemic drivers are.

Dr Hardy : There are a range of drivers in my view. It can arise in industries which have been identified by the ATO and the Fair Work Ombudsman. Those industries which are highly competitive and have high labour costs generally result in a highly casualised workforce characterised by large numbers of young workers or migrant workers. The way in which labour costs may affect the profit or sustainability of small businesses within those industries tends to perpetuate noncompliance. So that is one driver—the industry.

The other, which I have explored in my work under the Fair Work Act, is the way that the fragmentation of organisations can also lead to noncompliance. Again, we have seen this in the Senate inquiry into temporary migrant work. I am referring to franchising as an obvious example; the other is of course complex corporate groups—supply chains, labour hire. They are all examples of the way in which the splintering of organisations can drive noncompliance because the smaller businesses at the end of the supply chain or the franchisees within a broad franchise network have limited control over the way in which they manage their business—the price paid for the services or goods that they supply. The one thing they can control is labour costs, and that tends to drive a race to the bottom. They engage in unlawful behaviour because they perceive that they cannot survive as a business in any other way.

Senator HUME: In the last couple of days of hearings that we have had on this particular issue, a lot of the discussion has been around the size of the problem. I do not think there is anybody disputing that there is a problem. But what interests me most is how we best address it, and you have covered a couple of those issues today. One of the issues that have been raised by other witnesses is that part of the systemic driver of noncompliance is the complexity associated with it, and I think that the ATO are coming out and saying that 20 per cent of noncompliance is driven by a lack of adequate reporting. How do you see that issue better addressed?

Dr Hardy : But my sense was that 70 per cent was driven by cash flow problems, so that leaves 10 per cent due to other problems such as complexity. I think that, where the great bulk of unpaid superannuation is due to cash flow problems, that is a red flag for the economic drivers of noncompliance. It is not as a result of a lack of education, or ignorance, and that means that more education, more tweets, more Facebook posts—all this social media—are, in my view, wasted energy to some extent because they are not going to address some of the fundamental drivers, which are cash flow economic problems faced by small businesses.

Senator HUME: One of our witnesses suggested that all superannuation payments should go via the ATO; they should be paid with tax, as part of tax. To me, that seemed like a solution that would simplify matters so dramatically that the nonpayment of the superannuation guarantee would become almost a nonissue. Do you have any comments about that?

Dr Hardy : Except that cash flow issues would also lead to tax evasion. My sense is that it would not necessarily address the cash flow problems that are driving some of the superannuation noncompliance. It would make it simpler to administer and may make it easier for the ATO to detect that there has been a superannuation guarantee shortfall, but it would not necessarily address why the employer is not paying that additional amount: because they have no cash.

Senator HUME: One of the impressions that I get at the moment is that the reason why businesses tend to use superannuation for cash flow management purposes is that they can.

Dr Hardy : Yes.

Senator HUME: So, in my mind, if you remove that as an option, it then becomes a nonissue.

Dr Hardy : Certainly I think it would help. I am not sure whether it would be the panacea. Do you have anything to add?

Ms Streckfuss : I was just going to say, if you had, for example, a system where it is calculated monthly and paid monthly it is all simple. But in terms of why employers do not pay super, if you are looking at particular industries we have talked about, with highly casualised and often cash-paying industries. At a local cafe an employee might be paid 20 bucks an hour, and sometimes that works to their advantage as well. They might be on unemployment benefits or on a single parent pension, and if they are getting paid cash in hand and are not declaring that, they are not being paid super. In a way, in terms of regulation, you can have great systems, but how do you stop that kind of situation? It is often cultural.

Senator HUME: I was going to ask you about that. That was my next question. You did mention the cash economy, the black economy. In this particular debate, we need to separate out the cash economy on one side and the non-payment of superannuation guarantee from the non-cash economy on the other side. The cash economy is in itself a very big and difficult problem to deal with, and if we blend the two it is almost an insurmountable problem. With the cash economy, if I pay a gardener $35 an hour in cash and he does not declare it for tax purposes, he does not get paid superannuation either. At the moment, unfortunately, that is his responsibility.

We are really talking about people who have a contract and are paid, whether it be by award or not, but are not being paid what they are entitled to. One of my big issues with the non-payment of superannuation is the fact that most people do not see that they have not been paid their superannuation until months after they have actually earned the money. It takes a level of diligence to go to their superannuation statement and try to reconcile it with their payslips. That side of things is very complicated. How do you see us finding a solution to that particular problem?

Dr Hardy : I think some of the reforms that are geared toward synchronising payment of wages with the payment of super are a positive development in addressing—

Senator HUME: Do you mean like Single Touch Payroll and SuperStream?

Dr Hardy : Yes.

Ms Streckfuss : That is less than 20, isn't it?

Senator HUME: Yes, at the moment.

Ms Streckfuss : That is a problem because it is mainly small business.

Senator HUME: Is it an extension potentially of Single Touch Payroll?

Ms Streckfuss : Possibly, but obviously it is not your BHPs with payroll expertise in human resource.

Senator HUME: Well, it is with Dick Smith.

Ms Streckfuss : That is true, but my understanding from the evidence, and I might be wrong, is that it is mainly small business in certain industries.

Dr Hardy : The other thing is that when we talk about small businesses there does not seem to be a lot of transparency about what that actually means. A lot of the franchisees in 7-Eleven could be classified as small businesses. There are lots of differing definitions of what a small business is. Is it under 20 employees? Is it under 50 employees? Is it under 100 employees?

I think the kind of expectations of a small business flow from those characterisations. You do have the franchisee small business as part of a broader franchise network, and the franchisor might be able to assist with the way in which they manage payroll, either directly or by providing support or services. I do think that some of the assumptions about the lack of capacity of small businesses do not necessarily hold true. Sometimes we say, 'Small business is a big problem,' but there is no kind of inquiry as to the nature of that small business. They are just lumped into one big category with no real sense of what that means.

CHAIR: The current system relies on the employee becoming aware of underpayment of super for the whole system to gear up to address it. The Fair Work Act requires pay slip reporting. How do you believe this could be improved to make it easier for employees to monitor their own entitlements?

Dr Hardy : I think the point Jane raised is really critical one, because at the moment my understanding is that on the pay slip employers might refer to liabilities that they will pay rather than referring to the amounts that they have paid. Then there is that extra step that is required on the part of employees to get their member contribution statement and seek to reconcile the two. As we have seen, it is not uncommon for employers to fabricate records. The TCFUA submission I think provided some really excellent examples of the ways in which employers manipulate records and information supplied to employees, which makes it so difficult for employees to identify whether or not they have been paid their full superannuation entitlement. Certainly I think the things that Jane mentioned will assist in addressing some of those issues.

CHAIR: Finally, you have talked about the fact that the current set-up makes it difficult for third parties to assist in the recovery of superannuation. What would be your recommendation to allow unions' or funds' lawyers to more easily recover superannuation on behalf of employees?

Ms Streckfuss : As I indicated earlier, I think it is often a matter of resources, particularly when you are talking about the responsibility being on the employee to uncover the underpayment and take action. My view is that if you can get better resourced organisations to help in that process then that has to be a good thing.

CHAIR: Thank you very much, Dr Hardy and Ms Streckfuss.