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Wednesday, 8 December 2004
Page: 110

Senator SHERRY (5:04 PM) —We are dealing with the return of the message from the House of Representatives in respect of Tax Laws Amendment (Superannuation Reporting) Bill 2004 and the two amendments that the House has rejected which were passed in the Senate chamber and added to this bill yesterday afternoon. The taxation super laws reporting bill deals with the removal of the requirement for employers to report to their employees within 30 days of the end of the quarter that they have paid the superannuation contribution. This is a measure that was introduced by this government together with the requirement for the payment of superannuation contributions at least quarterly. So the issue that we are dealing with in this bill is a consequence of the government introducing this reporting requirement.

If the bill passes, which it will, the requirement that employers notify their employees of the payment of superannuation will be removed. However, this requirement will not be removed for all businesses because a substantial proportion of them are required under various industrial instruments, federal and state awards and other industrial instruments, to notify their employees of the payment of superannuation. Even many of those that are not required to do so do notify their employees of the payment of the superannuation contributions. From the outset, even prior to this bill being given notice of via a government announcement during the election, I had a number of complaints about the practical application of the payment reporting system.

In particular, I had drawn to my attention specific examples in the hospitality industry and in some sections of the agricultural industries of the practical limitations of this reporting mechanism, particularly in industries where there is a very high turnover of labour, as there is in the two examples I have given. There are practical problems in carrying out the reporting requirements and therefore, where it is impractical to carry out the reporting requirements, employers would be in breach of the law. The Labor Party recognised from the outset that there was a practical problem in some areas with this reporting mechanism. This highlights the fact that the government did not give sufficient thought to this mechanism when it introduced it some years ago.

In the message we are considering, the House of Representatives has disagreed with two amendments: one that was successfully moved by the Labor Party and supported by the Democrats, and one moved by the Australian Democrats and supported by the Labor Party. I would not say that I am disappointed; I think it is a sign of the arrogance of this government, which will get worse over time. The two amendments that were passed by the Senate and added to the bill were reasonable amendments. The Labor amendment went to ensuring that we are regularly updated with a factual report on the number of employers not paying the SG, the quantum of moneys involved, the number of employees and the actions being taken by the tax office to recover moneys. The Labor amendment required the reporting of this information on a yearly basis. I do not think that is unreasonable. That amendment was passed by the Senate.

In the public interest it is important that, in considering the reversal of a reporting measure, we do know the facts and what is going on. A relatively small number of employers do not pay SG, but the fact that SG goes unpaid, often for considerable periods of time, does impact, I am led to believe, on tens of thousands of employees. So it is important to at least know what the facts are. I think that that, in the context of what we are considering, is a reasonable amendment. But the government with its arrogant approach—take it or leave it; black or white—does not agree with that reasonable amendment; likewise with the Democrat amendment. I was not here for the debate yesterday but I think the Democrats recognise that there are some problems and they have attempted to come to some sort of practical solution to deal with the problems that do exist in some areas. Nevertheless, the government has chosen to reject both amendments by the message.

On the issue of unpaid superannuation contributions, it is hard to establish the facts. Occasionally we get some information from estimates. We do know that there are tens of thousands of employees each year who go without their SG and that it is crystallised as a problem when, as happens in some cases, the employer is put into receivership and bankruptcy proceedings. I point out to the chamber and to those who are listening that, even though the superannuation guarantee is a statutory entitlement in this country, there is no compensation in the event of employer bankruptcy. Often, the outstanding superannuation contributions—a statutory entitlement—will exceed the redundancy payments that an individual should receive and are covered, at least in part, by the Commonwealth's statutory employee entitlements scheme. We have an absurd situation where some elements of redundancy pay—long service leave, outstanding wages and matters of that like—are, on employer bankruptcy, covered by a limited statutory entitlements scheme, but not one cent of superannuation that is unpaid on employer bankruptcy is compensated for. I point out that one of Labor's policies is to ensure that in those circumstances the outstanding superannuation guarantee contributions are covered by an employee entitlements protection scheme. That is another issue for another day. We should minimise the outstanding superannuation guarantee contributions and ensure that, where we cannot recover the moneys, employees are covered in terms of compensation.

In considering this bill the Labor Party recognises that there are some practical issues that have to be resolved. The government has provided a blanket solution. It is not a perfect solution by any means but nevertheless it is a solution. It could have been dealt with in a better way. The two amendments that were carried in the Senate were reasonable in our view. However, a solution has to be found and, even though it is a solution that we think could have been better refined, we will not be insisting on our amendment and we will not be supporting the amendment that was successfully carried by the Australian Democrats, because we want to ensure the passage of this legislation. So we will be accepting the message transmitted from the House of Representatives.

A lot of the focus of the argument on this issue has been about red tape, particularly for small business. Whilst the problems in this area are important—and I have mentioned some of industries where they are important—the problems that businesses are going to face with new paperwork, new costs and legal liabilities when the so-called `fund choice' hits the deck on 1 July next year will rival those of the GST. There are other issues, but that is for another day. The problems that businesses are going to face with additional paperwork, record keeping, inspections by the tax office, paying moneys to multiple funds, paying for the transaction costs for payment to multiple funds and the legal liability if they give advice outside of the terms of the fund choice bill will be very significant indeed.

We have a government that talks the talk on red tape for business—in particular, small business—but it does not walk the walk. The Labor Party will be drawing to the attention of employers throughout Australia in the run-up to fund choice just who is responsible for the additional work requirements that employers will have to go through in respect of superannuation fund choice. We will be drawing to the attention of employers that it is a Liberal government that has imposed significant new red tape burdens on employers with superannuation fund choice. I am already starting to get significant levels of complaints from employers as they are being briefed by superannuation funds on the new obligations—the burdens, the red tape—that are going to be introduced for them with superannuation fund choice. Those burdens will far and away exceed the issues relating to red tape as it applies to small business in this bill.

That is another debate for another day. I look forward to that debate and to drawing the community's attention to the direct responsibility this government has for new employer obligations for superannuation fund choice. We will be holding the government accountable. It appears that there is a hypocritical double standard. You address the paperwork requirements for superannuation reporting, where there are some real problems—so it is one step forward for business—and then next year in the lead-up to 1 July it will be 10 steps backwards once employers start implementing superannuation fund choice.

That is not to say that superannuation fund choice can be reversed—I will be making comments about that on another occasion—but certainly there are going to have to be solutions found in two areas: the compliance burdens for employers and the issues in relation to fees and charges. Again, that is another debate for another day. The Labor Party will certainly be pointing out the Liberal government's responsibility for the new paperwork and costs that will result for employers. They will be many, many times those of the bill we are considering at the present time. The Labor Party will not be insisting on its amendment or supporting the Democrat amendment. We will accept the message from the House of Representatives.