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Thursday, 13 February 2020
Page: 996


Senator BILYK (Tasmania) (13:03): Labor created the superannuation scheme. We've worked since 1992 not only to defend the system but to build on it. It's been a core conviction of Labor over that time that our system of retirement savings needs to provide comfort for as many retirees as possible, while also being financially sustainable. Our superannuation system has been an extraordinary success in so many ways. It has funded a comfortable retirement for millions of Australians. It has reduced the burden on Australian taxpayers of funding retirement incomes through the age pension system. It has created a pool of assets, around $2.8 trillion now, that has provided a massive boost to business and infrastructure investment. By 2035, this investment is expected to grow to $9.5 trillion—that's trillion with a 't'.

Despite the success and the popularity of Australia's superannuation system, those opposite have never really supported it. They opposed it when it was introduced, they've opposed every measure to strengthen the system and they've tried to chip away at it at every opportunity. A case in point was their delay to the increase of the super guarantee. When Paul Keating introduced compulsory superannuation, the ultimate target for the super guarantee was 15 per cent. This is what experts agree is needed to fund the retirement needs of an ageing population. Labor legislated a timetable of increases until the guarantee reached 12 per cent in 2021. While the Liberals went to the 2013 election promising to delay the timetable by two years, they instead froze the guarantee at 9.5 per cent until 2021.

One of the latest moves in the Liberals' war on super was their legislation to limit union representation on industry superannuation fund boards—that was purely an ideological move. There was absolutely no evidence that it was needed, especially when industry superannuation funds have been consistently outperforming private funds. If the government are serious about protecting fund holders then perhaps they will do something about fee gouging as this is one of the major issues affecting superannuation balances. The bill we're now debating, Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019, does not provide an effective or evidence based way to protect fund members. In fact, from the evidence received to two Senate inquiries, the inquiry into this bill and the inquiry into the Treasury Laws Amendment (2018 Superannuation Measures No.1) Bill 2018, we know that the government's proposed amnesty does not have widespread support from stakeholders and could actually be counterproductive.

While we have strong reservations about the government's proposed amnesty, we have no argument with the government that unpaid super is an issue that needs addressing. It's a problem that costs fund members almost $6 billion a year. While the term unpaid super makes this offence sound quite benign, we're essentially talking about theft. It's no less serious than wage theft. The basic difference is that it's the theft of deferred earnings rather than current earnings. In fact, it could be argued that the offence is even more serious because superannuation accumulates and, as such, has greater value when it's paid out.

The interesting thing about this amnesty is: it's not for one year or the last one or two years; it's for 26 years. It's interesting to note that the first bill in which the amnesty was proposed was expected to recover around $230 million in superannuation. That's a one-off recovery of about four per cent of only one year's stolen superannuation. It's a very small amount in the overall scheme of things. While those opposite might say, 'Well, at least it's another $230 million those workers wouldn't have had,' we need to ask ourselves the question: at what cost?

Recent research by the International Monetary Fund found that amnesties can be counterproductive for future compliance. The reason for this outlined in research cited by the Australian Institute of Superannuation Trustees in their submission to this bill is that future amnesties get anticipated and honest taxpayers end up resenting the special treatment given to those who break the law. This is why we need to approach the idea of an amnesty with great caution to be sure that any short-term gains aren't offset by negative future consequences.

Not only is the amnesty potentially counterproductive; it is also unfair—it's unfair to those employers who do the right thing and meet their superannuation guarantee obligations on time. The whole purpose of the penalties and interest charges levied on overdue superannuation guarantee payments is to ensure that there is a strong business incentive to pay on time and to send a strong message that failure to pay on time is taken seriously. If an employee steals from their employer, it's theft. It's the same for employers where they steal from their employees: it's theft, pure and simple. I've heard the arguments that it's complicated and it's hard to do, but I've never yet heard of a senior manager or CEO not having their superannuation paid. Let's think about that: it happens to the workers; it doesn't happen to those at the top.

An amnesty undermines the message that paying on time is important. The proposed amnesty would waive both the administration component of the superannuation guarantee charge and the penalties, which could be up to 200 per cent of the superannuation guarantee charge. On top of this, the superannuation guarantee charge in contributions offset against the superannuation guarantee charge will become tax deductible for employers. So not only do the offenders get some charges and penalties waived for doing the wrong thing but they also get a tax break. Really? By waiving the penalties and charges, the businesses that take advantage of the amnesty after failing to pay on time are getting an unfair competitive advantage over the businesses that do the right thing in the first place. As the Australian Institute of Superannuation Trustees said in their submission to the Senate inquiry on this bill:

… an amnesty sends a message to employers breaking the law that they will be protected from the consequences of the law …

The issue is that it says to good employers, 'There's no reward for you doing the right thing.' In fact, by allowing this amnesty to occur, poor employers who have held the cash back and used it for other purposes are being rewarded. It creates a situation where you are rewarding bad employers and punishing good ones.

The proposed amnesty has been put forward as a measure that could bring forward employers who have made an error. But, as United Voice pointed out in their submission to the inquiry, genuine errors are not the major problem when it comes to noncompliance with superannuation guarantee obligations. As UV's national secretary, Jo-Anne Schofield, told the inquiry:

… it's our experience that, where there is an error due to misclassification or oversight, it is quickly rectified, with cooperation from the union. But, in our experience, superannuation theft is deliberate and it is systemic in some sectors.

Everything that is wrong with the proposed amnesty was actually summed up succinctly by the ACTU, which told the inquiry:

… it introduces a double standard on workers and their entitlements. Fundamentally, if workers were to steal from their employers, they'd face jail, lose their jobs and face significant penalties to their livelihoods. Workers face fines and penalties for exercising the right to strike under our systems. But, under this proposal, employers who refuse to comply with the law get a free kick from their legal compliance and their obligations, and they get a tax deduction to boot.

I would like to know where this amnesty idea was initiated. It has not been recommended by any parliamentary or government report, and it is not supported by employee representatives or the superannuation industry. It was not even recommended by the government's own Superannuation Guarantee Cross-Agency Working Group. In fact, the only stakeholders that seem to support it are employer representatives—in particular, the Australian Chamber of Commerce and Industry and the Council of Small Business of Australia. In evidence to the inquiry on the first amnesty bill, COSBOA said they had very brief conversations with a couple of ministers at the time but had not raised the issue publicly, although, 'There may have been a tweet or something.' While both ACCI and COSBOA justified the amnesty by saying superannuation guarantee payments could be missed for reasons such as health issues or national disasters, these were not accepted by the Treasury as valid excuses. Treasury officials told the inquiry that Single Touch Payroll, and technology more generally, had made it much easier for employers to comply with their obligations.

The way this proposal has come about reveals a very worrying approach to policy development by this government. It appears that a policy initiative gets thrown up based on a couple of brief conversations with employer groups, is not recommended by any report or inquiry, and is put forward without any consultation with other stakeholders, such as employee groups or the superannuation industry. As I've said before, Mr Morrison likes to talk a lot about the Canberra bubble, but he leads a government which governs by thought bubble. What we get as a result is ill-conceived, ill-thought-through bubble policy. There are far more effective ways to improve superannuation guarantee compliance than this proposed amnesty. Single Touch Payroll is certainly going to play a big role in the near future. Other suggestions have been put to the inquiry, such as strategic audits by the ATO and allowing individuals and unions to inspect wage and superannuation records.

When it comes to noncompliance with superannuation guarantee obligations, or any other form of wage theft, one of the best things the government could do to combat the problem is to stop their war on workers. Legislative proposals, such as the government's so-called 'ensuring integrity' bill are nothing but an assault on unions, the organisations at the front line of fighting wage theft. Those opposite would be amazed how much progress they could make on wage theft, at no extra cost to the taxpayers, if they simply stopped their ideological attacks on unions and let them get on with their jobs.

The truth is this government is not the slightest bit interested and it's not the slightest bit serious about standing up for workers, cracking down on wage theft or defending the superannuation system. They never even really supported it in the first place. We on this side believe there's a better way to recover unpaid superannuation guarantee obligations, which is why Labor have moved an amendment to this bill. The amendment is fairly straightforward. It inserts the right to superannuation into the National Employment Standards. This will give employees the power to pursue unpaid superannuation because, currently, unpaid superannuation is a debt to the tax office, which means workers cannot pursue these debts unless there's a clause in their award or their agreement that empowers them to do so. The government really should support our amendment. It's the only way they can have a bill before this place that will facilitate real, effective action to recover unpaid super. And if common sense is to prevail, then I look forward to receiving the government's support for our amendment.