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Economics Legislation Committee

GROZIER, Mr Dick, Associate Director, Workplace Relations, Australian Chamber of Commerce and Industry

STRONG, Mr Peter, Chief Executive Officer, Council of Small Business Organisations of Australia

Committee met at 11:02

CHAIR ( Senator Hume ): Good morning, everyone. I declare open this hearing of the Senate Economics Legislation Committee for the inquiry into the provisions of the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018. The Senate referred this inquiry to the committee on 24 May 2018 for report by 18 June 2018. The committee has received 11 submissions so far, which are available on the committee's website. This is a public hearing and a Hansard transcript of the proceedings is being made, although the committee may determine, or agree to a request, to have evidence heard in camera. The committee has set Thursday, 14 June 2018 as the date for responses to questions on notice from this hearing.

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 contempt. It is also contempt to give false or misleading evidence to a committee. 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. If the committee determines to insist on an answer, a witness may request that an answer be given in camera. Such a request may also be made at any other time.

Witnesses should speak clearly and into the microphone to assist Hansard to record proceedings. I would ask photographers and cameramen to follow the established media guidelines and the instructions of the committee secretariat. Please ensure that senators' and witnesses' laptops and personal papers are not filmed.

I now welcome representatives from the Australian Chamber of Commerce and Industry and the Council of Small Business Organisations of Australia, COSBOA. Mr Grozier or Mr Strong, do you have an opening statement for the committee?

Mr Strong : Yes, thank you very much. I'd like to make a statement on the amnesty. The amnesty is a very obvious thing that needs to happen. This is the third time in three weeks that I've been in front of this committee, so a lot of the things I won't elaborate on too much except to say: you know where we come from on a solution to this very complex area.

But when it comes to the amnesty, where we come from is that a small business is a person, and they may have not paid their superannuation because their child is ill. I've seen businesses rush off to look after sick children or parents et cetera, come back and go: 'I haven't done my super. What do I do, because I will potentially be fined if I don't do something here?' Dealing with superannuation funds is appalling. They don't know how to communicate. Some of them are very good at investment, so this is not about their investment or their returns; it's about their treatment of the supply chain—the supply chain being small-business people. I'd point out to the committee again that the only person in the whole collection process who is not paid for what they do is the small-business person, and the only person who can get fined for not doing their job is the small-business person. One of the state governments is now proposing that, if they don't do their job, they go to jail. They are the only people who don't get paid, yet they're the only people who will be personally punished. We need to fix this system as soon as possible.

Within superannuation collection, we also have another area where there's a disgraceful rort, and that's the area where funds are set up in enterprise agreements, making it compulsory to use certain superannuation funds. What that means is: over the years there'd be thousands, if not tens of thousands, of employees who, as a result, have lost that part of their retirement savings. So, if someone goes to Coles and they only work there for three or four weeks, the amount of money that goes into super doesn't reach the threshold where interest overtakes fees, so they lose their money. And that happens across other compulsory funds. Over the last 20 or 24 years, whatever it is, an awful lot of people have lost their retirement funds due to a system that's been set up that only works for the funds. It doesn't work for the employee or the collection system, and it doesn't work for the employer. The amnesty makes an awful lot of sense.

CHAIR: Thank you, Mr Strong. Mr Grozier, do you have an opening statement?

Mr Grozier : Yes, thank you. Our submission primarily deals, as did Mr Strong's, with schedule 1 of the bill, which would enact the 12-month amnesty for undeclared shortfalls which have not yet been rectified. In our view, an amnesty has a role to play in improving recovery of missed contribution, which is the policy objective of the SG charge. The ATO reports that unpaid superannuation guarantee is typically a small-business problem. It reported that 97 per cent of nonpayment reported by employee notifications were of small businesses, and the vast bulk of their missed payments were attributable to cash flow, in the order of 70 per cent of them, and to poor record keeping, in the order of 20 per cent. A third reason for missed payment or underpayment is not capturing all the components of ordinary time earnings or misunderstanding the deemed employee rules. Contributions not paid, or underpaid by error, are also associated with large employers which fail to properly meet their superannuation guarantee obligations.

We have argued in our submission that the amnesty does not establish a poor precedent with respect to the superannuation guarantee charge. The superannuation guarantee charge is a tax, but it can be broken into two components. One is remedial because its policy objective is to restore the affected member to the position that he or she would have been in if the relevant quarter's amount of contribution had not been missed. The other component of the superannuation guarantee charge is charges of penalties. Its remedial characteristic means that the amount of reported superannuation guarantee charge is not discretionary. Its tax-and-penalty characteristic means that it is not tax deductible. Under the amnesty, the remedial component will be treated in the same way as the contribution that it is compensating for. It will be tax deductible, but the amount will not be subject to discretion. The charges-and-penalty component, as with other payments of this kind, is not tax deductible, but it is suspended.

The amnesty is for historical nonpayment. It does not reach to the last quarter or to future quarters. It does not impact past rectifications or current investigations. We would submit that the amnesty is consistent with the approach which has been adopted by the Taxation Office in its administration of the superannuation guarantee. The tax office has placed more focus on self-correction, but the amnesty clearly extends the net past employers who have come to the tax office's attention. It gives them safety and self-correction, but the amnesty is also finite. The amnesty period precedes other legislation, the Treasury Laws Amendment (2018 Measures No. 4) Bill, which will make it more likely that small employers with outstanding superannuation guarantee charge will move more rapidly to administration or wind-up than in the past. Where that happens, recovery is much more problematic and much more unlikely. The self-corrected contributions under the amnesty are visible; they are required to be notified in the approved form.

For the amnesty to have its greatest chance to succeed—that is, to lead to the rectification of the greatest amount of missed contribution—we believe that it should be enacted expeditiously. Time is needed for people to understand the rules and for the commissioner to issue sufficient guidance material on questions such as: what is meant by having informed an employer of an intention to examine superannuation guarantee charge? We have understood the use of the word 'informed' in the bill as meaning 'by way of formal advice from the commissioner', and the current amnesty guidance, which is on the web at the moment, seems to suggest that examination is being confined to audit and/or to employee notifications. Whether we're right about that or not, quite clearly the rules about this need to be clear. The clock is ticking on the amnesty. Particularly where self-correction will require a payment plan, time is needed.

The Australian chamber's submission does not address schedules 3 and 4, but its understanding of these schedules is that they may raise technical issues but are not controversial in principle. Its submission also addresses schedule 2, which seeks to address an inequity in the system, and its enactment is also supported. In our assessment of schedule 2, the balance struck between the interests of employers and employees is appropriate. Schedule 2 is being introduced at the same time as single-touch payroll is being implemented. Single-touch payroll will lift data for reporting from the employer's payroll system at the same time as the pay is being made up and paid. Not all payroll systems are the same or will be enabled for single-touch payroll in the same way. Differences in payroll system flexibilities mean that the fact that an employee gives the employer a shortfall exemption certificate should not compel an employer to not make superannuation guarantee contributions for the quarter. Very briefly, we would therefore tend against the suggestion that requiring an employer agreement is a precondition for an application. We believe, ultimately, that the decision of whether or not to apply for a certificate should be the employee's decision only, and the employee will make a judgement about whether he or she wishes to talk about that with the employer before making the application or whether he or she wishes to have the certificate before entering into serious discussion.

Can I conclude by drawing the committee's attention to paragraph 68 of our submission, which is misleading and erroneous in parts, and I do sincerely apologise for the errors. The references in paragraph 68 to the Income Tax Assessment Act are incorrect. Division 95 of schedule 1 of the Taxation Administration Act provides that a person who receives excess concessional contributions is liable for an excess contributions charge, which is levied at the same rate as the shortfall interest charge but is not itself a shortfall interest charge. An excess contributions charge applies from the beginning of the financial year in which the excess contributions were made. I thank the committee for the opportunity to make this statement.

CHAIR: Can I ask you first to say, in just a couple of sentences, what you think the main causes of superannuation guarantee noncompliance are among small business?

Mr Strong : First of all, as Mr Grozier talked about, is cash flow. Cash flow management is the lifeblood of a good business. If you're a bad business, you won't last if you can't do that. It's the confusion and the complexity. Again, Mr Grozier's submission there just showed how much complexity there is in the whole system. That complexity is, without a doubt, something to be considered. Thirdly, there are the funds themselves. They aren't very good at administration. They aren't very good at taking in all the data that's sent to them. I remember when I employed someone—it is some years ago now—I made a payment online, because they finally went online instead of taking cheques, and the payment was rejected because I didn't fill out their form. I'd given the information I had to under the rules and the law, but they see themselves as their own regulator and they rejected the payment, which I then had to make by cheque, which would have been late. They are the three main reasons: complexity, cash flow management and the incompetence of the funds.

CHAIR: Do you think that the amnesty will result in more small and family businesses becoming compliant with the superannuation guarantee?

Mr Strong : It should, and it's up to us—government, industry associations et cetera—to communicate this out to our members and get it out there the right way, and that will certainly make it work better. But it will do that if we go out and say, 'Now is your opportunity to pay the money that you owe.' Most small-business people are honest and they're probably feeling guilty about it and they will say, 'Great. Let me get this off my back.' The dishonest ones won't do it, and the tax office will need to hunt them, as they do.

CHAIR: So it's more those that have negligently or accidentally missed payments that will now comply, you believe, under this system?

Mr Strong : That's right.

CHAIR: Mr Grozier, ACCI have said that the superannuation guarantee charge is one of the reasons for low levels of self-assessment and disclosure. Can you just give us a quick outline of why that is the case?

Mr Grozier : It's our perception that the superannuation guarantee charge is not of great assistance to recovery once a shortfall has arisen. It may, when the superannuation guarantee charge system was originally introduced, have been motivational or assisted employers to recognise what was intended, but the reality is that, once a guarantee charge is incurred, the cost on rectification is significantly higher than the missed payment, which doesn't sit very well if one of the major reasons for missed payment is cash flow, and the longer it remains undeclared and unrectified the longer it is also escalating at a rapid rate. I think that is part of the reason why the tax office regularly reports—and indeed the Audit Office has not disconfirmed this—that the longer the outstanding charge remains undiscovered and unrecovered the less likely it is to be recovered.

CHAIR: Do you think the superannuation guarantee amnesty will be taken up by a number of your members?

Mr Grozier : I have no way of estimating its impact except that it seems to me that it addresses that key problem in the superannuation guarantee, which is that missing a payment has suddenly made something which you couldn't afford much more expensive indeed, and there is, in the amnesty, an implicit stick, which is that if, subsequent to the amnesty completing its period, you've not made any effort, then you are likely to have at least a 50 per cent penalty; you are unlikely to be in a position where remission of penalties would be higher than 50 per cent.

CHAIR: I think that carrot and stick approach is exactly the intent. You're absolutely right. Finally—and I could probably address this to both of you—what do you think's the most effective means of promoting the amnesty among your members?

Mr Strong : I always say that you go to industry associations—local chambers—and find them and get information into their newsletters or however they communicate with their members. They are the experts at communicating with their particular groups. Owner-drivers communicate differently from people in restaurant and catering or retailing, so getting to them and supporting them and getting that information out would be a good thing.

CHAIR: Mr Grozier, do you have anything to add to that?

Mr Grozier : I certainly support the assumption under the senator's question, which is to assist me to be well publicised to maximise its potential for take-up. We would certainly agree. I would certainly agree with Mr Strong's observation that trusted advisers can be of great assistance. But I also feel that there is a responsibility on the Australian Taxation Office to quite clearly identify what is within the amnesty, what is meant by the amnesty and what falls outside it. I should also say that the office does in fact have a website or web page devoted to the amnesty at the moment and it is becoming increasingly helpful. I also notice that it is being frequently updated, and certainly where we have questions about the amnesty's operation we would raise them with the tax office and if they are questions that have a general impact would expect that to then be reflected on the website.

Senator KETTER: Just for the record, gentlemen, I take it that you both support the bill?

Mr Strong : Yes, we support the bill.

Mr Grozier : We support the bill and we would hope that the committee finds its way clear to recommending expeditious enactment. One of our concerns is that were the bill to be delayed for a significant period of time then much of the advantage of the amnesty would be lost, particularly where payment plans are involved.

Senator KETTER: And outside of the amnesty schedule, where most of the focus has been, Mr Grozier, you've made some comments about schedule 2. Are there any other modifications to the bill you would be looking at?

Mr Grozier : No. Schedules 3 and 4 fall outside the scope of my representative role, and I'd have to say that they get into areas of the law that are not my expertise at all. It would appear from the combination of the explanatory memorandum and the submissions before the committee, which were on the website when I was reading it, that there may be an issue with respect to the reach-back of operation in schedule 3, and I'm not sure there were serious issues raised about schedule 4. I accept that there may be technical issues, but I didn't perceive that there were reasons that those schedules should delay the passage of the bill. I would also say that of schedule 2.

Senator KETTER: Just coming back to the amnesty, Mr Grozier, you have said that ACCI has for some time advocated for a superannuation guarantee amnesty. Can you tell us when you first approached the government to adopt that policy?

Mr Grozier : It actually arose from one of the chamber's members, the New South Wales Business Chamber, and was first raised by a member in a meeting with the then Minister for Small Business. It was then considered by the New South Wales Business Chamber, which decided that it would support that. Subsequently the Australian chamber also made that decision. So, it would have been initially raised in about late 2015, and discussions with Treasury would have taken place probably in the first half of 2016. But until this bill came along we had presumed that although there may have been no final decision there hadn't been a positive decision.

Senator KETTER: Have you met with successive ministers in relation to this?

Mr Grozier : The meetings were with Treasury officials, as opposed to the Minister for Small Business at the relevant times.

Senator KETTER: When was the last time you had a meeting with Treasury about this?

Mr Grozier : On this matter my memory would say in the first part of 2016. I'm happy to go through my diary, and if I have misled you I will advise you.

Senator KETTER: Was that Minister Billson?

CHAIR: No, it wouldn't have been.

Mr Grozier : I think the initial idea was raised with Minister Billson but I think by that time he may not have been the minister. I'll check and give you a response on that.

Senator KETTER: Could you? Thank you very much. And Mr Strong, have you met with government about the issue of the amnesty?

Mr Strong : We haven't done anything in public about this that I can recall. There may have been a tweet or something. But I remember discussing this with Mr Billson just in a general conversation about the management of superannuation, because, as you know, we don't think we should be involved in PAYG. And then I had a discussion with Kelly O'Dwyer. Again, it was a very quick discussion—just a mention of it—and I said that yes, we'd support that. But I've had no discussions with Treasury or any of those sorts of people about the issue.

Senator KETTER: Can you tell me when that discussion with Minister O'Dwyer was?

Mr Strong : I'd say a year and a half ago. Again, I wouldn't even have it in my diary, to be honest. It was one of those quick discussions.

Senator KETTER: And Mr Grozier, when did you first become aware that the government was working on a bill that would include an SG amnesty?

Mr Grozier : The announcement on 24 May.

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

Mr Grozier : I support the notion that superannuation is part of the social support system. It's come into being so that at least in some cases it looks like someone's wages are being deducted from before they get them in hand. On the other hand, it could also be argued that it looks a little bit like a workers' compensation premium. All those additional costs on wages clearly have an impact on wages, and to that extent it's true that all those could be regarded as either wages for insurance purposes or deferred wages.

Senator KETTER: Would you support a wage theft amnesty?

Mr Grozier : I'm not certain what the senator means by 'wage theft'.

Senator KETTER: It is where employers do not pay the minimum legal wages to employees.

Mr Grozier : I think in the case of terms like 'wages theft' that at times there is a tendency to expand a concept that seems to explain the phenomenon well past what was really captured by the initial concept. What I mean by this is that underpayment of wages has been a feature of wage payments for years and years, usually by oversight or mistake. That has not changed. There are examples of people who are exploiting people. If it is of assistance, I am happy to call that second subset 'wage theft', but I don't accept the view that underpayment of wages is wage theft and I don't accept the policy implications of that name.

Mr Strong : If I could just comment on superannuation, I spend a lot of time with my employees explaining that it's their money. And I think I've given this example before: if we pay someone $100,000, in actual fact we're paying them $109,500, or whatever, and they should be given control of that money. In our submission I've come up with three solutions, one being of course that you put it in PAYG, and that removes so much complexity. The other one is this. Unions want us to pay fortnightly, which would just increase the debt and increase the profit for the debt collection agency that works for the industry super funds. But it also gives us the opportunity to say, 'How about we pay the employee their money, and then they put it into the superannuation funds, and, if they don't do it, they go to jail?' But of course we know that that won't happen. We inherently trust employers more than we trust employees with their own money when it comes to superannuation. So we trust us more, but now we're going to make it harder or fine people more at the end of the amnesty. And we are saying, 'Remove us totally from this.'

The other option is this. As I said before, we don't get paid. Everybody else in the system gets paid; all the directors get paid—as they should. I know we've got to work out how much it costs a business to actually collect and distribute money. Woolworths and the retail union have an agreement where Woolworths collects their members' union fees and then the union rebates 10 per cent back to Woolworths. They are big organisations; they've worked out the cost. So we are proposing that, if we stay in the system, we get 10 per cent rebated back to us if we pay it on time.

Those sorts of solutions recognise the real situation we have here. One is: it's their money—but of course we can't give it to them; that just won't work. The second one is: we get paid—we don't get paid at the moment; we get fined—and that won't happen, either. The third one is: remove us from the system.

Senator KETTER: Well, when you get a situation where employers deliberately underpay people's wages or superannuation—that's the sort of scenario I'm talking about—those employers are going to take advantage of this amnesty. If an employee steals from an employer then they, rightly, have the book thrown at them. But when businesses do the same thing, there's an amnesty and they get a tax deduction for it.

Mr Strong : First of all, as to the amnesty: there is compassion that we show to our employees. I know employers, especially in regional areas, who have caught young people with their hands in the till, and, instead of sacking them—which is not a good look for a family and not a good look in a community—they take them out the back and give them a good verbal dressing-down about what it means to them, and then they keep them on. I've seen that happen. It's quite extraordinary. So we're saying: here's the compassion. And, as Mr Grozier talked about, there is a group of people who make mistakes—the same as employees make mistakes—and then there's a group of people who steal things. Some employees steal from other employees. And some employers are inadequate—it's about five per cent; that's what we're hearing. What we're saying is: let's get an amnesty out to the honest people, in the same way that we give employees second and third chances—

Senator KETTER: It's not just the honest people, though, is it, who will take advantage of this?

Mr Strong : The dishonest people won't take advantage of the amnesty—that's been my experience of dishonest people—and the tax office will have to hunt them.

Senator KETTER: Mr Grozier, how do you respond to my proposition? Knowing the public, there would be something of a concern out there that there's a bit of a double standard.

Mr Grozier : I think two things with respect to that. The first is that it is likely that serial non-compliers who are wilfully not complying are less likely to take advantage of the amnesty than genuinely non-wilful non-compliers. Part of the reason for that is that, to trigger the amnesty, the whole of the transaction is visible: you have told the Australian tax office that you have this shortfall, or those shortfalls, depending on how many quarters are affected, and you're making up all of this money—you have created a record of the existence of what had previously been undeclared and undiscovered superannuation guarantee charge. I would think that, unless our serial non-complier has decided to turn over a new leaf, that would seem to be a step too far.

But I suppose the second point to make is that it then becomes an issue in the context of the major reason for noncompliance, which is cashflow. And the major problem with the superannuation guarantee once there is a charge is that recovery becomes increasingly difficult—even were a serial wilful noncomplier to act the way that I'm suggesting they might not, it will mean that the employees affected are likely to be much better off than had they not participated in the amnesty, because recovery would have been unlikely to have achieved the same amount of remedy.

Senator KETTER: Do you have a view as to what proportion of your membership will come forward and make use of the SG amnesty?

Mr Grozier : No, I don't. And I agree that, to some extent, we're in the position of reading the draft of the legislation and working out how it will work and why it will work. It's very difficult to know what the results will be. It seems to us that the certainty will encourage a greater level of voluntary disclosure. The treatment of contributions made under the amnesty means that the cost impact of remedy—which is not to the disadvantage of the employee—is lower, and that would seem to mean that more of what is currently unknown will be recovered. So I'm optimistic, but I have no way of estimating the proportions of employers who might have small amounts of charge or large amounts of charge, or the propensity to come forward under the amnesty.

Senator KETTER: Have your members been calling for this amnesty?

Mr Grozier : The idea originally came from a member in a conversation.

Senator KETTER: And have you done some consultation or any surveys of your membership?

Mr Grozier : No. It did cross our minds to try to investigate the extent of the problem. It also crossed our minds that it would be a very difficult survey to get people, who feel they might be revealing something which would expose them to economic cost, to want to fill out the survey.

Senator KETTER: Now, Mr Strong, you made a comment towards the end of your submission about what you might have to advocate in the event that we don't see business 'taken out of the collection system'. You say you:

… will have to recommend that a business does not directly employ staff and they only use contractors or labour hire firms.

Is this a way to minimise the payment of superannuation to workers?

Mr Strong : If you use a contractor and it's valid, then that's fine; the contractor sorts out their own superannuation. We actually held a round table on this last week with the tax office and the Fair Work Ombudsman, looking at the complications there, because there are some people that force someone to be a contractor against their will. So there are some issues there. Where I come from on that is that we are people—we have houses, we take a risk—and our houses et cetera become riskier and our health becomes riskier the more complicated and difficult it becomes. And they're talking about sending someone to jail for not doing their job in a complicated system, when we know the unions are asking for people who have kids under 18 to name their own working hours and we know that the unions were asking for someone who works for six months as a casual to become permanent—all sorts of things that put that person's house at risk. So we look at how we can run a business but also not lose our house and become high risk because of the changing regulations.

Senator KETTER: But a contract to somebody which is primarily for labour still attracts a superannuation payment.

Mr Strong : And that's fine. This is not about dodging superannuation; this is about dodging regulation that's impossible to understand and impossible to manage. Probably the better way, then, is the labour hire firms. Some of them have got a bad name at the moment, but I know plenty of small businesses out there who say they will never employ anybody again, and one of the reasons is superannuation. They say it's just a nightmare and the funds—

Senator KETTER: But the labour hire firm has to pay the super—

Mr Strong : That's right.

Senator KETTER: And then, ultimately, the business has to pay the labour hire firm.

Mr Strong : That's right, but they don't have the complication of the regulation. It's up to the labour hire firm to do all the superannuation and all the other issues that are dealt with as part of employing someone.

Senator KETTER: For a charge.

Mr Strong : Yes, for a charge. And businesses will say, 'That's fine. I'll do that.' And I know most small businesses will say, 'I'll pay that extra bit, as long as it's not ridiculous, and I don't have to worry about this other stuff.' That's fantastic news because we want small business to concentrate on their business, which keeps someone in a job. The superannuation industry wants small business to concentrate on superannuation first. We exist for superannuation and a secondary outcome might be someone having a job.

Senator KETTER: Have you already started recommending to your members that they should employ contractors or labour hire?

Mr Strong : No, we haven't. We certainly haven't started recommending it. We are saying that, given the responsibility that we have to our members, if regulation keeps getting worse and more difficult, we would have to recommend that they protect their assets and their health by using other mechanisms—not illegal mechanism, but other mechanisms.

Senator KETTER: But you're not already suggesting that small businesses should employ contractors?

Mr Strong : Not yet. We are not saying that. But, as you know, we are pushing really hard to be taken out of the collection process and have it put in PAYG. Every employer I've spoken to has said, 'Please do it.' The people who don't want it, in the main, are the people who are supposed to support employees, which are the unions and the funds. They want to keep their monopolies in different part of the industries and keep their incomes coming into their organisations.

Senator KETTER: We've got a 12-month amnesty under this bill. Is the government doing anything that you're aware of that is going to reduce compliance costs as far as superannuation is concerned?

Mr Grozier : I'm not sure I understand the question.

Senator KETTER: We've got a proposed 12-month amnesty. I hear Mr Strong saying there are regulations and compliance costs associated with that. Outside of this particular measure—the amnesty—is there anything else that you're aware of that the government is doing to reduce compliance costs?

Mr Grozier : I think that, if we go past the hurdle of set-up, the evidence is that SuperStream has reduced compliance costs with respect to superannuation contribution and enrolment. The superannuation guarantee charge itself is still fairly complicated, and the question primarily or wholly for labour is not simply on how people work, what they are supplying, but also on their level of professionalism. It's not just whether they are supplying labour as to whether they fall within the deemed employee line or not. It seems likely that the operation of Single Touch Payroll and events based reporting, which will bring the ATO's understanding of transactions much closer to real-time and much more accurate than currently, will have an impact on perhaps a level of missed contribution in the first place but also rectification and likely recovery. I don't think it totally overcomes the problems inherent in the superannuation guarantee charge, and we would like to see the remedy separated from the penalty and tax part of it, but it goes some way to addressing the implications of missed payments and the likelihood of missed payments.

Mr Strong : The Single Touch Payroll is hopefully a game changer, and that was something originally suggested by industry and supported by industry. So we know the value of good reporting, but we also know that it has to be easy. We'll see how Single Touch Payroll goes. Even if there are a few hiccups on the way through, it will solve a lot of problems.

Senator KETTER: Just finally, Mr Grozier, you mentioned in your submission that missed payments can arise because of natural disasters and system outages.

Mr Grozier : That is correct.

Senator KETTER: That would be a fairly rare occasion, I would have thought.

Mr Grozier : It's sadly slightly less rare than it used to be, and I'm not sure that I know the reason for that. But the reality is that those people incur a guarantee charge even if they are physically unable to make payments at the time because of what's happened, be it flooding or fire. The ATO attempts to handle their cases as sympathetically as possible, but I think it's a clear example. A widespread system fallout would be something which, again, is not open to discretion at the moment. They are charges which are incurred, and this is part of the reason why we would like to see the remedy component of superannuation, the missed and underpaid superannuation guarantee, separated from the penalty component. Under the current rules, the amnesty may pick up some of these missed payments in the past and make it easier and somewhat less expensive to pay without disadvantaging the employee, but, going forward, the superannuation guarantee rules are still as arbitrary in some circumstances as they are now.

CHAIR: Thank you, Mr Strong and Mr Grozier.