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Superannuation Guarantee non-payment Unions Tasmania submission to the Senate Economics Reference Committee Unions Tasmania 379 Elizabeth Street, North Hobart TAS 7000 PO Box 128, North Hobart, TAS 7002 Per: Jessica Munday Secretary Superannuation Guarantee non-paymentSubmission 44 Introduction Unions Tasmania is the peak body for trade unions in Tasmania.

It is also the local branch of the Australian Council of Trade Unions (ACTU).
With 25 affiliate unions in Tasmania, we represent approximately 50,000 union members across industry, in both the public and private sector.

The trade union movement works everyday towards building a better society for everyone.

We believe that workers and their families are entitled to live in a decent and civil society that values fairness and equality – where everyone is afforded the opportunity to succeed.
This submission will outline the background to achieving compulsory superannuation in Australia and the union movement’s ongoing role in protecting worker’s retirement incomes.

It will identify the non-payment of superannuation as a critical issue for workers with specific reference to Tasmanians who work in a small business.

Unions Tasmania welcomes the opportunity to make a submission to this Inquiry.

We note that the Australian Council of Trade Unions (ACTU) has also made a submission.
Unions Tasmania supports the arguments advanced by the ACTU.

Background Before the introduction of compulsory superannuation in 1992, less than half of the Australian workforce had any kind of retirement income or superannuation account.

It was agreement between the Keating Labor Government and the ACTU that saw wage rises devoted to superannuation instead of being paid directly to workers.
The right to compulsory superannuation for all was won by the trade union movement and of that we are incredibly proud.

It is the view of the trade union movement that superannuation contributions are deferred wages.

Superannuation is an industrial issue and unions have a vital role to play in ensuring that member contributions are protected and that worker’s interests are represented.
2 Superannuation Guarantee non-paymentSubmission 44 Industry super funds were established to look after member’s retirement incomes.

Unions Tasmania is a sponsoring organisation for Tasplan, a multi-industry fund with over 100,000 members established in 1987.

With over $3.3 billion in funds, Unions Tasmania nominates 3 directors of the fund and is passionate about ensuring the fund delivers for members.
Non-payment a critical issue for workers Many workers do not take an active interest in their superannuation account particularly in their early working life; balances are small, many workers have multiple jobs, and other more pressing financial concerns such as saving for a home or paying off a mortgage, often come first.
This, coupled with a lack of awareness of their entitlements, multiple accounts and a myriad of account types to choose from, are all reasons why superannuation may not receive the attention it should.

Unless a worker regularly checks their superannuation account, the non-payment of superannuation may not be discovered until the fund sends out annual or half-yearly statements.

The non-payment of superannuation is therefore a critical issue for workers.
Long term impact of the non-payment of Superannuation Guarantee The impacts of non-payment of superannuation to workers is clear – the worker will have less money to live on when they retire.

There are lots of good reasons why everything possible should be done to ensure correct superannuation payments are made.

Life expectancy is rising and many will now live to see one hundred years.

Superannuation needs to last.


Cost of living pressures are unlikely to abate and the age pension alone will be not enough to fund a decent standard of living.

Relying on the Australian Taxation Office (ATO) alone is not enough to protect workers The ATO is principally responsible for the enforcement and collection of unpaid superannuation.

Unions Tasmania notes that the ATO has been stripped of over 4,400 jobs since 2015, thereby diminishing its capacity to do this important work.
If responsibility for enforcing superannuation compliance rests predominately with the ATO – or even if that responsibility is shared elsewhere – the ATO must be adequately funded to do that work.

3 Superannuation Guarantee non-paymentSubmission 44 Unions can conduct investigations into suspected contraventions of the Fair Work Act, however, such investigations can be complex and time consuming, arising only after the union becomes aware of a suspected contravention.
Unions Tasmania urges the Committee to examine whether there could be a greater role played by the Fair Work Commission and/or the superannuation industry themselves in investigating and enforcing non-payment of superannuation.

The ATO payroll system will not protect 100,000 Tasmanian workers In Tasmania, small business comprises over 95% of all Tasmanian businesses.

There are around 13,806 businesses which employ between one and nineteen employees – or approximately 100,000 workers.
These businesses constitute 37% of all Tasmanian businesses.

The ATO’s new Single Touch payroll system will do nothing to help these workers should their employer not pay their superannuation contributions.

The Single Touch payroll system will come into effect on 1 July this year and is intended to streamline the way income and superannuation is reported to the ATO.
For businesses over 20 employees, they will be required to use Single Touch from 1 July 2018 but for businesses with 19 employees or less, there is no requirement and only a commitment to run a pilot “soon”.

Unions Tasmania recommends extending the operation of the ATO Single Touch payroll system to all businesses to ensure those who work for small business are not left behind.
Penalties for breach of Superannuation Guarantee (Administration) Act 1992 Penalties need to be greater for those employers who do not pay superannuation entitlements on time or at all.

Many workers trust their employer to simply pay their superannuation without incident.

This is a reasonable expectation.

An employer who does not pay the superannuation guarantee is effectively breaking the law and possibly committing fraud.
Consideration should be given as to whether penalties for breach of superannuation legislation are sufficient to deter employers who don’t do the right thing.

4 Superannuation Guarantee non-paymentSubmission 44 Conclusion Unions will always protect worker’s retirement incomes.

Our interest in our members does not end when they cease paid employment and retire.

We want to see workers set themselves up for retirement after a life of work.
We appreciate the opportunity to make a submission on the impact of non-payment of the superannuation guarantee on working people and encourage the Committee to strongly consider our suggestions relating to ATO funding, the Single Touch system and penalties for breach of superannuation legislation.

5 Superannuation Guarantee non-paymentSubmission 44