Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 201911 February 2020
I rise this evening to speak in support of the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019. Having listened to some of the submissions of those on the other side I am once again—would it be putting it too high to suggest this?—flabbergasted by the approach taken by the Australian Labor Party. This is not an opportunity to play politics. It sometimes seems in this place that if we on this side of the chamber were to put up the colour black we would simply get back the colour white from the other side of the chamber. It does make you wonder what is the modus operandi of those who sit opposite.
This is not, as we hear so often, anything to do with the so-called big end of town. I challenge anyone to find out for me what the big end of town actually is. What this bill actually represents is the Morrison government creating a new era of superannuation enforcement by legislating the superannuation guarantee amnesty, which was first announced way back on 24 May 2018. It’s a piece of legislation which is designed to encourage employers who were not compliant to come forward to ensure employees receive the superannuation that they are entitled to.
I’m not going to cast myself as some journeyman in this place, but I am old enough to know that once upon a time the Australian Labor Party considered itself to be the party of the workers. That seems not to be the case anymore, though, Madam Acting Deputy President. Let me assure you it’s no longer the case. I can show you example after example confirming that, in fact, the Morrison government is the friend of working Australians, that the Morrison government is on the side of working people in this country. And the Morrison government has the track record to prove that this is so.
We can show it demonstrably in the last period, because the Australian tax office has released data in recent days which show that in fact the government’s personal income tax plan has given 8.1 million Australians in the order of $6.1 billion in additional income in the first six months since implementation. Income earners in the range of $37,000 to $90,000 in that tax bracket have received around 80 per cent of the additional income from the government’s tax cut. They are receiving, on average, $967 from the low- and middle-income tax offset up to a maximum of $1,080. These low- and middle-income tax offsets contributed something in the order of $4.5 billion, or around 60 per cent of the growth in household disposable income in the September quarter, which has been the largest increase in a decade. Had these tax cuts not been paid, income would have grown by about one per cent, not 2.5 per cent. This is just one simple example, but one can well imagine what would have happened in circumstances where the Australian people had elected a Bill Shorten led government in this country. We would have seen $387 billion stripped from the economy—$387 billion ultimately stripped from the workers.
This government wants employers to bring nonpayments and underpayments out into the open to ensure that employees actually get in their hands the superannuation to which they are entitled. This is a piece of legislation which is designed fairly and squarely in the interests of workers. Don’t believe what you hear from across the chamber; this is for the working people of this country. With new powers given by this government to the Australian tax office recently, there is no longer anywhere for employers who do the wrong thing to hide. Unscrupulous employers will be caught—and that doesn’t sound very much like we are this so-called friend of the big end of town. That is a nonsense, that is a furphy and that is a creation of those opposite. These measures are, of course, forward-looking. They don’t address historical underpayments and nonpayments of superannuation. Reuniting as many workers as possible with superannuation which is rightly theirs is the priority of the government. This bill represents a rare opportunity for businesses to come forward, do the right thing and clean the slate for their future.
I think it’s important at this point to briefly outline the background in relation to the government’s position: what’s already been legislated and the rationale for this particular segment of legislation. In the last parliament, the package of legislation was passed to ensure that employers can no longer hide from their obligations. The government did this because of the significant issue with noncompliance. We now know that in 2015 to 2016 that noncompliance amounted to something in the order of $2.8 billion that went unpaid to employees. Once again, that doesn’t sound like something that is in the best interests of this fabled big end of town that we hear so much about. This sounds very much to me like something which is framed fairly and squarely for the workers of this country. In March 2019, this government introduced a suite of reforms designed to improve the superannuation guarantee system and, most importantly, to better detect and deter noncompliance by employers. This included measures such as the Single Touch Payroll regime, bringing payroll reporting into the 21st century and aligning payroll with regular employer reporting of tax and super obligations. More frequent reporting of employer superannuation guarantee obligations is now being complemented by near real time reporting for superannuation funds on the contributions that they actually receive, enabling the ATO to identify and take action against noncompliance. So the government has actually strengthened the ATO’s collection and enforcement capabilities already. The ATO now has a broad suite of new powers, which include the ability to be able to send out director penalty notices, security deposits and also, in some instances where employers are able to defy directions, the ATO can now apply for punitive court ordered penalties, including up to 12 months of imprisonment for those who are noncompliant. Once again, this does not seem to me to be something framed in the interests of anyone other than workers. It is a nonsense.
The government understands that there are times when employees are simply unaware that they’ve not been paid superannuation. Consequently the ATO can now inform all potentially affected employees of any investigation into their employer’s compliance. Previously, the ATO could only communicate with employees who had made a complaint to the ATO regarding their unpaid superannuation, leaving other affected employees in the dark—once again, always in the interests of the employees.
This government understands that the ATO cannot do its job without proper funding and resources. This government provided an additional $133.7 million in the 2018-19 budget for the ATO to fund this process, such is the compulsion to make this process work and make it viable. A critical limb to this process, one which furthers the sentiment that the government is absolutely serious about protecting workers and their hip pockets, is that as a result of that funding in the 2018-19 period the ATO contacted more than 22,000 employers and, as a result of reviews or audits, recovered something in the order of $805 million in unpaid superannuation.
The government’s crackdown on noncompliance therefore complements reforms to protect low-balance and inactive superannuation accounts from undue erosion and to put members’ interests first. The protecting your superannuation act, which commenced on 1 July 2019, does that job and seeks to protect Australians from excessive fees, unnecessary insurance premiums and inefficiencies from having multiple accounts. These reforms also provide the tax office for the first time with the ability to proactively reunite Australians with their low-balance or inactive accounts.
Together, these reforms to which I speak will result in millions of Australians saving billions of dollars in fees, charges and insurance premiums, and will reduce unnecessary duplicate accounts. All of this is background, framed for the purpose of showing the other side of this chamber that the suggestion to oppose this bill being somehow in the interests of workers and being a good thing is not a good thing. It’s a furphy. It’s a nonsense.
The bill before us today, if passed, will allow employers to come forward to disclose non-payments—or in fact underpayments—for the period from 24 May 2018 to six months after this bill receives assent and pay their workers what they’re owed. They will be required to pay a significant sum of interest—so that’s punitive enough for the employers—but they will avoid the usual penalties and fees that would apply, and will be entitled to claim a tax deduction for the amount they pay during the amnesty period. Importantly, employers will not be able to use the amnesty if they come forward after an ATO prosecution has already begun. This is about trying to flush out that which is owed to workers. It is about trying to recover as much as we can for workers by providing incentives to do so. The bill ensures that employers who came forward in good faith when the amnesty was announced are covered by the amnesty.
Without playing politics with this issue, the important thing is that since the amnesty was first announced over 7,000 employers have come forward. Those employers cannot receive the full concessional treatment under the amnesty until it’s legislated. Treasury estimates that a further 7,000 employers will come forward once the amnesty is legislated.
It’s a nonsense to suggest that this amnesty simply lets employers off the hook. That’s not the case. And it’s a nonsense to suggest that this legislation will somehow leave workers worse off. The amnesty is exclusively designed to benefit employees. Employers will only get the benefit of this amnesty if they pay their employees the full entitlement of that which has been underpaid,, or that which has not been paid in total, in full with the significant interest penalty. It simply provides an opportunity for employers to review their compliance history, to come forward in good faith and to pay anything that is owed before the ATO actually begins their investigation. Employers with a significant historical underpayment who have voluntarily failed to disclose those underpayments to the ATO after the amnesty will be subject to penalties.
So, once again, this is designed in order to act in the best interests of those for whom the scheme was originally designed. This is a piece of legislation which is designed to act in the interests of employees. As I have already pointed out, it’s important to note that this is not just in relation to nonpayments and this is not just in relation to instances where employers have simply forgotten to pay or have deliberately avoided paying superannuation. This is also in relation to the presumably very common instance of underpayment of superannuation.
When this bill was first introduced, the community sought what could only be described as a bigger stick to be used against employers who were either inadvertently doing the wrong thing or deliberately doing the wrong thing. This iteration of the amnesty achieves what we on this side of the chamber believe to be the perfect balance of what we have described and what those in the other place have described as being the carrot and the stick. That’s a very simple analogy. The carrot in this case is the amnesty itself, along with the suite of other measures that have already been legislated. And the stick is the significant penalties which will be imposed if this not complied with during the amnesty period.
So the bill complements the entire integrity package legislated earlier and it provides employers with an opportunity to come clean and to pay their historical debts before the new enforcement arrangements come into effect. Once again, it highlights, as I have said multiple times, that this government is on the side of workers. This is a piece of legislation which is designed to protect the employees. As they say, in life one gets more with honey than one does with vinegar. That’s very important to take into account.
I take this opportunity to commend this bill to the Senate.