Government goes in wrong direction over Superannuation Guarantee Charge - Cbus

25 August 2015

The Federal Government needs to seriously address the growing problem of non-compliance with superannuation guarantee payments for employees instead of moving to water down penalties for employers who fail to pay.

Small Business Minister, The Hon. Bruce Billson MP, released draft legislation on Friday designed to reduce penalties against employers who fail to pay their employees’ superannuation, claiming the current Superannuation Guarantee Charge (SGC) is too burdensome on small businesses.

However, the draft Bill makes no attempt to discern small business from any other employer; significantly reduces make up payments and interest charges reducing both the penalty and incentives for paying employees their money on time, and offers nothing by way of increased resources or powers to the ATO to police the spiraling problem.    

Cbus CEO, David Atkin has called on the Federal Government to look at measures which would reduce the level of non-compliance with superannuation obligations and protect employees’ retirement savings.

Mr Atkin said the problem of non-payment of super was growing with Tria Investment Partners estimating $2.5 billion in unpaid super contributions in 2012, a figure rising year on year. In a recent report to government the Audit Office noted that the ATO’s own internal risk assessment indicates that as many as 11 to 20 per cent of employers could be non-compliant with their SG obligations.

“This problem is getting bigger and is having an increasing impact on workers superannuation balances and, therefore, on government revenues. Reducing penalties for employers who fail to obey the law is simply heading in the wrong direction.

“Superannuation is the deferred wages of employees. It’s not a cash flow component of a business. In fact, the majority of employers want to know that every other business is doing the right thing and paying super on time so that an equal playing field is maintained.

“The current SGC is designed to impose a real incentive for employers to pay superannuation on time. If anything its penalties for non-compliance should be strengthened to address the burgeoning non-compliance issue, not watered down.

“If the Government is addressing long term budget sustainability then seriously tackling non-compliance of superannuation guarantee payments should be a priority for reform.

“Rather than reducing penalties for non-compliance, we think the Government should be looking to investigate aligning payment of the superannuation guarantee with wages and beefing up regulatory enforcement and education” said Mr Atkin.