Treasury Laws Amendment (Payday Superannuation) Bill 2025, Superannuation Guarantee Charge Amendment Bill 2025
Mr GEORGANAS (Adelaide) (16:34): I'm very pleased to speak in support of the Treasury Laws Amendment (Payday Superannuation) Bill 2025. This is a once-in-a-generation reform to tackle unpaid superannuation. Unpaid superannuation cost Australian workers $5.2 billion in 2021-22 alone.
The reform that we're putting through the House in this legislation requires employers to pay superannuation at the same time as wages, rather than giving them the option of a payment once every three months. Currently, some employers pay immediately on payday, putting the money into the super fund on the same day, or a couple of days after; others choose to wait three months, as the law allows them to do, to make those payments.
This legislation will strengthen the super system and help ensure workers receive what they're legally owed. A point that is worth making very clear—and it's a mindset we should all have, as Australians—is that superannuation, which employers pay into a superfund on behalf of workers, is not a present. It's not something that is done out of the goodness of the employer's heart.
It is money that is owed to workers for the work that they've done, no different to wages. It is remuneration for work done. It's just that, with the way that superannuation is set up, we split the wages.
You get the money into your bank account so you can go off and pay your bills et cetera, but part of the payment is some money to go into your retirement fund. If we hear a story where someone hasn't been paid wages, we are up in arms; it is unacceptable to our community. When we hear of someone who has a bit of super missing, or hasn't been paid all of their super, we're not outraged by it, but we should be.
It is no different to workers not being paid. This bill will help workers to receive—on time and correctly—the money that is owed to them. As I said, we wouldn't accept workers needing to wait months to receive their salary payments, so why should their superannuation be any different?
Not only that, receiving it weekly or fortnightly, as you're paid, means that the accumulation grows more quickly, rather than waiting every three months. Whether you work in construction, health care, hospitality, retail, education, aged care, agriculture or advanced manufacturing, these reforms will help ensure that more Australians get the secure retirement that they need and deserve.
A lot of people that are affected by this are young people. I suppose it's because superannuation seems to be so distant—it's such a long time before they actually receive the benefits of it. Also, many young people are going into the workforce for the very first time, so they may not be aware of all the industrial relations laws.
They may not even be aware that they're entitled to a certain percentage of their salary going into superannuation. As you get older, as you age in your employment, those benefits seem to be more at the forefront of your thinking. Over time, the benefits of compounding interest on earnings become obvious.
This bill will make a significant impact on the retirement balances of individuals—young workers, people in the workforce and people nearing retirement age. It's estimated that, for the average 25-year-old worker, more frequent and earlier super contributions will be the equivalent of receiving an additional $6,000 in their retirement balance, in today's money.
Again, the accumulation formula means that, if the money goes into the account quicker and earlier, it accumulates more money for the recipient. From 1 July 2026, the new law will mean that employers must ensure super contributions are received by the employee's superannuation fund within seven business days of payday or be liable for the superannuation guarantee charge.
The bill also updates the super guarantee charge to better target employers' behaviour and ensure employees are compensated, including through notional earnings and penalties, for delays. In other words, the notional earnings mean that, for the days where the money hasn't gone into the account, what they would have earned on those days would have to be paid. I believe that the majority of employers do the right thing and pay their employees the super that they're owed.
They employ people and look after their employees. But, of course, this is not always the case. We have all heard stories where people haven't been paid or haven't been paid the right amounts and therefore are owed money.
I've seen many people in my electorate office who have come to see me about not receiving their super payments. It has been reported that some businesses actually use the super entitlements to manage cash flow. Many businesses are doing it tough, but we have to ensure that we have laws in place that protect the workers who turn up to work and provide their labour in return for remuneration so that they can then go off, pay their bills and look after their families.
It's a terrible thing when people are using, for their cash flows or for other personal issues, money that's meant to be going to the employee. This can always lead to super being paid late, being underpaid or not being paid at all. As I said, we've seen this many times in my electorate office, where people have turned up to find some way of getting that payment back to them.
The ATO estimates that $5.2 billion in super went unpaid in 2021-22. That's $100 million every week that workers earned but never received. That money has been earned through the labour that they've put in.
They have not received payment for that labour, and it's important to get in that mindset. Superannuation is no different to your salary or your wage. It is a remuneration for the work that you have done, and we should be up in arms when it goes unpaid.
Unpaid super disproportionately affects younger workers, as I said, and those in insecure work or part-time work, vulnerable communities and the female workforce. These are the people who can least afford to miss out on retirement savings. In a typical ATO investigation of an unpaid super case, the average is that a worker has missed out on two years worth of super contributions.
For the average 35-year-old worker, failing to recover this money would reduce their retirement savings by approximately $32,000 in today's dollars. When employers go bust, the impact is even more severe. For an average 35-year-old, missing out on super from a liquidated business can leave their retirement balance worse off by over $90,000 in today's dollars.
An August 2024 Super Members Council report found that Australia's $4 trillion superannuation system is one of the most robust and effective retirement schemes in the world and it covers 90 per cent of employees, with median balances of around $200,000 for workers nearing their retirement. However, the report found that too many Australians are not paid their legal super entitlements.
That $4 trillion could quite easily go up to $5 trillion or $6 trillion in funds that would then be used for a whole range of things, such as infrastructure, loans and housing. The benefits would go back to the super fund and then back to the member of that super fund, the person who's been contributing to that super fund, meaning more money in their retirement.
We know that people who are denied the full benefits of our superannuation system will be short-changed in retirement. The Super Members Council modelling showed that, in the 2021-22 financial year, 2.8 million Australians missed out on $5.1 billion in legal super entitlements, and that's just the people that we're aware of. Over nine years, Australians missed out on $41.6 billion, and the average affected worker missed out on $1.8 thousand in super in a year.
This means, as I said, more than $30,000 on average less in retirement savings for a typical worker. The problem, of course, is getting worse, with Australians losing more money on average. The Super Members Council analysis also shows that those in insecure work—as I mentioned earlier, lower income earners, migrants, vulnerable communities, younger workers, people with disabilities—are most likely to be affected by someone not paying their super.
Relatively lower paid women are also affected, and workers in these groups often face broader inequities, which can be exacerbated and extended to retirement if they are not paid their super. Younger Australians are the most likely to be affected by unpaid super—31 per cent, or almost one in three workers in their 20s and 28 per cent in their 30s were affected in 2021-22.
Australians over 60, approaching retirement, are also more likely than average to have unpaid super at 28 per cent. The primary reason for many older Australians working beyond 67 years of age is because they cannot afford to retire, so unpaid super is arguably delaying their retirement. Examples of Australians being ripped off make it into our electorate offices, and I'm sure every person in this place, sadly, would have an example where someone has come to see them, to talk to them about not having received their superannuation.
I have one example. A couple of weeks ago, Nathaniel came into my electorate office. He had received no superannuation contributions from his employer over a four-year period.
None at all. During this time he had completed an apprenticeship with the company. He was telling me that he was paid for 38 hours per week, despite frequently working significantly more than 38 hours.
He is owed approximately $24,000 in super, based on an annual shortfall of approximately $6,000 per year, which wasn't paid. Understandably, Nathaniel has left his job due to not being paid properly, and his employer's failure to meet his super obligations and to pay him the correct overtime et cetera. This bill will prevent unpaid superannuation for Australians, and will protect others from financial hardship like that experienced by Nathaniel, who came to see me.
And Nathaniel is not the only one. Every so often I have someone come in. I find young apprentices will come in with their dads.
These apprentices don't know too much about the law and they're not too up-to-date with what superannuation is, how much it should be, and so they've spoken to their father. Many's the time I've seen fathers and sons come into my office, usually because an apprentice hasn't been paid their super. And it's not just the employees who are being ripped off.
It's unfair for businesses who do the right thing, who pay their employees on time and in full, because they have to compete with businesses that don't. So it's not only unfair on the people aren't receiving super, but also on businesses that do the right thing. It's also unfair on taxpayers, because if someone is going to retire with less money then it means they're more likely to go along to their local Centrelink office and ask for some form of social security payment.
And who is paying that social security payment? The Australian taxpayer is. The people who miss out are, first, the employee; second, businesses that can't compete because they're in an unfair competition with other businesses who are not paying superannuation; and, third, and most importantly, Australian taxpayers, who have to fork out more to keep the social security system going.
This case for reform is clear, it's compelling. This is why this government is acting. Again, I will go to the point that I made earlier: superannuation is not a gift.
It is not something that someone gives to you out of the kindness of their heart. Maybe some do, but the reality is that superannuation is renumeration for work that has been done by an employee. That is quite straightforward.
If we weren't paying wages, the community would be up in arms. Superannuation is the same thing. It's a result of a known payment.