Government urged to stop Hunter's $140 million super rip off

There are growing calls for the government to change the law to stop Hunter region workers missing out on $140 million in superannuation payments in a year.

Industry Super Australia (ISA) analysis of 2018/19 tax file data shows 73,950 workers in the federal electorates of Hunter, Newcastle, Shortland and Paterson were short-changed on their super, those impacted lost on average $1,879 in a year.

This year the $450 threshold was removed – which means workers who earn less than that amount a month are now paid super – and the super rate increased from 10% to 10.5% of wages.

But 29% of the region's workers won't get the full benefit of these changes because they are being ripped off on their entitlements. Missing out on super contributions can cost a worker up to $60,000 at retirement.

To end the Hunter's unpaid super scourge the government should change the law to require all employers pay super with wages.

While most employers do the right thing, some are exploiting an outdated rule that allows them to pay super quarterly, often despite what is written on the payslip. Without alignment of super and wages, workers lose track of payments and only discover they've been underpaid when it is too late.

Because super can be paid quarterly some small business owners also succumb to the temptation of using their employees' super contributions for cashflow, which also leads to underpayments.

Paying super with wages would level the playing field for all employers, stopping the unfair commercial advantage exploitative bosses get by not paying their workers' full entitlements.

The Australian Tax Office's patchy enforcement action has only recovered a dismal 15% of unpaid super. With limited enforcement a growing chorus of organisations have backed paying super with wages to fix the problem, including industry super funds, Super Consumers Australia, employer representatives, unions, think-tanks, accounting bodies, law firms and two senate inquiries.

The Labor government's commitment to creating enforcement targets and including super in the National Employment Standards are welcome but will not stop underpayments occurring, the only way to address the problem at its source is to mandate super is paid with wages.

Super should also be added to the Fair Entitlements Guarantee, the government fund that pays unpaid wages after a company's liquidation. Many businesses go bust owing substantial amounts of super to workers.

Comments attributable to Industry Super Australia Chief Executive Bernie Dean:

"With super going up, and thousands of lower-paid workers finally eligible to receive it, it's even more important for the government to make sure workers get what they are owed."

"There's a growing number of organisations calling on the government to change the law to make all employers pay super to their employees when they pay wages."

"By not mandating employers pay super with wages, politicians are effectively standing in the way of millions of workers getting money they've earned and undermining their future economic security."

Table 1: Unpaid super by NSW federal electorate in the Newcastle and Hunter regions in 2018-19