WA workers suffer $570 million super loss

Requiring employers to pay super with wages, instead of quarterly, would put a stop to more than 300,000 Western Australians missing out on a total $568 million in superannuation payments in a year.

Industry Super Australia (ISA) analysis of tax file data shows 29% of the WA workforce were short-changed on super in 2018-19, those impacted lost on average $1,810. In six years, WA's unpaid super bill climbed to an eyewatering $3.5 billion.

Changing federal law so super is paid with wages for all workers would end WA's unpaid super scourge.

Those most likely to be short-changed are younger workers on lower incomes in either blue collar jobs or in hospitality and retail.

This year the $450 threshold was removed – which meant workers were not paid super if they earned less than that amount a month – and the super rate increased from 10% to 10.5% of wages.

But 313,800 WA workers won't get the full benefit of these changes because they are being short-changed. Missing out on super contributions can cost a worker up to $60,000 at retirement.

While most employers do the right thing, some are exploiting an outdated rule that allows them to pay super quarterly, often despite what is written on the payslip.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 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 commitments 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 West Australian federal electorate in 2018-19

Source: ISA analysis of 2018-19 2% ATO tax file and ABS data.

Key Facts:

- New data reveals more than 313,000 WA workers were not paid $570 million in super in a year.

- In six years WA's unpaid super bill reached $3.5 billion.

- Industry Super Australia says paying super with wages will put an end to the unpaid super scourge

- The unpaid super debt in each WA federal electorate is revealed