Industry Super Australia and Cbus Super welcome Black Economy Taskforce
Industry Super Australia and Cbus Super have welcomed the Turnbull Government’s appointment of a Black Economy Taskforce chaired by Michael Andrew AO, noting that non-compliance with the 9.5 per cent Superannuation Guarantee (SG) in the cash economy remains a significant and growing problem.
Recent modelling by Tria Investment Partners for Cbus Super found that workers in the cash economy lost an estimated $800 million in unpaid super in 2014.
Using data estimates from the Australian Tax Office, Australian Bureau of Statistics (ABS), Reserve Bank of Australia (RBA) and Fair Work Australia, the Tria report concluded that 277,000 workers employed in the cash economy did not receive the superannuation they were entitled to. This amounts to losses of $2,888 on average for each affected worker, or more than seven months of super contributions
Construction is the most affected industry within the cash economy; others with elevated non-compliance include mining, manufacturing, hospitality and wholesale trade.
The Commonwealth Auditor-General’s 2015 report on compliance with the Superannuation Guarantee 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, and that non-compliance is ‘endemic’, especially in small businesses and industries where a large number of cash transactions and contracting arrangements occur. Importantly, this non-compliance primarily affects lower paid employees and those are most likely to rely on the age pension in later years.”
Industry Super chief executive, David Whiteley, said the focus on the black economy was welcome but long overdue.
“This is an important step to protect both workers from exploitation and honest businesses from being undercut by unscrupulous competitors,” said Whiteley.
“It’s not just super that workers in the black economy are missing out on, they’re also losing life and disability insurance cover that comes with superannuation.”
“This inquiry will provide some support for the small and medium sized companies who are looking after their workers while competing against bosses cutting corners,” he said.
The joint Industry Super Australia and Tria investments report on SG non-compliance can be found here.
David Whiteley is available for interview. Media contact: Rebecca Nicholson 0409 216 053
Industry Super Australia provides policy, research and advocacy on behalf of 15 not-for-profit Industry SuperFunds who are the custodians of the retirement savings of five million Australians.