License article

Call to revamp super, hit contractors with levy to fund aged pension

The Turnbull government should abolish the $450 monthly threshold for super payments, and introduce a new compulsory levy on contractors with incomes above $90,000 per financial year to fund the aged pension, if they don't contribute to their super.

Without such reforms the ‘super gap’ between older and younger, disproportionately female workers will only grow, according to a joint report by indutry fund Vision Super and the left-leaning John Curtin Research Centre.

Over 95 per cent of workers – or 12 million Australians – hold superannuation accounts, but currently employers are not required to make Superannuation Guarantee contributions for an employee who earns less than $450 (before tax) in a calendar month.

This leaves casual workforces, made up mainly of women and students, vulnerable to exploitation.

The report said non-payment of superannuation is rampant. “Australian workers have been fleeced of about $17 billion worth of payments since 2009; an average $2.81 billion every year between 2009 and 2015,” it said.

The report therefore recommends abolishing the $450 monthly threshold for super payments.


The report also proposes a new compulsory levy on contractors with incomes above a threshold of $90,000 per financial year to fund the aged pension, unless the contractor contributes an amount equivalent to the SG to a complying super account.

During the first three financial years of the new arrangements, all contractors will be eligible for a 150 per cent tax deduction for super payments made to a complying super account.

In the report, the centre’s executive director Nick Dyrenfurth also renews calls for increasing the Super Guarantee (SG) rate from 9.5 per cent to 12 per cent, ahead of the current schedule.  The federal government has said the SG will now not reach 12 per cent until July 2025.

The report said the disappearance of traditional 9-to-5 jobs in favour of the ‘gig economy’, or ‘uberisation’ of the workforce, dominated by casual and part-time workers would continue.

It said while technological improvements ought to be embraced “they must also be seen an excuse for a deliberate industrial strategy to tilt the balance of power against workers by weakening collective bargaining and undermining wages and workplace conditions”.

The report urges policymakers to further tackle the problem of the super gender gap by allowing working women to get paid the full SG for the first six months of Paid Parental Leave.

The report made a number of other recommendations. This included an education campaign, driven by the commonwealth government and super funds, aimed at improving the financial literacy of Australians.

It also suggested employers be required to give more detailed SG data to the ATO on a more frequent basis, that the federal government recognise the importance of industry super funds in meeting the challenge of meeting the nation’s infrastructure deficit, and greater efforts to reduce super fees.

Australia’s superannuation savings pool is Asia’s biggest and the largest per capita in the world. With current total assets worth $2.3 trillion, this savings pool is projected to double to $4 trillion over the next 10 years and hit $7.6 trillion by 2033.

Labor's shadow minister for finance Jim Chalmers said while the report "pitches up some well-considered recommendations", he could not tick off what could be "essentially billions of dollars of commitments".

Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck said "AIST backs the removal of the $450 monthly income threshold, which has a negative impact on low income earners, particularly women working part-time as well as indigenous workers".