BILLS DIGEST NO. 51, 2017–18              13 November 2017

Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017

Paula Pyburne
Law and Bills Digest Section 

Date introduced: 14 September 2017

House:  House of Representatives

Portfolio:  Treasury

Commencement:  Sections 1–3 on Royal Assent; Schedules 1 and 2 on the day after Royal Assent

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at November 2017.

Purpose of the Bill

The purpose of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 (the Bill) is to amend the Superannuation Guarantee (Administration) Act 1992 (SGAA) to:

•       Give employees under workplace determinations or enterprise agreements the opportunity to choose the superannuation fund for their compulsory employer contributions and

•       ensure that an individual's salary sacrifice contributions cannot be used to reduce an employer’s minimum superannuation guarantee contributions.

Structure of this Bills Digest

As the matters covered by the Schedules are independent of each other, the relevant background, stakeholder comments (where available) and analysis of the provisions are set out under each Schedule number.

Committee consideration

Senate Standing Committee on Economics

The Bill was referred to the Senate Standing Committee on Economics (the Economics Committee) for inquiry and report by 23 October 2017.[1] The majority of Senators on the Economics Committee recommended that the Senate pass the Bill.[2]

However, the Labor Senators on the Economics Committee recommended that the Bill be amended so as to:

•       ensure that there are no impediments to collective bargaining that would lift superannuation arrangements beyond the community standard and

•       ensure that sufficient safeguards exist when workers exercise choice of fund.[3]

The matters raised by submitters are canvassed under the relevant Schedule heading below.

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) considered the Bill in its Scrutiny Digest of 18 October 2017 but made no comment.[4]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[5]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights considered the Bill and reported that it did not raise human rights concerns.[6]

Schedule 1—choice of fund

Background

Under the SGAA, employers are required to make contributions to their employee’s superannuation fund (with limited exemptions). Most employees have the opportunity to choose which fund these contributions are paid into. However, individuals might encounter difficulty making retirement savings decisions that are in their own best interests for a number of reasons, including:

•       lack of financial literacy, which limits people’s ability to make informed financial choices

•       complexity of investment decisions and difficulty matching risk preferences with the right products

•       high search costs in terms of time taken to research and understand what is often a large number of products

•       the ‘endowment effect’ where people value money that is lost more highly than money gained, causing them to be unduly conservative in their investment decisions

•       lack of price awareness, as compulsory contributions, fees and other costs do not come directly out of members’ pockets

•       information asymmetries between superannuation providers and individuals

•       a long lag between the initial investment of contributions and the time when the benefits can be accessed

•       an associated tendency toward procrastination and inertia in making retirement savings decisions

•       mental rules or short cuts (heuristics) that people use when they have no clear preference, or where the cost of acquiring information is too high, which can lead to persistent biases in decision making

•       framing effects, where people choose based on how the available options relate to one another, how they are explained and what other information is provided at the same time, rather than which option is in their best interests.[7]

For those employees that do not make an active choice, employers are required to nominate a fund—which is called the default fund. Existing default arrangements evolved in the context of the workplace relations system. Specific superannuation funds were named in awards when superannuation became an industrial matter in national wage bargaining in the 1980s. Several industry-based funds were established as not-for-profit entities to cater for employees in specific industries.[8]

From 1 July 2005, most employees have been able to choose their superannuation fund and the product to which they want their contributions directed. Where employees have not made a choice, funds named in awards have become the default option in many cases. Default arrangements provide a safety net for employees that failed to make a decision, in view of the compulsory nature of superannuation.

Once a default fund has been selected, fund trustees are required to place default contributions into that fund’s default product, which in most cases must be a MySuper product.[9]

Types of superannuation fund

Accumulation funds

Most Australians have their super in an accumulation fund. The value of a person’s super depends on:

•       how much money their employer contributes

•       how much extra they contribute

•       how much they receive in bonus contributions

•       how much the fund earns from investing superannuation contributions

•       the amount of fees charged and

•       the investment option that the person chooses.

Importantly, investment profits are added to a person’s account, just as investment losses are taken out.

Defined benefit fund

Defined benefit funds are less common than accumulation funds. Most defined benefit funds are corporate or public sector funds, and many are now closed to new members.

The value of a person’s retirement benefit is defined by the fund rules and depends on:

•       how much money their employer contributes

•       how much extra the person contributes

•       how long the person has worked for their employer

•       the person’s salary when they retire.

Type of fund

Description

MySuper

Many super funds offer MySuper which has replaced most existing default accounts offered by super funds. MySuper accounts generally offer:

·    lower fees (and restrictions on the type of fees you can be charged)

·    simple features so you don't pay for services you don't need

·    single or life stage investment options

·    life insurance on an opt-out basis

MySuper is only offered for accumulation funds, not for defined benefit funds and does not apply to accounts in pension phase.

Retail funds

Retail funds are usually run by banks or investment companies.

·    anyone can join

·    they often have a large number of investment options. Retail funds are usually recommended by financial advisers who may be paid for their advice by fees and/or a commission (although commissions are being phased out)

·    they are usually accumulation funds. Most retail funds range from mid to high cost, but some are now offering a low cost or MySuper alternative

·    the company that owns the fund aims to retain some profit.

Industry funds

The larger industry super funds are open for anyone to join. Some others are restricted to employees in a particular industry. The main features of an industry fund are:

·    they usually have a smaller number of investment options, which will meet most people's needs

·    most funds are accumulation funds. A few older funds still have defined benefit members

·    they are generally low to mid cost funds

·    they are ‘not for profit’ funds which means profits are put back into the fund for the benefit of all members.

Public sector funds

Public sector funds were created for employees of federal and state government departments. Most are only open to government employees. The main features are:

·    some employers contribute more than the 9.5% minimum

·    a modest range of investment choices that will meet most people's needs

·    many long-term members have defined benefits; newer members are usually in an accumulation fund

·    they generally have very low fees and some offer MySuper accounts

·    profits are put back into the fund for the benefit of all members.

Corporate funds

A corporate fund is arranged by an employer, for its employees.

Some larger corporate funds have an employer who also operates the fund under a board of trustees appointed by the employer and employees.

Other corporate funds may be included as a separate part of a large retail or industry super fund (especially for small- and medium-sized employers).

Features of these funds include:

·    funds run by the employer or an industry fund will usually return all profits to members while those run by retail funds will retain some profits

·    those managed by a larger fund may offer a wider range of investment options

·    they are generally low to mid cost funds for large employers but may be high cost for small employers

·    some older corporate funds have defined benefit members, most others are accumulation funds.

Australian Securities and Investments Commission (ASIC), ‘Types of super funds’, ASIC website, last updated 18 October 2017.

Financial system review

The final report of the ‘Financial system review’ (known as the Murray Review after the chair of the review, former CEO of the Commonwealth Bank David Murray AO) was published in November 2014. The final report noted that there was scope to improve the efficiency of the superannuation system in a number of areas. Of concern was:

A significant minority of employees cannot choose the superannuation fund that receives their SG contributions. In particular, this affects employees with a superannuation fund nominated in an enterprise agreement, a workplace determination or a state-based award. A 2010 ASFA paper found that around 20 per cent of employees cannot choose their fund. These exemptions contribute to employees having multiple superannuation accounts and paying multiple sets of fees and insurance premiums, which reduces retirement income. For some individuals, lack of choice contributes to disengagement with superannuation. [10] [emphasis added]

Essentially the Murray Review took the view that the absence of choice is a barrier to members engaging with their superannuation, and that this barrier should be removed—thereby providing flexibility for members and lowering fees through greater competition.[11]

Accordingly, the Murray Review recommended the Government should remove provisions in the SGAA that deny some employees the ability to choose the fund that receives their SG contributions due to the exclusions given to enterprise agreements, workplace determinations and some awards.[12]

The amendments in Schedule 1 to the Bill respond to this recommendation.

Options considered

In determining the manner in which the recommendation would be put into effect, the government considered three options:

•       Option 1: maintain the status quo

•       Option 2: extend choice to employees under enterprise agreements and workplace determinations made after 1 July 2018

•       Option 3: extend choice to all employees under existing and new enterprise agreements and workplace determinations after one July 2018, and employers must offer a choice of fund form to all existing employees.[13]

The Government’s preferred option is option 2 because it spreads the costs across employees, employers and superannuation funds. The Government rejected option 1 as it does not address the ongoing problem of employees having multiple funds and so having to pay duplicate fees and charges.[14] (This, in turn, is likely to lead to lower retirement incomes.) The reason for rejecting option 3 was that it would result in higher compliance costs than option 2.[15]

Financial implications

According to the Explanatory Memorandum to the Bill, the measure in Schedule 1 will have ‘nil financial impact’.[16]

Policy position of non-government parties/independents

NXT

Rebekha Sharkie, of NXT, supports the choice measure contained in Schedule 1 to the Bill stating:

This does not mean that default funds cannot still be recommended for those people whose knowledge of superannuation is limited, but it places the power to opt out back in the hands of the employee…[17]

Australian Labor Party

Dr Andrew Leigh of the Australian Labor Party (ALP) indicated Labor would not oppose the Bill in the House of Representatives.[18] As stated above, the Labor Senators of the Economics Committee recommended certain amendments to the Bill and have reserved ‘their final voting position on the Bill depending on the outcome of such amendments’.[19]

In relation to the measure in Schedule 1 to the Bill the Senators stated:

… the collective bargaining of workers has been able to lift superannuation services beyond community standards [and] … when workers are offered “choice” in a mandatory financial service such as superannuation, there must be adequate safeguards so that workers are not left worse off.[20]

Position of major interest groups

Problem of duplicate accounts

The primary reason for supporting the measure to increase choice of fund is that employees who lack choice may have more than one superannuation account—and so are subject to duplicate fees, charges and insurance premiums.[21] This problem may be particularly significant for individuals employed in multiple jobs such as casuals.

ASIC’s submission to the Murray Review states that the choice of fund reforms which commenced in 2005 ‘made it possible for members with multiple accounts to more easily consolidate these accounts and reduce the amount of fees they pay for maintaining multiple accounts. However, in practice, this consolidation did not lead to a decrease in the number of accounts in the industry’.[22]

That is, even though there have been enhancements to superannuation to enable consolidation of superannuation accounts, many account holders have not done so. The ongoing review of superannuation default models by the Productivity Commission indicates that the number of members holding more than one account is approximately 40 per cent.[23]

Industry funds deliver high returns

The Australian Institute of Superannuation Trustees (AIST) supports the principle of choice in superannuation but argues that choice has to be provided in a way that does not leave consumers worse off, and operates in an environment of meaningful disclosure and consumer protections.[24]

Of note is the ‘evidence [from the Productivity Commission[25]] that superannuation funds listed in awards deliver higher investment returns than those not listed in awards’.[26]

The performance of superannuation fund types (for the year to June 2016) is provided by the Australian Prudential Regulation Authority (APRA) in its annual statistical bulletin as shown in table 1 below.

Table 1: Ratios by fund type

Corporate

Industry

Public sector

Retail

Total

Net assets ($m)

53,109

444,894

337,426

543,196

1,378,625

Total administration and operating expenses ($m)

129

1486

705

4120

6439

Total investment expenses ($m)

190

1551

977

401

3119

Total expenses ($m)

319

3037

1681

4521

9558

Net earnings after tax ($m)

1317

17,156

11,590

8310

38,373

Cash flow adjusted net assets ($m)

51,860

419,556

323,706

534,520

1,329,642

Operating expense ratio (%)

0.2%

0.4%

0.2%

0.8%

0.5%

Investment expense ratio (%)

0.4%

0.4%

0.3%

0.1%

0.2%

Rate of return (%)

2.5%

4.1%

3.6%

1.6%

2.9%

Five year average annualised rate of return (%)

7.4%

8.3%

8.2%

6.4%

7.4%

Ten year average annualised rate of return (%)

5.1%

5.4%

5.4%

3.6%

4.6%

Number of entities

30

41

38

135

244

Australian Prudential Regulation Authority (APRA), Statistics: Annual Superannuation Bulletin, June 2016, issued 1 February 2017, p. 17.

Unions

According to the ACTU ‘removing the ability for workers to nominate a single fund in their Enterprise Agreements will increase the incidence and magnitude of unpaid super’. Of particular concern is any regulatory measure which might have a detrimental effect on the superannuation gender gap:

A number of enterprise agreements exist in female dominated industries (the service sector, nursing, health, hospitality and the like) which include superannuation provisions which are better for women workers than alternative arrangements which would exist in an uncontrolled choice environment. Moving away from these provisions may damage investment earnings potential for women workers, default insurance arrangements and support mechanisms such as those which pursue unpaid superannuation.[27]

The Transport Workers Union of Australia expressed its concern that the measure in Schedule 1 to the Bill ‘will have an adverse impact in the operation of industry super in Australia’.[28]

Key issues and provisions

Choice of fund and industrial agreements

Currently subsection 32C of the SGAA sets out the circumstances in which a contribution to a fund by an employer for the benefit of an employee is made in compliance with the choice of fund requirements. In particular, subsection 32C(2) provides that if an employee has not chosen a specific fund, a contribution to a fund complies with the choice of fund requirements if it is made to a default fund.

Subsection 32C(6) of the SGAA provides that a contribution to a fund will comply with the choice of fund requirements if the contribution, or a part of the contribution, is made under, or in accordance with certain listed agreements and workplace determinations.

Item 5 of Schedule 1 to the Bill amends paragraph 32C(6)(g) so that the choice of fund requirements will only be met in relation to a contribution that is made under, or in accordance with, a workplace determination that was made before 1 July 2018. Similarly item 6 of Schedule 1 to the Bill amends paragraph 32C(6)(h) so that the choice of fund requirements will only be met in relation to a contribution that is made under, or in accordance with, an enterprise agreement that was made before 1 July 2018.

This means that employees who are subject to a workplace determination or an enterprise agreement that is made on or after that date must be given a standard choice form.[29]

Item 7 of Schedule 1 to the Bill inserts proposed subsection 32C(6AA) into the SGAA so that contributions to a fund will comply with the choice of fund requirements if, there is no chosen fund for the employee and the fund is a fund to which the employer has previously made contributions, in compliance with the choice of fund requirements under paragraph 32C(6)(g) or (h).

A failure by an employer to make contributions that comply with the choice of fund requirements will create a superannuation guarantee shortfall.[30] In that case, a superannuation guarantee charge is payable. The amount of the charge is an amount equal to the amount of the shortfall.[31]

Members of defined benefit schemes

Section 32F of the SGAA provides that a member of a defined benefit fund cannot choose another fund. In addition, an employer is not required to give an employee who is an existing member of a defined benefit fund a standard choice form in certain specified circumstances.[32]

Items 1–4 of Schedule 1 to the Bill amend the SGAA in relation to members of a defined benefit fund. Item 1 amends paragraph 19(2B)(c) so that there is no increase in the superannuation guarantee shortfall for an employer who makes contributions in respect of an employee who is a member of a defined benefit scheme and therefore, cannot choose a fund. Item 4 makes a consequential amendment by inserting proposed subsection 20(3A) into the SGAA. Together these amendments operate so that employers who do not technically comply with the choice of fund requirements because their employees are members of a defined benefit fund are not penalised.

Schedule 2—salary sacrifice integrity

Background

The superannuation framework obliges employers to contribute 9.5 per cent of the ordinary time earnings (OTE) of their eligible employees as a superannuation contribution. In general, OTE is salary and wages paid less bonuses, overtime and termination payments related to unused annual leave.

Where employers fail to pay compulsory superannuation contributions on time they are liable to pay the SG Charge which is the mechanism to require employers to pay superannuation guarantee contributions direct to an employee’s superannuation fund.

In December 2016 Industry Super Australia (ISA) released a report entitled Overdue: Time for Action on Unpaid Super which estimated that 2.4 million Australians are being underpaid SG of at least $3.6 billion.[33] That report highlighted, amongst other things, that if an employee makes voluntary contributions, a loophole allows their employer to count this towards SG obligations.[34]

Superannuation Guarantee Cross-Agency Working Group

In December 2016 the Minister for Revenue and Financial Services requested that a Cross Agency Working Group be formed to report on the incidence and nature of non-compliance for superannuation guarantee.[35]

The interim report of the Cross Agency Working Group dated January 2017 considered the methodology and data used in the ISA report and did not support all of ISA’s conclusions. However, it was satisfied:

… a small number of employers are using their employees’ salary sacrifice arrangements to satisfy their superannuation guarantee obligation. ATO compliance data does not indicate the practice is widespread [and the problem] … can be resolved with straightforward legislation that would address anomalies.[36]

The final report to the Minister for Revenue and Financial Services by the Cross Agency Working Group dated March 2017 states, amongst other things:

The Working Group considers that the Government should clarify the law on how salary sacrifice agreements affect an employer's superannuation guarantee obligations. In particular to, firstly, ensure that employers cannot use an amount an employee's salary sacrifices to superannuation to satisfy the employer's superannuation guarantee obligation; and secondly, to ensure that the ordinary time earnings base used to calculate an employer's superannuation guarantee obligation includes those salary or wages sacrificed to superannuation. This will ensure that employees receive the full benefit of voluntary contributions.[37]

Senate Economics References Committee

Also in response to the ISA report, on 1 December 2016, the Senate referred an inquiry into the Superannuation Guarantee to the Senate Economics References Committee (Economics References Committee) for report by 22 March 2017.[38] The Economics References Committee noted that a 2006 ATO ruling (SGD 2006/2) on the SGAA states that it is allowable for an employee's voluntary salary sacrifice contributions to firstly, reduce the employee's OTE base on which SG is calculated; and secondly, be counted towards their employer's compulsory SG obligation.

Numerous submitters raised concerns with this arrangement and emphasised it could be exploited by unscrupulous employers to the detriment of employees.[39]

The Economics References Committee stated its belief:

… that the SG must be a guaranteed minimum contribution to employees' retirement savings. When employees voluntarily contribute extra funds to their own superannuation savings they should be assured that these amounts are genuinely additional to the SG and not simply reducing their employers SG obligation. Without this assurance, employees may be disinclined to make adequate provision to their retirement through voluntary contributions.[40]

Accordingly, it recommended that the SGAA be amended to ensure that an employee's voluntary salary sacrificed superannuation contributions cannot count towards the employer's compulsory SG obligation, nor reduce the OTE base upon which SG is calculated.[41]

The amendments in Schedule 2 to the Bill give effect to that recommendation.

Policy position of non-government parties/independents

The position of Labor Senators is clear from the additional comments in the Economics Committee report into the Bill—whilst the closure of the salary sacrifice loophole is welcome, ‘it is only one important small step in taking significant action on unpaid super’.[42]

Position of major interest groups

Very few submitters commented on this measure—except to state that it was welcome[43] and would be likely to enhance the integrity of the superannuation system.[44]

However, some submitters were concerned that the Bill does not go far enough to address other identified problems in relation to unpaid superannuation contributions.[45]

Financial implications

According to the Explanatory Memorandum to the Bill, the measure in Schedule 2 will have ‘a small but unquantifiable impact on the fiscal and underlying cash balances’.[46]

Key issues and provisions

Defining a salary sacrifice arrangement

Item 2 of Schedule 2 to the Bill inserts proposed section 15A into the SGAA to provide a description of a salary sacrifice arrangement being an arrangement under which a contribution is, or is to be, made to a complying superannuation fund or a retirement savings account (RSA) by an employer for the benefit of an employee—provided that the employee agreed for the contribution to be made and in return, for either or both of the following amounts to be reduced (including to nil):

•       the ordinary time earnings of the employee

•       the salary or wages of the employee.[47]

Two new definitions are inserted to support this description:

•       a sacrificed ordinary time earnings amount of the employee for the quarter arises if ordinary time earnings are reduced and

•       a sacrificed salary or wages amount of the employee for the quarter arises if salary or wages are reduced.[48]

Amounts that would otherwise be excluded from salary or wages (under sections 27 and 28 of the SGAA) are not taken into account when working out the amount of a reduction under a salary sacrifice arrangement.[49]

Formula for calculating SG shortfall

Employers are liable for the SG charge for a quarter if they have a shortfall for the quarter.[50] An employer will not have a shortfall for a quarter if they contribute at least 9.5 per cent of an employee's ordinary time earnings (OTE) base for the quarter. An employer’s shortfall is calculated by reference to the SG charge percentage—currently 9.5 per cent.[51]

Existing subsection 19(1) of the SGAA sets out the formula for calculating an employer’s individual superannuation guarantee shortfall. That formula is based on the total salary or wages paid by the employer to the employee. Item 3 of Schedule 2 to the Bill repeals and replaces the formula so that under proposed subsection 19(1) the formula will take into account the quarterly salary or wages base, for an employer in respect of an employee being the sum of:

•       the total salary or wages paid by the employer to the employee for the quarter and

•       any sacrificed salary or wages amounts of the employee for the quarter in respect of the employer.[52]

The effect of this amendment is that the inclusion of sacrificed salary or wages amounts ‘ensures that the shortfall and charge is calculated on the pre-salary sacrifice base and that employers cannot calculate their superannuation guarantee obligations on reduced salary and wages’.[53]

Item 5 of Schedule 2 to the Bill repeals existing subsection 19(3) and inserts proposed subsections 19(3) and (4) into the SGAA. For the purposes of calculating the quarterly salary or wages base, where sacrificed salary or wages amounts are taken into account for one quarter but not actually contributed to the fund in that quarter the amount will be counted in the quarter to which the salary sacrifice arrangement relates.

Reduction of SG charge percentage

Under existing section 23 of the SGAA, the SG charge percentage of an employer in relation to an employee is reduced if the employer makes a contribution (other than a sacrificed contribution) to an RSA or to a superannuation fund that is not a defined benefit fund. The amount of the reduction is worked out using the formula in subsection 23(2) of the SGAA which is based on ordinary time earnings.

Item 7 of Schedule 2 to the Bill amends that formula so that it refers to the ordinary time earnings base. Item 9 inserts the new definition of ordinary time earnings base being the number of dollars in the sum of:

•       the ordinary time earnings of the employee for the quarter in respect of the employer and

•       any sacrificed ordinary time earnings amounts, of the employee for the quarter in respect of the employer.

These amendments operate to ensure that employer contributions that reduce the SG charge are calculated on a pre-salary sacrifice base.

Item 10 of Schedule 2 to the Bill inserts proposed subsection 23(7) into the SGAA to provide that sacrificed ordinary time earnings amounts that are taken into account in a quarter are not to be taken into account for any other quarter.

The amendments made by Schedule 2 to the Bill apply in relation to working out an employer’s superannuation guarantee shortfall for quarters beginning on or after 1 July 2018.

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[1].              Details of the terms of reference, submissions to the Economics Committee and the Committee’s final report are available on the inquiry homepage.

[2].              Senate Economics Legislation Committee, Treasury Laws Amendment (improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], The Senate, Canberra, 23 October 2017, p. 14.

[3].              Australian Labor Party Senators, ‘Additional comments by Labor Senators’, Senate Economics Committee, Inquiry into the provisions of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [provisions], The Senate, Canberra, October 2017, p. 22.

[4].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 12, 2017, The Senate, Canberra, 18 October 2017, p. 62.

[5].              The Statement of Compatibility with Human Rights can be found at pages 14 and 47 of the Explanatory Memorandum to the Bill.

[6].              Parliamentary Joint Committee on Human Rights, Report, 11, 2017, 17 October 2017, p. 60.

[7].              Productivity Commission (PC), Default superannuation funds in modern awards, Report, 60, PC, Canberra, 5 October 2012, p. 4.

[8].              PC, Superannuation: alternative default models, draft report, PC, Canberra, March 2017, p. 35.

[9].              Australian Securities and Investments Commission (ASIC), ‘MySuper: super made simple’, ASIC website, last updated 27 June 2017.

[10].              Financial System Inquiry, Financial System Inquiry: final report, (Murray Review), Treasury, November 2014, p. 131.

[11].              Ibid.

[12].              Ibid., recommendation 12.

[13].              Explanatory Memorandum, Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017, p. 4.

[14].              Ibid., p. 22.

[15].              Ibid., p. 32.

[16].              Explanatory Memorandum, Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017, pp. 3, 5.

[17].              R Sharkie, ‘Second reading speech: Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017’, House of Representatives, Debates, (proof), 23 October 2017, p. 49.

[18].              A Leigh, ‘Second reading speech: Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017’, House of Representatives, Debates, (proof), 23 October 2017, p. 46.

[19].              Australian Labor Party Senators, ‘Additional comments by Labor Senators’, op. cit., pp. 15–22.

[20].              Senate Economics Committee, Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], The Senate, Canberra, 23 October 2017, p. 15.

[21].              Choice, Submission to the Senate Economics Committee, Inquiry into Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], September 2017, p. 9.

[22].              Australian Securities and Investments Commission (ASIC), Submission to the Financial System Inquiry, April 2014, p. 227.

[23].              PC, Superannuation: alternative default models, op. cit., p. 8.

[24].              AIST, Submission to the Senate Economics Committee, Inquiry into Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], 29 September 2017, p. 9.

[25].              PC, Default superannuation funds in modern awards, op. cit., p. 2.

[26].              AIST, Submission to the Senate Economics Committee, Inquiry into Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], op. cit., p. 10.

[27].              Australian Council of Trade Unions, Submission to the Senate Economics Committee, Inquiry into Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], 29 September 2017, p. 2.

[28].              Transport Workers’ Union of Australia, Submission to the Senate Economics Committee, Inquiry into Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], 28 September 2017, p. 1.

[29].              SGAA, section 29.

[30].              SGAA, subsections 19(2A) and 19(2B).

[31].              Superannuation Guarantee Charge Act 1992, section 6.

[32].              SGAA, subsection 32NA(7)–(9).

[33].              Industry Super Australia (ISA) and Cbus, Overdue: time for action on unpaid super, ISA, Melbourne, December 2016, p. 2.

[34].              Ibid., p. 6.

[35].              Superannuation Guarantee Cross Agency Working Group, Cross Agency Superannuation Guarantee Working Group: interim report, [Treasury, Canberra], January 2017, p. 3.

[36].              Ibid., pp. 25–26.

[37].              Superannuation Guarantee Cross Agency Working Group, Superannuation guarantee non-compliance: a report to the Minister for Revenue and Financial Services, [Treasury, Canberra], 31 March 2017, p. 7.

[38].              The terms of reference, submissions to the Senate Economics References Committee and the final report of the Committee are available on the inquiry homepage.

[39].              Senate Economics References Committee, Superbad—wage theft and non-compliance of the superannuation guarantee, The Senate, Canberra, May 2017, p. 33.

[40].              Ibid., pp. 37–38.

[41].              Senate Economics References Committee, Superbad—wage theft and non-compliance of the superannuation guarantee, op. cit., recommendation 4, p. xi.

[42].              Australian Labor Party Senators, ‘Additional comments by Labor Senators’, Senate Economics Committee, Inquiry into the provisions of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], op. cit., p. 21.

[43].              AIST, Submission to the Senate Economics Committee, Inquiry into Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], op. cit., p. 5; Choice, Submission to the Senate Economics Committee, Inquiry into Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], op. cit., p. 10; AFSA, Submission to the Senate Economics Committee, Inquiry into Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], op. cit., p. 7.

[44].              BT Financial Group, Submission to the Senate Economics Committee, Inquiry into Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], 29 September 2017, p. 2.

[45].              ISA, Submission to the Senate Economics Committee, Inquiry into Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 [Provisions], op. cit., pp. 8–11.

[46].              Explanatory Memorandum, Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017, p. 5.

[47].              SGAA, proposed subsection 15A(1).

[48].              SGAA, proposed subsection 15A(2).

[49].              SGAA, proposed subsections 15A(3) and (4).

[50].              SGAA, section 16.

[51].              SGAA, subsection 19(2) provides that an employer’s shortfall is calculated by reference to the SG charge percentage—currently 9.5 per cent.

[52].              Inserted into subsection 19(1) of the SGAA by item 4 of Schedule 2 to the Bill.

[53].              Explanatory Memorandum, Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017, p. 42.