Treasurer Jim Chalmers has left the door open to more than 500,000 teenagers being paid up to $1bn in superannuation by some of Australia’s largest companies.
The Greens will lead a push in the Senate to stop Mr Chalmers from using ministerial discretion to allow businesses to avoid paying super to under-18s who work fewer than 30 hours.
Greens finance spokesperson Barbara Pocock, who introduced a motion to disallow the exclusion last month, said Labor’s carve-out was “undercutting” the futures of hard-working teenagers.
“The government says it understands how tough things are for young people, so why is it choosing to leave them behind?” Senator Pocock said.
“Young people are working hard, paying tax, and doing the right thing. They deserve every dollar they’ve earned, including their super.”
Super for young workers is an ‘important issue’, Treasurer Jim Chalmers says. Picture: NewsWire / Martin Ollman
Analysis by the Super Members Council found the loophole cost under-18s about $405m in super contributions over the last financial year alone.
Rest Super estimated the average missing contribution for the 515,000 teen workers logging less than 30 hours amounted to $3400, in a submission to the Senate economics committee scrutinising Labor’s new Payday legislation.
This estimate brings the average total unpaid super for the under-18s cohort to about $1.75b.
On Tuesday, Mr Chalmers described the issue as “important” and told ABC News Breakfast he had met with a delegation of young workers to discuss super entitlements last week.
“We’ve indicated a willingness to continue to engage with young people, with unions, with the super sector, on proposals about what the next set of changes might be in superannuation,” he said on Tuesday.
The Greens insist teenagers should get their fair share of super, with David Shoebridge saying under-18s are being “cheated” out of their long-term retirement savings.
“They’re putting the hours in, they’ve got a retirement like everybody else,” Senator Shoebridge said.
“I don’t think employers should get a freebie, particularly these big employers like McDonald’s and others.
Greens Senator David Shoebridge says teenagers are being ripped off when it comes to super entitlements. Picture: NewsWire / Martin Ollman.
“Literally, you know, it profits McDonald’s, and I understand Labor wants to drive the profits to McDonald’s, but the Greens are more interested in teenagers getting a fair pay.”
But opposition home affairs spokesman Jonno Duniam warned the government to consider the impact of the change on the economy before striking a deal with the Greens.
“On whether the government, the people who control whether this happens or not, are going to do it, I think you can bet your bottom dollar they will,” Senator Duniam told Sky News Australia.
“Obviously, there are implications for employers, and we want to understand all of this.
“You can’t just do these things on the fly.
“There are costs to employers, particularly when you’ve got a huge casual and young workforce.”
Super reforms to take effect from Wednesday
Labor’s Payday super reforms are set to take effect from July 1, meaning employers will be required to pay employee superannuation at the same time as workers receive their salary or wage.
Under the current model, superannuation only needs to be paid once every 90 days despite appearing on pay slips.
It is hoped the changes will help reconcile an estimated $5.7bn in lost or unpaid super a year.
Employment Hero research found that businesses would require an average of $124,000 in additional working capital to meet the forthcoming obligation.
Penalties for missing the seven-day payment deadline can comprise up to 25 or 50 per cent of the unpaid super guarantee based on their prior compliance history, the Australian Taxation Office has warned.