The former Treasury official who discovered proof that a third of workers are being underpaid superannuation has now revealed for the first time that younger, lower-skilled, lower-income workers are worst affected.
Phil Gallagher presented a paper to a research forum on Thursday that showed the most vulnerable occupations were tradies, machinery operators, labourers and apprentices.
“This is fundamental to the retirement incomes of Australians,” he told The New Daily after his speech.
“What we’re seeing happening because of the underpayment of younger and lower-income workers is that they’re being prevented from accumulating a sufficient fund to give them a decent standard of living in retirement.”
Last year, Mr Gallagher compiled a report for Industry Super Australia and Cbus that sparked a national debate and a Senate inquiry, using official ATO data in a way no one else had before.
The report was the culmination of his 21 years as director of Treasury’s Retirement Income Modelling Taskforce.
Mr Gallagher’s latest conservative estimate was that in the 2013-14 financial year, employers ripped off 2.7 million workers to the tune of $5.6 billion in underpaid super, at an average of $2025 per worker.
Building on this research, he told the forum on Thursday that the worst affected federal electorates were in less affluent areas of the Northern Territory, northern Queensland and high migration areas of Sydney, while the least affected were in well-off electorates of Melbourne, Adelaide and Sydney.
The Australian Taxation Office has criticised Mr Gallagher’s estimates as being “not … reliable” and “too high”, but has declined to publish any counter-estimates.
However, the Australian National Audit Office has described the numbers as having “a very thorough and cautious methodology”.
Mr Gallagher told The New Daily he was “disappointed” that the ATO has not attempted to produce its own estimates, despite promising to do so and despite criticising his methodology.
“It is inexplicable. They’ve got the best superannuation contributions data on individuals and the best wages data on the same individuals,” he said.
“It’s unbelievable that you wouldn’t compare the best contributions data with the best wages data at the individual level.
“Not only has the tax office not done that, except for some audit activity, it’s saying that it will not publish any estimates made that way. And that’s very disappointing.
“My view is, if you’ve got the best data and it’s your data, you might look at it. It’s very strange they don’t.”
Mr Gallagher’s employer, the lobby group Industry Super Australia, has called on the government to fix the problem of underpaid superannuation by:
- Removing the $450 threshold on SG eligibility
- Closing the loophole that allows voluntary contributions to count towards an employer’s SG obligations
- Requiring monthly rather than quarterly SG payments to align with pay cycles
- Reviewing the definition of ‘Ordinary Time Earnings’ for the purpose of SG calculations
- Extending unpaid SG liabilities to related corporate entities
- Reviewing ATO resourcing to ensure it can undertake effective compliance activities
- Extending ‘Single Touch Payroll’ to all businesses regardless of size