The Turnbull government’s new Black Economy Taskforce, to be chaired by Michael Andrew AO, should focus on the $800 million in superannuation payments being missed out on by cash-in-hand workers, according to Industry Super Australia and Cbus.
Recent modelling by ISA and Tria Investment Partners with Cbus Super found that workers in the cash economy lost an estimated $800 million in unpaid super in 2014.
The finding was part of a larger survey that identified $3.6 million in under payments of the 9.5 per cent super guarantee along with $1 billion in salary sacrifice payments diverted by employers
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.