Superannuation Guarantee Amendment Bill

Today is a red-letter day for small business, with the Senate approving the tax cut for small business companies. It has also approved changes to the small business instant asset write-off. We have seen the small business company tax rate cut to its lowest level in almost 5 years, since 1967, and all small businesses are given an immediate tax deduction on any asset they buy costing up to $20,000. This gives small businesses the capacity to invest further in themselves and also to offer more employment to both young and mature-aged Australians, which is what they do out in regional and rural areas. I want to acknowledge the commitment of the Minister for Small Business, Bruce Billson, and also the Treasurer, Joe Hockey, and the Prime Minister, in this process.

There has been an absolute commitment to small business, and the Superannuation Guarantee (Administration) Amendment Bill 2015 continues that work. It introduces changes to simplify the superannuation choice regime used by employers and employees, reducing the business compliance costs by simplifying when a standard choice form must be provided to an employee by an employer. This is a further reduction in red tape for small business, something they are crying out for. Small businesses, as we know, do not have dedicated human resources people, and small business owners are extremely busy working in their businesses. So this is an important measure for them.

The Superannuation Guarantee (Administration) Act 1992 requires employers to offer a choice of superannuation fund to employees. An employer satisfies this requirement where they make superannuation guarantee contributions to a fund chosen by an employee or, if the employee does not make a choice, to a default fund chosen by the employer and specified in a standard choice form provided to the employee. Employers must give employees a standard choice form within 28 days of their employment commencing. Employers who do not comply with their choice of fund obligations may be liable to pay the superannuation guarantee charge for given employees.

The requirement to provide employees with a choice of super fund is particularly burdensome for employers who employ a large number of temporary residents. This includes many businesses in my electorate of Forrest. The horticultural industry have long been reliant on travellers and backpackers. They have just struggled so hard to get workers. They have needed these people simply to provide the basic labour to harvest their crops—to pick and to pack. They literally cannot harvest—they have not been able to harvest at times—without backpackers and travellers. When you look at other industries—such as the dairy industry, which is struggling to find those who will milk cows, and abattoirs—the same sort of situation arises. This is really apparent in my electorate of

Forrest in and around places like Donnybrook, Busselton, Myalup, Harvey and Cookernup, where a range of fruit and vegetables that rely on labour-intensive hand picking are produced. The compliance burden on those small producers who use backpacker labour is extreme. Often these producers are simple small businesses—a couple or a family business. Many of the backpackers only stay in the region for a couple of weeks, and they are generally on good wages. Many producers are paying in the vicinity of $25 an hour for these workers. I compare this to what I read recently: the same sorts of workers in New Zealand are perhaps paid around $13.20 per hour, or $12 in Germany, or $7 in Israel, or $5 in Taiwan. This means that in Australia they earn a good wage for a relatively short period, grossing perhaps $1,000 for a 40-hour week. Employers have to pay 9.5 per cent superannuation when an employee is paid $450 or more before tax in a month. The worker staying two weeks and earning $2,000 is therefore due $190 in superannuation—perhaps not a large sum, but many producers are forced to set up numerous small superannuation accounts for temporary workers who simply do not have those accounts. Those accounts generally end up with a few hundred dollars in them, and those few hundred dollars can be eaten up by fees. So what we see here is a lot of churn, often for very little result.

Many temporary residents do not have existing superannuation arrangements and, given the short-term nature of their employment, they are unlikely to choose a fund. It is similarly another burden for employers to be required to provide employees with a standard choice form when an employee’s superannuation benefits are transferred to a successor fund under a fund merger arrangement. The amendments contained in this bill will simplify superannuation compliance obligations for employers in these circumstances as well. Employers will no longer have to provide a standard choice form to a temporary resident employee or when super funds merge, nor will they need to allocate time explaining the importance of completing the form and how to do so. Previously an employer who did not provide a standard choice form to employees in these situations may have been liable for the choice shortfall penalty.

These changes will reduce compliance costs for businesses operating in industries that employ a high volume of individuals on working holiday visas, such as hospitality and agriculture, which are very prevalent in my Forrest electorate. Of course these people are prominent in tourism as well. I remember being in the little town of Augusta. A lot of tourists go there. Going back a couple of years, I remember going to the local bakery and them saying that they simply could not survive without these workers. They rely on these workers simply to keep their business doors open. They have to have these workers because there are none locally for them. It is the only way they can continue to operate their business.

Employees in these situations though retain the right to choose a super fund if they wish to do so. Where benefits are transferred from an employee’s chosen fund to a successor fund, the successor fund is taken to be the chosen fund for the employee and the original fund is taken to no longer be a chosen fund. This means, in simple terms, that contributions the employer makes to the successor fund for the benefit of the employee satisfy the choice of fund requirements and the employer will not need to give the employee a standard choice form. Where benefits are transferred from a default fund to a successor default fund, the successor default fund is deemed to be the fund specified in the standard choice form for a given employee. This means that contributions the employer mmakes to the successor default fund for the benefit of the employee satisfy the choice of fund requirements and the employer will not need to give the employee a standard choice form. A fund is a successor default fund if certain requirements are met. This includes that the employee’s interest in the fund is transferred to a new fund without their consent, the original fund was a default fund specified on the standard choice form provided to the employee and the new fund is a successor fund within the meaning of the Income Tax Assessment Act 1997.

These amendments do not affect an employee’s ability to choose their own fund under division 4 of part 3A of the Superannuation Guarantee (Administration) Act 1992. When you are a small business anything that simplifies the processing of superannuation is a very good thing. Reducing that ongoing red tape burden for small businesses is a commitment that the coalition has made. Of course there is more to be done on reducing red tape. As I have said repeatedly in this House, small businesses often actually employ young people in their very first job and often they employ people at a very mature stage of their employment. They employ people throughout the ages.

We see them in small rural and regional communities. So often these businesses are undervalued and perhaps under respected in the broader economic sense. They keep our small communities operating. I am a farmer and the small businesses in my community are always there when I need them. Their doors are open and they are there for me with whatever it is I need on my farm or in my home. Often they are also the people who support our local sporting clubs. They provide the prizes and sponsorship. They are committed to their local community. They support community service organisations and local volunteer groups. Emergency services groups rely on small businesses in their community to provide their employees. When there are emergencies people can bolt from a small business and take care of the emergency, whether they work as a volunteer ambulance operator or in fire and emergencies services. It is the people in the small businesses in our communities who support that sort of activity that keeps our small communities operating.

Having a massive number of small superannuation accounts with almost nothing in them is really a concern and a waste of time and money for everyone, perhaps with the exception of the super funds that collect the cash. There have to be better ways. I am very pleased with the total of our jobs and small business package. As I said at the start, today is a red-letter day. We saw the measures go through the Senate. We saw the $5.5 billion small business package out there. Businesses will be able to deduct $20,000—the tax cut for small companies. It does not stop there. We will continue with a range of measures. All of us understand the commitment of small business people. We also understand the time it takes to work in the administration of small business. So often these people work endless hours. They have invested all of their own money, mortgaged their home, taken huge risks—often to follow their passion—and have done some pretty solid planning.

They are often the same people who do not sleep at night. If you have a debt and you are employing people, there are some huge challenges when you are a small business operator. As always, I acknowledge and respect the work that these people do right through the whole of Australia, but particularly those who frequently have to survive and work hard to survive. They cut their costs. They do everything they can to stay in business and be such a strong part of our rural and regional communities.

As I said, we are committed to continuing to support small business. Nothing shows that more clearly than our commitment not just to the reduction of red tape but also through the jobs and small business package that we introduced as part of the budget. To think that we have a small business minister now sitting in Treasury, in cabinet—he is a key part of every decision that is made. Small businesses know that we take them seriously and that we respect the efforts they make. We know that they employ nearly half of the Australians who look for work. Often young people get their very first job in a small business. It can be the people towards the maturing age of their commitment and ability to work who work in small businesses as well. On that basis I support the bill before the House.